ConocoPhillips eyes new Alaska pipeline

ConocoPhillips, the largest oil producer in Alaska, has proposed a $30 billion pipeline to link untapped natural-gas deposits on the North Slope to markets in the lower 48 U.S. states and Canada.

The pipeline, the most costly ever in North America, would transport about 4 billion cubic feet of gas a day, Houston-based ConocoPhillips said Friday in a statement. Cost projections range from $25 billion to $42 billion, according to company spokesman Charlie Rowton, who said $30 billion is the "best estimate."

"It's a monumental project and a huge amount of gas," said Fadel Gheit, an analyst at Oppenheimer. "It's way above Conoco's pay grade. They will probably have to get some partners."

Producers are dusting off plans to tap gas deposits discovered in Alaska decades ago as gains in demand lift prices for the heating and power-plant fuel. At the same time, fields that are cheaper to develop are becoming scarce. North Slope gas reserves, estimated at 35 trillion cubic feet by the state, are now inaccessible because there's no way to get the fuel to consumers.

ConocoPhillips said it's prepared to make significant investments without state matching funds to advance the project. The company is interested in partnering with other Alaskan oil producers and a pipeline operator, Rowton said.

The proposal doesn't meet all the requirements under a state law that set Friday as a deadline for pipeline proposals, Rowton said. He declined to say how the plan deviates from the guidelines.

The North Slope pipeline, as proposed by ConocoPhillips, would carry enough gas to meet 6.8 percent of the U.S. demand predicted by the federal Energy Department for 2025.

"I think they see an opportunity to leverage that position as one of the pre-eminent domestic natural-gas suppliers," said Ted Harper, who helps manage $8 billion in assets, including shares of ConocoPhillips, Exxon Mobil and BP, at Frost Bank in Houston. "What I'm a little less convinced about is the political climate these days."

ConocoPhillips rose $1.22, or 1.6 percent, to $80.04 in New York Stock Exchange composite trading. The shares have climbed 11 percent this year.