ConocoPhillips presses ahead with gas pipeline construction bid

After speculation that ConocoPhillips, which is bidding with BP to build and operate the proposed North Slope pipeline, was reassessing its options, the company has re-affirmed its commitment to the project.

The natural gas market in the US has changed significantly over the last two years, mainly due to shale gas. Now a method has been found to economically exploit the vast reserve of shale gas in the US. However, the company's Chief Executive Jim Mulva struck a confident note, pointing out that natural gas will be a very attractive source of energy in the future compared with other resources, and that prices are expected to become less volatile.

The two companies have created a jointly owned pipeline company, Denali, to bid against the state-backed opposition, which consists of ExxonMobil and TransCanada Corp. The pipeline will take natural gas from the North Slope fields and into North America.

Both companies have proposed similar pipeline projects but only one pipeline will be built. In order to win the project the companies have been seeking shipping commitments from shareholders in North Slope. The open season to acquire shipping commitments ended on 4 October.

ConocoPhillips will now consider the market response, long-term gas prices, supply forecast and taxation issues that the proposed pipeline is likely to face.

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