Oct. 5--Denali Pipeline President Bud Fackrell gave additional details on the company's gas pipeline planning effort at the Alaska Oil and Gas Symposium in Anchorage Sept. 23.

Fackrell said that most of the chilled pipeline would be buried, while other segments would be built above-ground through earthquake-prone areas and major river crossing. The gas pipeline will be placed on vertical support members similar to the procedure used for the trans-Alaska oil pipeline.

The company in 2009 will also begin studies of long-term in-state gas needs and will ramp up training initiatives, he said. The in-state needs assessment is required by the U.S. Federal Energy Regulatory Commission.

Alaska groups like the Alaska Natural Gas Development Authority and Enstar Natural Gas Co. are working on ways of getting North Slope gas to consumers in the state, he said.

Denali is focused on the big pipeline, but the company intends to work closely with these groups. Fackrell said Denali has established five take-off points for gas within Alaska and is setting up a special engineering team to work with groups like ANGDA and Enstar, which want to take gas from the pipeline.

Natural gas liquids, as well as conventional natural gas, will be available at the take-off points. To take gas from the high-pressure pipeline, the pressure must be reduced. When that happens, gas liquids like propane and butane drop out of the gas, Fackrell said.

Studies are now being done of an idea to ship propane to communities on the Yukon River from a designated take-off points where the pipeline will cross the Yukon, he said.

"Training is a monumental task. We're concerned about where we will get the people to build this project," he said. "Fortunately, our owners, BP and ConocoPhillips, have had job-development programs underway for years and we hope to tap into this experience."

Denali intends to cooperate with the state of Alaska in job training, he said.

"We know how to build a pipeline like this, but getting the people will be one of our biggest challenges," he said.

Training efforts need to focus on young people currently still in school. They'll need to be ready when the construction is set to begin.

Much of the existing skilled technical and professional workforce is aging.

"People now in their 50s will not be working on this project, most likely," Fackrell said.

At peak construction, the pipeline will require 10,000 workers on the Alaska portions of the route.

Upgrades of key infrastructure in the state, mainly on bridges and highways needed to support heavy loads during construction, is also a major concern in both Alaska and Canada, Fackrell said. The one-inch thick pipe will be very heavy, about 600 pounds per foot, and loads carried on highways and bridges will be substantial. The pipe diameter will range from 48 inches to 52 inches.

Fackrell said people from the Denali group will be in Canada the first week of October to discuss needs with officials there. In Canada, the infrastructure focus is on the Alaska Highway and portions of highways within Canada that connect the Alaska Highway with Haines, Alaska, and Whitehorse, Yukon Territory, with Skagway, Alaska. All three road links will be heavily used for construction support.

Needed upgrades in Alaska already have been identified by the state Department of Transportation and Public Facilities, and mainly involve bridge and highway improvements on the major highways linking Southcentral Alaska with the Interior -- the Richardson and Parks highways -- as well as the Alaska Highway from Fairbanks to the Canada border.

DOT had asked for funding from the Legislature during the 2008 special session to get a start on infrastructure work, but legislators put off the request until the 2009 regular session.

Fackrell said Denali's key "terms of service" will cover many of the state's goals sought in the Alaska Gasline Inducement Act. These include operating an "open access" pipeline, on which any gas owner would be able to ship gas (this is required by the FERC in any event), as well as "distance-sensitive" tariffs (mileage-based fees for shipping gas).

Other terms include designing the pipeline so that it can be expanded efficiently. Also, every two years Denali will solicit for new customers to ship gas.

In addition, while Denali will build its pipeline from the North Slope to Alberta and will consider using existing pipelines to carry Alaska gas onward to Lower 48 markets, it will consider building a new pipeline from Alberta to the U.S. if that is what the customers -- the gas shippers -- desire, Fackrell said.

Denali will have 300 to 400 people doing fieldwork in Alaska and Canada in 2009, up from 60 in 2008, Fackrell said. The company is also nearly ready to close a deal on leasing 50,000 square feet of office space in Anchorage for its corporate headquarters, he said. Denali is now working out of two temporary offices in Anchorage, and also maintains a field office in Tok.

While summer field work is mostly wound down, the group has about 60 people continuing to work on engineering and environmental studies and will continue to ramp up its workforce. Details on several engineering contracts will be released later this year and awarded early in 2009, Fackrell said.

Denali would spend $600 million between now and 2010 to get the best-cost estimates possible for the project. The company will conduct its "open season," a period when gas shipping contracts are solicited, in late 2010.

The last cost estimates for the project were done by North Slope producers in 2001, but inflation since will push costs up, he said. The 2001 estimate was $20 billion. Sources among the producing companies have said they now expect the cost to exceed $30 billion.

Major expenditures are needed on the cost estimates so that the most reliable estimate can be made.

"When we go to an open season, we need to give shippers confidence that we really understand this project," Fackrell told the oil and gas symposium.

Grant Encelewski, operations lead tech for the BP heavy oil team, shows heavy oil recovered from a well

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