Pipe Dreams

Connecting the north slopes of Alaska to Alberta in Canada is going to require cutting-edge technology and a big budget. Denali – The Alaska Gas Pipeline will be the largest private construction project in North America with an estimated cost of around $30 billion. O&G catches up with the project’s president, Bud Fackrell, to find out more.

Earlier this year, BP and ConocoPhillips, two of the major Alaska North Slope energy producers, launched a new pipeline project, called Denali - The Alaska Gas Pipeline LLC. This new pipeline will run approximately 2000 miles, depending on its terminus, from Alaska's North Slope to Alberta, Canada. The gas will move to Lower-48 markets from Alberta, through existing pipe infrastructure, or if required, through a new pipeline that Denali will construct. "This is a truly, 'basin-opening project'," enthuses Bud Fackrell, President of Denali. "It will allow, for the first time, Alaska's North Slope gas to reach the hungry North American marketplace. A successful project will encourage new exploration and development, and will provide a major new domestic source of clean energy for decades to come."

The project is expected to deliver approximately four billion cubic feet of natural gas, per day, to market and there is an opportunity to expand this through additional compression. If the project goes to plan and sticks to the itinerary then gas will be flowing to market in 2018. "This project has the capacity to provide decades of reliable, clean and secure energy to consumers in the lower 48 states, Alaska and Canada," says Fackrell.

Challenges
There will be a number of technical challenges involved in the construction of the Denali pipeline, mostly due to the difficult terrain and freezing temperatures. Numerous river and stream crossings, as well as several mountain passes - including Atigun Pass in the Brooks range at 4800 feet - will add to mountains of challenges.

The pipeline will be buried in permafrost and discontinuous permafrost in the northern sections, and in order to ensure that the surrounding soils remain frozen, propane chillers will be used to cool the gas to around 30 degrees Fahrenheit.

As planning for the pipeline continues, Fackrell has the opportunity to make the most of the latest developments in pipeline construction thinking. He is currently evaluating the prospects of using high-strength steel, which would reduce the overall weight and cost of pipeline steel. "We expect to use large, powerful trenching machines to help optimize the construction effort, and plan to employ automated welding technology to help increase construction efficiency and lower overall project costs," explains Fackrell.

The design and operational plan for the pipeline will include a number of features to address operations, particularly pipeline monitoring, leak detection, safety and security. Specifically, Fackrell cites leak detection tools being built into the computer controls that will be used by control room operators to manage the pipeline system, as well as advanced inline inspection tools that will regularly inspect the line. Intermediate block valves will isolate sections of the line. "The outside of the pipe will be coated with a fusion-bonded epoxy resin to resist corrosion," says Fackrell. "Further corrosion protection to appropriate sections of the pipeline will be provided by cathodic protection - the application of a carefully controlled electrical current to prevent electrolysis that can cause external corrosion."

The first steps
There is a huge amount of work involved before any building can get started, in fact, in the "success case", the construction of the Denali pipeline won't begin until 2013, and the first gas won't be seen until 2018. There are four phases involved. The first three will take until 2013, and involve planning, application preparation and permit approvals. And phase four will be the execution, from 2013 to 2018.

The Denali project will also involve the construction of a gas treatment plant on the North Slope. This gas treatment plant will be a mega project in its own right, and will be the largest plant of its kind in the world, requiring world-class project execution skills. The plant will remove CO2 and other impurities before dehydrating, compressing and chilling the gas before it goes on its way down the pipeline to Alberta.

The first major milestone is open season in 2010. The key to a successful open season is having a quality cost estimate and construction schedule that shippers can rely upon. "The last cost estimate that was done for this project was in 2002," explains Fackrell. "Over the next 18 months, we intend to update the cost estimate and develop a tariff structure. As part of this effort, we will be collecting field data in critical areas of the pipeline corridor and awarding preliminary engineering contracts for the gas treatment plant and the pipeline." 

Impact
The Denali pipeline will undoubtedly have an impact, both environmentally and socially. The question is, just how much of an impact will it have? Fackrell explains that steps are being taken to manage the pipeline's impact, and that the Federal Energy Regulatory Commission and the National Energy Board will oversee a rigorous stakeholder engagement process to address these areas. "Denali will be holding a series of stakeholder engagement meetings along the pipeline corridor, and will be developing an Environmental Impact Statement to ensure issues are identified and addressed appropriately. If these issues are not addressed adequately in the planning stage, the pipeline construction could be significantly delayed," warns Fackrell.

Without doubt the Denali pipeline has the potential to become an economic engine for development. Fackrell anticipates, and welcomes, efficient pipeline expansion opportunities, encouraging new exploration and development on Alaska's North Slope and along the pipeline corridor in Alaska and Canada in the area, extending the life of North Slope fields.

Opportunity

In addition to helping meet critical energy needs, this multi-billion dollar project will:

• Serve as the economic engine to create jobs and new business opportunities for Alaskans and Canadians
• Generate billions of dollars of new gas sales, royalties and taxes
• Make it possible for Alaskan and Canadian consumers to obtain North Slope natural gas supplies from off-take points on the main pipeline
• Promote new oil and gas exploration and production on Alaska's North Slope and along the pipeline corridor in Alaska and Canada

• Help extend the life of North Slope fields

Project in numbers

• The pipeline will be 2000 miles
• It operate at around 2500 psi
• 2-3 million tons of steel will be used
• $60 million spent in 2008 alone
• The gas will move to the Lower 48 markets