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BP, Conoco Phillips drop Alaska natural gas pipeline bid

BP and Conoco Phillips are abandoning their joint venture to build a $35 billion natural gas pipeline from Alaska to the Lower 48, known as the Denali project. The decision is renewing the debate over whether an Alaska gas line is just a pipe dream.

Bud Fackrell, who led the Denali project for the two companies, said Tuesday that there wasn't enough customer interest to make it work.

"Denali is ending its efforts because of a lack of customer support ... we cannot spend the billions of dollars necessary to advance the project unless we have binding agreements with shippers. Although we have been in discussions with potential shippers for nearly a year and half, we have been unable to secure the financial commitments necessary to advance the project," he said.

He said Denali spent more than $165 million on the effort.

Natural gas prices have plummeted since BP and Conoco announced the Denali project in 2008. There was little surprise that it pulled the plug.

"It was a matter of when, not if," said Fadel Gheit, an analyst at Oppenheimer Co. in New York.

There's a separate effort led by the Canadian pipeline firm TransCanada that continues its pursuit of an Alaska gas pipeline to the Lower 48. The TransCanada effort is supported with state money, unlike the rival Denali gas pipeline proposal. An executive with TransCanada expressed optimism Tuesday and said the end of Denali does not impact his project.

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