Conocophillips Corp North Slope wells produce gas with the oil.

Two oil and gas producers on Alaska’s North Slope have joined the race to build a natural-gas pipeline to the contiguous U.S. On April 8, BP PLC and ConocoPhillips Co. announced plans to build “Denali—The Alaska Gas Pipeline.” Their $30-billion-plus project will include a $5-billion gas treatment plant at Prudhoe Bay and a 2,000-mile-long large-di-ameter pipeline from there to Alberta. The companies may build a separate 1,500-mile pipeline from Alberta to the contiguous U.S.

The buried pipeline would be built in the Trans Alaska oil pipeline right-of-way before turning to follow the Alaska Highway, covering about 700 miles in Alaska. Executives say fieldwork would begin this summer and they predict full-capacity gas flow in ten to 11 years. The line is expected to deliver 4 billion cu ft of natural gas per day, up to 8% of U.S. daily consumption.

The plan presents competition for TransCanada Corp., which submitted a proposal to build a pipeline along the same route under AGIA, the 2007 Alaska Gasline Inducement Act. TransCanada is encouraged that two of the three North Slope producers are ready to advance the project, says spokeswoman Shela Shapiro. “We see this as positive news for consumers [but] if alignment with producers does not occur, this could turn out to be a competitive environment,” she cautions.

Other companies have expressed interest in the Denali project. ExxonMobil Corp. has said it is evaluating all options. Officials from Royal Dutch Shell PLC and pipeline builder Enbridge Inc. also say they might become involved.

Some Alaska officials greeted the proposal with skepticism. At a press conference after the announcement, Alaska Gov. Sarah Palin (R) applauded the effort, but says it doesn’t affect the TransCanada proposal under review. Democratic state senator Kim Elton says AGIA caused some producers to realize there is a new game and they had better join it.

BP and ConocoPhillips have committed to spend $600 million over the next three years on planning, infrastructure, engineering, regulatory tasks and permit applications. As many as 150 people will be working on the project by year’s end, says Steve Rinehart, BP spokesman. “We will be awarding [engineering] contracts, but it’s premature to say when,” he says. TransCanada has not yet hired contractors for its project, says Shapiro.

The legislature will convene in a special session June 3 to discuss the gas line project.