Conoco and BP team up for Alaska gas pipeline

By Michael Erman and Robert Campbell

NEW YORK (Reuters) - ConocoPhillips (COP.N: Quote, Profile, Research) and BP Plc (BP.L: Quote, Profile, Research) said on Tuesday they would partner to build a natural gas pipeline costing more than $30 billion (15.2 billion pounds) to link Alaska's North Slope with markets in the rest of the United States by 2018.

The announcement marks the latest attempt to build a megaproject that has been discussed since the 1970s but bedevilled by high costs and disputes over revenues.

"This is not an announcement to build a plan, this is an announcement to start the project. This is what we're doing today," Doug Suttles, the head of BP's Alaska unit, said at a news conference in Anchorage.

Denali, the new BP-Conoco joint venture that would build the pipeline between the North Slope and Alberta, Canada, will spend $600 million on preliminary studies over the next two years to firm up cost estimates.

The proposal is broadly similar to a 2007 ConocoPhillips initiative that was rejected by Alaska Gov. Sarah Palin in January over Conoco's insistence that the state and the North Slope producers begin talks over a tax deal beforehand.

However, the Denali plan drops the demand for immediate talks over taxes, although the companies' overall position is little changed as they continue to insist a tax deal must be in place before the pipeline begins signing up customers in 2010.

Palin, whose administration is evaluating another gas pipeline proposal made by TransCanada Corp (TRP.TO: Quote, Profile, Research), welcomed the announcement.

"Whichever project gets us there first in Alaska's best interests is what we'll be supporting. I think it's further proof that competition does work," she told reporters.