Conoco and BP team up for Alaska gas pipeline

By Michael Erman and Robert Campbell

NEW YORK (Reuters) - ConocoPhillips (COP.N) and BP Plc (BP.L) 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), 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.