The four oil & gas giants – Exxon Mobil Corporation (NYSE:XOM), BP plc (ADR) (NYSE:BP), TransCanada Corporation (NYSE:TRP), and ConocoPhillips (NYSE:COP), said that the project to liquefy and export natural gas from Alaska may cost $65 billion or more, and its completion may take more than 10 years. The companies told Sean Parnell, Governor of Alaska, that the project involves an 800-mile pipeline from North Slope to the southern coast, a liquefaction plant, and many storage tanks. Its construction will require about 15,000 employees (more than 1,000 of them permanently), and 1.7 million tons of steel.

Alaska Pipeline

Extraction of oil in North Slope has declined, so Alaska’s government and the energy companies are planning to explore the gas in the area. As the demand in Asia is increasing, LNG may generate more than $20 billion in revenues every year. According to the governor, North Slope has 35 trillion cubic feet of reserved gas, and another 200 trillion cubic feet of recoverable, but undiscovered, gas.

“The opportunity is challenged by its cost, scale, long project lead times, and reliance upon independent oil and gas operations with declining production,” said the executives of the four energy companies in a joint letter to the Alaska Governor. The venture will compete with the LNG supplies coming from East Africa, Australia, the U.S. Gulf Coast, and Canada. Royal Dutch Shell plc (RDS.A) (RDS.B) has already started their oil & gas exploration in Alaska.

The companies haven’t made any final decision on whether to go ahead with the proposed project. They are already planning to build an LNG facility in the West Coast of Canada, to export fuel to Asia, and that’s how the plan to export North Slope gas came into formation.

The Alaskan coast has very close routes to Asian markets, thus shipping costs will be lower than the competing projects. The rising consumption of gas in Asia will push the global gas demand by 17 percent in the next five years, according to the International Energy Agency. Annual gas consumption in China will double in five years to 273 billion cubic meters. IEA says that Japan, China, India and South Korea will be the world’s largest consumers of LNG by 2025.