JUNEAU -- A high-stakes showdown is taking shape over who will be in charge of a major pipeline to move natural gas from the North Slope to North American markets and what it will take to make the long-hoped-for project a reality.

Denali, a joint effort of Conoco Phillips and BP, formally proposed a $35 billion project Wednesday, with a pipeline spanning 1,750 miles and having delivery points to help meet gas needs in Alaska and Canada.

Denali billed the project, which includes a huge gas treatment plant at Prudhoe Bay, as "one of the largest private investments in the history of North America." Houston-based Conoco and Britain's BP claim lease rights for about half of Alaska's known North Slope gas.

The Slope's other major producer, Irving, Texas-based Exxon Mobil Corp., is helping TransCanada Corp. of Calgary, Alberta, with a competing project that has been promised up to $500 million from the state. Its two options include a line to Canada with a $32 billion to $41 billion price tag.

Both ventures aim to have a pipeline built and gas flowing by 2020, with plans to deliver about 4.5 billion cubic feet of gas per day to North American markets after connecting to the Canadian pipeline network in Alberta. TransCanada's other option is smaller, and it would pipe gas to Valdez for export.

Attention now turns to the next few months, when the competing projects plan to court North Slope gas producers and seek shipping commitments as part of what's called "open season."

"No one is going to build two pipelines," said Larry Persily, the federal coordinator for Alaska Natural Gas Transportation Projects.

TransCanada and Denali officials agree and say the best option for moving forward is having all three North Slope majors, and the state, behind a single project.

The question then becomes who supports which project, and what tax changes, if any, Alaska will be asked for to make the project more attractive.

TWIN PROJECTS

Persily said Alaskans should be patient for now, letting the market do its work during open season.

"It's going to get better from here on out," he predicted.

Persily pointed out that the two open-season filings show the competing pipeline ventures have independently arrived at similar conclusions about how much it will cost to build the line to Alberta.

"The Denali estimate is right in the middle of the TransCanada range," Persily said.

TransCanada successfully bid for a state pipeline license and the promise of a $500 million reimbursement under the Alaska Gasline Inducement Act pushed by then-Gov. Sarah Palin.

Tony Palmer, TransCanada's vice president of Alaska development, said Wednesday that the contents of Denali's open-season filing is "remarkably similar" to his company's, which was filed two months ago, regarding the project costs and commercial terms.

He said TransCanada's state license and its ownership of a certificate to build the Canadian segment of the pipeline are two key advantages for its project. He also pointed out that TransCanada fleshed out the LNG option and Denali did not.

Denali is pushing ahead without state help. President Bud Fackrell said Wednesday that, while there's only enough room for one line, BP and Conoco do not agree with all the state's terms under the act, making it problematic to coalesce now. He said Denali and its owners are open to anyone who can add value joining their project, defending it as highly competitive.

UNLOCKING THE GAS

Gov. Sean Parnell chalked Fackrell's comments up to "posturing." "They're negotiating," he told reporters, adding that he sees back-to-back open seasons as a positive for Alaska. TransCanada and Exxon plan to begin seeking shipping commitments as early as May 1, with Denali hoping to hold its own starting July 6. The open seasons will last about three months, likely followed by negotiations between the pipeline companies and the gas producers on exact terms.

Doug Reynolds, a professor of energy economics at the University of Alaska Fairbanks, said there will be a pipeline, but it's a matter of what can be worked out with the state on long-range tax and royalty terms.

"This is all a game," Reynolds said. "The state is a little bit over the barrel," with companies holding leases to the vast resource that state officials have long seen as a way to help Alaska shore up state revenue as North Slope oil production declines.

While oil's still king, estimates have put the North Slope's proven natural gas reserves at 35 trillion cubic feet. But that's worthless to the state unless the gas flows to consumers.

Parnell has said the state would do what it sees as being in its best interests. The companies want greater control, he said, but the state should "stay the course."

IS ALASKA GAS COMPETITIVE?

There are other obstacles.

In its filing Wednesday with the Federal Energy Regulatory Commission, Denali noted the risks involved. It's seeking leeway to consider other options -- a scaled-down project, an entirely different project, such as a line to a liquefied natural gas plant, or allowances to drum up additional support for the original -- if it doesn't get commitments for at least 85 percent of the line's capacity at open season.

Fackrell also pointed out questions of financing and an ongoing legal dispute over some Alaska lease holdings.

He noted that prospective shippers will have to decide, given the energy market's volatility, tax questions and other issues, whether they want to commit to the Denali project, TransCanada's project, or neither.

Some lawmakers have become skeptical of the idea of a mainline to North America because of other gas plays ahead of Alaska's and improved methods to tap natural gas stored in Lower 48 shale formations. There's also the question of whether there will be sufficient demand for gas to justify the Alaska pipeline.

Reynolds said environmental concerns associated with developing shale gas, and infrastructure and other costs, should allow for Alaska gas to be competitive and make money.

An Alaska pipeline would supply only a small slice of demand, he said. U.S. consumers used about 60 billion cubic feet of natural gas per day in 2009.