An Alaska state authority charged that BP PLC and Exxon Mobil Corp., the world's largest publicly traded oil companies, are conspiring to withhold natural gas from U.S. markets and reinforce their market power over North Slope supplies.
In an antitrust suit filed late yesterday in federal court in Fairbanks, the Alaska Gasline Port Authority alleged that a series of illegal agreements and acquisitions by the companies has choked the flow of the state's vast gas reserves. It seeks to stop the companies' alleged collusion through a court injunction and unspecified damages.
Exxon and BP spokesman both denied the accusations that the companies were trying to delay exports of gas from Alaska. "This is another sobering reminder of our litigation-crazed society. This suit is frivolous and it's totally without merit," says Exxon spokesman Russ Roberts.
The lawsuit is the latest twist in a 30-year effort to move the estimated 37 trillion cubic feet of natural gas within Alaska's sprawling oil field, enough to satisfy two year's worth of U.S. demand. There is currently no significant natural-gas production in the North Slope; gas now produced by oil wells is injected into underground reservoirs. The dispute comes at a time when U.S. natural-gas prices are soaring.
The port authority, created in 1999 to build a gas pipeline, says it has $18 billion in federal guarantees and the permits to build a pipeline from the North Slope to Valdez in the southern part of the state, where gas would be liquefied and loaded onto tankers. But BP and Exxon favor an alternative, longer pipeline through Canada, a pipeline over which they would have more control, the authority charges.
Talks between the state and producers on building the longer pipeline have stalled. BP and Exxon Mobil, which produced a combined 1.7 trillion cubic feet of gas last year in the U.S., about 9% of the domestic total, have balked at the state's terms; a third producer, ConocoPhillips, agreed to the state's basic terms in October. The natural-gas pipeline disputes aren't related to the battle in Congress over opening the Arctic National Wildlife Refuge to oil and gas exploration.
The Alaska Gasline Port Authority said that BP's refusal to agree to ship its natural gas and Exxon Mobil's failure to develop its huge fields amounts to "warehousing" a desperately needed resource in an effort to drive up prices. "Gas prices are at record highs, and big oil companies still won't move the gas to market," authority Chairman Jim Whitaker said in a statement.
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