State moves ahead on gas line plans
TERMS: Governor to present oil companies with tax-rate proposal.
adn.com
By WESLEY LOY
Anchorage Daily News
(Published: October 21, 2004)
State officials plan to give major oil companies a proposal by Oct. 28 spelling out tax rates and other terms for an Alaska natural gas pipeline, and the three major oil companies that might build the line have indicated they'll reply within a week, Gov. Frank Murkowski said Wednesday.
A written statement from the governor's office also said oil companies Conoco Phillips, BP and Exxon Mobil "have embraced" his idea of the state owning a share of the pipeline, a megaproject that could carry North Slope gas as far as Chicago and cost $20 billion.
Murkowski issued the statement after meeting in Pasadena, Calif., on Tuesday with several top oil company executives including Conoco chairman Jim Mulva; Exxon president Rex Tillerson; BP exploration and production chief executive Tony Hayward; and Steve Marshall, president of BP Exploration (Alaska) Inc.
The executives were in Pasadena for a meeting of the American Petroleum Institute, an oil and gas industry trade association. Murkowski said he stopped there on his way back to Alaska from Oklahoma, where he attended a meeting of the Interstate Oil and Gas Compact Commission, an association of governors from oil-producing states.
Murkowski said his talks with the executives significantly advanced the effort to strike a deal between the state and the oil companies. The companies say they need stable tax and other terms for many years before risking so much money on a pipeline.
Negotiating teams for the state and the oil companies have been meeting for much of the year in Anchorage to try to agree on a contract under the Alaska Stranded Gas Development Act. The act gives the governor the power to negotiate a deal with the pipeline builders, subject to final approval by the Legislature.
Such a contract would not mean pipeline construction would begin.
Rather, it would only set out terms, such as production and property tax rates, hiring commitments, and the availability of some gas for local use.
The oil companies that hold development rights to the Slope's gas reserves would still have to decide when it's time to market the gas. For some 30 years, the companies have said the huge cost of the pipeline makes the project uneconomical.
Murkowski said, however, that conditions are brightening for a gas pipeline, long an elusive economic development dream for the state.
He cited the recent passage in Congress of a package of financial incentives for pipeline builders, including loan guarantees and faster permit approval.
The state's all-Republican congressional delegation, including Murkowski's daughter Sen. Lisa Murkowski, touted the incentives as "the greatest news we have received in 20 years." But spokesmen for at least one oil company, Conoco, say other federal incentives still are needed. And Lisa Murkowski's opponent going into the Nov. 2 election, Democrat and former Alaska Gov. Tony Knowles, has said the recent congressional action, while helpful, didn't go far enough.
Gov. Murkowski said the state wants to submit a final contract proposal to the Legislature early in the next session, which begins Jan. 10.
But oil company spokesmen who could be reached late Wednesday were noncommittal on the governor's assertion that the oil companies would respond within a week of receiving the state's proposal.
"Fiscal contract negotiations are continuing, and we plan to have a comprehensive proposal available for legislative review early in the coming session," said Dave MacDowell, BP's Alaska gas spokesman.
Kristi DesJarlais, spokeswoman for Conoco in Houston, issued a similar statement.
Larry Persily, a former state Department of Revenue official who took part in some of this summer's negotiations between the state and oil companies, said time is short for getting a contract in the hands of lawmakers. For one thing, the stranded gas act requires a 30-day public comment period before the Legislature can fully consider the contract, he said.
Daily News reporter Wesley Loy can be reached at wloy@adn.com or 257-4590. |
