Gas line claims in ads called false
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May 19, 2005 (Anchorage Daily News - Knight Ridder/Tribune Business News via COMTEX) -- An oil company executive Wednesday branded as "absolutely false" certain claims the backers of a natural gas development proposal are making in a statewide advertising blitz featuring prominent Alaska politicians including former governors Wally Hickel and Jay Hammond.
Joe Marushack, vice president for North Slope gas development at Conoco Phillips, said the newspaper, television and radio campaign by the Alaska Gasline Port Authority misrepresents how Conoco and other oil companies intend to bring Alaska gas to market.
The ad campaign and Marushack's comments to an Anchorage lunch crowd of oil field contractors reflect rising intensity in efforts to turn Alaska's abundant gas, long stranded under the distant North Slope tundra, into billions of dollars that could sustain the state's economy for decades.
The port authority and a coalition of oil companies including Conoco, BP and Exxon are among three main groups with competing gas pipeline proposals.
The port authority, an agency led by the Fairbanks North Star Borough and the city of Valdez, in recent weeks has run ads claiming that its pipeline project is the best and suggesting that the oil company proposal would take longer to complete and would yield fewer benefits for the state.
Marushack fired back Wednesday. As his audience savored chicken and halibut in a Sheraton Anchorage Hotel meeting room, he projected a port authority ad onto a big screen and broke down its claims point by point.
The ad features a large photo of Hickel, Hammond, former Wasilla Mayor Sarah Palin and retired state Sen. Rick Halford standing together in support of an "all-Alaska pipeline."
The port authority wants to build a pipe from the North Slope to Valdez, where gas would be chilled into a liquid for shipment aboard tankers to the West Coast. The port authority is working with Sempra Energy, a San Diego company that's competing with several other firms to develop ports to accept liquefied natural gas, or LNG, into the country.
In kicking off their ad campaign, port authority officials said in early April they had submitted an offer to buy large volumes of natural gas from the companies that hold rights to it on the Slope -- Conoco, BP and Exxon.
Spokesmen for two of those companies, Conoco and BP, said Wednesday their company executives had at least agreed to talk with the port authority people about the offer.
The oil companies have a whole different idea for getting gas to market -- and a better one, Marushack said. It involves spending up to $20 billion on a pipeline to take gas down the Alaska Highway and across Canada to as far as Chicago.
Marushack took issue with the port authority's contention that the oil companies intend, within two years, to merely conduct "some studies" while the port authority proposes to begin actual construction.
He also said the ad underestimates the number of jobs the oil company project would create for Alaskans; falsely says the oil company pipeline would result in less taxes and royalties for the state; and incorrectly says that local gas users would be charged the same rates for gas as buyers in faraway Chicago.
No one is better suited to make the gas pipeline dream come true than the giant oil companies, who have experience building such megaprojects all over the world, Marushack said.
And Alaskans would greatly benefit once the project were in place, with plenty of opportunity to draw off gas for local consumption, he said.
"Our project will generate billions of dollars," Marushack said.
The oil companies are deep into negotiations with Gov. Frank Murkowski on a contract that would set out tax and other terms for a gas pipeline, if one is ever built. Another company, Calgary-based pipeline company TransCanada Corp., also is negotiating a contract.
Whether any of the pipeline projects ever comes to fruition is very much in question, due to the cost and complexity of each proposal plus the availability of more accessible gas elsewhere around the world.
The port authority chairman, Fairbanks borough Mayor Jim Whitaker, could not be reached for comment Wednesday.
Communications director Jomo Stewart said the port authority stands by its ads and doesn't care to get into a public debate with oil company representatives.
Some critics of the port authority's proposal with Sempra say the West Coast is not a big enough market to absorb huge volumes of Alaska natural gas. Marushack touted the larger Midwest and East Coast markets as one reason why the oil company pipeline is a better proposal.
But Stewart pointed out what he considers a contradiction. It was Conoco's announcement Tuesday that the company and industrial giant Mitsubishi had inked an agreement to develop an LNG import terminal at Long Beach, Calif.
The oil companies "are simply trying to hold us back" and don't really want to develop Alaska gas anytime soon, Stewart said.
He wouldn't specify the cost of the port authority's ad campaign.
GAS PIPELINE PROPOSALS
ALASKA GASLINE PORT AUTHORITY
-- Who: An agency led by Valdez and the Fairbanks North Star Borough that wants a pipeline built from Prudhoe Bay to Valdez, where natural gas would be chilled into a liquid for export to the West Coast.
-- What: The authority is using money from partner Sempra Energy, a San Diego-based natural gas distributor and power company, to run an ad campaign that says its plan is the best pipeline project for Alaska, with more jobs and more public revenue.
-- Status: Has submitted proposal to North Slope producers to buy their natural gas production. Is one of three entities negotiating with the Murkowski administration over how the state would tax its project. Says it could finish its project by 2012.
-- What critics say: This project is an impossible dream. It would need an act of Congress to get affordable tankers. It would glut the West Coast with gas. The authority could not borrow 100 percent of the money to build the project as it claims. The authority's tax-exempt status is a fiction.
CONOCO PHILLIPS, BP, EXXON MOBIL
-- Who: By far the North Slope's biggest natural gas producers. Currently inject gas produced with oil back underground.
-- What: They say Alaska would more value if the natural gas were piped through Canada into the Lower 48.
-- Status: Is one of three entities, with the Gasline Port Authority and TransCanada, a pipeline company, negotiating with the Murkowski administration over how the state would tax its project.
-- What critics say: Their pipeline would take longer to build, would create fewer Alaska construction jobs and would not guarantee in-state supplies of gas.
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By Wesley Loy
Copyright (c) 2005, Anchorage Daily News, Alaska |
