ConocoPhillips agrees terms for Alaska gas pipeline
Fri Oct 21, 2005 11:51 PM ET
today.reuters.com
[ One down, two to go. Will Exxon Mobil and BP continue to hold out and demand more concessions? ]
By Yereth Rosen
ANCHORAGE, Alaska (Reuters) - Alaska's top oil producer has agreed to fiscal terms proposed by the state for a North Slope natural gas pipeline, bringing the huge energy project a step closer to reality, Gov. Frank Murkowski announced late on Friday.
ConocoPhillips (COP.N: Quote, Profile, Research) accepted a contract proposed by the state that would establish tax, royalty and other financial conditions for the gas pipeline, the Republican governor said.
"There's no question, this is a significant milestone, but there are other positive signs on the horizon with regard to the work that needs to be done," Murkowski said at a news conference.
He described the pipeline as "the largest construction project ever undertaken in North America," with significant financial risks and potential rewards.
The head of ConocoPhillips' Alaska unit said the company was pleased with the outcome of the "long and difficult" negotiations with the state.
"In our view, this project's been in the making for 30 years. The time is right to move it forward," ConocoPhillips Alaska President Jim Bowles said at the news conference. "We're now one step closer to making the Alaska natural gas pipeline a reality."
Still considering the state's proposal are the two other major North Slope producers, BP (BP.L: Quote, Profile, Research) and Exxon Mobil (XOM.N: Quote, Profile, Research).
Ken Konrad, BP's senior vice president for Alaska gas development, said some "outstanding issues" remain to be resolved but that his company is likely to strike a deal with the state as well.
"We do hope and expect that, if we get through these issues, we'll be able to finalize an agreement soon," he said at the governor's news conference.
If all three producers agree to it, the contract will be made public and presented to the state legislature for its approval.
The pipeline, an ambition of Alaska leaders for three decades, would deliver the North Slope's vast natural gas reserves to market. Prudhoe Bay and other North Slope oil fields hold about 35 trillion cubic feet of known natural gas.
The gas pipeline that Murkowski and ConocoPhillips propose would cost about $20 billion, according to state and industry experts. It would run more than 3,000 miles through western Canada and into the U.S. Midwest, delivering 4 billion cubic feet a day.
While details of the state's contract proposal were being kept confidential for now, the governor has described some broad outlines of the state's terms.
They include a state equity share of about $4 billion, or about 20 percent. They also include guarantees for in-state use of the gas shipped through the line and guarantees of shipping access for other energy companies that might make future natural gas discoveries on the North Slope.
The state is also considering competing pipeline proposals from entities other than the North Slope producers.
One proposal is for a pipeline built and operated by TransCanada Corp. (TRP.TO: Quote, Profile, Research). Another is for an 800-mile (1300 km) pipeline paralleling the existing trans-Alaska oil line that would deliver liquefied natural gas into tanker vessels at the port of Valdez. |
