Oil chief criticizes proposed gas deal
ROADBLOCKS: Exploration by small companies would be hampered, outgoing state official says.
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By SEAN COCKERHAM
Anchorage Daily News
(Published: November 2, 2005)
JUNEAU -- Outgoing state oil chief Mark Myers charges that the governor's proposed natural gas pipeline deal could throw up roadblocks for the smaller, independent petroleum companies that the state needs to explore and develop its oil and gas.
"I believe the deal is bad for the state and bad for independent producers," Myers said in an interview this week.
The governor's office on Tuesday declined to respond to Myers' statements.
Myers has been director of the state Division of Oil and Gas for five years. He is one of six top officials in the Alaska Department of Natural Resources who resigned Thursday after Murkowski announced he was getting rid of the department's commissioner, Tom Irwin. Irwin had written a memo saying the governor was giving up too much in the gas pipeline negotiations with the major oil companies.
Myers said the smaller independents are needed because they will take the risks to explore for Alaska's oil and gas. The proposed pipeline to the Lower 48 won't work without exploration.
It's widely believed there are vast amounts of North Slope natural gas yet to be found. There are 35 trillion cubic feet of proven gas reserves, mostly at the Prudhoe Bay and Point Thomson fields controlled by the major oil companies. That's enough to keep a pipeline full for the first 15 years or so, Myers said.
But more must be discovered to make the estimated $20 billion project pay off over the long term.
Murkowski has been negotiating for two years with the major companies -- Conoco Phillips, BP and Exxon Mobil -- over a contract setting out tax, ownership and other terms should the companies someday build the pipeline. Conoco has accepted the deal, and the others are negotiating with the state. Part of the governor's offer is for the state to invest about $4 billion to own 20 percent of the line.
The details of the governor's offer are being kept confidential until the deals are struck. At that point, the contract will go out for public review. Then the Legislature will decide whether to approve it. Pedro Van Meurs, an international oil and gas consultant working for the governor's office, has said the deal offers world-class benefits to the state. Murkowski, in a written statement, said the deal will mean jobs, state revenue and increased exploration for oil and gas.
"Critics know the only way to stop the gas pipeline is to kill the contract before I can make it public," Murkowski wrote. "I will not let this happen, despite the political theatrics of its opponents."
One of the six principles that Murkowski has said are guiding his approach to the gas pipeline is that future explorers must have access to the line. Another is that the pipeline must be expandable so new discoveries can get to market.
Myers, the governor's outgoing oil and gas director, said he would not discuss what is in the deal while it remains confidential. But, in his resignation letter, he said the negotiations have implications for all aspects of the state's oil and gas interests.
"I cannot continue as director and watch silently as the state's interests are undermined by creating barriers for the new oil and gas participants that are so vital to the economic future of our state," Myers said.
This week, Myers -- emphasizing that he was speaking in general terms and not about specifics of the governor's contract -- said the independents need guaranteed access to the pipeline at a reasonable cost to justify investing in exploration. They also need an idea of when the gas pipeline might be built, he said. Myers also discussed the fact, which the governor made public, that revising oil taxes are part of the gas pipeline talks.
Myers questioned whether making oil taxes part of the deal could "create an unbalanced playing field" that favors companies included in the negotiations over those that are not.
Anadarko Petroleum is worried about that, said Mark Hanley, the company's public affairs manager for Alaska. Anadarko, one of the companies known as independents, holds oil and gas leases in the Brooks Range foothills of the North Slope.
Hanley said the big three companies negotiating with the state "do not understand our interests and nor do they care." Two of them, BP and Exxon, are not even actively involved in Alaska oil exploration anymore, Hanley said.
He agreed with Myers that access to the proposed gas pipeline is a huge issue for the independents. Hanley said he is worried, but his company is not at the table with the governor's negotiating team and he does not know what is in the deal.
"The problem of all this is that the devil is in the details and we haven't seen them," Hanley said. |
