Court rules against Exxon over disputed gas line access rules -
APPEALS COURT: Ruling is another blow to big three North Slope producers.
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By ALAN ZIBEL, The Associated Press
Published: July 28, 2007
Last Modified: July 28, 2007 at 04:59 AM
WASHINGTON -- A federal appeals court on Friday rejected an effort by Exxon Mobil Corp. to overturn rules governing access to a potential multibillion-dollar pipeline that would transport natural gas from Alaska to the Lower 48.
The U.S. Court of Appeals for the District of Columbia Circuit upheld Federal Energy Regulatory Commission rules published in 2005 that were designed to give Alaska energy suppliers the ability to deliver their fuel through pipelines they don't own.
Natural gas producers, including Anadarko Petroleum Corp., were concerned that access to the proposed 3,600-mile pipeline would be limited by the companies building it.
Alaska has struggled for decades to get a deal either with North Slope gas producers or independent pipeline companies to build a line that could supply gas to the Lower 48 or even Asia's Pacific Rim.
The appeals court ruling was another blow to the big three North Slope producers -- Exxon, Conoco Phillips and BP -- and their vision of how a gas pipeline project should proceed.
Last summer, a proposed deal between them and then-Gov. Frank Murkowski fell apart. And this year, Alaska legislators approved a new gas pipeline law pushed by new Gov. Sarah Palin that the three oil companies vigorously opposed.
The three oil giants control rights to most of the North Slope's known natural gas reserves and they want maximum say on cost overruns, pipeline expansion, fees for shipping through the pipeline and taxes.
In the case before the appeals court, Exxon argued that government regulations would force the pipeline's sponsors to build a larger pipeline than necessary to carry natural gas that might never be found, according to the court decision.
The company also argued that the large costs of paying to build the pipeline for companies that hadn't committed to use it might make the project too risky to continue.
The court, however, ruled that FERC could not order the pipeline's builders to build more capacity than they want to add.
FERC in 2005 finished rules for the "open season" in which companies would bid for capacity on the pipeline.
Companies that own large amounts of the gas that will largely pay for the pipeline will be able to pre-subscribe to pipeline capacity outside of an open season, under FERC rules. But other bidders must have an opportunity to negotiate the same terms.
Palin said this month that the state is ready to receive applications for a state license giving rights to build a natural gas pipeline. State officials and others believe such a pipeline would ultimately deliver trillions of cubic feet of reserves to market.
Representatives for Exxon and Anadarko did not immediately have any comment |
