Revised Alaskan gas pipeline accord issued

Alaska Gov. Frank H. Murkowski has released a revised natural gas pipeline accord negotiated with the three North Slope producers, which he said the oil companies are ready to sign if the state legislature approves it.

May 25, 2006

2 min read

By OGJ editors
HOUSTON, May 25 -- Alaska Gov. Frank H. Murkowski has released a revised natural gas pipeline accord negotiated with the three North Slope producers, which he said the oil companies are ready to sign if the state legislature approves it.

On May 24, Murkowski released a second draft that was 460 pages long. The first draft, released May 10, was 356 pages. The second draft includes oil tax rates and credits in a section that Murkowski calls "the oil fiscal certainty piece."

The companies would pay a proposed 20% tax on their Alaska oil profits, and they also could subtract investment credits of 20%.

As previously reported, the accord would freeze oil and gas taxes for up to 45 years (OGJ, May 22, 2006, Newsletter). Murkowski and the oil companies cannot sign the proposal until it is approved by the legislature, which is on Memorial Day recess from its special session until May 31.

Industry reaction
ExxonMobil Alaska Production Inc. Vice-Pres. Richard Owen said, "The fiscal contract provides the predictable and durable terms that are necessary to advance the gas pipeline project to the next phase."

BP Exploration (Alaska Inc.) Pres. Steve Marshall said, "The time is right to advance this project, and we're ready to get started as soon as a contract is approved."

ConocoPhillips Alaska Pres. Jim Bowles said, "Alaskans have the opportunity to voice their support for the fiscal contract and the Alaska gas pipeline through the public process."

Murkowski told reporters during a news conference in Juneau that he is "very optimistic about the gas pipeline contract going forward."

He also noted that BP Chief Executive John Browne affirmed in a May 22 Wall Street Journal article that the producers significantly will increase investment in Alaska if the gas pipeline contract is approved.

Browne was quoted as saying BP would increase its investment in Alaska from a current level of $600 million/year to $1.5 billion over a 10-year period if the gas pipeline is approved.