Alaskan governor reports gas line status

Alaska hopes to reach agreements with the two remaining Alaska North Slope producers about their participation in a gas pipeline to the Lower 48 states by June, Gov. Frank H. Murkowski said.

Feb. 15, 2006

2 min read

Nick Snow
Washington Correspondent

WASHINGTON, DC, Feb. 15 -- Alaska hopes to reach agreements with the two remaining Alaska North Slope producers about their participation in a gas pipeline to the Lower 48 states by June, Gov. Frank H. Murkowski said.

State negotiators have been meeting about every 7 days with representatives of BP PLC and ExxonMobil Corp. after reaching an agreement with ConocoPhillips, Murkowski wrote in a report to state legislators on Feb. 9.

"It is expected that the final contract will contain the same terms for all three companies," he said.

The state will take a 20% equity share in the project, an amount Murkowski said would be commensurate with its royalty and tax interests.

"This will require a multibillion dollar investment by the state and is unprecedented in the US," he said.

The legislature also is considering tax incentives for investment in oil and gas facilities and exploration that will need to be passed before it adjourns in May, Murkowski said.

"The proposed fiscal contract will need to integrate the oil tax revisions if they are passed to accommodate the producers' desire for certainty for oil as well as for natural gas," the governor said.

Assuming agreements are reached with BP and Exxon Mobil and approved by the legislature, he said the producer group could then begin to make plans and seek permits.

The project also needs to resolve permitting and right of way issues with Canada, he noted.

Murkowski said "today's best estimate" is that the Federal Energy Regulatory Commission's open season would take place in 2007, that construction would commence in 2009 or 2010, and that the pipeline could be in operation by 2014.

Contact Nick Snow at [email protected].