Alaska accepts producers' application for Alaska Gas Pipeline 1 day after receiving competitor's

By OGJ editors

HOUSTON, Jan. 26 -- The Alaska Gas Pipeline project lurched ahead another notch Friday, when Alaska Gov. Frank H. Murkowski delivered letters to North Slope producers BP Group LLC, ConocoPhillips, and ExxonMobil Corp. accepting their joint application to enter into negotiations to build the major pipeline. It would deliver natural gas from the North Slope producing area through Alaska to Canada, which would then deliver it on to Lower 48 and Canadian markets.

Their application has been under review by the Department of Natural Resources and the Department of Revenue since it was submitted to the state Jan. 13, Murkowski said, and it was accepted after a number of amendments were made to accommodate requests from the applicants, as indicated by the letters.

"It is a great day for Alaska," Murkowski said. "We have had a long and productive relationship with the North Slope producers in the oil patch, and it is heartening to have them take this significant step toward commercializing our natural gas. We recognize this is just one step in the right direction and there remains much work to be done. But it is a step in the right direction."

Competing group
The announcement came one day after Murkowski's press conference Thursday afternoon to report that he had received an application from another group also proposing, under the Stranded Gas Act, to build the pipeline. That consortium consists of MidAmerican Energy Holding Co.—a privately held company of which Warren Buffett and his Berkshire Hathaway Corp. are the major owners—Pacific Star Energy, and Cook Inlet Region Inc. (CIRI). Pacific Star Energy is an umbrella group of 12 of the 13 ANASCA Native corporations.

At that time, Murkowski had said the next step would be to negotiate a draft contract with the MidAmerican-led group. Once negotiations were completed, the contract would be submitted to the Legislature for its approval, the governor's office reported.

Murkowski was joined at the press conference by MidAmerican chairman and CEO, David Sokol, Pacific Star Energy president and CEO Ken Thompson, and CIRI president and CEO Carl Marrs. "These companies have a level of financial vitality, pipeline expertise, consumer market base, and Alaska business association that is far beyond anything we have seen to date," Murkowski had said at that time.

The state will now enter into negotiations with the producer group. The state's negotiating team consists of Atty. Gen. Gregg Renkes, Commissioner of Revenue Bill Corbus, and Commissioner of Natural Resources Tom Irwin, along with members of their staff. Murkowski said he hopes to have concluded negotiations on the terms of a draft contract in time to submit it to the Legislature for approval.

Stranded gas reserves in the North Slope area are estimated to be more than 100 tcf, Murkowski said.