NEWS BULLETIN

August 11, 1998 --- Vol. 4, No. 40August 1998

Sponsor group signs on for North Slope gas development

“Alaska North Slope Gas — naturally powerful” read the project logo as ARCO Alaska Inc. announced a project sponsor group to advance the prospects of exporting ANS gas in Anchorage Aug. 11.

ARCO Alaska President Kevin Meyers said that a team will work out of ARCO Alaska’s Anchorage office, with an initial budget of $20 million to look at commercial and engineering issues over 21 months, and the potential to spend $100 million over a four-year period with the goal of making the project economic.

“We hope to achieve breakthroughs,” Meyers said, “in all areas of project development.” The cost of the 800-mile pipeline from the North Slope to Valdez has to be brought down, he said, if the project is going to be successful. “We believe breakthroughs in pipeline technology will help us achieve some of those cost reductions,” he said.

Absent from the sponsor group were ANS gas owners BP Exploration (Alaska) Inc. and Exxon. Meyers said ARCO’s gas alone would not be enough and that other gas owners could come in either as part of the overall project or could simply sell gas at the wellhead.

ARCO Alaska has 37 percent of the project. Foothills Pipe Lines Ltd., owned by TransCanada Pipelines and West Coast Energy Inc., has the second largest share, 22 percent. Terry Cameron, senior vice president of Foothills, said the company brings 25 years of research and development of northern pipelines to the project. Existing Foothills pipelines serve the U.S. Midwest, Pacific Northwest and California, delivering one-third of all Canadian gas to the United States.

Marubeni Corp., a major Japanese trading house which is engaged in the trade of products, materials and goods and also in investment, financing and development of projects including energy resources, has a 17 percent share.

Phillips Petroleum Co. and CSX Corp. through its subsidiary, Yukon Pacific Corp., each have 12 percent shares. Phillips has North Slope acreage with known gas reserves at Point Thomson, and produces gas in Cook Inlet as well as operating the Kenai LNG plant. CSX, an international transportation company, holds a majority interest in Yukon Pacific, which has major permits for an Alaska LNG project.

BP, Amoco merger to have little impact on Alaska

BP’s merger with Amoco is likely to have little impact on BP’s Alaska operation, BP Exploration (Alaska) Inc. spokesman Paul Laird told PNA today.

The only significant change will be that the Alaska office might be reporting to Houston, versus London. BP and Amoco both have offices in Houston.

The final decision on whether or not Alaska will report to Houston will be made by “a transition team that has been appointed now to handle those considerations,” BP America Director of Corporate Communications told PNA today. “It could very well stay the way it is,” Tom Koch said.

“I have no idea what, if any, impact the merger will have on London (staffing),” said Laird. “But it’s fairly apparent there will be no staffing impacts up here because there’s no overlap, since Amoco has no operations in Alaska.” In the United States Laird said staffing overlaps occur in Houston, Cleveland and Chicago where both companies have offices.

The only producing property in Alaska that Amoco owns is 10.5 percent of Endicott, said Laird, which combined with BP Exploration (Alaska) Inc.’s share of 57.4 percent, will make BP Amoco p.l.c.’s ownership in the field 67.9 percent.

The new company will be the third largest oil company in the world and Great Britain’s largest company. Combined current market capitalization will be $110 billion.

The executive management of the new group will be headed by BP chief executive Sir John Browne and the board will be co-chaired by BP chairman Peter Sutherland and Amoco chairman Larry Fuller.

The merger will be effected by the issue of new BP shares, in the form of American Depository Receipts, in exchange for Amoco common stock, with BP shareholders owning 60 per cent and Amoco shareholders owning 40 per cent of the combined group. The board of BP Amoco will comprise 13 directors from BP, of whom six will be executive directors, and nine directors from Amoco, of whom two will be executive directors.


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