July 23, 2002 --- Vol. 8, No. 75July 2002

Duke Energy, not Williams, withdraws from gasline MOU

Duke Energy has withdrawn from the Nov. 15, 2001, memorandum of understanding between six major American energy firms and three Canadian firms which established principles for re-enlisting in the Alaska partnership to construct the Alaska portion of the Alaska Highway natural gas pipeline project.

“A key element of the MOU,” Foothills said Nov. 15, “is that the current and re-enlisting parties are committed to eliminating historic and other commercial barriers to construction of the Alaska Highway project.”

Williams, one of the withdrawn partners which signed the MOU, told PNA July 23 that the document no longer has any strength because of Duke's withdrawal.

A spokeswoman for Duke Energy Gas Transmission in Vancouver told PNA July 18 that Duke Energy had withdrawn from the MOU “because it did not achieve the objectives agreed to by the parties within the targeted timeframe.” She said “Duke Energy will continue to work with Alaska producers and other stakeholders to develop a successful Alaskan natural gas pipeline project.”

Peter Thomas of Williams' Arctic project team told PNA July 23 that Williams has not withdrawn from the MOU, “but when one of the major partners, such as Duke, withdraws… the document or the non-binding memorandum of understanding… is truly not in effect any more, or is not as functional as it was…”

One of the strengths of the MOU, he said, was the involvement of “the strong, true owners of ANGTS, such as Duke.”

Point Thomson owners opt to pay penalty, drop acreage at Red Dog

Point Thomson unit operator ExxonMobil Production Co. has told the state that the working interest owners at the unit cannot justify drilling in the work commitment area identified in the unit expansion-contraction agreement, and have decided instead to pay the state $940,000 drilling extension charge and relinquish the Red Dog leases on the western edge of the unit.

In its draft 19th plan of development ExxonMobil said cost estimates to deepen the Red Dog No. 1 well to test the Thomson Sand “are now estimated to be considerably more than the initial estimates that were used to prepare” the 18th plan of development.

ExxonMobil also told the state that permitting for the Point Thomson gas cycling project is not going as quickly as unit owners would like, but that development drilling will still begin on schedule, “no later than 2006.”

The company said studies under the 18th plan "have identified sufficient economic incentive" for the major owners “to proceed to the next level of expenditures to fund a project management team and begin preliminary engineering design work with a contractor.”

The focus of the 19th plan of development, which starts Oct. 1 and runs through Sept. 30, 2003, will be to seek the permits necessary to develop the Point Thomson sand and to execute the front-end engineering design in parallel with permitting.

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