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March 25, 2004 --- Vol. 10, No. 32March 2004

MidAmerican withdraws Alaska natural gas pipeline application

MidAmerican Energy Holdings Co. announced today it has withdrawn its application under Alaska’s Stranded Gas Development Act, walking away from its proposal to build a North Slope natural gas pipeline.

The company said it broke off negotiations and shut down its effort after failing to come to terms with the state for exclusive rights to the project.

“We are extremely disappointed the state of Alaska rejected this approach, which we had clearly discussed with Governor Murkowski before filing our application,” said David Sokol, MidAmerican’s chairman and chief executive officer.

“We believed our request to be the state’s sole development partner for the initial project development period was reasonable, given the magnitude of the risk involved,” said Robert Sluder, president of the MidAmerican subsidiary set up for the Alaska project.

MidAmerican had been negotiating with the state since it applied in late January for a long-term fiscal contract on the project.

MidAmerican, a pipeline operator and power retailer controlled by Warren Buffet’s Berkshire Hathaway Inc., attracted a lot of publicity when it announced in January that it was interested in building the multibillion-dollar Alaska project.

“There was a high degree of enthusiasm. This was a fresh face in town,” said Mike Menge, the governor’s special assistant on oil and gas issues.

But the company’s demand for a five-year exclusive right to build the project was too much for the governor to accept, Menge said. “He didn’t think it was fair at this time to cut everyone else off at the knees.”

The three major North Slope producers also are negotiating with the state for a fiscal contract governing all state and municipal taxes on a proposed gas line from the North Slope to Lower 48 markets. Menge said the administration hopes to reach a draft contract with the producers before the end of the year, and also is continuing discussions with TransCanada about its interest in building the Alaska gas line.

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