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March 28, 2003 --- Vol. 9, No. 33March 2003

Governor, producers, say gasline contract could be negotiated this year

There was a quick reaction to the March 26 passage by the Alaska House of Representatives of House Bill 16, reauthorizing the stranded gas act, which allows the administration to negotiate fiscal terms for a natural pipeline.html'>gas pipeline with project sponsors.

The governor met March 27 in Juneau with officials of ConocoPhillips, BP and ExxonMobil. The governor, ConocoPhillips and ExxonMobil issued separate statements today.

"I am pleased to announce that, as a result of our meeting with the producers, once the legislation is passed and we receive an application, the state will begin negotiations with the qualified sponsor group.

"The plan is to conclude such negotiations this year," Gov. Frank Murkowski said in a statement.

ConocoPhillips said that the producers "are optimistic that these negotiations could begin soon after HB 16 is signed into law. These negotiations could produce contract terms by year-end, which could allow for approval by the state Legislature in early 2004."

ConocoPhillips noted that federal legislation is also a critical component of project viability.

ExxonMobil said the companies, the governor and his staff also discussed ways to reduce project cost and improve project viability.

The governor said at a press conference this afternoon that reduction in project costs include an alteration of the southern pipeline route, shaving off some 100 miles; welding techniques and new and lighter high-pressure pipe.

"I'm personally convinced," the governor said," that Alaska has a window of opportunity." The need for natural gas in the Lower 48 "will be filled by Alaska gas or LNG imports," the governor said.

He said there was also an extended discussion with the producers of events in Canada. The expectation, the governor said, is that Mackenzie gas will be produced before Alaska gas, and that most of the Mackenzie gas will be consumed in Canada by the oil sands projects.

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