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April 13, 2006 --- Vol. 12, No. 25April 2006

Shell will offer to market state’s gas

Alaska Gov. Frank Murkowski met in The Hague April 11 with Malcolm Brinded, Royal Dutch Shell executive director, exploration and production.

The governor’s office said Shell expressed interest in marketing Alaska’s share of natural gas from the proposed Alaska natural pipeline.html'>gas pipeline and indicated the company would soon submit an independent proposal to the state to market its gas. Shell is one of the largest transporters and marketers of natural gas in the world, the governor’s office said.

“One of the key features of the gas pipeline contract is that the state will take its gas in kind,” Murkowski said in an April 12 statement. “While this provides significant financial benefits to the state, some have expressed concern about the state’s capacity to market that gas.

“It is of tremendous value to have a worldwide industry leader and expert in gas marketing and transportation such as Shell express interest in marketing the state’s gas.”

Shell Trading affiliate Coral Energy, headquartered in Houston, is, according to the company’s Web site, the exclusive marketer of Shell Oil’s North America natural gas production, some 1.8 billion cubic feet of production per day, and has overall sales volumes of more than 9 bcf per day.

The complexities of the gas trading business are one of the issues raised by former Department of Natural Resources employees who resigned last year over differences with the administration on the gas pipeline fiscal contract negotiations.

Marty Rutherford, former DNR deputy commissioner, told a Pac Com audience in February that “gas trades very differently and many more times than oil, creating transportation, marketing and valuation challenges,” and allowing “participants to continually try to ‘game’ the system and create extra profit opportunities” within transactions “at the expense of less sophisticated players.”

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