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NEWS BULLETIN

April 11, 2001 --- Vol. 7, No. 41April 2001

North Slope gas owners set up shop in Calgary

The North American Natural Gas Pipeline Group, made up of the North Slope's major gas owners, has opened a Calgary office as it explores pipeline options.

Group project manager John Carruthers told reporters April 10 that the decision by ExxonMobil, BP and Phillips Petroleum to set up shop in Calgary shows how serious they are about their initial engineering, regulatory and route evaluations expected to cost $75 million.

He said there is a "huge Canadian component to moving gas and a lot of work will come out of Canada."

Carruthers earlier told a Canadian Energy Research Institute conference on North American gas that if the three producers decide to proceed with North Slope development another pipeline will be needed through Alberta to the Chicago market.

He said the Alaska volumes will require a "brand new greenfield pipeline to market," but he gave no indication whether the partnership has a preferred route.

The group is expected to decide later this year whether to make regulatory applications, as is a Canadian-based producer group of Imperial Oil, Shell Canada, ExxonMobil Canada and Gulf Canada on development of their Mackenzie Delta reserves with a possible Mackenzie Valley pipeline to carry 800 million cubic feet per day.

Meantime, Northwest Territories Premier Stephen Kakfwi stepped up his lobbying for a Mackenzie Valley pipeline, urging the Canadian government April 10 to express its unequivocal support for an NWT-based gas project.

Speaking at an Edmonton conference April 10, he noted that President George W. Bush said recently he would work with Canada to tap NWT gas reserves. Kakfwi said that "even the President of the United States said he wants to see a pipeline taking Canadian gas down the Mackenzie Valley. I want to hear the Prime Minister (Jean Chretien) say that."

Federal Natural Resources Minister Ralph Goodale, who attended the conference, said Ottawa will stay out of the Arctic pipeline debate, leaving the decision to the U.S. and Canadian gas producers.

Lower ANS price, production, in spring forecast

Both the Alaska North Slope crude oil price and ANS production were lower in the state's spring revenue forecast than in the fall forecast.

The Alaska Department of Revenue said April 11 that it is now projecting an average ANS crude oil price of $27.61 a barrel for fiscal year 2001, down from the December forecast of $30.17 a barrel, but still, the department noted, up about $10 from the historical average for ANS.

"The good news, though, is production is looking up for the next several years," Deputy Commissioner Larry Persily said. "This year, fiscal year '01, for the first time the average daily Alaska North Slope production will slip just below 1 million barrels a day, about 995-996,000. But we're looking for an increase," he said. "Between FY02 and '06 we expect the daily average production off the North Slope to be 1.07 million barrels a day, about 7 percent higher on average than it has been this year."

Chuck Logsdon, the state's chief petroleum economist, said the drop in crude oil prices since December is due to the success OPEC had in bringing the price down from the $30 level combined with the slowdown in the U.S. economy and some oil from the U.S. Strategic Petroleum Reserve.

"In other words," Logsdon said, "around December a whole bunch of oil started hitting the market. We dropped almost $9 a barrel in December we at one point were down to close to $22 a barrel. And OPEC got together again and decided that they would cut production effective Feb. 1 by a million and a half a day. That was enough psychologically to begin moving price back up and we have been averaging around $25 a barrel roughly pretty much since January."

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