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Providing coverage of Alaska and northern Canada's oil and gas industry
June 2007

Vol. 12, No. 24 Week of June 17, 2007

Two Prudhoe gas owners looking at ‘options’ under AGIA

Kay Cashman

Petroleum News

Before the Alaska Gasline Inducement Act was signed into law by the governor on June 7, the three major Prudhoe gas owners said they would not submit a bid to build a pipeline from the North Slope under AGIA as it was written. Representatives from BP, ConocoPhillips and ExxonMobil all testified before the state Legislature against the bill, saying AGIA did not provide for a commercially viable project; specifically that it was too “prescriptive” — i.e. rigid and did not allow them enough options.

Not giving up

The position of two of the companies has since shifted, albeit slightly, about submitting a bid to build the pipeline under AGIA.

Petroleum News recently asked BP, ConocoPhillips and ExxonMobil if they planned to submit bids, together or singularly, for the gas line project.

BP’s press officer Steve Rinehart responded: “We are very disappointed that BP cannot submit a bid that conforms to the requirements of AGIA,” which suggests BP is looking at putting in a bid, but not necessarily one that conforms to AGIA’s guidelines.

What’s the likelihood of BP submitting a bid?

“We have not given up, and will continue to seek ways to help make this project happen. We are considering what options may be open to us, but at this point can’t speculate,” Rinehart said.

Exxon, too, appears to be considering its options. Its response to the first and second question was simply: “We are evaluating our options,” per Exxon’s upstream media advisor Susan Reeves.

ConocoPhillips would not respond to either question, although Brian Wenzel, vice president of Alaska North Slope gas development for ConocoPhillips Alaska, did offer criticism of AGIA, saying it had serious flaws.

MidAmerican: Free to make proposals

Pipeline giant MidAmerican, however, said AGIA was not prescriptive. Kirk Morgan told House Finance May 3 that parties were free to make proposals and the Federal Energy Regulatory Commission was free to authorize them under the legislation: “To put it another way, if a party thinks it has a superior proposal, nothing in AGIA stops it from putting that proposal in writing,” said Morgan. He is president of MidAmerican subsidiary Kern River Gas Transmission Co., and has said his company would very likely submit a bid under AGIA.

Alaska Gov. Sarah Palin raised another option on June 6. She said the “beauty of AGIA” was that it “lets us consider building this transportation infrastructure … ourselves.”

State officials had said they hope to have a request for applications out for bidders on July 2.






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