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Legislators ask Palin to prepare lawsuit against producers for holding North Slope gas hostage
Nine Democratic members of the Alaska House have asked Gov. Sarah Palin and Attorney General Talis Colberg to begin preparation to force North Slope leaseholders to sell natural gas into an economic pipeline project.
“For the last three years the major oil companies have done more to block a gas line than anyone,” said Anchorage Rep. Les Gara in a statement. “Whenever a company interested in building one comes forward, Exxon and others simply say, ‘You can’t build one unless we sell you our gas, and we refuse to tell you we’ll do that.’”
“If the producers are truly committed to bring Alaska’s gas to market, they will balance Alaska’s future against the bottom line, and make the best decision for everybody,” said Rep. Harry Crawford of Anchorage.
Also signing the letter were Rep. Beth Kerttula, the House Minority Leader, and Rep. Andrea Doll, both of Juneau; Reps. Bob Buch, Mike Doogan, Berta Gardner and Max Gruenberg of Anchorage; and Rep. Scott Kawasaki of Fairbanks.
Call for gas commitment In their March 20 letter the legislators said the resistance of major North Slope leaseholders to selling gas has been a “major impediment” to a gas pipeline project. “No pipeline builder will spend the billions of dollars necessary to begin construction without a commitment that companies will sell gas from their leases,” the group said.
“Alaska law provides that a leaseholder cannot refuse to produce on a lease that is economic,” but litigation to enforce this right would likely take many years to complete, so the group said it believes the state should prepare for the litigation “so that an informed and speedy decision can be made when the state decides we need to exercise this option.”
The group believes Alaska law “would allow a suit for a ‘declaratory judgment’ action, in which the court is asked to render a ruling on the producers’ duty to produce gas into an economic gas project.”
They said such a ruling would state that once a project is approved with transportation charges providing a reasonable return on investment, the leaseholders must sell their gas or give up their leases.
Under the Alaska Gasline Inducement Act — and under Federal Energy Regulatory Commission rules — gas would be committed to a pipeline at an open season. An open season has not yet been held for a North Slope gas pipeline project.
—Petroleum News
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