BP: Election may slow gas pipeline project

Matt Volz

The Associated Press

An executive with BP Exploration (Alaska) Inc. says that if a new governor is elected this fall without legislative approval of a natural gas contract, those contract negotiations may have to start over, reported Radio Kenai.

John White, senior project manager of BP’s Alaska Gas group, told the Soldotna Chamber of Commerce on June 13 that could mean a three-year delay of the North Slope gas pipeline.

Gov. Frank Murkowski’s contract proposal with BP, ExxonMobil and ConocoPhillips is out for public review. The contract would set long-range tax and royalty terms between the state and three oil companies who propose building the gas pipeline. BP spokesman Daren Beaudo said White’s comments were not an endorsement of Murkowski and that BP does not endorse any candidate.

Beaudo said an agreement was reached after three years of working with the Murkowski administration and the company would like to proceed under that deal.

White was in Soldotna to drum up support for the contract, which must be approved by the Legislature to take effect but which does not guarantee construction of a pipeline.

Murkowski, the Republican incumbent, faces challenges within his own party from former Wasilla Mayor Sarah Palin and Fairbanks businessman John Binkley.

Palin supports a competing pipeline proposal to build a line from the North Slope to Valdez, where the gas would be liquefied and shipped to the West Coast. Binkley says Murkowski’s contract proposal with the oil companies is flawed but fixable and that he would get rid of the 30-year freeze on the companies’ oil taxes that Murkowski proposes to include.

The main Democratic challengers, former Gov. Tony Knowles and Rep. Eric Croft, also have strongly criticized Murkowski’s contract proposal with the companies.

The Legislature did not pass two key bills this special session that would set up a ratification vote of the contract. One would have changed the state’s production tax system to one based on the net profits of oil companies’ Alaska operations. The provisions of that bill were to be inserted into the contract. The Legislature also adjourned without amending the state’s Stranded Gas Development Act to give Murkowski the authority to negotiate oil taxes as part of a gas pipeline contract and to lock in those terms for multiple years.

The primary elections are Aug. 22. The general election is Nov. 7.