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Vol. 12, No. 36 Week of September 09, 2007
Providing coverage of Alaska and northern Canada's oil and gas industry

Pearce sets record straight

Federal coordinator for Alaska gas line clarifies, corrects statements quoted in press

Kay Cashman

Petroleum News

Sept. 5 news reports carried statements from Drue Pearce, the federal coordinator for Alaska gas pipeline projects, that were incorrect, Pearce’s communication director Jennifer Thompson told Petroleum News Sept. 6. At the top of the list of erroneous information was Shell being identified as an Alaska North Slope producer AND an opponent of Alaska Gov. Sarah Palin’s Alaska Gasline Inducement Act, neither of which is true. BP, not Shell, should have been identified in that context, Thompson said.

Passed this past spring, AGIA initiates an application process and contains specific mandates for any entity interested in constructing a gas pipeline from the North Slope to market.

Shell was mentioned by Pearce as an offshore Alaska oil and gas explorer, Thompson said, and a possible future user of an Alaska gas pipeline.

Pearce was also quoted as saying a Chinese oil company, Spain’s Repsol and Canada’s BG Group were three companies that have expressed interest in building an Alaska gas pipeline, which Thompson said was true, but Pearce, she said, does not have any inside information that suggests these companies are still interested. Pearce was referring to “rumors flying about in Alaska,” Thompson said. “Those three are among the names she heard as potentially being interested.”

Pearce has heard “Enbridge, for sure, was not applying under AGIA,” Thompson said.

Canada-based pipeline companies Enbridge and TransCanada have both said publicly they would not be submitting a proposal under AGIA. Thompson said Pearce had not heard that TransCanada was out of the running and included it, MidAmerican and the Alaska Gasline Port Authority in her public statements as entities expected to submit gas line proposals to the state.

LNG, maybe to Asia

Thompson said that Pearce had heard the unnamed Chinese oil company, Repsol and BG Group, which is Anadarko’s partner in the gas-prone Brooks Range Foothills, were looking at an “all-Alaska route … an LNG project,” involving a pipeline from the North Slope to a gasification terminal in Valdez. It was Pearce’s understanding that “two non-compliant applications from two of the North Slope producers” and applications from MidAmerican and TransCanada were going to be for an Alaska Highway route, taking the gas to Lower 48 markets via Canada.

News reports said some of the expected gas line license applications “could allow gas to be exported to Asia.” Pearce reportedly said that when Congress passed the Alaska Natural Gas Pipeline Act in 2004 to spur development of the pipeline that lawmakers intended the gas for U.S. markets, but that nothing in the act prohibited gas from being exported. (The same bill set up the Office of the Federal Coordinator for Alaska Natural Gas Transportation Projects. Pearce’s title as head of this office is federal coordinator. The office hung its shingle in December 2006 when Pearce took office.)

Thompson said that statement was true — neither the federal act nor AGIA prohibits Alaska gas being shipped overseas.

Alaska Commissioner of Revenue Pat Galvin told Petroleum News that AGIA does “not reference what markets are targeted.”

“The market, and potential legal restrictions to access it, will be a factor in the evaluation of likelihood of success” evaluated under AGIA, Galvin said.

One news report said that from Valdez LNG “could be transported to any regasification terminal in the world, but the primary focus would be on the Pacific Rim,” noting that getting approval to build regasification LNG terminals on the U.S. West Coast has been impossible for many applicants because of local opposition.

Thompson said one thing Pearce said that did not appear in the news reports Petroleum News mentioned, was that Anadarko Petroleum planned to drill the first exploration well purposely targeting commercial quantities of natural gas this coming winter.

Applications under AGIA are due Nov. 30.

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