At the end of March the Alaska Gasline Port Authority applied to the state for a fiscal contract under Alaska’s Stranded Gas Development Act. On April 4 the authority offered to buy natural gas from the North Slope producers and the state.
The week of April 25 the authority began a public relations campaign for its proposal, with ads describing in-state gas use benefits from the project, as well as jobs, revenues to the state and revenue sharing for the municipalities.
The port authority is proposing a pipeline from the North Slope to Valdez, with a spur to Southcentral. The gas going to Valdez would be liquefied and the liquefied natural gas shipped to the West Coast, where the authority is working with Sempra LNG for project development and LNG marketing.
The ads encourage Alaskans to contact the governor and state legislators and voice their support for an all-Alaska gas pipeline.
When Alaska Gov. Frank Murkowski updated legislators April 27 on stranded gas act negotiations he said economics, not emotion, will govern the state’s decision on a stranded gas application (see story on page 1 of this issue).
The state is considering three applications for North Slope gas development: two pipeline proposals through Canada to North American markets — one from the North Slope producers (BP, ConocoPhillips and ExxonMobil) and one from TransCanada Pipeline — and the port authority LNG proposal.
Will not negotiate in the press, says ConocoPhillips
ExxonMobil spokeswoman Susan Reeves told Petroleum News when the port authority made its purchase offer announcement in early April that ExxonMobil had not had a chance to review the offer, but has studied the alternatives for commercializing Alaska North Slope gas and believes a pipeline to North American markets “is the most promising alternative for the commercialization of Alaska gas.” Reeves said April 26 that she had no additional information.
ConocoPhillips Alaska spokeswoman Dawn Patience said April 5 that the company had no comment on the offer. Asked about the advertising campaign, Patience said April 26: “ConocoPhillips does not intend to undertake negotiations through the press.” She said ConocoPhillips has not discussed the port authority offer with BP or ExxonMobil, and that any response it has to the port authority offer “will be on behalf of ConocoPhillips only.”
“We are vigorously pursuing the development option that we believe holds the most promise of success — a gas pipeline to serve North American consumers,” BP Exploration (Alaska) gas spokesman Dave MacDowell told Petroleum News April 26.
MacDowell said when the port authority purchase offer was announced in early April that “BP has always said that we would welcome discussions regarding credible project proposals to commercialize Alaska’s North Slope natural gas.” It is not clear to BP that the port authority proposal is “commercially viable,” MacDowell said, but BP would be happy to meet with the port authority to learn more.
The port authority said in an April 4 statement that it believes its offer to purchase approximately 4 billion cubic feet a day of North Slope natural gas for 30 years “returns the highest wellhead price for the gas” to both the producers and the state.
The governor said in his April 27 update that because the port authority project is different than those proposed by the producers and TransCanada, the state will have to find a way to analyze the numbers so that it can compare costs as apples to apples across the projects. The wellhead value of the gas is important to the state not only because it owns 12.5 percent of the gas, but because wellhead value is the basis for state taxes.
