Alaska Gov. Frank Murkowski, this year’s chairman of the Interstate Oil and Gas Compact Commission, said at the organization’s midyear meeting in Anchorage May 16 that he will be appointing a task force to study enhancing the ability of utility companies to enter into long-term gas marketing agreements.
Long-term marketing agreements are key to an Alaska gas pipeline project, the governor said, because predictability and financial stability are needed not only at the resource end in Alaska — he’d just described the state’s negotiations for a project fiscal contract under the Stranded Gas Development Act — but at the consumer end of the project as well.
The governor said that as chairman of the IOGCC he was joining with the National Association of Regulatory Utility Commissioners to appoint a special IOGCC-led task force, which will report back to him by Aug. 15.
Its mission, he said, will be to study ways to enhance the ability of the utility companies to enter long-term gas marketing agreements.
Ken Konrad, BP Exploration (Alaska) senior vice president, raised the same issue later in the day. Konrad described the pipeline to Chicago that BP, ConocoPhillips and ExxonMobil have proposed, and said the states are not spectators in this project, because a project of this magnitude “needs some degree of support from customers.” He said the producers expect utilities and local distribution companies to be part of the customer fix for Alaska gas.
A National Petroleum Council study noted that state utility regulators need to provide utilities and local distribution companies the opportunity to “participate in longer-term relationships with suppliers of gas from projects like this,” Konrad said. Such participation could take the form of transportation commitments or “gas purchase contracts that are more than one month long.” The project itself, he noted, will run for as long as 50 years.
Konrad said that earlier in May “we had a number of regulators up here from the upper Midwest — Minnesota, Michigan, etc. — talking about the project so that they could get familiar with it and start thinking” about how the project fit with local regulatory regimes. What BP is seeking to do, he said, is get conversations and education going with regulators and customers.
—Kristen Nelson
