December 04, 2003 --- Vol. 9, No. 114December 2003

Governor calls for application under Alaska’s Stranded Gas Act

Gov. Frank Murkowski today said time is short to negotiate a contract under Alaska’s Stranded Gas Development Act, and he called on producers or anyone else willing to submit an application to start the process for a North Slope gas project.

Today’s press conference in Anchorage “is a notice that we’re going out and soliciting all those that meet the qualifications” for an application, Murkowski said.

The Stranded Gas Act allows the administration to negotiate a contract of regular payments from pipeline owners in lieu of all state and municipal taxes. The intent is to provide investors with the fiscal certainty of contractual payments for the proposed multibillion-dollar project instead of risking changes in myriad state and municipal taxes.

Under the law, all three North Slope producers could submit a joint Stranded Gas Act application, or just one or two of the companies could start the negotiations. Or, a pipeline company or a consortium of pipeline companies with a contract to purchase gas from the producers could submit an application.

“We want to have this done prior to the Legislature getting out so we can act upon it,” Murkowski said. “I don’t want to lose a year.”

The Stranded Gas Act requires at least a 30-day public comment period after the administration negotiates a contract and before the governor can submit the deal to the Legislature for its approval. Lawmakers may not amend the contract — their only option is to approve or reject the deal. The Legislature starts its 121-day session Jan. 12, and the administration is worried it could run out of time for the public comment period and legislative debate unless it receives an application and completes contract negotiations early in the year.

Qualified applicants under the Stranded Gas Act include companies that own an equity interest in the proposed project, or commit gas to the project, or hold permits to construct and operate the project. A qualified contract is not limited to a pipeline to mid-America and also could include a line to tidewater for shipping liquefied natural gas out of Alaska.

Governor to meet with explorers Dec. 9

Alaska Gov. Frank Murkowski will meet Dec. 9 in Juneau with companies interested in exploring for oil and gas in Alaska to discuss what the state can do to encourage more exploration.

Both independents and majors have been invited to the meeting which will also include other state officials.

The governor’s invitation list includes current North Slope and Cook Inlet explorers, but at least one company that has no holdings in Alaska has accepted his invitation.

Italy-based Eni S.p.A., which produces approximately 1.5 million barrels of oil per day, will be in attendance.

Editor’s note: See full stories in the Dec. 7 issue of Petroleum News.

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