December 16, 2005 --- Vol. 11, No. 102December 2005

Holiday hiatus for gas line negotiations

Alaska Gov. Frank Murkowski said Dec. 16 that the state is suspending its gas line negotiations with the North Slope producers for the holiday season. When the negotiations resume in January they will move from Anchorage to Juneau, Murkowski said at a press briefing.

“I would suggest that we are somewhat at a defining moment in our negotiations, because we have reached consensus on many of the important issues,” including a basic agreement with ConocoPhillips in October. “... We have come to terms on the numbers, that basically means the cash,” he said.

As to when those negotiations will resume, the governor said one issue is that some of those involved are traveling over the holidays and will not be available. Pedro van Meurs, for example, one of the state’s consultants, won’t be available again until Jan. 6, Murkowski said.

The governor also said there are some items which are non-negotiable for the state, and as soon as the producers are ready to engage on those issues, the state is ready to meet and work on finalizing the contract.

Those issues include access to the gas line by explorers — those who do not have gas reserves ready to go. Another issue, he said, is “equal treatment for all North Slope participants, investors and explorers,” and the impact on communities. Subordination, which relates to debt for the pipeline, is also an issue, he said.

These are points, the governor said, where the state cannot respond to the point of view of the producers, and has asked them to respond to the state’s view.

He said principals of all three companies have been emphatic about their desire to complete negotiations, and the working-level group will continue to work through the holidays.

The governor also said that he has invited principals from the three companies — BP, ConocoPhillips and ExxonMobil — to meet in Juneau the third week of January. At that time, the governor said, he hopes they can either celebrate or substantially complete the negotiations.

Joe Marushack, ConocoPhillips Alaska’s vice president for gas commercialization, appeared with the governor. Marushack said some issues take a fresh set of eyes, a different way of getting to a resolution.

BP and ExxonMobil were not present at the press briefing, but Ken Konrad, BP’s senior vice president-Alaska gas, said in a statement: “We have agreed to suspend the negotiations over the holiday period. Our teams have been working very hard and need a well deserved break to be with their families. Some difficult issues remain on both sides and we expect to resolve them in the New Year.”

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