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Outside firm lands state gas study contracts
Steve Sutherlin
The state Division of Oil and Gas has chosen a single firm, Econ One of Los Angeles and Houston, for a pair of studies relating to the commercialization of Alaska North Slope natural gas, Kevin Banks, DOG petroleum market analyst told PNA.
One study will analyze how ANS gas will be valued for the purposes of calculating state royalties, and the second study will analyze in-state demand for ANS natural gas. Valuation study in Los Angeles The valuation study will be done primarily at Econ One’s Los Angeles office, which was also involved with the state’s work on the Amerada Hess royalty litigation, Banks said.
“These are people we are familiar with, and who have quite a bit of understanding of the state’s position versus the company positions (with respect to value) that were at issue in the Amerada Hess litigation,” he said.
The valuation study will seek to make the best case for the state in royalty calculations, and establish the state’s valuation methods in advance to avoid litigation and provide certainty for the companies. It will first examine trading hubs and the conditions necessary to establish them, pipeline ownership, government regulations, and other factors affecting value. Secondly, the study will determine how the market conditions affect the state’s position and will identify concerns the state must consider with respect to the valuation of gas. No in-state bids for demand study The demand study will be handled primarily by Econ One at its Houston office, with the assistance of a consulting professor from Louisiana State University, Banks said.
Banks noted that no in-state companies bid on the ANS natural gas in-state use study contract likely because most qualified in-state firms were already committed to the producer group.
The study will estimate the cost of delivering ANS natural gas to various regions of the state. It will also evaluate energy use and costs by region, and whether ANS gas can be competitive with current energy sources.
The department expects to have the first drafts of the studies in late October or early November.
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