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Exxon unwilling to line up
Larry Persily Petroleum News government affairs editor
Although the major North Slope producers got together to submit a joint application under Alaska’s Stranded Gas Development Act, they are not of one mind whether to spend any more time discussing a possible northern route for a natural gas line from the slope.
The application for a state fiscal contract covers the proposed pipeline route that would follow the Alaska Highway into Canada and also the so-called over-the-top route that would run from the North Slope offshore to Canada’s Mackenzie River delta, where the pipe would pick up Canadian gas and head south to Alberta.
ConocoPhillips and BP Exploration (Alaska) said they are not interested in the over-the-top route, but ExxonMobil wants to keep the option open.
“It’s just Exxon being Exxon,” said John Manly, the governor’s press secretary.
State law prohibits permitting the over-the-top route, which Alaskans generally oppose because of the perceived environmental risks from a buried pipeline running offshore in the Beaufort Sea; the loss of short-term construction jobs from building less pipe in Alaska; and the loss of potential gas delivery to Fairbanks and other Interior communities unless the highway line passes through the area. Conoco firm on highway route “ConocoPhillips has been steadfast over the past three or four years that the best way to do this project is the southern (highway) route,” said Kevin Meyers, president of ConocoPhillips Alaska Inc. “Not all of our partners have converged on that conclusion yet.”
The company also put it in writing to the state. “ConocoPhillips is only interested in a southern route project,” said a Jan. 13 letter accompanying the stranded gas application and signed by ConocoPhillips and BP.
BP has reached the same conclusion. “BP is entirely focused on a southern highway route,” said Dave MacDowell, gas project spokesman in Anchorage.
The application acknowledges that the producers’ 2001-2002 multimillion-dollar engineering study looked at both routes, but also says: “It is recognized that current state law prohibits the issuance of right-of-way permits for a northern route pipeline until a southern route pipeline is built.”
The producers have applied to negotiate a long-term fiscal contract with the state, setting up a schedule of payments in lieu of state and municipal taxes should the companies decide to build the gas pipeline. Negotiations are expected to start this month, and the contract is subject to legislative approval. Exxon wants all options open ExxonMobil, however, is not ready to limit the discussions to just the highway route.
“A commercially viable project has not been identified,” said company spokesman Bob Davis of Houston. “For this reason all options need to remain open. This approach provides the greatest opportunity to identify a commercial project.”
ExxonMobil was not part of the original application submitted Jan. 13 by ConocoPhillips and BP, but a few days later approached the two companies and asked to join the application. The producers submitted their amended application Jan. 20.
Asked why the company was not part of the original application but later joined up, ExxonMobil’s Davis answered, “I can’t respond to this question, but ExxonMobil is delighted to be working with the state on fiscal terms.”
The other application to the state to negotiate a gas line fiscal contract, from MidAmerican Energy Holdings Co., applies only to the highway route. MidAmerican submitted its application Jan. 22, two days after the three producers turned in their amended application.
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