Providing coverage of Alaska and northern Canada's oil and gas industry
March 2006

Vol. 11, No. 11 Week of March 12, 2006

Oil Patch Insider

Alaska House leadership says gas reserves tax a shoo-in if governor, ANS producers do not deliver a 'legitimate' gas pipeline contract

The State of Alaska has certified the gas reserves tax proposal for the November ballot, the lieutenant governor’s office said March 6.

It’s a shoe-in, legislative leaders say, unless a gas contract is approved before the election.

The initiative’s prime sponsors are Reps. Eric Croft, D-Anchorage, Harry Crawford, D-Anchorage and David Guttenberg, D-Fairbanks. The initiative would tax North Slope gas reserves in fields with known resources of at least 1 trillion cubic feet which were unitized before 2002 — i.e. Prudhoe Bay and Point Thomson.

The lieutenant governor’s office said sponsors collected at least 31,450 signatures from registered Alaska voters to qualify the initiative for a vote of the people. This is 10 percent of the 314,502 votes cast in the 2004 general election. Under the constitutional amendment approved by voters in 2004, signatures are needed from at least 7 percent of voters in at least 30 of the 40 Alaska House Districts.

Harris: vote depends on contract

What’s the prognosis for the vote?

It depends on a gas contract, House Speaker John Harris, R-Valdez, told members of the press March 6.

Harris said if there is a “legitimate contract on gas ... and that’s a big if,” he thinks “the public in Alaska will say that’s a really good step forward and we don’t need to do the reserves’ tax.”

“But if we don’t — and I think this is a shot across the bows of the industry — if we don’t get a legitimate contract coming out of this Legislature I think that reserves tax passes overwhelmingly.”

Rep. Ralph Samuels, R-Anchorage, said there would be more leverage than just having the reserves tax on the ballot.

At the end of May, he said, the state will begin the process of re-claiming the expansion leases at the Point Thomson unit.

Unit operator ExxonMobil Production had until this spring to drill a required well, but declined to do so. In November Commissioner of Natural Resources Mike Menge gave the company a six-month extension to appeal an October decision finding the unit in default.

“There’s leverage for the expansion leases at Point Thomson” as well as leverage from the public, Samuels said.

Samuels said he agreed with Harris that if there has not been a legitimate gas offer by November general election, “I think the public will overwhelmingly vote for that.”

“I agree with my friends on this one,” said House Majority Leader John Coghill, R-North Pole.

—Kristen Nelson

Big Oil and Big Apple

Calgary’s image of itself as a player on the global energy stage got burnished on March 1 when Air Canada decided to resume a direct daily flight between Calgary and New York after a lapse of 20 years.

The non-stop service, using 93-seat regional jets built by Brazil’s Embraer, answers the volume of traffic involving Wall Street investment bankers heading to Western Canada and Canadian-based companies drumming up business in New York.

An Air Canada spokesman said there is “no question economic prosperity in Calgary is driving demand for this route.”

If the traffic warrants, Air Canada said is may introduce a larger Airbus jet to the service this summer.

The airline is also offering regional jet service between St. John’s, Newfoundland, and the oil sands capital of Fort McMurray in northern Alberta.

That connection is aimed at workers employed in the oil sands, who have left families behind in Newfoundland.

—Gary Park

Groups to hear gas pipeline overview

The Alaska Association of Environmental Professionals and the Air and Waste Association will hear a talk on “Alaska gas pipeline — project overview and update” at the BP Energy Center March 15 at 11:45 a.m.

Speakers will be BP Exploration (Alaska) Inc.’s John Horstkoetter, manager of project planning, Alaska gas pipeline, and David MacDowell, director of external affairs Alaska gas.

The brown bag lunch is free; for more information call 338-2238.

‘Many unanswered questions’ about Alpine satellite, says ConocoPhillips

Last week’s Oil Patch Insider reported that permit applications for ConocoPhillips’ CD-5 Alpine satellite project had been elevated to the North Slope Borough’s planning commission vs. being administratively approved earlier in February, and that the commission planned to hold a public hearing on CD-5 on March 30 in Nuiqsut.

When asked if the permitting delay would hold up work on CD-5 or pose any other hardship for ConocoPhillips, company spokeswoman Dawn Patience said, “There are still many unanswered questions about the CD-5 (Alpine West) project right now, including the outstanding permits, and potentially increasing project cost. All these issues must be considered when evaluating the economics of the project before moving it forward.”

—Kay Cashman

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