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Thompson: Legislation not first option But natural gas pipeline investors could ask for legislation requiring North Slope producers to take on partners Larry Persily Petroleum News Juneau Correspondent
Alaska investors lining up for a piece of a natural gas pipeline would prefer the major North Slope producers voluntarily let them buy in as partners. If not, however, they would consider seeking state or federal legislation requiring it. (See related story on page 1.)
“We’ve met with the local management of all three companies,” said Ken Thompson, who is organizing Pacific Star Energy, a consortium of Alaska regional Native corporations and other investors that hope to own 10 percent of an Alaska gas line project.
Officials of ConocoPhillips, ExxonMobil and BP Exploration told Thompson it would be 12 to 18 months before they could give him an answer on letting Pacific Star Energy buy in for 10 percent of the project.
“What they have stressed to us,” Thompson said, “is that any party like ours needs to really show that we can bring value in excess of our capital investment.” That value could include assistance in obtaining permits or developing in-state uses for the gas, a key to Pacific Star’s early business plan, he said.
“Without a business agreement … the answer we’ve received from them is a maybe,” Thompson said. If that doesn’t work out, he said, the group would pursue a legislative solution. Legal requirement a possibility That means talking with Alaska’s congressional delegation, the governor and Legislature about possibly inserting a requirement into state or federal law that owners of any Alaska natural gas pipeline must allow a consortium of Native corporations and others to buy into the project.
“We’ve always said we would be open to participation by any entity that adds value to the project,” said Dave MacDowell of BP’s gas operations in Anchorage. “Mandates — state or federal — are unhelpful to moving a project forward.”
The producers are waiting to see if Congress passes a national energy bill this fall with enabling provisions for an Alaska gas project before deciding their next move in the decision-making process for the multibillion-dollar pipeline.
U.S. Sen. Lisa Murkowski, R-Alaska, in June proposed an amendment to the energy bill that would have required developers of a gas line to take on an Alaska group for at least 10 percent of the project.
The amendment defined “Alaska group” as an entity in which regional Native corporations hold a controlling interest, and also an entity established by the state to allow individual Alaskans to invest in the project.
Though Murkowski proposed the amendment it was never offered in the Senate, which adopted last year’s energy bill and failed to take up any of the 393 amendments offered to this year’s bill, said Chuck Kleeschulte, the senator’s spokesman. Congressional chance not good Senate leadership decided to pass last year’s bill and move it to a conference committee with the House rather than debate amendments to the new version. The conference committee, which is expected to start work next month, will pick, choose and rewrite the House and Senate versions of the bill in an attempt to draft a measure acceptable to both chambers and the president.
Although the committee could add Murkowski’s Alaska-ownership amendment to the bill, Kleeschulte said it’s unlikely since it is not part of either version before the conferees. “It’s not absolutely dead as a doornail, but its chance of passing is not very good.” No requirement before state legislators State legislators have discussed requiring Alaska investment in the project, but no such measure is before lawmakers.
Whereas everyone wants the project to move forward with Alaska investment and in-state benefits of the gas, requiring the producers to take on partners is different, said Rep. Hugh Fate, chairman of the House Resources Committee and a member of the Oil and Gas Committee.However, Fate, a Fairbanks Republican, said he expects the producers would be “more than happy to share the risk” with other investors. “If the producers look at the potential investors … they’re going to look at every aspect of their financial sheet.”
Money also is likely to be the determining issue, said Rep. Norman Rokeberg. The producers would want to see that the partners could come up with the cash and obtain financing for the rest of their share of the project, he said.
“Conceptually, I have no problem with that,” the Anchorage Republican said. “Obviously, if they (the producers) want to cooperate, that’s great.” The goal is to build a pipeline and bring benefits to Alaskans, he said.
He is cautious, however, about a state law mandating that the producers accept specific partners. “Whether we need to enact legislation is another issue,” said Rokeberg, a member of the House Oil and Gas and Labor and Commerce committees.
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