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ConocoPhillips signs gas deal with state Governor announces natural gas contract agreement; negotiations continuing with other sponsor group members BP, ExxonMobil Kristen Nelson Petroleum News Editor-in-Chief
Calling it “one of three legs of a three-legged stool,” Alaska Gov. Frank Murkowski said at a press conference Oct. 21 that the state has “reached an agreement on the base contract terms” for a gas contract with ConocoPhillips — one of the three members of the gas sponsor group.
Jim Bowles, president of ConocoPhillips Alaska said at the press conference that he was pleased by the agreement, and noted that this has been “in the making for 30 years” and “we’re now one step closer to making an Alaska natural gas pipeline.” Bowles described the negotiations between the sponsor group — BP, ConocoPhillips and ExxonMobil — and the state as “long and difficult.”
“We still have a lot of work to do,” Bowles said, noting that ConocoPhillips and the state “reached an agreement on all of the essential elements of a fiscal contract, including the six principles laid out by the governor as critical for a deal to advance.”
The governor said agreements have not yet been reached with BP or ExxonMobil. BP, ExxonMobil still in negotiations Although BP has not signed off on an agreement with the state, Ken Konrad, BP Exploration (Alaska)’s gas performance unit leader, said at the press conference that a lot of progress has been made over the last 14 weeks on “a large number of issues” but there are “still a few outstanding issues that need to be finalized and negotiated.”
He said BP has agreed to a process with Jim Clark to continue negotiations.
“We’ve agreed on a process with Jim Clark, who’s leading the efforts for the state, by which … all three companies will continue to try to finalize the agreement and we look forward to doing that,” Konrad said.
As to how fast that might happen, Konrad said: “I’ve certainly been instructed by our senior management to do everything humanly possible … to conclude negotiations as quickly as possible.”
Bloomberg reported that BP’s Chief Executive John Browne said in an Oct. 25 interview in London that the company’s negotiations on an agreement to help build the pipeline may be reaching a conclusion.
ExxonMobil also said negotiations are continuing. “The negotiations are well-advanced on this complex agreement that underpins the largest private sector energy project in the world,” Houston-based ExxonMobil spokeswoman Susan Reeves told Petroleum News by e-mail after the press conference.
“The state, BP, ConocoPhillips and ExxonMobil are in constant negotiations, and the parties are negotiating in good faith,” she said.
“When successfully finalized, this contract will establish unprecedented commercial alignment between the State and industry.” Governor: ‘significant milestone’ The governor said the contract with ConocoPhillips “is a significant milestone,” although additional work remains. He also said he could not discuss details of the contract due to confidentiality requirements until the state has reached agreement with all three of the producers.
“We are still continuing our negotiations with the three companies, ConocoPhillips, ExxonMobil and BP, as we continue to refine the contract,” he said.
The governor said he couldn’t share details of the agreement because negotiations were ongoing, but he said the agreement with ConocoPhillips meets the six principles he has outlined for a contract, and said the agreement provides the “maximum benefit” for Alaskans and the “maximum benefit to the treasury.”
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