Asia may be best market for Alaska gas, says Conoco CEO

Slope producers eye exports to Asia-Pacific region.

Associated PressJanuary 5, 2012 

From left, British Petroleum CEO Bob Dudley, Conoco Phillips CEO Jim Mulva, Alaska Gov. Sean Parnell and Exxon Mobil Corp. CEO Rex Tillerson gather following a meeting Thursday, January 5, 2012. Parnell had called for a meeting with the oil executives in an effort to try to reach agreement to advance a natural gas pipeline project.

PHOTO COURTESY ALASKA GOVERNOR'S OFFICE VIA THE ASSOCIATED PRESS

Shipping to Asia-Pacific markets may be the best way to commercialize the natural gas from Alaska's North Slope, the chief executive of Conoco Phillips said after meeting the state's governor on Thursday.

To do that, the company would like to build a pipeline from the North Slope to a liquefied natural gas plant in the middle part of the state to prepare the gas for export, Conoco Phillips CEO Jim Mulva told reporters in Anchorage.

Alaskans have long hoped for a gas line as a way to create jobs, provide more reliable energy and shore up revenues as oil production declines.

Mulva spoke after a closed reception with business and political leaders featuring him and the CEOs of the North Slope's other major players, Rex Tillerson of Exxon Mobil Corp. and Bob Dudley of BP.

The reception followed a two-hour meeting between the chief executives and Parnell that focused on ways to advance a natural gas pipeline.

Parnell said in October that he wants the companies to unite behind a project that would allow for liquefied natural gas to be shipped overseas, if the market for gas has truly shifted from the Lower 48. Such a project would have to come about under the framework of the Alaska Gasline Inducement Act, which gave TransCanada Corp. an exclusive state license to build the pipeline and up to $500 million in reimbursable costs.

The Canadian company has been working with Exxon Mobil to advance a pipeline project. TransCanada has focused attention on a longer line into Canada that would deliver gas to North American markets, but it also has proposed a shorter line that would allow for liquefied natural gas exports out of Alaska.

A rival project, a joint effort of BP and Conoco Phillips that also would have gone through Canada, folded last year.

In the meantime, the boom in shale gas production elsewhere in the U.S. has made building a pipeline into Canada less attractive, Dudley and Mulva said.

Dudley told reporters in Anchorage he thinks it would be possible for the companies to come together under terms of AGIA. He said there would have to be adjustments to tailor it to a liquefied natural gas option, if that's the route that's ultimately chosen.

An Exxon Mobil spokesman said the parties are in early talks, with both pipeline options under consideration.

TransCanada recently began talks with BP, Exxon Mobil and Conoco Phillips about the liquefied natural gas option, said Tony Palmer, the company's vice president for major projects development.

Palmer said TransCanada will proceed with making a filing to federal regulators for the Canada option later this year, in keeping with the terms of AGIA. The company would need state approval if it changed course and went with the liquefied natural gas option, he said.

Parnell said no firm commitments were made in Thursday's meeting, but at least the companies are talking. He called it a "significant start."

The governor also said he urged the executives to resolve a long-running dispute over gas leases, considered key to the prospects of a line. The state has reached an agreement with Exxon Mobil, but other interest-owners -- including BP and Conoco Phillips -- haven't announced whether they'll sign off on the deal.

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