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Oil companies on track to meet gas line deadline, exec says

Becky BohrerAssociated Press

JUNEAU -- The three major players on Alaska's North Slope are on track to meet a month-end deadline to unite to pursue a natural gas pipeline project, an oil company executive said Wednesday.

John Minge, president of BP Exploration Alaska, told The Associated Press "great strides" have been made toward alignment by BP, Conoco Phillips and Exxon Mobil Corp.

"We have more alignment today than certainly we had eight months ago, because we're all working together," he said, adding later: "We're actually working together with an aligned view of how Alaska gas can compete in the world marketplace."

Alignment, to Minge, means being on the same page, interested in the same project: in this case, a liquefied natural gas line that would allow for overseas exports.

In January, Gov. Sean Parnell set a March 31 deadline for alignment of the parties under "an Alaska Gasline Inducement Act framework," a deadline that he has said was born of his frustration with the lack of progress on a line. He said alignment must include work on a large-diameter liquefied natural gas pipeline to tidewater that would allow for overseas exports.

Parnell has not specified any consequences for what might happen if his target date isn't met.

He has noted that the parties are working together and has said he remains optimistic.

The inducement act was passed under then-Gov. Sarah Palin as a way to jumpstart a line.

TransCanada holds an exclusive license to advance a line under terms of the act and has been working with Exxon Mobil.

TransCanada has focused its efforts so far on a line that would serve North America markets but changes over the last several years, including the rise of shale gas, have led to concerns that there will be little demand for Alaska gas in the Lower 48. And the company has yet to announce any agreements with producers.

Parnell, in October, called on the Big Three to unite behind a project that allows for liquefied natural gas exports to the Pacific Rim if the gas market has truly shifted from the Lower 48.

Minge said the companies are pursuing the liquefied natural gas option in a "structured, systematic way," meaning, determining who would do what, how the issue would be studied and how the companies would share information.

This would be done, he said, without throwing out the Lower 48 option.

TransCanada and the state are also involved, he said.

A TransCanada spokesman on Wednesday said work continues toward alignment with the companies but he said TransCanada's project team wouldn't speculate on the timing for achieving alignment.

BP and Conoco Phillips, which balked at terms of the inducement act, had pursued a rival project to the Lower 48 but that folded last year when it couldn't garner the commitments needed to move forward.

Minge said he still doesn't like terms of the act, he doesn't think they work and expects a "massive" debate about it in the Legislature as early as next year.

He called alignment "a good first step. Without it, (a project) goes nowhere. But there's a lot of work to do. This will be a major, major, major investment."

Litigation over disputed leases in the Point Thomson gas fields also must be resolved. The leases are seen as key to a major gas line project. Parnell had wanted resolution last month, but instead arguments were held before the Alaska Supreme Court on the case. Minge said he thinks a settlement is close.


By BECKY BOHRER
Associated Press