Anchorage Daily News

FAIRBANKS -- Natural gas from the Point Thomson field on Alaska's North Slope must be tapped to make feasible a multibillion-dollar natural gas pipeline to Canada or the Lower 48, according to Alaska's former governor.

Frank Murkowski said Tuesday that unless gas reserves are tapped at Point Thomson, there will be no pipeline.

He called on state officials to work for a responsible solution to a dispute with Exxon over oil and gas leases at Point Thomson.

The field is estimated to hold nearly one-fourth of the North Slope's 35 trillion cubic feet of known natural gas reserves.

Exxon and its partners won the rights to drill at Point Thomson 31 years ago but have produced no oil or gas from the tracts. The state Department of Natural Resources in April terminated Exxon's leases for failure to fulfill development commitments.

Irving, Texas-based Exxon has sued the state to reclaim the leases and is trying to move forward with developing Point Thomson. Alaska officials this month denied the company's application to build an ice road to transport a drilling rig to the lease area.

Murkowski called for negotiation.

"I think it's time for the Department of Natural Resources to get over the old quarrels and move the project along in the interest of the state," Murkowski said. "You are not going to get a gas line until Point Thomson is determined. That gas has to go into the project. Otherwise, the project is not feasible financially."

Murkowski served 22 years in the U.S. Senate and was elected governor in 2002. He was trounced by Sarah Palin in the 2006 Republican primary.

Murkowski issued "a passionate call" for resource development as the national economy continues to slide and the price of oil, the mainstay of Alaska government revenue, has fallen.

Murkowski listed problems he perceives with Palin's Alaska Gasline Inducement Act and urged legislators to iron out wrinkles before an "open season," the period in which natural gas owners bid for shipping space.

"I am personally not optimistic that, as structured, this strategy is going to work," he said. "It's seeking to obtain a major piece of infrastructure through politics and ideology instead of making it a commercial transaction among aligned companies."

He said the Alaska Legislature should conduct an extensive review of a state license granted this summer to TransCanada Corp. and seek reassurances that producers will be willing to bid on pipeline space in an open season, an action that could determine whether TransCanada is able to solidify financing for the massive project.

ADVERTISEMENT