Murkowski expresses optimism for gasline deal

Posted: Sunday, March 30, 2003

JUNEAU (AP) -- Gov. Frank Murkowski hopes to wrap up negotiations by the end of the year on a deal with major players in a North Slope natural gas pipeline to the Lower 48, he said Friday.

Murkowski made the announcement after a day-long meeting Thursday with senior officials with Conoco Phillips, BP and Exxon Mobil discussing the prospects of a natural gas pipeline.

He called it a ''major milestone'' in the life of the plan and said the project -- which would provide the state with millions in royalties and other revenues -- now has parameters around it that were not there before.

''We have a commitment to initiate and complete this by year end and basically the intent is at that time we would have a decision on 'go' or 'no go,''' Murkowski said.

The natural gas pipeline project is one of the state's largest potential economic development projects and could provide between $400 million to $1 billion in revenues to the state.

The governor said producers plan to submit an application for the $20 billion pipeline project after the Legislature approves House Bill 16, which reauthorizes the state's Stranded Gas Act.

That bill was approved in the House on Wednesday and Murkowski said it should come up in the Senate next week. That would set the stage for negotiations to begin.

''Clearly, the producers were optimistic that negotiations could begin as soon as House Bill 16 is signed into law,'' Murkowski said during a press conference on Friday. ''When that bill comes to me, I will sign it.''

If a deal is struck between the state and producers, the Legislature would be asked to ratify it during the 2004 session, Murkowski said.

Construction could begin as early as 2008 on the pipeline that would ship natural gas from the North Slope to the Lower 48, Murkowski said.

Conoco Phillips issued a statement on Friday that said legislative approval of the Stranded Gas Act would allow for negotiations ''regarding fiscal certainty and clarity'' for the project.

The natural gas pipeline project has been on the horizon for decades as Alaskans have wrung their hands about how to get the estimated 24 trillion cubic feet of gas from Prudhoe Bay to markets.

The major oil producers in Alaska have been reluctant to commit to a $20 billion project without action by the state and federal governments to reduce the risks.

In its statement, Conoco Phillips said passage of a comprehensive federal energy bill is critical to making the project viable. The state and the producers agreed to continue efforts to promote passage of the measure before Congress, the company said.

One potential sticking point is the issue of price supports to aid producers when natural gas prices dip. The Bush administration is opposed to offering such price supports, which also worry other natural gas producers.

The pipeline route has also been an issue, but Murkowski seemed less concerned with that aspect of it.

He said a pipeline from the Mackenzie Delta in Canada will be constructed but that most of its natural gas would be used in Canada.

The major competitor to a pipeline that generally follows the route of the trans-Alaska Oil Pipeline is liquid natural gas production, he said.

Demand for natural gas in the United States will be filled by natural gas from Alaska or liquid natural gas from other areas, Murkowski said.

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