BP aims for North Slope gas sales by 2007

Posted: Thursday, September 21, 2000

ANCHORAGE (AP) -- BP's global production chief says the company wants to begin selling North Slope natural gas within seven years.

''The stars appear to be aligning for Alaska,'' said Dick Olver after a speech to the Alaska Support Industry Alliance in downtown Anchorage Wednesday. The Alliance is a group of Alaska companies that serve the oil industry.

Olver said BP is contemplating all options for the gas, including converting it to liquid for the oil pipeline and selling chilled, compressed liquefied natural gas to Asia.

But Olver devoted most of his speech to a pipeline from Alaska to Canada, the idea with the most momentum these days.

Olver called the pipeline a top priority for BP over the next five years and said the company is planning the project ''aggressively.''

He estimated the cost of the 1,200-mile pipeline to be at least $10 billion. Estimated capacity would be 4 billion cubic feet a day. He pegged the lifetime at 30 years.

Such a project could send hundreds of millions of dollars a year flowing into the state treasury, because the North Slope's 35 trillion cubic feet of natural gas lies on state land.

Since the 1968 North Slope oil strike, companies have dreamed of selling the vast gas reserves in the oil fields. But the distance from markets and the high cost of developing the reserves thwarted plans. Most of the gas is reinjected into wells to boost oil production.

With natural gas prices soaring in the Lower 48, Alaska gas projects are again under discussion.

BP holds almost 27 percent of Prudhoe Bay's gas.

Olver said he was skeptical that gas prices would hold above current highs of $5 per million British thermal units. He did not define a minimum price at which the pipeline would be economic.

But Olver was sensitive to the politics of arctic oil and gas development. The project must be ''in the best interests of U.S. consumers, the people of Alaska and our Canadian stakeholders.''

Pressed for specifics on issues like whether the pipeline should run offshore or through Fairbanks, Olver demured, calling such questions ''premature.''

At a natural gas summit in Columbus, Ohio Wednesday, another BP executive, Jack Golden, and Phillips Petroleum chief executive Jim Mulva also focused on an Alaska gas pipeline.

Golden and Mulva said their companies are virtually certain to build a pipeline although it may be a year or so before they select a route.

''We are very committed to building a pipeline,'' Golden said.

Mulva said that as long as prices remain higher than $3 on average, a pipeline investment is economic.

''The time is right, the technology is here and the market is here,'' Mulva said. ''We are completely committed to making this a reality.''

Alaska Gov. Tony Knowles said North Slope producers have committed to him to build the Alaska pipeline and that he will be meeting with them in two weeks to discuss additional details, including an Alaska labor agreement for the project.

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