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Conoco pitches gas line proposal

Posted: Wednesday, December 19, 2007

ConocoPhillips representatives presented an alternative to the Alaska Gasline Inducement Act, also known as AGIA, to the Alaska Support Industry Alliance on Tuesday in the hopes of gathering public opinion and support for their project.

Brian Wenzel, vice president of Alaska North Slope gas development for ConocoPhillips, and North Slope gas development manager Wendy King, are taking their proposal on the road in order to generate enough public support for the project so that Gov. Sarah Palin and the Legislature would consider it as well as the five AGIA proposals. Wenzel and King presented a Powerpoint presentation at the Alliance's Tuesday luncheon summarizing ConocoPhillips' 115-page proposal and vision to work with the state to begin making strides toward a natural gas pipeline by next summer.

"It's important to build a partnership in order to be successful," King said. "It's just too big."

The pipeline ConocoPhillips proposes would extend from the North Slope to the Alberta-British Columbia border in Canada. The pipeline would transport approximately 4 billion cubic feet of gas per day to Canada to be distributed to markets in the Lower 48. The full proposal is available online at www.ansnaturalgaspipeline.com.

King said ConocoPhillips' first task in getting the pipeline built was to develop a gas fiscal framework in order to ensure pipeline owners, customers and the state, which together will be putting forward money on a $30 billion project, that the pipeline will actually be built. ConocoPhillips would also include a third-party pipeline company, such as TransCanada, to work jointly with the state to find other potential pipeline investors to add value to the project.

"Finding the right balance is the critical next step," King said. "We want to see progress in summer '08. We can make that happen."

King said under its proposal, ConocoPhillips promises to have a full project management team in place by the latter part of 2008 ready to negotiate with potential customers the following year. ConocoPhillips hopes to conclude open season and permitting in six years, start construction by 2015 and get gas to market by 2018.

King said most people are concerned about how gas will get to them, jobs and expansion and access to the pipeline itself. Under the proposal, there will be six delivery points for Alaskans to access the gas in the pipeline. This includes delivery points near the Yukon River, at Fairbanks, Delta Junction and Tok. A delivery point in Whitehorse, Yukon Territory, Canada, will provide gas to Southeastern Alaska. King said the company would cooperate with local distribution companies and set up an in-state rate so the customer would only have to pay to move the gas to their respective location.

"(The customer) should only pay to move gas to Fairbanks," King said. "Not to the Alberta-British Columbia boarder."

A big part of the cost of the project is labor, King said. ConocoPhillips put $10 million in training in addition to grant money available from the federal and state governments. The company would also set up its local project headquarters in Anchorage with construction headquarters in Fairbanks.

ConocoPhillips would also build the pipeline with future expansion in mind and would also cover part of the cost for expansion.

King said ConocoPhillips hopes to get the gas fiscal framework completed in a few months. This means, she said, state legislators would consider it this session so the company can start its environmental impact study by June. It would cost between $400 million and $600 million to complete the open session plus another $1 billion to $2 billion for the permitting process.

"That's a lot of money before construction started," King said. "We want the project to happen. (We want to) see if legislation and the administration is able to work with the proposal and still get the fastest way to first gas."

Kenai Peninsula Borough Mayor John Williams said ConocoPhillips is giving the state legislature a very compressed time frame by asking them to consider their proposal in 90 days and added that he doesn't see the legislature getting to the proposal until after mid April. He also said the court of public opinion should be allowed to discuss the proposal and asked what would happen if they didn't get that chance.

"The court of public opinion needs to be heard," Wenzel said. "Now is time for us to talk about our proposal. The administration does not have to look at the proposal. Part of our road show is looking for public and legislative support."

Jessica Cejnar can be reached at jessica.cejnar@peninsulaclarion.com.



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