New developments push gasline project forward: this year could prove to be a critical period for the Alaska gas pipeline project.

• Author: Liles, Patricia
• Position: Building Alaska

Development of Alaska's vast natural gas resources on the North Slope advanced significantly in 2004, culminating with a mid-December announcement that the producers' group offered the state a proposal for construction of a natural gas pipeline project.

Although specific terms of the proposal were kept confidential at press time, the three North Slope producers--BP, ConocoPhillips and ExxonMobil--provided to the state on Dec. 15 a "comprehensive, joint response" to the state's earlier proposal for an equity ownership in the gas project, according to a press announcement from Alaska Gov. Frank Murkowski.

"We are particularly encouraged that their response was unified among the three producers," he said in a Dec. 16 press release. "This state has been talking about marketing Alaska's gas for nearly 50 years. And for the first time ever, we now have a detailed and specific offer from a group to actually build the pipeline."

The producers' group offer, submitted under the Stranded Gas Act allowing fiscal term negotiations with the state, is the "most significant news development in the gas pipeline story to come along in decades," Murkowski said, in a following news release.

Specific terms continue to be negotiated and will be submitted to the Legislature this session, according to the governor. Then, the contract terms will become public. "We will have a lot of tough negotiating to do," Murkowski said in his press release. "But we are committed to negotiating a contract that is in the interest of the state and putting it before the Legislature this session."

TALKS WITH TRANSCANADA CONTINUE

But the producers' pipeline proposal is just one the state is currently considering. State officials also are negotiating tax and royalty terms with TransCanada Corp., a North American energy company focused on natural gas transmission and power services.

Those negotiations with TransCanada are "less complex" than talks with the producers' group, according to Mike Chambers, spokesman for the governor's office. "The dynamics are less complex-there are fewer moving parts," he said.

Alaska legislators potentially could receive the two negotiated agreements for consideration during this session, Chambers said in mid-December. "They will not have something waiting on their desks when they arrive, but we hope they will have something before they leave town."

Through its subsidiaries Foothills Pipe Line Ltd. and Alaskan Northwest Natural Gas Transportation Co...