The Ongoing LNG Gas Pipeline Project.

• Author: JONES, PATRICIA

Some day, natural gas may be piped from the North Slope to an ice-free shipping port for export, but first planners have to make the project economically feasible.

Alaska's gas pipeline advocates believed more than a year ago that the pending merger of the state's two largest oil producers might help efforts to commercialize the mammoth-sized untapped natural gas reserves on the North Slope.

Unexpected and unknown back then were the final results of that business deal concluded this spring--which, in a sweeping turn of events, redistributes ownership of North Slope oil and gas as well as places a 30-year veteran of LNG production in Alaska into a major ownership role on the North Slope.

"I think the realignment works to Alaska's best interest-it's a real benefit to Alaska," said Hank Hove, Fairbanks North Star Borough mayor and a board member of a government-backed gas pipeline advocacy group. "It certainly does advance the interest of gas commercialization in Alaska."

And now, oil and gas industry observers say the long-awaited and much-discussed natural gas pipeline project has as good of a chance of becoming reality as it ever has before.

"We think that is a significant step to a major gas sale," said Ronnie Chappell, spokesman for BP Exploration (Alaska) Inc., one of the state's three largest oil producers. "It aligns for the first time all the owners in a way that should make achieving a gas sale easier. Everyone has the same commercial interest."

Granted, all three producers, as well as other interested parties hoping to some day build a gas pipeline to transport natural gas from the North Slope to an ice-free shipping port, say the concept is still uneconomical in today's market.

Substantial problems of placing a large volume of natural gas in a still-sluggish Asian market and coming up with affordable construction costs remain major obstacles to the coming of Alaska's second pipeline boom.

"All of these problems that existed prior to the realignment continue," explained Roger Marks, a petroleum economist in the state Department of Revenue. "But there are several groups spending a lot of money, time and effort to see if they can get these things to work and that's a positive thing."

Merger and Realignment

Due to federal antitrust regulations, BP Amoco agreed this spring to sell off the Alaskan assets of its pending acquisition, Atlantic Richfield Co. And who should step up to the buying plate but Phillips Petroleum Co., a 30-year...