ConocoPhillips to seek Alaska pipeline project

November 30, 2007

By TOM FOWLER
Copyright 2007 Houston Chronicle

Houston-based ConocoPhillips will be one of the companies to submit an application to build a $20 billion to $30 billion natural gas pipeline from Alaska’s North Slope, a project that many say will be the largest single construction project in U.S. history.

The company said today it has submitted a pipeline proposal to the state of Alaska, the same day applications are due under a pipeline construction process that Conoco and the other major North Slope producers, Exxon Mobil and BP, sharply criticized. Conoco says its proposal is being made outside that process.

“We desire to work directly and purposefully with the state of Alaska and the Legislature to advance this project as quickly as possible,” said Jim Mulva, chairman and chief executive officer of ConocoPhillips. “We also expect to approach other parties to explore ways through which their participation could add value to this effort.”

The three producers had negotiated a pipeline deal with former Alaska Gov. Frank Murkowski last year in private negotiations, but he was defeated in the November 2006 election.

Current Gov. Sarah Palin threw out that deal when she took office and created an open bidding process — the Alaska Gasline Inducement Act — which closes today.

The AGIA offers $500 million in financial backing to the project, a 10-year lock on gas-related taxes and other inducements. That would be on top of federal incentives for the project, including billions of dollars in loan guarantees.

Palin will announce all of the applicants tonight.

BP officials have said they are not submitting a bid because they believe the AGIA process won’t work for them.

“We want a successful project,” said spokesman Steve Rinehart. “It’s important for us, for Alaskans and the whole country. But our determination is AGIA would not produce a successful project.”

Exxon Mobil has declined to comment on the pipeline project.

The North Slope has proven gas reserves of 35 trillion cubic feet, or about 13 percent of the United States’ known reserves, but geologists say the potential for undiscovered gas is as high as 200 trillion cubic feet.

Source: Houston Chronicle