From Saturdays Financial PostALASKA MAY LIFT GAS RIGHTS
GOVERNOR DISBELIEVES PIPELINES ARE UNECONOMICAL
BY PETER MORTON Washington Bureau Chief
Financial Post pmorton@nationalpost.com
WASHINGTON • Angered by the latest threats by ExxonMobil Corp. to shelve northern natural gas pipeline projects, the governor of Alaska is now threatening to take back the vast North Slope gas reserves.
Republican Sarah Palin is warning the three North Slope owners — ExxonMobil, BP PLC and ConocoPhillip Ltd.— that they risk seeing the rights to develop the vast 35 trillion cubic foot pool soon disappear.
“These companies cannot continue to warehouse this gas,” said Meghan Stapleton, a spokeswoman for Ms. Palin.
Ms. Stapleton said the governor is not buying into claims by Rex Tillerson, the chairman of ExxonMobil, who said this week in Dallas that neither the Alaska pipeline nor the $15-billion Mackenzie Valley proposal were economically viable unless there is more government support.
“Our modeling shows that the pipeline is very economic to complete,” Ms. Stapleton said in an interview. “So we disagree with his assertion.”
The Alaska Highway pipeline, as it sometimes called, would go from the remote North Slope through Alaska to the Yukon and then into British Columbia before, presumably, connecting to the large Alberta pipeline network.
At the same time, the governor is signing a new law this week that will open the bidding on the Alaska natural gas pipeline to any company willing to build it, now thought to cost as much as US$30-billion — more than double the last estimate.
The previous governor, Frank Murkowski, had tentatively put together a deal with the three major gas owners of the North Slope to sponsor a pipeline. Mr. Murkowski had agreed to have the state own a 10% interest.
However, that deal was widely criticized because it was largely negotiated in secret. In addition, it was not clear which pipeline company would get the nod although TransCanada Ltd., the owner and operator of a huge Canadian and U.S. network, appeared to be the frontrunner.
Tom Irwin, the new commissioner of Natural Resources, said the new law sets out a number of conditions for the pipeline leg within Alaska, including allowing all gas producers access and “fair tariffs” based largely on Canada’s rolled-in system that essentially says every producer pays the same amount.
In addition, he said, there has to be five delivery points within Alaska so that North Slope gas can reach residents rather than heading straight to the lower 48 states.
“We believe, as a result, there is potentially room for two pipelines — one through Canada and a second all-Alaska leg to take [liquefied natural gas] to Valdez,” he said.
The proposed all-Alaska route would connect the North Slope fields with Valdez. There, the gas would be liquified or condensed before being putting on to special tankers headed to the U.S. West Coast.
Shela Shapiro, a spokeswoman for TransCanada, said yesterday that the Calgary-based pipeline understands the need for the new act.
“We’re supportive of advancing the project expeditiously,” she said, adding that TransCanada will wait until June to see details of the requests for proposals from the Alaska government.
Analysts have already started fretting about ExxonMobil’s threat to shelve the project, saying it is the equivalent of losing all the country’s production in the Gulf of Mexico.