From: Steve Quinn, Associated Press
Published July 4, 2007 12:00 AM

Alaska Opens Application Process for Gas Pipeline

JUNEAU, Alaska -- Alaska Gov. Sarah Palin said Tuesday the state is ready to receive applications to build a natural gas pipeline that officials believe will ultimately deliver trillions of cubic feet of reserves to market.

A potential multibillion dollar pipeline carries implications for North America's long-term energy supply and has been widely discussed by lawmakers, energy regulators and company executives throughout North America since Palin outlined her plans in March.

Palin said Tuesday's development reflects progress toward building a pipeline that one day will "feed hungry markets with Alaska's energy."

It also reprises the burning question the administration has faced since the bill was introduced in March: just how many meaningful applications will arrive by the Oct. 1 deadline. Oil and independent pipeline companies have until that date to submit an application that must outline details such as the pipeline's route, the market it will serve and how it can build a pipeline and avoid cost overruns.

Palin warned that the state and the nation cannot afford to let the natural gas supplies -- estimated at about 35 trillion cubic feet on the North Slope -- sit untapped any longer.

In May, lawmakers heeded the warning when passing the Alaska Gasline Inducement Act designed so producers and independent pipeline companies can vie for rights to build the pipeline.

The new law, known as AGIA and recently signed by Palin, is designed to stimulate competition through inducements such as a $500 million matching grant to the license winner.

Some independent producers and independent pipeline companies favored AGIA as balanced and conducive to stimulating more North Slope exploration.

North Slope lease holders BP PLC, Exxon Mobil Corp. and ConocoPhillips, however, have said the Palin's plan is too restrictive and not commercially viable for them.

BP reiterated its concerns in a prepared statement, adding that it has not given up on the project.

Brian Wenzel, ConocoPhillips' vice president of Alaska North Slope Gas Development, agreed in a prepared statement.

"The company agrees that development of Alaska's North Slope gas resources is important to the state and the nation, and we're trying to find a best path forward to make it happen," he said.

Exxon Mobil did not immediately return e-mails seeking comment.

Alaska has struggled for decades to get a deal either with North Slope producers or independent pipeline companies to build a line that could possibly run from the North Slope through Canada and into the Midwest.

A proposed deal between former Gov. Frank Murkowski and North Slope producers BP, Exxon Mobil and ConocoPhillips fell apart last year.

Murkowski had a deal with these companies that would have set tax and royalty terms should a pipeline get built but there was no guarantee it would.

Additionally, the Legislature did not like the terms and never voted on it, so Palin decided to start over with a more inclusive plan.


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