From: Matt Volz, Associated Press
Published February 10, 2005 12:00 AM

FERC Rules on Access to Proposed Alaska Gas Pipeline

JUNEAU, Alaska — Federal regulators on Wednesday issued rules on how exploration companies would tap into a natural gas pipeline from Alaska's North Slope.

Federal Energy Regulatory Commission members say the rules will make sure the competition for capacity is fair when smaller companies seek access to the proposed pipeline.

The three major North Slope oil producers -- BP PLC, ConocoPhillips Co. and Exxon Mobil Corp. -- are negotiating to build the mammoth 3,500-mile pipeline through Canada to the Midwest. Smaller companies say they are concerned about fair access to a pipeline that is built, owned and operated by the same companies that will be using the line as shippers.

The rules were outlined Wednesday at a FERC meeting in Washington, D.C., but companies who could be using the pipeline reserved comments until they have studied the documents.

"We haven't actually seen the final details yet, but we're encouraged by what we've heard so far about their proposal," said Mark Hanley of Anadarko Petroleum Corp. "It sounds like many of the concerns of explorers have been addressed."


In a statement, BP said it is reviewing the rules and had no immediate comment.

The FERC's decision has to do with the open season in which companies would bid for capacity on the pipeline. Anchor shippers -- companies that own large amounts of the gas that will largely pay for the pipeline -- will be able to pre-subscribe to pipeline capacity outside of an open season, under FERC rules.

But other bidders must have an opportunity to negotiate the same terms, and the pre-subscribed agreements must be made public within 10 days, according to the FERC rules.

The potential pipeline sponsors have said entering into early agreements is necessary to keep the financial risks and uncertainty low before moving ahead with the gas line, which has been estimated to cost $20 billion.

Small exploration companies had viewed presubscription warily, saying that could allow large companies to cut favorable deals.

The rules also would require that the costs of expanding the pipeline be shared among all gas shippers unless a convincing argument can be made against it.

The gas pipeline as envisioned by the major producers would take about 10 years to build from the time an application is filed. It would initially ship 4.5 billion cubic feet of gas per day.

BP, ConocoPhillips and Exxon Mobil own the rights to about 90 percent of the known gas reserves on the North Slope, about 35 trillion cubic feet.

Source: Associated Press

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