Sensing Natural Gas in Alaska Δ 13th of January 2014 Ω 5:11 AM

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«U.S. Gas Sensing	Θ	Θ
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~ Fairbanks Natural Gas

»FNG
ξ FNG and Exxon reached a 10-year supply contract for up to 10 billion cubic feet of gas per year

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~ BP, Conoco join forces to pursue gas pipeline

»BP, Conoco join forces to pursue gas pipeline
ξ BP and Conoco Phillips announced they're joining forces on an Alaska natural gas pipeline
ξ news fired both excitement and doubt in the state capital
ξ Gov. Sarah Palin and many lawmakers hailed the announcement as healthy progress toward the state's grandest economic development dream.
ξ But some raised questions: Are the companies sincere?
ξ Should the state now award an exclusive license plus a $500 million subsidy to a Canadian company touting a pipeline of its own?
ξ BP and Conoco executives in Anchorage said their companies will form a new firm to pursue what they call the Denali project
ξ -- a pipeline costing more than $30 billion from the rich North Slope gas fields down the Alaska Highway and into Canada
ξ The project sounds very similar to one Conoco proposed by itself in November, but the executives said this is a fresh approach.
ξ they'll spend $600 million in the next three years on engineering and field work before pursuing U.S. and Canadian permission to build the pipeline.
ξ The new Anchorage-based project headquarters will have 150 employees by year's end
ξ work will start this summer, the executives said
ξ They project the pipeline will be finished in 10 to 11 years.
ξ Alaska gas pipelines have been proposed repeatedly in the decades since North Slope gas was discovered,
ξ only to fade away due to low gas prices or other factors
ξ The BP and Conoco executives insisted Tuesday the Denali project is different.
ξ "I would just say watch," said BP Alaska President Doug Suttles. "Watch."

EXXON'S MISSING
ξ The partnership notably doesn't include Exxon Mobil, the largest North Slope gas holder.
ξ Palin, speaking to a Capitol boardroom packed with reporters and lawmakers,
ξ said the absence of Exxon -- which the state is battling in some high-profile court cases -- might be a plus.
ξ "There's a lot of people in Alaska who are probably very pleased with that," she said.
ξ "The sentiment shared by a lot of Alaskans is that, you know, Exxon, don't let the door hit you in the stern on the way out if you choose not to participate in progressing development of Alaska's resources."
ξ Palin met with BP and Conoco executives Tuesday
ξ she said their news wouldn't push her administration off its review of a separate pipeline proposal from TransCanada Corp.,
ξ which is bidding for a state license and subsidy under AGIA, the Alaska Gasline Inducement Act of 2007.
ξ The administration plans to recommend as soon as May 19 whether legislators should approve the license for TransCanada,
ξ the only company under consideration.
ξ And Palin said her earlier call for a special legislative session on the gas line and TransCanada beginning June 3 still holds.

ξ BP and Conoco didn't seek the AGIA license, and executives said they don't need a state subsidy to proceed with their plan.
ξ However, they indicated that ultimately -- before any earth is turned or steel pipe laid --
ξ they'll need a deal with the state on how the gas will be taxed when it's pulled out of the tundra.
ξ The tax question long has been a sticking point on a gas line.
ξ Tuesday's announcement, however, showed how much ground the oil companies have surrendered in their demands of the state.
ξ Two years ago, under Palin's predecessor, Frank Murkowski, the trio of BP, Conoco and Exxon insisted they needed a tax freeze not only on gas but oil as well,
ξ and they negotiated a gas pipeline contract to that effect.
ξ But the contract was politically unpopular and faded before lawmakers ever voted on it.
ξ Now the state appears on the brink of possibly awarding a license, cash and other incentives to TransCanada.

TIMING QUESTIONED
ξ That BP struck a partnership with Conoco and announced it Tuesday, with only five days left in the regular legislative session,
ξ struck many lawmakers as shrewd timing.
ξ Sen. Hollis French, D-Anchorage, said the partnership could chisel away at the will of many lawmakers to grant a license to TransCanada,
ξ which unlike the oil companies doesn't control any of the North Slope's prodigious 35 trillion cubic feet of gas.
ξ "I hope Alaskans are viewing this with the skeptical eye it deserves," French said.
ξ "It could potentially confuse people about the reality of a TransCanada pipeline with the illusion of a producer line."
ξ Of course, neither TransCanada nor any other company has promised to actually start welding pipe.
ξ Wasilla Republican Sen. Charlie Huggins, an ex-Army colonel and chairman of the Senate Resources Committee,
ξ sounded excited about BP and Conoco competing with TransCanada for a pipeline.
ξ "In the military vernacular, this puts Alaska on the high ground," he said.
ξ Huggins noted BP and Conoco said they'd use their own money, $600 million, to plan the pipeline
ξ while TransCanada wants a $500 million subsidy from the state.
ξ That subsidy money, he said, could build a lot of schools and pave a lot of roads.
ξ House Speaker John Harris, R-Valdez, said he visited Tuesday with BP and Conoco executives at the Capitol and they said their project is real.
ξ Harris and others said they believe Exxon eventually will join the partnership if BP and Conoco move ahead with a pipeline.
ξ Tuesday's events seemed to echo the procession seen under the Murkowski administration,
ξ when Conoco was the first to show interest in a gas line, followed by BP and then Exxon.

ξ Margaret Ross, an Exxon spokeswoman in Houston, said the company learned of the BP alliance with Conoco a few days ago and
ξ will need time to see whether their approach will lead to a "commercially viable development."

TRANSCANADA HOLDS FIRM
ξ Steve Porter, a former Conoco employee and deputy state revenue commissioner now advising the Legislature on the gas line,
ξ said he believes TransCanada doesn't really want to build or own the Alaska portion of a pipeline.
ξ And even if TransCanada doesn't get the state license or build the pipeline, it's still likely to achieve a major objective
ξ -- having Alaska gas flow into its extensive North American pipeline network once it reaches Alberta, Porter said.
ξ Tony Palmer, TransCanada's vice president for Alaska business development,
ξ said his company is awaiting word May 19 on whether the Palin administration will recommend the company for the state license.
ξ He said TransCanada stands firm on its AGIA bid and welcomes the North Slope oil companies as either competitors or partners.
ξ As to whether the BP-Conoco partnership could cause members of Alaska's House and Senate to waver and vote against a TransCanada license,
ξ Palmer said: "I do believe both bodies are sophisticated and are fully capable of comparing our proposal to any others."
ξ Alaska Republican U.S. Sen. Lisa Murkowski, the former governor's daughter,
ξ said an alliance of two oil companies controlling more than 60 percent of Slope gas is "great news for Alaska."
ξ She said she hopes TransCanada and Exxon soon join the partnership.
ξ And she complimented Palin.
ξ "By her tough stance over the past two years, she has brought the companies around to building a gas line now," Murkowski said.

ξ Conoco Alaska President Jim Bowles said his company and BP already have divided the chores for a pipeline
ξ that could extend 3,500 miles to the Midwest.
ξ BP will take the lead role on an enormous, multibillion-dollar North Slope plant
ξ to remove impurities from the gas before it goes into the pipeline, Bowles said.
ξ Conoco will lead on laying the pipe from the Slope to Alberta, with BP handling a pipe into the United States.

ξ In 2002, the oil companies concluded an Alaska gas line didn't make financial sense.
ξ But the world has changed since then with gas prices running much higher, BP's Suttles said.
ξ "We're starting," he said. "This is not an announcement to build a plan. This is an announcement to start the project."

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