Palin meets with ConocoPhillips

Posted: Tuesday, February 12, 2008

Gov. Sarah Palin met with executives from ConocoPhillips to discuss a prospective natural gas pipeline - one month after turning down the company's proposal.

She stressed the state was not negotiating any long-range fiscal plans - tax rates and length of the terms - which the company has sought as part of a gas pipeline deal.

The meeting took place Sunday afternoon in Anchorage and included members of her gas line team. It lasted about four hours, Palin said.

Last month, Palin rejected ConocoPhillips' gas line proposal, but has pledged to keep meeting with company officials.

Palin said Sunday's meeting was simply to review concerns the company had with the state's Alaska Gasline Inducement Act, or AGIA.

"It's to fulfill our commitment to not dismissing anybody's ideas and proposals on how to monetize Alaska's gas resources," Palin said.

When reached Monday, a ConocoPhillips spokeswoman said the company would not be able to immediately comment.

The company submitted a proposal last November that was outside the guidelines established by AGIA.

Rather, ConocoPhillips has asked the state to first deal with a fiscal framework needed to ensure commitments of shipping gas in a pipeline.

ConocoPhillips is the state's largest producer of oil and shares in the leases for nearly 35 trillion cubic feet of natural gas reserves in the North Slope.

As a potential shipper of gas, the company has said it wants the state to establish long-range fiscal terms covering costs such as taxes and the length of the terms.

"In order to enable shippers to make long-term shipping commitments, prospective shippers need clearly defined natural gas fiscal terms and an understanding of the period during which those terms will apply," the company wrote in its proposal.

Last month, independent pipeline company TransCanada emerged as the only application deemed compliant so far.

The Calgary-based company proposes shipping gas from the North Slope 1,715 miles southeast into a Canadian pipeline system, ultimately sending it to the Midwest. A public comment period ends March 6.

But ConocoPhillips has launched a public campaign to keep its positions on the forefront.

ConocoPhillips, BP PLC and Exxon Mobil Corp. are three North Slope producers who would likely be among the first companies shipping gas.

The state tried reaching fiscal terms with the three companies two years ago, but the Legislature would not vote on an agreement because many felt it gave away too much.

Additionally, it did not guarantee a pipeline would get built.

The state then pursued an option it believed would stimulate competition to build the line, receive a timeline toward construction and was friendly to further exploration.

Even with 35 trillion cubic feet of known gas reserves, it's expected to take more than 50 trillion cubic feet for a successful pipeline project to Midwest markets.

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