http://racerealty.com/

Antitrust lawyer says big oil is blocking gas line

Posted: Thursday, March 16, 2006

FAIRBANKS - An antitrust lawyer working for the Alaska Gasline Port Authority says big oil producers have kept natural gas prices high in the Lower 48 by illegally blocking North Slope gas development.

Sound off on the important issues of the week at juneaublogger.com/voxbox

Oil executives denied the charge. They pointed to a proposed agreement before the Alaska Legislature that could soon prompt their companies to build a line.

David Boies led the government's lawsuit against Microsoft six years ago but now has a private practice. He is working for the port authority, comprised of the Fairbanks North Star and North Slope boroughs and the city of Valdez. The group is proposing a line be built from Prudhoe Bay to Valdez.

Boies told the Senate Judiciary Committee that Congress should improve antitrust laws to discourage oil companies from manipulating markets by withholding gas supplies.

The authority filed suit against ExxonMobil Corp. and BP PLC on Dec. 15 in the Fairbanks office of the U.S. District Court. The lawsuit alleges that the companies violated federal antitrust laws through agreements, mergers and purchases that stymied the sale of Alaska natural gas.

Over the years, not only the authority but also the Yukon Pacific Corp., MidAmerican Energy Holdings Co. and TransCanada have asked the major oil companies to provide natural gas for a pipeline, Boies said.

"Every single one of those proposals was refused," he said. "And the reason it was refused was because that allows the oil companies to keep control. ... They are refusing because they know that by refusing, they prevent the development of a pipeline that will bring the gas to the United States."

Much of the hearing focused on whether mergers in the oil industry had undermined competition and contributed to recent high prices.

Oil company officials have said that they don't believe the port authority's proposal, which involves construction of a liquefaction plant in Valdez, would get the best value from the gas.

At the hearing, Rex Tillerson, chief executive officer of ExxonMobil Corp., declined to respond in detail when asked to do so by Sen. Mike DeWine, R-Ohio.

"Well, senator, I think it's regrettable that Mr. Boies has decided to try this case in front of this committee," Tillerson said. "I would categorically state that his allegations are untrue and we look forward to defending ourselves in that lawsuit, which is active as you noted. I think to say anything further than that would be inappropriate."

Ross Pillari, president of BP America Inc., said he also would refrain from a detailed response.

"I would add what I said earlier: There is a very strong high-quality proposal sitting in the Legislature in Alaska today that will bring that gas to market," he said.

Boies, in his written testimony, said the terms of that deal are not known. Only a package of oil tax changes that Gov. Frank Murkowski's administration negotiated as a precursor to the gas deal have been made public.

"In other words, ExxonMobil and BP have not committed to construction of a pipeline, they have just agreed to continue to study and negotiate," Boies said.

ExxonMobil and BP remain in control of the timing, he said.

"This provides them with complete control over determining when North Slope natural gas finally comes to market and permits them to extend the period of artificially high prices," Boies wrote. "Further, it is not certain that they will ever construct a pipeline."



CONTACT US

  • Switchboard: 907-586-3740
  • Circulation and Delivery: 907-523-2295
  • Newsroom Fax: 907-586-3028
  • Business Fax: 907-586-9097
  • Accounts Receivable: 907-523-2270
  • View the Staff Directory
  • or Send feedback

ADVERTISING

SUBSCRIBER SERVICES

SOCIAL NETWORKING