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BP speaks out against Palin gas line plan

Company says it won't bid unless bill is changed

Posted: Monday, April 30, 2007

FAIRBANKS - Oil company BP PLC on Saturday made a strong public statement against Gov. Sarah Palin's gasline legislation in a hearing before state lawmakers.

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Dave Van Tuyl, BP's Alaska manager for gas commercialization said Saturday that his company would not participate in the competitive bidding process on the project unless the bill undergoes significant changes.

The Alaska Gasline Inducement Act, "needs substantial modification to result in a successful project," he said at a Senate Finance Committee hearing on the bill.

Van Tuyl also said the company most likely would not ship its North Slope gas reserves through a pipeline chosen under the bidding process proposed in the legislation.

The bill's requirements for prospective pipeline builders include project deadlines and commitments relating to pipeline expansions.

It allows the state to pick the project it considers the best and grant exclusive incentives, in part to pressure leaseholders to commit the gas to the pipe.

Van Tuyl argued the state should give up the requirements in favor of "objectives," which the companies could then compete to meet; waive the exclusivity of the state license to ensure competition among builders; avoid imposing firm deadlines on pipeline builders; and offer greater fiscal stability to gas producers such as BP.

Joe Balash, a member of Palin's gas line team, said the administration would "absolutely not" consider softening the requirements.

"The whole point of AGIA is to establish what the state must have out of the project," he said. Balash said the administration remains convinced that "reasonable commercial parties" would get a project off the ground.

"BP is, I think, well aware of its obligations under the terms of its leases and its unit agreements to market its gas when it's reasonably profitable to do so," he said. "It's hard to imagine a 50 percent rate of return not being reasonably profitable."



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