Oil giants take steps toward gas line

BP, ConocoPhillips make first move for federal permission

Posted: Wednesday, June 18, 2008

ANCHORAGE - A joint venture of two global oil companies has taken preliminary steps toward federal permitting for a natural gas pipeline.

Michael Dinneen / The Associated Press
Michael Dinneen / The Associated Press

BP PLC and ConocoPhillips contacted the Federal Energy Regulatory Commission, considered the first move for receiving federal permission.

The letter, dated Sunday, was written by the company's newly named president Bud E. Fackrell, who was appointed last week.

The letter requested approval to get preliminary review of its pipeline proposal.

It also comes as the state Legislature reviews Gov. Sarah Palin's request to issue a license and $500 million seed money to TransCanada Corp.

BP and ConocoPhillips announced their intent to build a competing line two months ago and named it Denali-The Alaska Gas Pipeline Project.

The companies had long sought to negotiate fiscal terms, such as long-term taxes and royalties, with Palin's administration.

But Palin said she preferred a path she deemed be more inclusive and competitive, and declined to enter into exclusive negotiations.

The two companies, which also are North Slope leaseholders, said they would proceed on their own, without any state seed money.

Lawmakers have until Aug. 2 to decide whether to support Palin's recommendation or reject it.

Should they turn it down, that would leave the state back to working with the North Slope producers as it did two years ago.

Some lawmakers believe the Denali plan warrants more consideration, especially as it distinguished itself for not relying on the seed money offered by the state.

The other major difference between the two proposals is TransCanada's offering is teeming with details on costs, financing and routes.

Details on the Denali project remain scarce, although the company's Web site is slowly featuring more data.

Meanwhile, word of the oil companies' letter to FERC was received as a positive step even by those who back Palin's plan.

State Sen. Gene Therriault, a North Pole Republican, said he liked the news because it illustrates progress toward a getting a gas line built.

On Monday, Mark Robinson, director of the agency's Office of Energy Projects, told lawmakers that starting a preliminary project review is an essential step, regardless of the builder.

This type of review typically lasts 18 months and features field surveys and other studies to back a formal application for permission to build a pipeline, Robinson said.

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