Palin hopeful that producers will apply to build gas pipeline

BP exec says nothing has changed since end of legislative session

Posted: Friday, July 06, 2007

Gov. Sarah Palin is publicly hoping that the state's major oil producers will apply to build an Alaska natural gas pipeline. The companies remain reluctant.

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Palin on Tuesday presented the request for applications called for in her Alaska Gasline Inducement Act passed by the Legislature in May. She said she hopes the companies that fought AGIA in the Legislature will be more open to it now.

Oil producers' response so far has not been positive, however.

"We've determined that we cannot submit a bid that conforms to the requirements of AGIA," said BP spokesman Steve Rinehart.

BP, Exxon Mobil Corp. and ConocoPhillips control most of the North Slope's natural gas. In the legislative process, the three companies presented a united front against the AGIA proposal.

Legislators' opposition to the bill collapsed after several current and former legislators and lobbyists were indicted on bribery charges, however, and AGIA passed nearly unanimously.

Alaska Gas Pipeline Information

Web site with the request for applications called for in the Alaska Gasline Inducement Act and which be downloaded by anyone:

http://www.dog.dnr.state.ak.us/agia/agia_rfa_july_2R.pdf

Text of the Alaska Gasline Inducement Act:

http://www.dog.dnr.state.ak.us/agia/pdf/agia_docs/HB0177F.pdf

Web page to receive comments and questions about the request for applications. Gov. Sarah Palin and Lt. Gov. Sean Parnell pledged to respond to all comments:

http://www.gov.state.ak.us/agia/agia_comments.php

AGIA applications Web site, including a white paper on the topic, AGIA myths, and financial documents:

http://www.dog.dnr.state.ak.us/agia/index.htm

Palin said Tuesday she believed the chief executive officers of those companies would find the prospect of participating in a gas pipeline deal too attractive to pass up. Some of them, she said, might not submit an application itself, but would join in other ways. That might be to work with an applicant or to sell its natural gas into a pipeline developed by a third party.

"I think somehow they will wind up being participants," she said.

BP's Rinehart said nothing has changed since the end of the legislative session, and BP wouldn't be applying.

"We were not happy to reach this conclusion, but we cannot bid under this bill," he said.

Rinehart said BP was concerned it couldn't successfully bid on the license to construct the pipeline without a long-term guarantee of lower taxes and royalties.

At the end of the legislative session in May, Exxon executive Marry Massey also panned the bill, for similar reasons.

It is not clear if that position has changed.

"We are evaluating our options," said Exxon spokeswoman Margaret Ross on Thursday from Texas.

Exxon lobbyist Wendy King referred questions Thursday to company press relations staff, who did not respond by press time.

Palin administration officials say they've twice toured the country visiting potential applicants, and said they expect to have qualified companies interested in submitting applications. That includes not just the major oil producers but also independent pipeline companies.

Department of Natural Resources Deputy Commissioner Marty Rutherford said she expects to have more than one qualified applicant.

"All we need is one good one," she said.

AGIA also allows companies to submit more than one application, allowing the state to pick between applications with different benefits to the state, as well as submitting applications based on different contingencies.

The deadline for submission of applications is Oct. 1. Applications can be submitted before that time, but none will be opened or made public until that date, when all will be opened simultaneously, said Pat Galvin, commissioner of the Department of Revenue.

• Pat Forgey can be reached at 523-2250 or patrick.forgey@juneaumepire.com.



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