Gas pipeline deals pitched to oil giants

The state sent a proposed contract on Thursday to the three top oil producers in Alaska to build a $20 billion pipeline that delivers natural gas to markets in the Lower 48.

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Gov. Frank Murkowski made the announcement at a press conference in Anchorage.

"I anticipate receiving an affirmative response from producers within the next few days," Murkowski said.

Until Thursday, producers Exxon Mobil, BP and Conoco Phillips had only been given the state's terms of what it expects from the deal, but this is the first contract they have received to review.

Daren Beaudo, spokesman for BP, said his company was looking forward to getting a contract to the Alaska Legislature "as soon a possible," but he did not elaborate on how long the company would review the proposal.

A spokeswoman for Exxon Mobil said she did not want to speculate on when the company might sign a contract.

The governor did not say the contract is a line drawn in the sand, only that if producers did not sign the agreement, "There will be a lot second-guessing as to why this did not come together."

Murkowski added that the contract he held in his hands Thursday could have "modest" adjustments in the next round of talks.

A rival proposal sent by an organization of municipalities known as the Alaska Gasline Port Authority suggests the state should not wait on oil producers but build its own pipeline to a liquid natural gas terminal in Valdez.

"I have nothing to comment on because there is nothing to show at this point," said AGPA spokesman Jomo Stewart.

If producers agree, the public would have at least 30 days to review the contract, though the governor told reporters that comment period would likely be a few weeks longer.

Then the Alaska Legislature would meet for a special session to discuss changes and present a final contract for the producers and the governor to sign.

Murkowski said he would wait until producers sign the contract to announce when a special session of the Alaska Legislature would be called. The Legislature's regular session starts in January.

Details of the contract are still confidential, but the governor said it included the six terms he mentioned last month and in the spring in negotiations.

The terms include state ownership in the pipeline. Murkowski did not answer how much ownership the state is asking in the contract but he said previously in a speech that he is seeking 20 percent, which would obligate the state to spend $4 billion on construction.

The proposal sent by producers plans for a pipeline to transport gas from reserves in the North Slope through Canada and into the American Midwest.

Four take-off points are outlined in the contract to deliver gas to Fairbanks, Delta Junction, villages along the Yukon River and the Anchorage-Kenai area.

Bill Corbus, commissioner of the Alaska Department of Revenue, said the state has focused more on the proposal from producers because it is in the best interest of the state long-term.

"I'm not saying it's better," Corbus said. "But the contract is the furthest along in discussions."

The North Slope holds 35 trillion cubic feet of known natural gas and current prices are at $14 per thousand cubic feet, a 121 percent increase since last year.

• Andrew Petty can be reached at andrew.petty@juneauempire.com