ANCHORAGE - Former oil company executives see hopeful signs in the results of bidding for a natural gas pipeline tapping Alaska's North Slope reserves.
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Gov. Sarah Palin on Friday announced the state had received five gas line applications under a new law, the Alaska Gasline Inducement Act. The applications are for a package of state incentives and an exclusive license.
Just one of the state's three major oil companies, ConocoPhillips, submitted a pipeline proposal. Exxon Mobil and BP stayed on the sidelines.
Ken Thompson, a former Alaska president of Conoco's predecessor, Arco, said Monday it's both natural and positive that Conoco alone put in a proposal.
The big North Slope gas reserves compose a larger part of Conoco's portfolio than that of rivals Exxon and BP, Thompson said. It's not surprising that Conoco appears to be the most eager for a gas pipeline, he said, noting a precedent on the North Slope.
In the years after the 1968 oil discovery at Prudhoe Bay, when the question of a multibillion-dollar pipeline was still up in the air, Arco pushed hardest for the pipeline because Prudhoe oil meant more to it than to the other companies, Thompson said. Larger companies eventually joined in.
"Maybe the same thing will play out" on the gas pipeline, he said.
Conoco's proposal does not meet the application requirements under the Alaska Gasline Inducement Act. Conoco executives touted it as an "alternative path" toward a gas line, long one of the state's top economic development dreams.
Conoco proposed a pipeline costing up to $32 billion and stretching from the North Slope to Alberta, Canada, and possibly to Chicago. The Houston-based company said it is not seeking any state money.
The AGIA bidders included:
TransCanada Corp., a leading Canadian energy and pipeline company with a long interest in an Alaska gas line.
AEnergia, a new Alaska firm whose California principals worked on previous gas pipeline plans many years ago, according to the trade journal Petroleum News.
The Alaska Gasline Port Authority, a coalition of local governments including the Fairbanks North Star Borough, the city of Valdez and the North Slope Borough.
The Alaska Natural Gas Development Authority, a state agency created by voters that wants to bring gas to Anchorage through a spur line tapping whatever main line is built.
Sinopec ZPEB. Sinopec is a Chinese global energy conglomerate. ZPEB is a huge Chinese oil-services company.
Sinopec's entry caught the attention of Alaskans with an interest in the oil industry.
Harold Heinze, chief executive of the Alaska Natural Gas Development Authority and another former president of Arco Alaska, said Palin wanted to attract the attention of top energy players with her pipeline bill.
"The Chinese showing up at least proves that point," he said. "They figured out from a pretty far distance there was something here worth putting their name on."
No one from Sinopec could be reached Monday for comment on the company's application. The firm's New York office referred questions to headquarters in Beijing.
Thompson, who from 1998 to 2000 was in charge of Arco's Asia Pacific region, said he worked with Sinopec and found it to be a sophisticated firm heavily involved in refineries and marketing.
"They're a huge company, very well thought of in the world, with a lot of capital," he said.
An ideal scenario, Thompson said, would be for Conoco to team with TransCanada for a gas line running east across Canada, with Sinopec investing in a branch line to Valdez, where gas could be liquefied and shipped to the Far East.
Sinopec's bid, however, drew a negative reaction from a Washington, D.C., group called the Genocide Intervention Network. Members urged Palin to reject Sinopec's application, claiming the company's oil work in Sudan helped the government there press violence in the Darfur region.
Construction of any Alaska gas line remains several years away.
The bids received last week are not for a contract to build. Rather, they are for state incentives to help the winner accomplish the costly and difficult planning necessary to compete the project.