Posted on 09/15/2005 8:20:30 AM PDT by thackney
Gov. Frank Murkowski proposed that the state invest $4 billion in a pipeline to transport North Slope natural gas to market in the Lower 48.
In a speech Wednesday at the Alaska State Chamber of Commerce convention in Valdez, the governor said the state investment is part of a "comprehensive draft proposal" for a gas line contract he submitted to the three major North Slope oil companies Tuesday.
The $4 billion is based on a 20 percent state ownership stake in the proposed line, and the state could end up paying more if the project ran into cost overruns.
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While Murkowski didn't say it in his speech, a subsequent press release from his office threatened repercussions if the companies turn down the offer.
"I believe this contract proposal is good for Alaska, good for the nation and good for the producers," he said in the press release. "If they do not agree with my assessment, then I have an obligation to pursue other opportunities for marketing our gas."
Chuck Logsdon, spokesman for the governor's gas line negotiating team, said the state is "exploring strategies" for what to do if the companies rebuff the offer. He wouldn't give specifics.
But the oil companies aren't the only ones talking about building a gas pipeline. There are proposals from a Canadian pipeline company and a consortium of municipalities, although the oil companies have an advantage because they hold the leases for the North Slope gas.
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"The governor is becoming concerned that the negotiations have gone on for quite awhile and there is a pretty good understanding of where each side is," Logsdon said. "I think he believes it is time to start making some decisions."
(Excerpt) Read more at adn.com ...
From the Fairbanks Daily News-Miner, Inc.
http://www.news-miner.com/Stories/0,1413,113~7244~3055232,00.html
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Details of the proposal remain confidential under the state's secret negotiations with the producers.
The announcement was an attempt by the state to get some forward motion started on negotiations with the producers, said Fairbanks Republican Sen. Gene Therriault, chairman of the Senate Budget and Audit Committee.
"It asks the producers if they're on board or not," he said. "At the very least, it gets the state to the point where it's clear that it's not going to reach an agreement with the producers and that it needs to focus on one of the other two proposals."
The three producers hold leases for 95 percent of the state's natural gas reserves. So far, negotiations have focused on reaching a deal with the producers, who have proposed building a pipeline from the North Slope through Canada to markets in the Midwest.
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What a difference a hundred years make.
Related news at Petroleum News
http://www.petroleumnews.com/pntruncate/193728160.shtml
Gas shock ahead
Consumers see natural gas hit new heights; up 84 percent from last year
Gary Park
Petroleum News Canadian Correspondent
Amid the endless human misery on the U.S. Gulf Coast and rocketing gasoline prices across North America another possible calamity is quietly lurking — the cost of natural gas this winter.
The upshot, in the view of some analysts, will be a renewed call for action to clear a path for the Alaska and Mackenzie Delta gas projects, along with a demand for fast-tracking liquefied natural gas terminals.
Typically overlooked when the world is preoccupied with oil prices, which are up about 60 percent this year, natural gas has climbed by 84 percent.
In the immediate aftermath of Hurricane Katrina, gas futures spurted past US$12 per million British thermal units on the New York Mercantile Exchange, stirring fears of grim heating bills in the next few months.
Martin King, at FirstEnergy Capital, said forecasts of a colder-than-normal winter put the North American gas market in a vulnerable position that could result in average prices at US$10 per million Btu for the winter and into 2006, with peaks of US$13 per million Btu possible.
New highs for EnCana
There are all kinds of barometers reflecting the impact on gas-weighted companies, none clearer than EnCana, North America’s leading producer.
The Canadian independent set new trading records and saw its market capitalization top C$50 billion, becoming Canada’s second largest company overall, trailing only the Royal Bank of Canada.
Overall, the energy sector now accounts for 26.5 percent of the S&P/Toronto Stock Exchange composite index, up from 17.4 percent a year ago and about 4 percentage points behind the financial services index.
But EnCana shows no desire to gloat over its position. Just the reverse.
Chief Executive Officer Gwyn Morgan is worried that the “excessive” climb in oil and gas prices could choke off economic growth.
“I’d like to see an environment where there’s more breathing room,” he told the Globe and Mail.
For now, Morgan said the profits EnCana can make are “well beyond” what it needs to make a very strong return on investments. He suggested oil prices of US$40 a barrel and US$7 per million Btu would be more sustainable.
Morgan said North America is on a “knife edge in terms of (gas) supply and demand.” There is little that can be done by producers to respond to any conditions that drive demand up.
He said there is “not much room for unforeseen events or for higher demand than expected.”
Morgan suggested that the current forward strip could be a good indication of what will happen to gas prices in a cold or even normally cold winter.
The U.S. Energy Information Administration is holding to a moderate 20-year outlook, suggesting prices should drop under US$4 by 2010 because of supply additions from the Mackenzie Delta and LNG, with Alaska reinforcing that outlook if it comes on stream in 2015.
Get er dun!
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