A meeting characterized as historic took place at the Dena’ina center in Anchorage on Thursday, bringing the top CEOs of ConocoPhillips, BP, Exxon and Governor Parnell together for a first ever meeting to discuss a new approach to building a gasline for getting North Slope gas to market.
BP’s head Robert Dudley was the first to leave the closed door meeting and talk with reporters. Dudley said he was encouraged that economic conditions have changed in world markets. He says the potential to unlock Alaska’s gas for shipping as LNG to Pacific Rim markets is real.
“It’s a very large, large project, it needs scale. It will be an enormous investment, there are many steps that need to be worked out but one of the first one is getting alignment among 3 companies and working with the state. And I’m very encouraged and I think over the weeks and months ahead, I’m hopeful we can lay out a set of specifics to help move that gas to market,” Dudley said.
Dudley says moving the gas south to tidewater in Alaska is probably the most economical way to go. The Governor said getting the three companies together is a strong signal to Alaskans that there is serious commitment to getting a gas project going.
“What I’m attempting to achieve is, we already have alignment between Transcanada and Exxon, I’m working to bring alignment now between Transcanada, Exxon and the other two companies, BP and ConocoPhillips. But to do that requires greater alignment between these three companies that actually own the gas and that’s what I was working to achieve there,” Parnell said.
The Governor was clear that he is still planning to develop the line within the framework of AGIA- the Alaska Gasline Inducement Act. But that is seen as problematic to some. Former Governor Tony Knowles was in attendance. He says he doesn’t think much of AGIA.
“You can’t outsource the fundamental responsibility of Alaska’s government to negotiate the development of our resources. And that’s basically what I believe AGIA did, it outsourced it and not only that, it subsidized it. So, that’s I think, not by anyone’s announcement, but that’s gone,” Knowles said.
But Parnell says AGIA protects Alaskans interests in ensuring there will be take off points for Alaskans to access gas and encourage future exploration. He says incentives, like the $500 million to Transcanada also help advance the line.
“There are royalty inducements already in AGIA for those who got their gas in the first open season. Those, those, that give and take was already established by the legislature in law. The state’s interests were protected, there were some inducements given to participate. That remains the law of the land and that’s what we’re trying to get alignment with,” Parnell said.
The Governor stressed the idea of alignment between the companies. This may take considerable work. Gas from Point Thompson will be important to getting a gasline project developed, but although the state and
Exxon have reached a ‘resolution in principle’ in the litigation over developing the field, there is still not an agreement in place with BP, Chevron and ConocoPhillips. Also BP and ConocoPhillips had for a time, pursued their own gasline project called Denali, but abandoned it last year from lack of commitments from producers for gas shipments.
“I want to see Transcanada and Exxon, BP and Conoco in alignment moving forward. And I want to see measurable benchmarks that Alaskans can count on and that they can point to and say, this happens on X date and that way we know that progress is being made on a gasline,” Parnell said.
ConocoPhillips CEO Jim Mulva said the meetings focused on commercializing North Slope gas and promoting new investment in oil development. Mulva says the companies have committed to working hard throughout 2012 to move forward. He said LNG is the best alternative for Alaska’s gas. He called North Slope gas a challenged resource.
“Not because it’s not a good resource, it’s very good resource, just because of where it’s located. There’s a lot of investment and cost and we just have to really work this very hard, because what we see is a strong, good Asian pacific market and that’s where the Alaska North Slope gas should go,” Mulva said.
The Governor was careful in his phrasing about where the line should end, saying only that it should be at tidewater. He said he didn’t want to demand a specific site be used, saying economics should drive it. ConocoPhillps has an LNG facility at Nikiski. There is also the terminal at Valdez and ports in Southcentral at Anchorage and Point McKenzie.