North Slope gas producers announce joint pipeline project to Lower 48

ANCHORAGE, Alaska - Alaska's three major oil producers announced an agreement Wednesday that could pave the way for construction of a natural gas line to the Lower 48.

BP Exploration (Alaska) Inc., Phillips Alaska Inc. and Exxon Mobil Corp. will spend about $75 million for preliminary work to determine if the project is feasible. The work will include evaluating possible routes for the line, preliminary design and engineering work and permitting requirements, the companies said.

Alaska's North Slope is estimated to hold about 35 trillion cubic feet of natural gas - about 20 percent of known U.S. gas reserves. Developing those gas reserves has been discussed since oil was first discovered on state land in 1969. But with no easy way to bring the gas to market it has remained unused.

With a surge in demand for natural gas and gas prices climbing, efforts to develop those reserves have come to a head.

''We sure think the stars are aligned,'' said Joe Marushack, vice president of gas commercialization with Phillips Alaska Inc.

Ronnie Chappell, Alaska spokesman for BP, said the three companies have not yet determined when they will make a final decision on whether to proceed with construction of a gas line.

''We're going to invest $75 million in this first step. We're going to work as effectively and efficiently as possible and we're going to get an answer as quickly as we can. We're peddling hard,'' he said.

Chappell said BP officials think the prospects for building a natural gas pipeline in Alaska have never been better, but he said much work remains.

The three companies will share the costs and management of the project equally. Staffing for the project will include 50 to 100 full-time employees from the three companies as well as contract workers. The work wil be done primarily in Anchorage.

Two possible pipeline routes have emerged in recent months as the preferred routes for delivering natural gas to the Lower 48. One would go from Prudhoe Bay along the Beaufort Sea coast to Northwest Territories' Mackenzie River Delta and then turn south. The other would follow the trans-Alaska oil pipeline route and the Alaska Highway into Yukon Territory.

Backers of the Beaufort Sea-Mackenzie River route say it would be about 300 miles shorter and would cost about $1 billion less than the highway route.

But that route would include construction of a portion of the pipeline under the Beaufort Sea. Critics say that route would present more technical and environmental challenges that could delay the project.

Alaska Gov. Tony Knowles has said he favors the trans-Alaska Pipeline route. In their announcement Wednesday, the three companies did not discuss a possible route for the line.

''A lot of stakeholders interests have to be addressed,'' Marushack said. ''We have to look at the true cost then we have to spend a lot of time working with the various stakeholders, all the environmental groups, the permitting agencies. All those folks will have a say in which project is chosen.''

Members of Alaska's Congressional delegation applauded the announcement.

''Alaskans have waited for decades for the owners of the gas to commit to bringing this valuable commodity to market,'' Sen. Frank Murkowski, R-Alaska, said.

Congressman Don Young said the announcement could be the start of what he called one of the most important economic projects in Alaska's history.


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