A federal judge dealt a setback Monday to the Alaska Gasline Port Authority (AGPA) with dismissal of the consortium’s antitrust complaint against Exxon Mobil and BP. The AGPA complaint charged Exxon Mobil and BP with conspiring to refuse to sell natural gas from the resources they control on Alaska’s North Slope (see Daily GPI, Dec. 21, 2005).

AGPA — a tax-exempt consortium of the Fairbanks North Star Borough, the North Slope Borough and the City of Valdez — is touting an 800-mile “All-Alaska” natural gas pipeline project that would run parallel to the existing trans-Alaska oil pipeline. The project is a competitor to The Alaska Gas Pipeline, a $20 billion-plus project touted by Gov. Frank Murkowski that would deliver 4.5 Bcf/d from the North Slope to Lower 48 states. The Alaska Gas Pipeline is backed by Exxon Mobil, BP, and ConocoPhillips.

The AGPA suit in December followed an announcement by Murkowski that talks between the state and the three producers would be suspended until early this year. The state was in discussion with the trio to establish fiscal terms for the pipeline project (see Daily GPI, Dec. 20, 2005). ConocoPhillips, which was not named in the lawsuit, is the only one of the three producers to agree on some base fiscal terms for a deal with the state. Since then, the state has established a draft contract for the fiscal terms of the pipeline project. It has yet to be ratified by the legislature. Lawmakers have been debating the terms of the contract, which also is out on a public comment road show (see Daily GPI, June 8)

On Monday U.S. District Court Judge Ralph Beistline ruled AGPA failed to prove Exxon Mobil and BP broke the law when they joined together to negotiate a deal with the state.

BP Alaska spokesman Daren Beaudo told NGI that the company was pleased the court agreed that the Port Authority suit had no merit. “A gas pipeline can’t be built on lawsuits, advertisements and PowerPoint presentations. It has to be based on good business,” he said.

Beaudo said BP and the other producers are continuing to follow the procedures outlined in the Stranded Gas Act for the development of a gas pipeline from the North Slope. This includes numerous public meetings. “It’s a challenge; there’s no doubt about it,” Beaudo said of the process. “This is a big, important, seminal moment for the state. It took three years, roughly, to negotiate the terms in the contract. There are provisions in there that are new to Alaska, long-term contractual terms…

“One of the issues that we’re working hard to help articulate is the fact that these kind of contracts are very common internationally. Foreign governments all over the world, in order to attract the capital that’s needed for mega-projects like this, enter into contracts like this.”

AGPA did not immediately return calls from NGI seeking comment on the ruling.

AGPA has building permits and $18 billion in federal guarantees to build its pipeline, which would run from the North Slope to Valdez, AK, parallel to the Trans-Alaska Pipeline System. From Valdez, the gas would be transported by liquefied natural gas (LNG) tankers to LNG receiving facilities on the Pacific Coast, and from there, via pipeline to markets in the United States and Canada. The All-Alaska Gasline would also include a spur line from the North Slope to provide gas to the south-central Alaska gas grid.

To pursue its All-Alaska Gasline, AGPA had been attempting to strike a supply agreement only with the state for its royalty gas, which would leave the majors out of the process (see Daily GPI, Aug. 31, 2005). It claimed it has been attempting to negotiate to purchase gas from the producers for several years, “but the defendants have refused to engage in any discussion of the price or terms for the sale of their North Slope gas.”

In the lawsuit AGPA alleged that ExxonMobil and BP, “which together control a dominant share of the gas found on the North Slope, violated Sections One and Two of the Sherman Act and Section Seven of the Clayton Act by a series of illegal agreements, mergers and acquisitions that enabled them to jointly prevent the marketing of any natural gas from the North Slope. The result of their illegal conduct has been to artificially restrict the supply of natural gas and thereby artificially inflate the price of natural gas both in Alaska and in the Lower 48 states.”

Former Alaska Gov. Walter J. Hickel, who also is a former secretary of the Interior, threw his support behind AGPA’s complaint, saying, “This historic lawsuit reveals a story of extreme corporate greed that has abused Alaska and punished the American consumer. By opposing an all-Alaska pipeline, the producers have conspired for years to delay the export of Alaska LNG.”

Last month, the AGPA said it would participate in the open season for expansion of Sempra LNG’s Energia Costa Azul (ECA) LNG receipt terminal. The Port Authority also said it received a draft memorandum of understanding from a “world-scale shipper of LNG” that owns eight U.S.-built LNG tankers that would be compliant for shipping LNG from Alaska to the Lower 48. Jim Whitaker, chairman of the Port Authority, said, “This is an opportunity for Alaska’s gas in LNG form to get into the West Coast market in 2012.”

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