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Murkowski Assigns Chief of Staff to Focus on North Slope Pipe

In an apparent move to have a deal in place before the end of the year, Alaska Gov. Frank Murkowski last week assigned Jim Clark, his chief of staff, to focus only on developing the North Slope natural gas pipeline project.

Murkowski has stated that he wants to reach an agreement by this fall with one or more of the three groups negotiating to build a gas pipeline from the North Slope to the Lower 48 (see NGI, April 11). The state is negotiating with a producer group consisting of BP plc, ConocoPhillips and ExxonMobil, as well as TransCanada and the Alaska Gasline Port Authority. The pipeline's price has been pegged at $20 billion.

In a press conference Wednesday, Murkowski called the proposed pipeline "the most important project ever undertaken in Alaska with the possible exception of the Trans-Alaska pipeline." A replacement for Clark was not named, but Murkowski said he was "still chief of staff and chief counsel and chief negotiator."

The producer group and TransCanada have proposed pipeline routes through Canada and to markets in the Midwest. Besides setting fiscal terms with Alaska for the next 30-40 years, an acceptable Canadian regulatory process is one of the conditions the producers have set before moving forward with a proposal. The port authority's pipeline would stretch to Valdez, where the gas would be liquefied and shipped by tanker to markets on the West Coast. The port authority proposal suffered a setback a few weeks ago when partner Sempra Energy Co. said it was pulling out of the deal (see NGI, June 6).

State officials also are searching for a financial adviser to plan for Alaska's partial ownership of the proposed pipe. The adviser also would assist state negotiators calculate how federal loan guarantees approved by the U.S. Congress last year could be used to lower the cost of building the pipeline. Federal loans guarantees could cover 80% of the project's cost.

The Alaska Department of Revenue will be taking bids from firms until July 15, with the contract to begin on July 29. The adviser would immediately enter fiscal negotiations the state is holding with the three groups vying for the pipeline under Alaska's Stranded Gas Act. The state has proposed taking ownership of 20-25% percent of the pipeline, depending on the project.

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