ExxonMobil Corp., the largest holder of Alaska North Slope gas reserves, has reportedly told the state it “plans to be a co-owner” in a pipeline to commercialize those reserves to the extent of its share of the system’s throughput.
The major producer and more than 300 others have submitted comments on a proposal by TransCanada Corp. for a gasline project under the state’s Alaska Gasline Inducement Act (AGIA). The TransCanada proposal is the only one being weighed under the AGIA process, although ConocoPhillips has submitted its own proposal outside of the process, and it has garnered the interest of lawmakers despite being rejected by Gov. Sarah Palin (see NGI, Feb. 25).
The fact that ExxonMobil said it would take a share in a TransCanada pipe — as it and other producers have been invited to do by TransCanada — does not mean the company is not a critic of the proposal. ExxonMobil says TransCanada is seeking too much profit.
“If approved by the FERC [Federal Energy Regulatory Commission] and NEB [National Energy Board], TransCanada’s proposed commercial terms would increase gas treating and transportation costs versus more reasonable commercial terms, thereby reducing the netback profits of ANS [Alaska North Slope] gas producers,” ExxonMobil said in its comments.
The company also dings TransCanada for the project’s funneling of Alaska gas exclusively into TransCanada’s Alberta pipeline network, preventing shippers from using other pipelines. “This sort of limitation on shippers’ options to market their ANS gas is inconsistent with basic market principles, and the state should insist on removal of this concept if it intends to recommend TransCanada as the prospective AGIA licensee,” ExxonMobil said.
Palin’s gasline team is reviewing public comments on the TransCanada proposal prior to making a recommendation on the project to lawmakers. ExxonMobil and others have insisted the pipeline won’t get built unless the state first strikes a deal with producers on taxation of North Slope gas, but Palin so far has been unwilling to discuss taxes with ExxonMobil, ConocoPhillips and BP — the big three on the North Slope.
“ExxonMobil appreciates TransCanada’s suggestion that anchor shippers should be involved as co-owners, so as to have better alignment of interests,” the company said. “However, as explained in ExxonMobil’s testimony to the Alaska Legislature during April 2007, because AGIA disconnects the upstream and the midstream aspects of the business, ExxonMobil’s participation in an AGIA-related project would be difficult.”
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