Talks restart between Alaska officials, ANS operators on gas line

Talks restart between Alaska officials, ANS operators on gas line

Anchorage (Platts)--3Aug2006

Alaska officials and North Slope producers BP, ConocoPhillips and
ExxonMobil are in a new round of contract negotiations for a $20 billion-plus
Alaska natural gas pipeline, state officials told Platts Thursday.

State Revenue Commissioner Bill Corbus said the new talks were expected
following a series of public hearings on the proposed deal. Public comment on
the proposal closed July 24.

In response to public criticism, Corbus said the state is asking
producers for revised terms on a proposed 14-year freeze on oil and gas taxes
and new language giving Alaska workers and firms preference on jobs and
contracts. Other items are on the list for discussion but Corbus would not
identify them.

The commissioner would not reveal the state's proposed changes on the tax
terms but Jim Clark, chief of staff to Governor Frank Murkowski, said in
legislative hearings July 26 that the administration is looking favorably
toward a proposal made by legislators for the freeze beginning at the time the
project is given final FERC approval, followed by a 25-year period of "fiscal
balancing," where taxes can be changed but the state would agree to adjust
other terms in the contract so that overall profitability for industry
is preserved.

Pedro van Meurs, a consultant to the state, told legislators in the July
26 hearings that several oil-producing countries use fiscal balancing
fiscal contracts.

Corbus said the state faces an August 23 deadline of revising the
contract and issuing a new state Best Interest Finding under the Stranded Gas
Act, the state law guiding the contract negotiations.

State legislators, who are meeting in Juneau in special session on
legislation related to the gas contract, have asked the administration to also
negotiate more definitive work commitments and nonperformance penalties.

The legislature is meeting to work on a revised state oil and gas
production tax that would be part of the gas pipeline contract.

--Tim Bradner, newsdesk@platts.com

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