September 20, 2005

Alaska gas pipeline talks making progress: governor

ANCHORAGE, Alaska (Reuters) - Alaska state officials and
major North Slope oil producers are making enough progress in
their negotiations on fiscal terms for an Alaska natural gas
pipeline that it may be possible to get a signed contract by
the end of the year, Alaska Gov. Frank Murkowski said on

Although meeting that timeline will be difficult because of
the project's complexity, the Republican governor said in a
speech at an energy conference that he is hoping to call a
special legislative session on the issue this fall.

"We still have time, in my opinion," Murkowski said, "But
it's premature to make any predictions until we have a
contractual result."

The Alaska natural gas pipeline, proposed since the early
1970s, would ship gas from Prudhoe Bay to the U.S. Midwest. The
project is estimated to cost $20 billion. Although Prudhoe Bay
and other North Slope oil fields contain 35 trillion cubic feet

of proven natural gas, the project was until recently
deemed uneconomical.

Passing legislation could be difficult because of
lawmakers' personal end-of-year plans, the winter holidays and
the fact that the regular legislative session is scheduled to
start in January, he told reporters after his speech.

If built, the line will immediately supply a tenth of the
nation's natural gas needs, Murkowski said. The contract being
negotiated envisions the line operating for 30 years, but most
likely it will operate for at least 50 years, he said.

The three major producers -- ConocoPhillips, BP and Exxon
Mobil -- have responded to a comprehensive draft proposal that
the state presented last week, Murkowski said. State
negotiators earlier in the day answered that response, he said.

If the state and oil-company negotiators strike a tentative
deal, there will be a 30-day public comment period, and then
the contract will go to the state legislature for its approval,
under provisions of state law.

The Murkowski administration's proposal for fiscal terms
includes a state equity share in the pipeline. The state would
contribute about $4 billion for what would be about a 20
percent share in the project, the governor told reporters.