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BP, ConocoPhillips, Exxon In Talks Over Alaska Gas Export Plan

Alaska Oil

First Posted: 01/05/12 07:33 PM ET Updated: 01/06/12 09:17 AM ET


(Adds background on overland pipeline plans)

By Yereth Rosen

ANCHORAGE, Alaska, Jan 5 (Reuters) - The chief executives of BP and ConocoPhillips, two of Alaska's three major oil producers, said on Thursday that the only profitable way to exploit a vast but stranded quantity of Alaska's North Slope natural gas is to export it to Asian Pacific markets.

In a dramatic change from decades-old plans to send North Slope natural gas to domestic U.S. markets by overland pipeline through Canada, the BP and ConocoPhillips CEOs said they will work with Exxon Mobil, the third major North Slope oil producer, to develop an LNG project that would export to Asia.

North American producers and LNG shippers are scrambling to develop export plans after a sudden surge in domestic natural gas production, thanks to shale gas, that swamped the market and pushed gas prices way below global levels.

BP CEO Bob Dudley and ConocoPhillips CEO Jim Mulva made the comments to reporters after an unprecedented meeting in Anchorage of the chief executives of all three major North Slope oil producers.

Exxon, whose CEO Rex Tillerson also attended the meeting, said the parties are in early discussions on an export plan, but added that the pipeline plan through Canada is still under consideration.

Once expected to be a major importer, the United States now has up to a century's worth of supply, prompting plans to ship the cheap fuel to thirsty markets in Europe and Asia where prices are up to five times higher.

Five projects across the United States and two in western Canada have applied for construction and export licenses, seeking long-term deals predominantly with buyers in Asia

However, critics say that exporting gas may drive prices higher at home and discourage use of a homegrown resource.

TransCanada Corp and partner Exxon Mobil have been unable to win customers for the 1,700-mile (2,735 km) natural gas pipeline they proposed building from Alaska's North Slope to Alberta, at a cost of up to $41 billion.

BP and ConocoPhillips in May abandoned a rival natural-gas proposal for a similar route and similar delivery volumes after they also failed to attract shipping commitments.

TransCanada has also floated the concept of a line to the port of Valdez, which would move 3 billion cubic feet of gas a day and cost up to $26 billion. (Writing by Bill Rigby, additional reporting by Edward McAllister in New York; Editing by Steve Orlofsky and Bob Burgdorfer)

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