New Alaskan Governor Pleased With Gas Pipeline Talks

CALGARY, Dec 07, 2006 (Dow Jones Newswires)

New Alaskan Governor Sarah Palin said Wednesday that talks held this week with oil companies over the proposed Alaska Gas Pipeline were progressing well.

In particular, supermajors Royal Dutch Shell (RDSB.LN) and Chevron Corp. (CVX) showed particular enthusiasm during negotiations, Palin said in a conference call.

"They showed a lot of excitement at being invited to the table," she said.

Alaska has been seeking to bring its stranded North Slope gas reserves to market, with a pipeline from Alaska to the continental U.S. seen as a way of lessening the nation's dependence on foreign energy sources and bringing billions in royalties and taxes to Alaska.

However, the state's approach to solving the stranded gas problem has changed with the inauguration of Palin as governor earlier this month. Alaska's former governor, Frank Murkowski, tried to force a project, backed by North Slope producers Exxon Mobil Corp. (XOM), BP BLC (BP) and ConocoPhillips (COP) and consisting of a 4.5 billion to 6 billion cubic feet a day gas pipeline, through the state legislature, but his proposals were seen as being too favorable to oil firms and were held up by state legislators.

Palin has pledged to consider a wider slate of proposals to bring Alaska's gas to market than just the Murkowski-supported project, and has invited companies that weren't previously part of negotiations, such as Shell and Chevron, to the talks.

Palin said all topics were up for discussion, adding that the Alaskan state taking a stake in any pipeline project was still a possibility. She's previously backed the idea of an "All Alaska" pipeline, whereby a pipeline would be constructed from Prudhoe Bay, on Alaska's North Slope, to a liquefied natural gas export facility at Valdez.

Palin didn't give a cost estimate for any new project, nor did she give a time by when any new pipeline may be built. However, earlier this week the U.S. Energy Information Administration said it now sees a pipeline being in place by 2018, three years later than it was estimating in 2005.

Copyright (c) 2006 Dow Jones & Company, Inc.

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