State considers selling royalty gas before pipeline's built

AP Photo/Lucy Pemoni
Buyers of state royalty gas from Alaska’s North Slope will face a host of uncertainties. But selling the gas now before a gas pipeline is built could eliminate even more unknowns for would-be bidders, an Alaska official testified Nov. 13.

Bonnie Robson, deputy director of the Alaska Division of Oil and Gas, told members of the Alaska Oil and Gas Development Advisory Board that the state is leaning toward requiring royalty gas buyers to agree to a base price for possible seven- to 25-year terms and to pay a bonus of $1 per thousand cubic feet per day, as well as an additional consideration as a one-time premium to sway the state in competitive bidding.

Robson said Alaska officials view royalty-in-kind gas sales as a win for all parties. Buyers would gain the ability to bid for pipeline capacity during an open season that Alaska gas producers could hold as early as March or April. Alaska would develop a new revenue source, while encouraging new gas exploration.

Even the three existing North Slope producers -- ExxonMobil Production Co., BP and Phillips Alaska Inc. -- would gain from such a sale. That’s because pipeline capacity which would have been used for state royalty gas would instead be freed up for the producers to monetize their own gas reserves at a faster rate in the early years of the project, Robson said.

Updated: 
11/25/2001 - 8:00pm