Attendees: Dayle Lyke, Bob Bulmer, Grant Hunter, Mark Foster, Rich Wilson, Pat Burden, Karen Matthias, Jeff Staser, Blair Murphy, Jerry Strang, Brian Davies, Joe Farrell, Brian Wenzel, Wendy King

Discussion: (Primarily information and questions from Wendy King)

• The AGIA bill, inducements and requirements-review of bill
• There are midstream inducements
  • The pipeline
  • The 500 million
• There are Resource inducements
  • Streamline the permitting process only to licensee
  • 3 components
    • Regulations (higher of)
    • RIK RIV switching-90 day
    • Tax stability provision
• ConocoPhilips concerns
  • 1. Exclusivity
  • 2. Bid requirement variables
• Timing is important-steel and labor cost continue to rise
• If the resource side and shipping commitments are address, the project will fall into place
• Has to include the cost estimate of gas processing (getting CO2 out)
• See chart of two factors:
  • Cost
  • Gas prices
• The deal needs to be public and balanced
• ConocoPhilips already is experienced and value added
• Two areas ConocoPhilips is testifying:
  • Exclusivity
  • Bid variables
• Exclusivity means the only one who gets $500mil and AGIA coordinator
• The problem with exclusivity is that Alaska can be at risk for damages if the wrong winner is chosen (e.g. what if the winner can't complete the project-stuck with them for 10 years and other possible litigation issues for unforeseen circumstances)
  o Exclusivity is focused on the pipeline
• Most important success factor is if the company chosen can attract customers (possibly no one else than the big 3 can be included)
• Possibly $100 billion in shipping commitments are necessary for years
• ConocoPhilips has objections to taking the State money-inducing a low risk side of the project and many strings (rights to information etc.)
• $500 million really isn't that much compared to the cost
• Gas price and capital costs are greatest concern for all interested companies
• CP would partner on a case-by-case basis like in Prudhoe
• All study group wants to know if there is a way to get away from lowest common denominator when working with the other producers?
• The size of the pipe is variable so no one knows-depends on cost and economies of scale
• The problem is that AGIA is not limited to the type of proposed projects or parts of the project-could end up comparing large apples to small oranges
• The group discussed the types of projects that are possible
  • Variables in partnerships
  • Anti-trust issues
• CP doesn't like the fixed dates in AGIA-don't like not being flexible even if negotiated with money and there are other requirements that limit acceptable proposals
• Review of slides re:
  • Project risk allocation
  • Rolled in rates-FERC regulation
• There is the issue of public perception & politics that shape the subjectivity of the process-has to be a long term perception of commitment