January 4 Meeting

Attendees: Rich Wilson, Dayle Lyke, Paul Wilcox, Karen Hunt, Bob Bulmer, Jack Roderick, Gov. Hickel, Malcolm Roberts, James Strong, Mary Ann Pease, Jerry Strang, Harold Heinze, Grant Hunter

Discussion: (Primarily information and questions from Harold Heinze)

• There was an “agreement” in 2005 between State and ConocoPhilips. Might be a good place to start at looking at what an agreement in future might be. (This agreement has not been released.)
• Drue Pearce is now on the job- we need to involve her with our group
• How does LNG Valdez option affect gas coming into southcentral?
• What is the “Project”? Interested firms could build LNG plants and ships, or gasline companies that could build in-state or other pipeline.
• Need balance in process- have various players involved, including Trans Canada, etc, working with and providing balance to the Producers.
• Size- what is the right size? State and explorers asked for expanded line, Producers wanted a large line. Timing of the project may be more important than size.
• In-state use is higher on the list of priorities for new Admin. New Admin is more open.
• What is Federal timeline:
  • 18 months- expired, then allows Federal Gov't to be involved
  • Loan guarantee is somewhat resilient
• LLC- majors were not able to reach agreement. Control issues were unresolved.
• Pt. Thomson has owners other than Exxon, including BP. Different from Exxon. Could possibly be developed roughly as:
  • 6 trillion tcf of reserves
  • 1 bcf line (maybe 24”)
  • cost a few billion
• Gas liquids and gas line- 2 lines, maybe use small pipe for liquids and Canadian line for gas
• Still plenty of gas on NS for a pipeline to Canada, even with line to SouthCentral

January 11 Meeting

Attendees: Rich Wilson, Dayle Lyke, Paul Wilcox, Bob Bulmer, Jack Roderick, James Strong, Mary Ann Pease, Jerry Strang, Harold Heinze, Grant Hunter, Joe Farrell, David Wight

Discussion: (from all members, without identifying specific members)

• Should Admin just ask for interest in the gasline, or should it lay out a bottom line?
• Public acceptance is what Gov. Palin will try to get
• Oil and gas are tied together, physically. Reservoir management is critical to attain highest yields.
• Oil & Gas Commission is responsible for balancing resource extraction. State lost “control” in last proposed contract, will need to get this back in future deal.
• The process: even though negotiations are private, need to engage public periodically- keep them informed.
• Need to keep separate:
  • Pipeline building- guaranteed returns
  • Shipping commitment- high risk
  • Upstream investments
• ConocoPhilips agreement with state was done in October, 2005.
• Let's go forward, use prior testimony to determine what CWN wants to recommend.
• Is it necessary to have all 3 Producers involved? At open season, could one or more say no?
• Generally build pipeline sized for known reserves. The proposed line is twice that big. Should consider a smaller project?
• Open season determines the size of pipe.
• If producers or others want to ship gas, need to step up at open season and reserve the space. Should not expect to see a surplus size line.
• Smaller pipe may be economic, but larger has more economies of scale.
• Econ One did a study of pipeline size economics.
• Independent pipeline company (whether Producers/State or others) will set size of line based on open season commitments.
• Producers spent $125 million engineering.
• Each company has a different yardstick for profit and profit requirements from a project.
• For ConocoPhilips, Alaska gas is a big resource. Other companies have different global portfolios.
• Possible agenda items for future meetings:
  • Legislation tracking (as it is introduced and moves along)
  • Update from one of the owners
  • Evaluate big issues- determine if CWN wants to take a position
  • Technical issues of oil/gas
  • Chuck Logsdon
  • Mark Hanley
  • Marty Rutherford