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Alaska's major oil producers converge for rare meeting with state lawmakers

Alex DeMarban

Alaska Gov. Sean Parnell's bid for a summit with major oil company officials will culminate Thursday at a high-level gathering in Anchorage.

The unusual meeting in one of the country's most important oil provinces will bring together ExxonMobil CEO Rex Tillerson, BP chief Bob Dudley and ConocoPhillips CEO Jim Mulva, representing Alaska's three major oil producers. It comes amid rumors that the companies will align under a plan to get Alaska natural gas to market. Alaska Dispatch has been informed that the majors may soon make an announcement in response to Parnell's recent overtures that they "align" their efforts on a liquefied natural gas project.

The Legislature will convene in less than two weeks and revisit the contentious issue of a tax cut on oil production, proposed by Parnell last year and already passed by the state House, which could cost the state billions of dollars in coming years.

Parnell will speak at a reception Thursday at Anchorage's Dena'ina Convention Center, according to Sharon Leighow, a spokesperson for the governor's office. When asked whether the governor would be making any "major announcements," Leighow said she wasn't aware of any.

An ExxonMobil spokesman would not comment.

"We do not discuss schedules of senior executives," Patrick McGinn of ExxonMobil’s media relations department said via email.

Parnell suggested a meeting of the Big Three in a letter sent in October to the three executives. In it, he said "commercialization of North Slope natural gas reserves is important (to the producers) and also holds great significance to the state of Alaska."

Alaska's North Slope is believed to hold the largest conventional gas reserves in North America.

"I am inviting the chief executives at each of the companies with major interest in North Slope natural gas reserves," Parnell wrote to Tillerson, Dudley and Mulva in the Oct. 4 letter.  

Currently, ExxonMobil is working with TransCanada Corp. under a state-subsidized effort to study construction of a multi-billion-dollar natural gas line from Prudhoe Bay through Canada.

ConocoPhillips and BP subsidiaries had been studying their own Alaska gas line project, called Denali - The Alaska Gas Pipeline, but abandoned that idea last year when customers didn't materialize.

In late October, Parnell announced he'd like to see the oil majors operating on the North Slope join forces and work together on a gas line that delivers liquefied natural gas to markets in Asia, because Lower 48 markets are awash in shale-extracted gas, thanks to new technology.

In early November, Parnell flew to Europe, a trip that included a meeting with BP's Dudley.  

As for Thursday's luncheon, Alaska lawmakers are among the state leaders invited to the private event in the Dena'ina's Kahtnu Room, beginning at noon.  

Speaker of the Alaska House Mike Chenault said he'll likely be there and he hopes to tell the CEOs: "Build a pipeline."

Chenault said he's not expecting a major announcement, though he couldn't remember the last time the three oil company CEOs had been in the same room in Alaska.  

"As far as I know it's just a luncheon," he said.

But he echoed what many have said over the years:

"Until you get Exxon, ConocoPhillips and BP all lined up on a project, you'll never see a project. So my thoughts are simply: Let's figure out what we have to do to put a project together that makes economic sense and moves Alaska forward for the next 100 years with an in-state gas line that provides jobs and revenue to the state."

The three oil companies are aligned in one area: They all support Parnell's proposed oil-tax cut. Tillerson, CEO of Exxon, bashed Alaska's oil taxes on Wall Street in 2007, saying Alaska’s tax stability was on par with Nigeria. That year, the Legislature had just raised oil-production taxes under former Gov. Sarah Palin's so-called Alaska Clear and Equitable Share (ACES).

The state's production taxes haven't been raised since then, but the issue has become increasingly contentious as the amount of crude oil flowing down the trans-Alaska pipeline declines. It's now approaching one-fourth of its peak of 2 million barrels a day in the late 1980s. In 2011, about 579,000 barrels per day flowed down TAPS.

Two of the major oil companies have promised new development if the tax cut passes.  

Les Gara, D-Anchorage, said he had no idea whether there's going to be any kind of major announcement at the luncheon. Responding to a call from the Dispatch, Gara said he didn't know which legislators were going. 

An Exxon representative told Gara that the reception amounted to just a "meet and greet."

When asked whether the closed reception may violate state laws or ethical rules on public access to state business, Chenault said no. If a speaker at a Resource Development Council meeting called for a tax cut for the oil companies, does that mean every lawmaker in the audience needs to flee the room, he asked?

No, he replied.  

Contact Alex DeMarban at alex(at)alaskadispatch.com