Friday, January 25, 2008

ConocoPhillips Steps Up the Pressure

Although Alaska Governor Sarah Palin recently declined to consider the ConocoPhillips proposal, ConocoPhillips has stepped the lobbying effort.

Today ConocoPhillips ask the Governor to take a second look at their proposal.

I give ConocoPhillips credit for persistence and consistency in their approach. They have consistently asked for fiscal certainty. It's not going to be easy or cheap to build that long pipeline. It's understandable that ConocoPhillips wants to know what tax structure, or royalty scheme they will be faced with for the life of the project. ConocoPhillips has a duty to their shareholders to make sure that the investment will generate a predictable rate of return over the years.

The Governor's AGIA team posted a note titled "QUESTIONS ALASKANS SHOULD ASK CONOCOPHILLIPS.

The Questions include "What fiscal terms does ConocoPhillips propose?" and "Why does ConocoPhillips continue to link changes in tax and royalty laws to this pipeline project?"

Maybe Question #10 should read "Whats the value of that gas sitting in the ground forever" The question should focus everyone's attention on hammering out an agreement. Neither side wins if the gas is not brought to market.

Even though the Governor has rejected the ConocoPhillips proposal it's good to see this public dialog taking place. The State of Alaska wants to maximize the benefit obtained from production of their natural resource and ConocoPhillips wants to add shareholder value. Eventually I hope both sides can find some common ground.

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