Processing Magazine

Exxon Mobil loses Alaska pipeline case

July 30, 2007

A federal appeals court rejected an effort by Exxon Mobil Corp. to overturn rules governing access to a potential multibillion-dollar pipeline that would transport natural gas from Alaska to the Lower 48 states, the Associated Press reports. The U.S. Court of Appeals for the District of Columbia Circuit upheld Federal Energy Regulatory Commission rules published in 2005 that were designed to give Alaskan energy suppliers the ability to deliver their fuel through pipelines they don''t own. Natural gas producers, including Anadarko Petroleum Corp., were concerned that access to the proposed 3,600-mile pipeline would be limited by the companies building it. Alaska has struggled for decades to get a deal either with North Slope gas producers or independent pipeline companies to build a line that could possibly run from the North Slope through Canada and into the Midwest. A proposed deal between former Alaska Gov. Frank Murkowski and North Slope producers BP PLC, Exxon Mobil and ConocoPhillips fell apart last year.

Exxon argued that government regulations would force the pipeline''s sponsors to build a larger pipeline than necessary to carry natural gas that might never be found, according to the court decision. The company also argued that the large costs of paying to build the pipeline for companies that hadn''t committed to use it might make the project too risky to continue. The court, however, ruled that FERC could not order the pipeline''s builders to build more capacity than they want to add.