Alaska sues BP, Exxon Mobil over natural gas

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The federal lawsuit arose from the producers' refusal to sell supplies of natural gas to the port authority, which wants to build a pipeline from the North Slope to Valdez. From there, the gas would be liquefied and shipped by tanker to the West Coast.

BP and Exxon Mobil, along with ConocoPhillips, have their own gas pipeline proposal that they are in negotiations with the state to build. They say the port authority's 800-mile (1,300-kilometer) pipeline project is not competitive with other LNG projects around the world.

"Our North Slope gas has always been available to commercially viable projects. It's not at all clear to us that the port authority project is viable," BP spokesman Daren Beaudo said.

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Officials at Irving, Texas-based Exxon Mobil did not return a call for comment.

The port authority is seeking unspecified dollar amount in damages and to restore competitive conditions to the North Slope. The only thing keeping the port authority from moving forward with its pipeline plans, its officials say, is BP's and Exxon Mobil's refusal to sell the gas.

"This is an effort to acquire a supply (of gas)," said Jim Whitaker, chairman of the port authority and mayor of the Fairbanks North Star Borough. "They have refused to deal, therefore we are here."

Gov. Frank Murkowski has halted negotiations with the port authority and is focused solely on closing a deal with the three oil companies for their $20 billion (euro16.7 billion) pipeline proposal. Murkowski spokeswoman Becky Hultberg said the governor's office has not seen the lawsuit and could not comment.

She said the governor hoped to finalize a long-term fiscal contract with BP, Exxon Mobil and ConocoPhillips to build a gas pipeline after negotiators return from a holiday break.

State Rep. Eric Croft of Anchorage, a Democratic gubernatorial candidate who is sponsoring a petition to tax the producers if they do not develop the North Slope gas, applauded the lawsuit.

"We're going to need to use a number of tools to get Exxon to give up it's stranglehold on our resources," Croft said.

Republican gubernatorial candidate Sarah Palin of Wasilla, who has been a vocal supporter of the port authority's pipeline plan, said she had hoped litigation can be avoided, but the lawsuit is in the state's best interests.

"If what the lawsuit says is true, it could explain why it's taken so long to build the Alaska gas line. Perhaps those filing the lawsuit will help break the logjam," she said.

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