Three major oil companies are considering a financing plan for the $20 billion Alaska natural gas pipeline with a less sweeping federal role than the outright takeover by a government corporation suggested by the Department of Energy's special counsel for the project.
Under the latest proposal, the government would have the power to name enough directors to the board of the entity actually building the pipeline to prevent any deadlocks between representatives of the gas producers and the pipeline company consortium originally picked to build and operate the line.
In addition, the government would provide loan guarantees for additional constructon financing if cost over-runs drove the total price of the 741-mile Alaska segment and the gas-conditioning plant at Prudhoe Bay beyond about the $16 billion mark.
The proposal was discussed at a meeting with Energy Secretary Charles Duncan last Saturday, and Randall Myer, president of Exxon Co. U.S.A.; A.W. Whitehorse Jr., chairman of Standard Oil Co. (Ohio); and Thornton Bradshaw, president of Atlanta Richfield Corp., agreed to respond to it within two weeks, sources said.
Together the three companies own about 80 percent of the 26 trillion cubic feet of proved gas reserves in the Prudhoe Bay field which already is producing about 1.2 million barrels of oil a day.
The pipeline consortium, Northwest Alaskan Pipeline Co., was chosen in 1977 by the Carter administration to build and operate the pipeline. By its own admission, it doesn't have the resources to construct the pipeline without assistance from the gas producers.
However, Northwest Alaskan and the producers haven't been able to agree on a financing plan, partly because a 1977 law prohibits producers from having an equity ownership in the line or being involved in its management.
The latest proposal, also drafted by the DOE's special counsel, Martin Lipton, would require new legislation and possibly easing some of those restrictions.
The DOE estimates the cost of the Alaska segment at $6.2 billion, or $7.5 billion with provision for a 20 percent cost overrun. The gas-conditioning plant is expected to cost about $3.5 billion.
The new proposal would require the producers to provide part of that total of $11 billion and guaranteed financing for the next $5 billion in cost overruns. The federal government guarantee wouldn't be available under the proposal until that $16 billion was exhausted.
It also provides that no party -- the government, the producers or the pipeline consortium -- would be committed to construction until all three were satisfied with the final design of the pipeline and the cost estimates.
The precise amount of the potential government guarantee wouldn't be determined until final cost estimates were available.
If this proposal or a variation doesn't produce an agreement that will lead to a privately financed pipeline. Lipton recommended late last month that the DOE consider seeking legislation to allow the producers to build the pipeline with ownership and operation being taken over by a federal corporation named Fedline.
In that case, Northwest Alaska no longer would be involved in the line in any way.
The Canadian portion of the line and two segments in the United States south of the Canadian border aren't involved in the financing difficulties. A separate group of Canadian companies is to build the 2,028 miles of pipeline in that country, while still other groups with both U.S. and Canadian partners will build lines south from Canada to Illinois and California.
The completed system at first would be able to carry about 2.4 billion cubic feet of gas a day, about 5 percent of daily U.S. consumption. Present plans call for the southern portions to be built first to carry gas from Alberta, Canada.