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Public Statements

Grassley to Natural Gas Companies: Finalize Alaska Pipeline Negotiations

By:
Date:
Location: Washington, DC


GRASSLEY TO NATURAL GAS COMPANIES: FINALIZE ALASKA PIPELINE NEGOTIATIONS

Sen. Chuck Grassley today sent a letter to the three natural gas producers who have rights to the natural gas resources on Alaska's north slope. The letter, sent with several of Grassley's colleagues in the U.S. Senate, urges the companies to quickly complete their negotiations with Alaska on the terms of constructing the pipeline to deliver the resources to the lower 48 states.

Grassley, as chairman of the Senate Finance Committee, worked with the oil and natural gas industries to help expedite construction of the pipeline. Now, more than a year later, Grassley said he was disappointed that the companies have decided to drag out the negotiations with Alaska.

"When I asked the oil and gas industry to contribute 10 percent of their profits to organizations that support LIHEAP, they stated their profits were needed to reinvest energy in resources in order to get more product to the market and relieve supply pressures and lower costs," Grassley said. "Well, this seems like the perfect opportunity to reinvest those profits and help consumers and here they are dragging their feet. Let's get it done so I don't have to wonder how genuine their earlier response was."

The letter also points out that the "continuing imbalance of supply and demand in natural gas markets is also threatening to drive countless American manufacturing jobs overseas. U.S. industries such as chemical and plastics are highly dependent on natural gas and are being harmed severely. The fertilizer industry and the farmers who depend on their products are also suffering from the economic impact of higher natural gas prices."

Here is a copy of the letter.

December 16, 2005

Mr. Lee R. Raymond

Chairman and CEO

ExxonMobil

5959 Las Colinas Blvd.

Irving, Texas 75039

Mr. James J. Mulva

Chairman and CEO

ConocoPhillips

600 North Dairy Ashford

Houston, Texas 77252

Mr. Ross J. Pillari

President and CEO

British Petroleum America

4101 Winfield Road

Waaenville, Illinois 60555

Dear Gentlemen:

This winter, American consumers are preparing to pay the highest bills for home heating in memory. Households that use natural gas can expect a nearly 50 percent increase from last year alone.

The continuing imbalance of supply and demand in natural gas markets is also threatening to drive countless American manufacturing jobs overseas. U.S. industries such as chemical and plastics are highly dependent on natural gas and are being harmed severely. The fertilizer industry and the farmers who depend on their products are also suffering from the economic impact of higher natural gas prices.

Few issues concerning our nation's energy policy receive overwhelming support. However, there is near-unanimous support in Congress for construction of a natural gas pipeline from Alaska to the lower 48 states. In October 2004, Congress provided a package of extraordinary regulatory and financial incentives to support construction of the Alaska pipeline. There is widespread agreement that this project is critical to the United States' economic and national security interests.

Unfortunately, more than a year has passed without agreement on a pipeline proposal in spite of Congress having provided this package of incentives and regulatory streamlining requested to support the project. We have been encouraged in recent weeks to read of progress in these negotiations. At the same time, we are troubled that these negotiations have not reached a conclusion as the winter heating season begins.

During this time of record-high energy prices and record-high corporate profits in the oil and gas sectors, American consumers expect energy companies to make every effort to identify opportunities for domestic reinvestment of profits to increase energy supplies. However, in recent weeks executives in the oil and natural gas industry have stated that an obstacle to adequate supply of affordable natural gas is the limit on access to domestic supplies. Given that significant reserves of natural gas in Alaska are already open to development, building the pipeline to deliver these known resources to market in the lower 48 states would demonstrate your commitment to increase energy supplies and lower prices for consumers.

Alaska's North Slope has more than 35 trillion cubic feet of proven natural gas reserves and more than 100 trillion cubic feet of potential reserves. Constructing the Alaska natural gas pipeline is one of the most vital and strategic opportunities you have to show you're committed to investing in domestic energy resources and providing relief to America's consumers.

We encourage you to promptly conclude your negotiations with the state of Alaska and move forward expeditiously on construction of the Alaska natural gas pipeline.

Sincerely,

http://grassley.senate.gov/index.cfm?FuseAction=PressReleases.Detail&PressRelease_id=4982&Month=12&Year=2005

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