Company Withdraws Plan to Build Alaska Pipeline

The most advanced of three proposals to build a pipeline to carry natural gas from Alaska to the Lower 48 states will be withdrawn, with MidAmerican Energy Holdings Co. (search) blaming the state for a breakdown in negotiations.

"We are very disappointed," Susan Flaim, director of administration for Des Moines, Iowa-based MidAmerican, said Thursday. "We still believe the pipeline is a very important project."

Gov. Frank Murkowski (search) left open the possibility that negotiations could resume, saying the state made an offer to MidAmerican on Thursday, the same day the company pulled out.

"It is my hope that MidAmerican will reconsider and that negotiations will continue," he said.

MidAmerican said plans for the 745-mile pipeline would be withdrawn because the state would not grant the company exclusive rights to develop the $6.3 billion project.

The pipeline would have allowed the transport of natural gas from the North Slope to the Lower 48 in a partnership with a consortium of Alaska Native corporations. The North Slope contains more than 35 trillion cubic feet of natural gas.

Flaim said in exchange for the sole right to develop the line it was willing to bear the risk the $100 million project could fail.

Mike Menge, a spokesman for the governor, said MidAmerican sought too many concessions from the state, lacked clear financial terms and provided no guarantee the project would be built.

"We would have had to sit on the 50-yard line and cross our fingers for five years," he said.

Other pipeline projects are under discussion.

Major oil producers BP Exploration (Alaska) Inc., ConocoPhillips and Exxon Mobil Corp. have filed a joint application for a pipeline that would extend from the North Slope to Chicago.

The Alaska Gasline Port Authority (search), a consortium of local governments in the state, also proposed a line that would run from the North Slope to Valdez.