China bid to export Alaska gas draws fire

A bid from Chinese energy giant Sinopec to build an Alaska natural gas export project is drawing fire from politicians and activists that analysts say could leave it dead in the water.

Sinopec, China's second biggest oil company, is among six companies vying for state support for a plan to bring Alaska's long-languishing natural gas reserves to market under the Alaska Gasline Inducement Act.

But unlike other proposals to build a pipeline to the lower-48 states, Sinopec's bid involves construction of a liquefied natural gas terminal on the coast to allow the gas to be shipped overseas – raising the hackles of US officials seeking to protect domestic fuel sources and human rights activists angered by Beijing's dealings in Sudan.

The opposition to Sinopec's bid comes after top Chinese oil firm CNOOC Ltd lost out in a bid to purchase US oil company Unocal in 2005 amid heavy political pressure to defend US companies from foreign ownership.

"Given the outcome that you saw with China's failed attempt to buy Unocal, this is something that will certainly elicit a knee-jerk reaction from America's politicians that this gas needs to stay in America," said Greg Priddy, energy analyst at Eurasia Group in Washington.

"It would be almost unimaginable to me that someone won't block this politically," he said.

Alaska Republican Senator Lisa Murkoski has voiced her opposition to Sinopec's proposal, saying the natural gas supplies are intended for the US and that plans to export it would likely face opposition in Congress.

World's top consumer the United States has sought ways to cut its dependence on oil and fuel imports for decades, and experts expect the US demand for natural gas will rise in the coming years, straining domestic supply.

Drue Pearce, a federal official coordinating the development of Alaska natural gas, said she expected "there would be substantial opposition to exporting North Slope gas from around the country."

China, the second biggest consumer of oil in the world, has aggressively sought deals with producer nations to shore up energy supplies to fuel its rapid economic growth, including Sudan, whose government is accused of committing atrocities against residents of the Darfur region.

Washington-based Sudan Divestment Task Force sent a letter to Alaska Governor Sarah Palin asking that she reject the Alaska bid, while local politicians have also taken up the cause.

"Alaskans should not do business with a company linked to a government perpetrating systematic and widespread rape, torture and murder in Darfur," said former Alaska House Minority Leader Ethan Berkowitz in a statement.

Alaska Revenue Commissioner Pat Galvin said concerns about either exports or alleged human-rights violations could be valid considerations during the months-long review process of the gas project proposals.

Along with Sinopec, the Alaska Gasline Port Authority is also proposing an LNG project under the AGIA system.

Alaska has for decades sought to develop the vast natural gas reserves located in its North Slope oil fields. The area holds known reserves of 35 trillion cubic feet and is believed to hold much more in undiscovered reserves.

Lack of a transportation system and the high cost of building a pipeline have kept the natural gas stranded from markets thousands of miles away.