In January, CIRI announced it had joined forces with MidAmerican Energy Holdings Company, a subsidiary of Berkshire Hathaway, Inc., to invest in the proposed development of a trans-Alaska natural gas pipeline. On March 25, MidAmerican announced the withdrawal of its application with the State of Alaska Department of Revenue under the Alaska Stranded Gas Development Act.

The application was the starting point for a proposal to develop and construct a $6.3 billion pipeline to help transport stranded natural gas reserves from Alaska’s North Slope to the Lower 48. The company cited an inability by the state of Alaska to complete a contract on terms that would have allowed Alaska Gas Transmission Company, and entity formed by MidAmerican, CIRI, and Pacific Star Energy, a consortium of Alaska Native regional corporations, to move forward on an accelerated schedule with an exclusive five-year development period.

“When we filed our application on Jan. 22, 2004, we requested a business partnership with Alaska that would have aligned us with the state on an exclusive basis in recognition of MidAmerican’s willingness to fund development of an independent pipeline and to do so on an accelerated schedule,” said David Sokol, MidAmerican’s chairman and chief executive officer. “We are extremely disappointed the state of Alaska rejected this approach, which we had clearly discussed with Governor Murkowski before filing our application. Our inability to obtain an agreement does not diminish our continuing view that the Alaska gas pipeline is extremely important to natural gas markets in the Lower 48, and passage of federal energy legislation supportive of the project is essential.”

The partnership group had hoped to reach agreement with the State of Alaska Department of Revenue on a contract in a timely fashion in order to allow for public comment and legislative approval of the agreement by early May 2004. Instead, negotiations were suspended with the state on March 22 after it became evident a contract resolution would not be reached.

“Alaska Gas Transmission Company was willing to take significant up-front risk during the next three years to bring this project to the construction phase,” said Robert L. Sluder, Alaska Gas Transmission Company president. “We believed our request to be the state’s sole development partner for the initial project development period was reasonable, given the magnitude of the risk involved and the absence of any other independent proposal that would expedite development as we had proposed. Since we do not own any North Slope reserves, it appeared to us it would be in the state’s best interest to have an independent owner of the pipeline.”

CIRI will continue to work with MidAmerican and other interested and reputable companies in pursuit of development of an Alaska natural gas pipeline.