Alaska sues BP, Exxon Mobil over natural gas

updated 8:10 a.m. ET Dec. 20, 2005

JUNEAU, Alaska - An antitrust lawsuit filed against Exxon Mobil Corp. and BP PLC claims the two oil giants are restricting the nation's supply of natural gas and keeping prices at record highs.

The lawsuit, filed Monday in U.S. District Court in Fairbanks, says the two companies acted together to eliminate competition for the exploration, development and marketing of natural gas from Alaska's North Slope to U.S. markets.

"The only reason for them to collusively not to sell is to try to continue the scarcity that has driven natural gas prices to historic highs," said David Boies, the attorney for the Alaska Gasline Port Authority, which filed the lawsuit.

BP and Exxon Mobil are two of Alaska's biggest oil and gas leaseholders, and are the operators for the North Slope's largest oil and gas fields, Prudhoe Bay and Point Thomson. Alaska's North Slope is estimated to have at least 35 trillion cubic feet (1 trillion cubic meters) of natural gas reserves, which could supply 7 percent to 10 percent of the nation's natural gas, Boies said.

The January future contract for natural gas rose 41 cents Monday to settle at $14.04 per 1,000 cubic feet on the New York Mercantile Exchange. The gas contracts have reached record levels near $16 per 1,000 cubic feet in recent months.

"I don't think anybody can tell you exactly how much the prices would decline, but it's clear it would decline substantially," Boies said.

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