updated 12/20/2005 8:10:16 AM ET 2005-12-20T13:10:16

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.

The federal lawsuit arose from the producers' refusal to sell supplies of natural gas to the port authority, which wants to build a pipeline from the North Slope to Valdez. From there, the gas would be liquefied and shipped by tanker to the West Coast.

BP and Exxon Mobil, along with ConocoPhillips, have their own gas pipeline proposal that they are in negotiations with the state to build. They say the port authority's 800-mile (1,300-kilometer) pipeline project is not competitive with other LNG projects around the world.

"Our North Slope gas has always been available to commercially viable projects. It's not at all clear to us that the port authority project is viable," BP spokesman Daren Beaudo said.

Officials at Irving, Texas-based Exxon Mobil did not return a call for comment.

The port authority is seeking unspecified dollar amount in damages and to restore competitive conditions to the North Slope. The only thing keeping the port authority from moving forward with its pipeline plans, its officials say, is BP's and Exxon Mobil's refusal to sell the gas.

"This is an effort to acquire a supply (of gas)," said Jim Whitaker, chairman of the port authority and mayor of the Fairbanks North Star Borough. "They have refused to deal, therefore we are here."

Gov. Frank Murkowski has halted negotiations with the port authority and is focused solely on closing a deal with the three oil companies for their $20 billion (euro16.7 billion) pipeline proposal. Murkowski spokeswoman Becky Hultberg said the governor's office has not seen the lawsuit and could not comment.

She said the governor hoped to finalize a long-term fiscal contract with BP, Exxon Mobil and ConocoPhillips to build a gas pipeline after negotiators return from a holiday break.

State Rep. Eric Croft of Anchorage, a Democratic gubernatorial candidate who is sponsoring a petition to tax the producers if they do not develop the North Slope gas, applauded the lawsuit.

"We're going to need to use a number of tools to get Exxon to give up it's stranglehold on our resources," Croft said.

Republican gubernatorial candidate Sarah Palin of Wasilla, who has been a vocal supporter of the port authority's pipeline plan, said she had hoped litigation can be avoided, but the lawsuit is in the state's best interests.

"If what the lawsuit says is true, it could explain why it's taken so long to build the Alaska gas line. Perhaps those filing the lawsuit will help break the logjam," she said.

Copyright 2005 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

Discuss:

Discussion comments

,

Data: Latest rates in the US

Home equity rates View rates in your area
Home equity type Today +/- Chart
$30K HELOC FICO 4.71%
$30K home equity loan FICO 5.26%
$75K home equity loan FICO 4.70%
Credit card rates View more rates
Card type Today +/- Last Week
Low Interest Cards 13.42%
13.42%
Cash Back Cards 17.94%
17.94%
Rewards Cards 17.14%
17.14%
Source: Bankrate.com