New year, new governor, new hope for gas deal

Alaskans hope 2007 will be the year for natural gas contract

Posted: Monday, January 01, 2007

With a change of governors, many Alaskans see hope for agreement on the long-stalled North Slope gas contract, which would open of a pipeline for trillions of dollars worth of natural gas.

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Jim Whitaker, a former state representative and current mayor of the Fairbanks North Star Borough, said the first item of business by the new administration should be deciding that the gasline must be constructed.

After that, Gov. Sarah Palin will then need to work out a contract that will be the most suitable for Alaskans.

In her inaugural speech Dec. 4, Palin promised to ensure that Alaskans receive the best deal during the negotiating process. Whitaker said a reason former Gov. Frank Murkowski failed to get re-elected was that his version of the deal benefited producers more than Alaskans, collective owners of the natural resource.

Higher gas prices point to a promising future, and the project is now considered more possible than before.

Within days of taking office, Palin met in Anchorage with representatives of the petroleum industry along with her administration's negotiating team, including Lt. Gov. Sean Parnell and Marty Rutherford, acting commissioner of the Department of Natural Resources.

"Virtually every party continued to say this was an economically viable project," Rutherford said following the meeting. The "big three" companies - BP, Exxon Mobil and Conoco Phillips - are "all very enthusiastic about this project," she said.

Murkowski also was criticized for secrecy in the negotiating process, and Palin has promised to involve the public.

How much information would actually come out of such negotiations - where discretion is commonly accepted as a necessary business practice - remained uncertain.

Whitaker sounded hopeful, however.

"She speaks openly and freely with regards to the discussions, and she needs to keep doing that," he said.

During initial meetings, Palin reopened several doors that her predecessor had closed. She hinted that she might be willing to reconsider the route for the gas line, bringing proponents of an "all-Alaska" line back to the table.

Palin acknowledged that at one point she'd been a supporter of the "all-Alaska" idea. The all-Alaska line has been touted by the Alaska Gas Port Authority as the best project, in large part because it would directly benefit Alaskans with access to the gas.

"It was great to talk to the Port Authority folks," she said following the December meeting. "No bias for or against them."

Palin's predecessor had a rocky relationship with the authority.

The line would extend from Prudhoe Bay to Valdez. Some see the route as too costly because it would require the natural gas to be liquefied before being shipped to the Lower 48.

Sen. Hollis French (D-Anchorage), however, has been a supporter of an alternative that would extend through Canada, with an spur line to the Anchorage area.

"We also know that Alaskans in the Railbelt are faced with rising energy costs and a shortage in the Cook Inlet. It just seems absurd to ship to Chicago when we need it in Southcentral," he said.

French said that for him and many others, the big question is, "Who is the lead gas line negotiator? Many of us are guessing that it is going to be Sean Parnell."

Palin also alluded to the possibility of involving independent producers besides the three major ones.

"I was able to offer participants assurance we would not lead them on," she said.

French acknowledged that the project could be stalled longer "if they go back to the drawing board and solicit from besides the producers."

Whitaker, who is also chairman of the Port Authority, said Palin should consider involving a third party, such as the Port Authority or TransCanada energy company to ensure Alaskans' interests are taken care of first.

State Sen. Albert Kookesh (D-Angoon) said he plans to wait until all the options are formally presented before making any decisions.

"I am willing to be convinced either way," he said. A contract does need to be finalized, however, he said.

"I think it would be a mistake if we didn't do anything," said Kookesh

• Brittany Retherford can be reached at Reporter Pat Forgey contributed to this story.

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