Palin outlines gas line plan

Governor shuns old contract that 'gives up rights'

Posted: Thursday, January 18, 2007

Gov. Sarah Palin blasted former Gov. Frank Murkowski's abortive gas line contract in her highly anticipated inaugural State of the State speech on Wednesday.

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She said the state was committed to developing a gas line and she provided the first sketchy outlines of how the valuable natural gas resource, which has sat unused for 30 years, will be developed.

"While bringing natural gas to market is costly and risky, there's no question - this is a sound, economic project," she said.

The gas line must be built, the governor said.

"Warehousing Alaska's resources is not an option," she said. "We can't afford it."

House Minority Leader Beth Kerttula, D-Juneau, called it a great speech. "She had a great message."

Palin named her new proposal the Alaska Gas Inducement Act, which she said she'll ask the Legislature to pass soon. The act will lay out a process in which those who might develop the gas line are given the state's development requirements and asked how they might meet them.

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One option not on the table in terms of developing the natural gas pipeline, according to Palin, is the Murkowski contract. The companies with which Murkowski was negotiating had demanded that Alaska give up "fundamental rights as a state," she said, removing Alaska's regulatory, judicial and taxing authority for decades.

"Our Legislature was handed a plan that exceeded the administration's authority," said Palin, who praised its rejection.

The governor said developing Alaska's natural gas reserves could help with the national goal of energy independence.

"We've already begun working with the White House," she said. "In fact, I had a nice conversation with Vice President Cheney today."

The key to Alaska's new effort, she said, will be to induce construction of a gas line. That will include encouraging those who hold the leases to develop the gas. The inducement will include a substantial, but as-yet-undefined, state participation in the deal, she said.

Before the speech, Palin said that state investment would not include money from the Alaska Permanent Fund.

"AGIA will contain clear, competitive criteria by which we can judge which project best meets our long-term needs," she said.

Rep. John Coghill, R-North Pole, called Palin's plan "something like a request for proposals."

Palin also criticized the petroleum profits tax passed last year. She said she would have preferred to stick with the proven method of taxing gross receipts instead of "claimed" expenses. The state will closely monitor the first returns that come in under the new tax, she said.

Afterwards, Sen. Kim Elton, D-Juneau, said he liked what he heard. Last year he fought the gas tax and Murkowski's gas line proposal.

"The 10 pages that addressed that issue, I could have written," he said.

Palin said her "must-have" conditions for the pipeline include making gas available for Alaskans, providing jobs for Alaskans and project benchmarks. She also wants terms that ensure competitive and long-term exploration and more development on the North Slope.

• State of the State speech: Word format

• State of the State speech: PDF format

• Pat Forgey can be reached at patrick.forgey@juneauempire.com.



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