Murkowski: State must do 'soul searching' on economy

Posted: Friday, February 19, 2010

JUNEAU - Alaska's economy faces significant threats from environmentalists, federal regulations and even from within - in the form of problems like high student dropout rates and domestic violence, U.S. Sen. Lisa Murkowski said Thursday.

The Republican told a joint legislative session she would do her part in Washington to fight such things as reactive or overreaching federal policies, but Alaska must do some "soul searching" about the future of its economy.

Oil drives Alaska's economy - nearly 90 percent of unrestricted general fund revenue comes from it. But forecasts call for production to continue declining from the aging North Slope fields, and there's currently a mix of high hopes and unease about the prospects for a major natural gas pipeline to help make up some of the anticipated revenue losses.

At least two projects are competing for the mega line. The companies behind one proposal, TransCanada Corp. and ExxonMobile last month estimated the cost at $20 billion to $41 billion, depending on the route. They also projected the line could begin carrying gas by about 2020, assuming there are no major hang-ups on matters such as courting gas producers and securing shipping deals during what's called an open season.

Murkowski told legislators she would fight new federal oil and gas taxes and continue pushing for drilling in the Arctic National Wildlife Refuge, an issue her father, Frank Murkowski, pressed as a U.S. senator before her.

She also said she wanted to get Alaska out of the U.S. 9th Circuit Court of Appeals, whose rulings on federal lawsuits she believes are often sympathetic to environmental interests. Murkowski is advocating for $30 billion in loan guarantees for the natural gas line, a project she said has bipartisan support, as well as support from the White House.

But she said the state must do its part, too, if Alaska is to be a major future player on the world energy scene.

"We've got to get our gas to market," she said.

While the window for a gas line remains open, with expectations for natural gas to be an in-demand energy source in the future, "that shouldn't be viewed as an invitation to procrastinate," Murkowski said. "Maybe America can wait for Alaska's natural gas. Perhaps industry can wait. But Alaska cannot wait. We can't wait because other parts of our state's economy are not strong enough ... to carry our state."

Legislators are in the midst of asking what more, if anything, they should do to spur the gas line. Several bills have been introduced that range from tweaking to broadly changing the state's system for taxing oil and gas production, a system created just over two years ago. House Democrats have balked, arguing that the evidence they've seen shows the system works.

One project hopes to go to open season by May, weeks after lawmakers are set to adjourn and begin hitting the campaign trail for elections later this year. And there are concerns the prospective deals will be heavily conditioned, seeking long-range certainty on state tax and royalty rates.

Murkowski noted there's a process playing out. But she told reporters the state could further help by understanding what producers believe to be incentives, in the way of so-called fiscal certainty.

"I think that the Legislature knows full well that this is a situation where we as a state can be a participant in this market," she said, "but we've got to be fully competitive."



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