Natural gas pipeline battles resurface

Oil industry allies take on Palin and TransCanada pipeline

Posted: Thursday, March 19, 2009

With tens of billions of dollars in Alaska natural gas at stake, last year's battles over a natural gas pipeline show no signs of ending.

Brian Wallace / Juneau Empire
Brian Wallace / Juneau Empire

That's despite a strong vote last year in the Legislature to award a license to TransCanada Corp. to develop a pipeline that would bring Alaska's huge gas reserves to Lower 48 markets.

A legislative resolution introduced last week is seeking to have the Alaska Gasline Inducement Act's selection of TransCanada reconsidered.

This week, a national business magazine attacked Gov. Sarah Palin's gas pipeline efforts, saying they were standing in the way of building a pipeline.

At a news conference Wednesday, Palin called that theory "idiotic."

In a Conde Nast Portfolio cover story, writer Joe McGinnis laid the blame on Palin for the lack of a pipeline.

"Sarah Palin says she's building a gas pipeline. The only problem: It isn't there. And it's her fault."

That view has other adherents in the Legislature.

One of those, Rep. Mike Hawker, R-Anchorage, is an oil industry ally and co-chairman of the powerful House Finance Committee.

He told Portfolio "The only thing standing in the way of an Alaska gas pipeline is the Sarah Palin administration."

Alaska legislators on the other side, however, including an unusual mixture of Democrats and pro-Palin Republicans, say Palin has made more progress in advancing a pipeline than has been made in decades.

"The pipeline is moving forward even as we speak," said Rep. Berta Gardner, D-Anchorage, who visited state and federal officials in Washington, D.C., recently to monitor the pipeline's progress.

Palin's staff say the AGIA plan, approved by the Legislature in 2007, made that happen.

Under the AGIA plan, TransCanada qualified for an exclusive license granting it a $500 million state subsidy in exchange for developing an expandable, open-access pipeline that would help the state develop its North Slope gas basin.

A competing pipeline, developed by ConocoPhillips Co. and BP, also is under way.

Hawker, who confirmed his quote in Portfolio, said he opposed the TransCanada license last summer and continues to oppose the government interfering in the petroleum industry marketplace that AGIA represents.

"The single, number one problem is the presumption that government is going to pick a winner and back that winner to the exclusion of all others," he said.

Palin administration members say they're not surprised to see the state's oil producers, including BP, ConocoPhillips and Exxon Mobil Corp., unhappy with the state pushing "must have" requirements for an independent, open-access pipeline.

"If I was a producer, I might have trouble with those too, if I wanted to control the Alaska gas basin," said Tom Irwin, Commissioner of the Department of Natural Resources, the state's lead development agency.

State officials say the companies that control the Trans-Alaska Pipeline System have used that control to exclude competitors from Alaska and charge high rates for shipping oil.

"We've learned from TAPS," Irwin said.

Gardner, part of the informal coalition that approved the AGIA selection last year, said the Palin administration was winning that control for Alaska.

"What we're really in is a battle over basin control, a battle over being open for business for new explorers and new development" she said. "That's where Alaska's future is, and that's why its so important to have an independent pipeline."

Two other members of the House, Reps. Jay Ramras, R-Fairbanks, and Craig Johnson, R-Anchorage, have introduced a resolution urging reconsideration of the TransCanada license.

Palin said the resolution was unnecessary because Alaska was always continually reviewing the issue, but that passing it could send a message that Alaska was an unstable place to do business.

"AGIA is a contract. We expect the oil and gas industry to abide by their agreements with Alaskans; we expect them to be as good as their word," she said. "We should be held to no less a standard."

House Concurrent Resolution 12 is scheduled for a hearing before the House Energy Committee today, and tentatively before the House Resources Committee next week.

• Contact reporter Pat Forgey at 5876-4816 or patrick.forgey@juneauempire.com.



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