Palin praises gas pipeline plan

Posted: Wednesday, April 09, 2008

Alaska's governor and top legislative leaders are both praising a BP and ConocoPhillips proposal to build an Alaska natural gas pipeline.

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Michael Penn/ Juneau Empire File
Michael Penn/ Juneau Empire File

"It sounds great for the state of Alaska," said Gov. Sarah Palin, who campaigned for governor opposing efforts by former Gov. Frank Murkowski to offer tax breaks to the state's oil and gas producers, including BP, ConocoPhillips and ExxonMobil Corp., to get them to build a pipeline.

At a press conference Tuesday, Palin praised legislators - and by implication herself - for passing the Alaska Gasline Inducement Act last year and spurring development interest.

"The credit goes to Alaska lawmakers," she said, for passing the bill she sponsored.

Palin said she wasn't backing away from her support for AGIA, despite the alternative plan brought forward by the two companies.

BP and ConocoPhillips were outspoken opponents of Palin's AGIA proposal last year, saying that only they could build the project and urged the state to negotiate tax deals with them instead.

Palin's gas pipeline team is now reviewing an application by TransCanada under AGIA to see if it meets the state's needs, and is scheduled to announce in the week of May 19 whether the Legislature will be asked to award an exclusive license to the Calgary, Alberta, company.

That license would qualify TransCanada for a $500 million state subsidy and a 10-year tax freeze as part of a state inducement package.

The BP-ConocoPhillips proposal may help legislative opponents of AGIA stop the awarding of a license to TransCanada.

Sen. Charlie Huggins, R-Wasilla, chairman of the Senate Resources Committee, hinted Tuesday that he'd support the new proposal by the two oil producers over TransCanada.

"They don't ask us for $500 million," he said.

"We could build a lot of schools and miles of road with $500 million," Huggins said.

Huggins spoke Tuesday at a press conference with top legislative leaders, many of whom have sided with the oil producers against Palin.

Tuesday, they praised the BP-ConocoPhillips pipeline plan rolled out at an Anchorage press conference that morning.

"It's a wonderful, wonderful way to get started," with bringing natural gas to Alaskans, said Sen. President Lyda Green, R-Wasilla.

Others in the Legislature were less impressed with the BP-ConocoPhillips proposal.

"It's not a plan, it's a press release," said Rep. Beth Kerttula, D-Juneau, House Democratic leader.

Kerttula, too, praised AGIA, saying it put the state in the lead in getting a pipeline.

"I do think AGIA has gotten their attention," she said.

At least one legislator suggested it might be better to have TransCanada, a pipeline company and not an oil company, develop the pipeline rather than help the oil producers do it. The three oil producers have rights to trillions of cubic feet of natural gas, along with their oil holdings.

"I started out thinking it would be a good thing having an independent pipeline," Kerttula said. "An owner pipeline has not proven best for Alaska."

Kerttula and others say the owners of the trans-Alaska oil pipeline have used their control of the pipeline to control Alaska's resources, at the expense of the state.

Rep. John Coghill, R-North Pole, said the BP-ConocoPhillips proposal brings forward the people who hold crucial rights to the North Slope gas, unlike the TransCanada plan.

"Where are the people who produce the gas?" he asked. "Here they are."

AGIA created a series of minimum requirements for any company hoping to build a natural gas pipeline with the state's assistance, called "must haves."

Among those must haves were off-take points for gas for use in Alaska, and encouraging new exploration by making it easier for other companies to use the pipeline to ship gas they discover on the North Slope.

Palin said she's still waiting to hear how the BP-ConocoPhillips proposal meets Alaska's needs.

She said the plan sounded wonderful at first blush, but "the devil is in the details."

Kerttula said she was reluctant to abandon Palin's AGIA effort, because it has put the state in charge of developing its gas, and progress is finally being made after decades of resistance by the oil producers.

"I think we're in the front of the bus, driving the bus right now," she said. "I like driving the bus. I'm not going to get up and walk to the back."

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