Alaska editorial: Act like a sovereign state, not a colony to oil producers

This editorial appeared in Thursday's Anchorage Daily News:

Posted: Tuesday, April 13, 2004

R ep. Eric Croft wants Alaskans to vote on whether to impose a reserves tax on North Slope natural gas if the major oil companies won't move it to market.

Good. Let's take a hard look at it.

The majors say the project doesn't pencil out yet, at least not without the sweeteners of federal support and tax incentives. But other suitors say Alaska's natural gas may be marketable now, and some have submitted applications to the state.

No reasonable Alaskan would argue that the North Slope producers or anyone else should build a pipeline to lose money. The argument for a reserves tax is based on the assumption that a gas line can be shown to be profitable. When it's clear that such a project can make money, then Alaska stands to gain. And at that point, it's also time for the majors to produce, punt or pay the price to hold Alaska's gas in their reserves.

It's too late to put such a measure on the 2004 general election ballot, so Rep. Croft is aiming for 2006. That's fine; it gives everyone a chance to strive for and build confidence in the profitability of a project.

If the state reaches agreements with the major North Slope producers (Conoco Phillips, BP, Exxon) and/or any other group to get Alaska's gas to market before then, so much the better.

But right now, it appears there is a long way to go before such an agreement is reached.

And that means there's a long way to go before Alaska's abundance of natural gas will begin to pay off for Alaskans. So Alaskans may need to turn up the heat.

Such an initiative could accomplish several goals for Alaska:

• First, it would draw a clear line between the major oil companies' interests and the state's interests. They don't always converge, and this is something that the majority in the Alaska Legislature fears to acknowledge. Alaska needs to take a page from former Gov. Wally Hickel's book. Alaskans are the owners of the state's resources. We want to use them for the fullest benefit of the citizens of Alaska, not necessarily for the fullest benefit of the strategic corporate interests of the major oil producers.

Sitting on that gas may suit the producers. But that's not their right. It's a privilege; a reserves tax would make them pay for it.

• Second, such a vote would help to break the Legislature's - and indirectly, the producers' - grip on the debate. The producers are a concentrated political force at the Capitol. That force is diffused on a statewide basis. Case in point: There never would have been an Alaskan Natural Gas Development Authority to explore the feasibility of an all-Alaska gas line without a vote of the people. Nothing like that would ever have cleared the Legislature. It passed overwhelmingly when put to the people.

• Third, such a vote could help change the terms of the debate. Alaska does not have the juice to force the producers' hands, or to change world markets, or to change the economics of production in other parts of the world. But Alaskans can change the terms here, and thereby make it more expensive for producers to keep our natural gas treasure buried.

Alaska must look out for the interests of Alaskans first. Our natural gas is valuable. We should be paid for it - either as it's produced and going to market here and elsewhere, as Alaskans would prefer, or as reserves that benefit the producers in their global strategies.

Alaska will gladly continue to work with industry to bring its goods to market and create more opportunities here. But Alaskans should make it clear that this cooperation must be a two-way street, and that it is not the state's purpose to serve corporate interests unless they overlap with our own.

Rep. Croft's initiative would send a strong message to the producers: You're not dealing with a colony here, you're dealing with a sovereign state. But in order to send the message, we have to act like a sovereign state.

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