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We do and don't need rush jobs

Posted: Sunday, April 16, 2006

Pity Alaska's lawmakers. They have about three weeks left in the regular session to come up with an oil tax plan that encourages more development, especially the natural gas pipeline to Lower 48 markets, yet fairly compensates Alaskans for their resources.

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Gov. Frank Murkowski gave them a plan and took off for Europe to drum up more business for Alaska and its lawmakers. In the Netherlands, he met with Royal Dutch Shell officials about marketing Alaska natural gas and developing coal resources to create syn-gas and other products from coal.

He left the lawmakers plenty. So if they have to go into special session after the regular one, they should be forgiven. There are many things beyond their control to consider.

For example, the price of oil is heading for $70 a barrel as this is written. That means more state revenue but it also means higher costs for Alaskans, from gasoline to heating oil, plastics, medicines, food, packaging and even printing ink (these words could become priceless!), all from oil.

It also means more competition. Abandoned wells in the Lower 48 are reopening, such as on the high plains of Montana where 300 reopened wells are producing 48,000 barrels of oil a day.

Russia, the world's largest oil producer, plans a pipeline to its east coast to get Russian Arctic oil (the Russian ANWR) to new markets. Oil development has been going on for 10 years on Russia's Sakhalin Island with investment from major oil companies also in Alaska, including ExxonMobil and Shell. That oil can be shipped to the United States almost as easily as from Valdez if Alaska oil becomes too expensive.

Alaska needs a taxing program so fair that it attracts the major oil companies, creating pressure to force opening of the Arctic National Wildlife Refuge to oil production. Alaska holds the reserves to meet the nation's demand in this century for energy and other products from oil, gas and coal.

Sen. Ted Stevens said a few weeks ago that Alaska holds one-half of the nation's coal reserves. The U.S. Geological Survey says that 80 percent of that one-half lies in the 23-million-acre National Petroleum Reserve-Alaska. That means that the entire Arctic Coast from Kotzebue to Barrow to Prudhoe Bay, across ANWR to the Canadian border holds a huge energy deposit.

The governor and Shell are discussing use of syn-gas from coal. Germany began making liquid fuel from coal in the 1920s. Ninety-five percent of the fuel powering Germany's war machine in World War II came from 25 plants producing 124,000 barrels of fuel a day, converted to gasoline for war planes and vehicles. After the war, the United States built a refinery in Missouri that successfully converted coal to 78-octane gasoline, but oil was cheaper so the project shut down in 1953.

Among hundreds of other products from coal are smelling salts, if what the governor is exploring in Europe, such as using wind power to produce hydrogen to provide energy for remote villages, is too much for his critics.

Alaskans need a rush job on oil taxes, but we don't need a rush job to the extent we get it wrong.

•••

Ketchikan voters approved $38.5 million on Tuesday for expansion of its harbor to accommodate bigger cruise ships and vessels in other industries. The voters approved the bonds by better than 2-1. There is nothing like shutting down a major employer, the timber industry, to wake up a town - particularly an aggressive town.

Even before Ketchikan's pulp mill closed, the city was cooperating with the state and federal agencies to create the Ketchikan Shipyard. Many maritime businesses, including the state, say it has been a lifesaver for them - especially in emergencies - as well as an economic lifesaver for the community.

The Ward Cove site of the old pulp mill is gradually being developed, mainly with state and private investment, with the eventual goal of getting a veneer plant back in operation and seeing private businesses operating on what was vacant property or a site of a salmon cannery, now out of operation.

Ketchikan was a leader in setting up the Four Dam Pool that operates hydroelectric plants serving Ketchikan, Wrangell, Petersburg, Kodiak, Valdez and the Copper River Basin. Ketchikan's major interest now is a half-finished intertie between Swan and Tyee lakes, the first leg in a Southeast-wide power grid. It also provides an opportunity to sell excess power to Canada and the Lower 48 via a power line from Tyee Lake to Stewart via Bradfield Canal.

Getting Southeast Alaska communities off power from oil is a priority. Ketchikan's expansion also requires more power, but not with $70 a barrel oil. The goal is to get the hydro power by completing the intertie.

Ketchikan might attract state and federal support for completing the intertie if Ketchikan Public Utilities puts up $5 million of the $50 million needed for completion. U.S. Sen. Stevens, state Sen. Bruce Stedman, Rep. Jim Elkins and Gov. Frank Murkowski might find more sympathy at funding sources if they could say Ketchikan is again putting up as it did to build the shipyard and enable Ward Cove development.

This is a rush job.

• Lew Williams Jr. is a retired publisher of the Ketchikan Daily News.



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