Alaska editorial: Now that session is over, time for gas line focus

Posted: Sunday, April 27, 2008

The following editorial first appeared in the Alaska Journal of Commerce:

T he spending spree in Juneau has subsided for now, and we can again turn our full attention to the idea of Alaska landing a gas pipeline.

Some are struggling with the dynamics of the effort to bring a world-class gas reserve to market, mainly because of the inability to grasp the magnitude and the risk inherent in the single-largest private construction project in the history of North America.

Politicians are partly to blame. Recall during the primary in 2006, when then-Republican gubernatorial candidate Sarah Palin, sitting with a natural gas fireplace in the background, saying it was time to bring the state's gas to market. It seemed to leave one with the impression this was forgone conclusion. People get cynical when things don't happen quickly.

And as Oscar Wilde put it, a cynic is someone who knows the price of everything and the value of nothing.

To be sure, the next 90 days will be telling. The governor has announced she will produce her recommendation May 19 on TransCanada Corp. and its Alaska Gasline Inducement Act application. A special session of the Legislature is slated to begin June 3.

To add to the timeline, state Resources Commissioner Tom Irwin will decide in late spring on ExxonMobil's Point Thomson project, and the U.S. Supreme Court's opinion on the Exxon Valdez oil spill will probably come in early summer.

These are heady days in Alaska. While the producers BP and ConocoPhillips have formed the company Denali to build a pipeline, TransCanada may be left holding the AGIA bag.

Will TransCanada get a piece of the pipe? Does the company have an incentive to continue with AGIA? If the governor continues this effort, will the Legislature go along with her?

If producers view TransCanada as damaged goods due to a previous liability, the company may find itself without a dance partner at the Denali ball. Turn the dance card over and the governor may find out this is a Sadie Hawkins dance. She could find herself without a partner.

While TransCanada can't withdraw its application during the initial months, if the company is given the nod by the administration and the Legislature, it can ultimately withdraw if company officials deem the project uneconomic. If TransCanada doesn't get the nod, then it is free to pursue other options, such as a role in the Denali project, which, by the way Sen. Hollis French has referred to as an "illusion."

The governor likely will recommend an AGIA applicant, and when she does, the Legislature will likely go ahead and authenticate her decision. If it happens, public servants will agree to spend millions of dollars on a project that has been thoroughly superseded.

Here's why: There is a high level of cynicism on the part of legislators and the governor. One can sense her presuppositions in her comments, like for instance, just after the producers announced they were going to proceed, Palin in her press conference told Exxon to not let the door hit them when they were leaving.

TransCanada meanwhile has been busy lobbying Congress to become shippers with no gas, while the real shippers who have gas are starting work on a real project with a real future.

Will the real governor of Alaska please stand up?

Additionally, neither the Legislature nor administration is afraid to waste Alaska taxpayer money because Alaskans don't care. Taxes are collected from businesses, not individuals.

It is also an election year, and everyone wants to make sure not to get on the wrong side of the governor and her AGIA train. All this is about to play out even with the producers making a solid commitment to begin hiring and spending hundreds of millions of dollars to begin an assessment to bring the pipeline to reality.

What possible advantage would the producers gain if they gave a false start, only to change their minds? Make no mistake, despite the governor's levity, and the outright depression-like symptoms exhibited by some legislators, this project is moving forward, not because of the state of Alaska but in spite of it.

We worry the clear, crisp spring meltwater flowing down from Denali is about to get muddied up. Why don't we get involved to see if we can make this water potable?

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