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Alaska gas pipeline battle heats up

Senate president questions Palin's AGIA proposal

Posted: Wednesday, May 02, 2007

Alaska's third major oil company appeared before the Senate Finance Committee on Tuesday and joined in panning Gov. Sarah Palin's Alaska Gasline Inducement Act.

For Exxon Mobil Corp. to bring its vast resources and its North Slope gas to the project, AGIA needs numerous significant changes, said Martin Massey, U.S. joint interest manager for Exxon.

"It would be a shame it we weren't allowed to participate," he said.

Palin proposed the AGIA legislation to strengthen the state's hand in negotiations for a gas line with the big oil producers and others who control most of the state's natural gas.

Lately, some members of the House and Senate finance committees looking at the bill have been raising questions that suggest they may find the governor's plan too tough.

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In a meeting with reporters Tuesday, Senate President Lyda Green, R-Wasilla, said she fears Palin's approach is going to keep producers and anyone else from bidding to build the pipeline.

"I'm not sure that AGIA as written is going to attract anyone," Green said.

Also in the Capitol on Tuesday was former Gov. Wally Hickel, who served as the state's chief executive in both the 1960s and 1990s.

Hickel endorsed the AGIA approach, saying it was needed to get a gas pipeline for Alaska.

"Gov. Sarah Palin's plan is a good one," he said.

Hickel is a backer of the all-Alaska gas line plan, which would follow the route of the trans-Alaska oil pipeline and then export liquefied natural gas from Valdez. He said an open, competitive process would get maximum value for Alaska.

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He said that as governor he had to force oil companies to drill in Prudhoe Bay when they were looking to leave the state.

In the 1960s he told the companies, "If you don't drill, I will," Hickel told the House Finance Committee.

They drilled and opened Prudhoe Bay.

Appearing with Hickel was David Gottstein of the public interest group Backbone II. Gottstein also appeared at the rollout of AGIA with Palin and the oil companies in February.

Before the Finance Committee, Gottstein warned that the producers were fighting AGIA because it threatened their monopoly grip on Alaska's resources.

"If they can't control it, they want to stop the process, or at least slow it down as much as possible," he said.

In the Senate Finance Committee, Exxon's Massey urged that AGIA's requirements be changed to objectives that the state could then negotiate with the producers.

That's similar to what former Gov. Frank Murkowski did last year under the Stranded Gas Act, said Sen. Kim Elton, D-Juneau.

"I think we've had a pretty good demonstration that that didn't work," Elton said.

Murkowski gave away more than was acceptable to the Legislature and most Alaskans, and he still failed to get a contract, Elton said.

"The governor deserves a chance to do it her way," he said.

Senate Finance Committee Chairman Bert Stedman, R-Sitka, walked Massey of Exxon through a draft version of AGIA point-by-point, asking for specifics on what he didn't like.

Several times Massey said the plan's "must haves" should be replaced with objectives the state could negotiate for.

Stedman also asked Massey to suggest other changes to AGIA, as long as it "keeps our treasury intact."

Massey said he would provide more detailed suggestions in writing.

• Pat Forgey can be reached at patrick.forgey@juneauempire.com.



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