Alaska editorial: Administration's finally seeing some pipeline realities

Posted: Friday, June 23, 2006

This editorial appeared in the Fairbanks Daily News-Miner:

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A public acknowledgment of reality has been coming from the Murkowski administration lately regarding the draft agreement reached between the governor and the heads of Exxon Mobil, BP and ConocoPhillips on fiscal terms for construction of a natural gas pipeline from the North Slope. The reality is that the public hasn't rushed to embrace the deal and that changes will be needed before the public, and the Legislature, sign on.

Accepting that fact is a good move by the administration, which has been frustrated by the Legislature's reluctance to move along speedily and by some doubts from the public. To be fair, a large number of people support the agreement, but there's no broad rapture over its contents and legislative approval of the agreement in its current form is far from assured.

And yet it would be hard to argue that Alaska doesn't want the gas pipeline. What Alaskans want, though, is a pipeline on terms they can live with.

"Clearly we have to come up with something that is acceptable to the Legislature and the public," the governor's chief of staff, Jim Clark, said in a News-Miner story the other day. He made similar statements in a meeting with the newspaper's editorial board earlier in the week.

Several important issues have yet to be resolved. And chief among them is that many Alaskans don't seem to want - and nor should they - to lock in the terms of oil and gas taxation for several decades as called for in the draft agreement. Yet the governor and two of the three oil companies have said they need that fiscal certainty in order to proceed with the gas pipeline.

Many also have concerns about the state giving up its ability to sue the companies in court, although the practice is not unheard of in these things. There's concern, too, about the workings of the corporation that would be set up to run the pipeline and about the risks the state would incur in owning 20 percent of the project.

And there's even continuing debate about whether there should be a gas agreement at all. Some, including the Legislature's own consultants, argue strongly that the gas pipeline is economic right now and that the incentives - concessions, in the words of some - given by the state aren't needed.

The administration has a big task ahead of it.

The governor and his people, in continuing to press for the pipeline, need to convincingly rebut misleading and erroneous allegations, yet they must be mindful of the concerns of the public and the Legislature if they are to gain acceptance and approval of the pipeline agreement. Mr. Clark expressed that very view when he said this week, "It's clear that the Legislature feels very strongly about making changes on oil and we have to take that into account."

Hearing administration officials express willingness to revisit some issues, and to see the governor extend the public comment period and provide a second round of community forums, is something to applaud and could lead to improved support for the agreement. The real worth of those moves won't be known for a long time yet, however, and can't be measured until the public sees what changes might be made to the pipeline agreement.

But it's a good move by the administration nonetheless.

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