Pipeline official defends secrecy

Posted: Wednesday, July 21, 2010

Federal pipeline coordinator Larry Persily gingerly waded into the Alaska governor's race Tuesday, questioning calls by Gov. Sean Parnell's opponents in the Republican primary for confidential bids to be made public.

Briefing Alaska reporters on pipeline progress Tuesday, Persily said that the two competing pipeline proposals that are currently soliciting business in the process known as an "open season" will not become public before the November's general election, let alone the August primary.

Persily, a former Alaska journalist and legislative and executive staffer, was appointed earlier this year to head up the federal pipeline effort, which also includes loan guarantees and other assistance.

The pipeline regulatory process is governed by the Federal Energy Regulatory Commission, which doesn't make shipment bids public. The companies involved could choose to do so, but doing so might put themselves at a business disadvantage, Persily said.

"Those bids are confidential financial proposals from one entity to another," he said.

Parnell, who with former Gov. Sarah Palin was instrumental in spurring the pipelines forward with the passing of the Alaska Gasline Inducement Act, is facing primary opposition from AGIA opponents.

Under an AGIA license, TransCanada Corp. is in the midst of an open season that ends at the end of the July. The competing Denali project, owned by ConocoPhillips Co. and BP, will conclude at the end of October.

Persily said it will likely be next year before the bids are made public.

Both of Parnell's Republican opponents, former legislator Ralph Samuels and gas export proponent Bill Walker are attacking Parnell and AGIA and demanding the bids be made public.

Walker, an opponent of AGIA and the plan for a pipeline to the United States Midwest markets, has filed public records requests seeking to force Parnell to release TransCanada's information.

"The Alaska people have a right to know on August 1st if the open season was a success or failure," Walker wrote in a public records request rejected by Parnell.

Under AGIA, TransCanada's license gives the company up to $500 million in state funding to proceed towards a crucial FERC certificate for the pipeline. In exchange, the pipeline will have to meet several conditions designed to benefit the state, including open access to new North Slope explorers.

Alaska pays half the early costs until the close of the open season, and then pays up to 90 percent, up to the $500 million.

ConocoPhillips and BP balked at those conditions and began their own pipeline project.

Samuels, who while in the Legislature was the only member to vote against AGIA, said that proposals to TransCanada should be made public because of the state funding.

"The people of Alaska should know, we paid for that information, we paid half the bill and starting August 1st the state will be paying 90 percent," Samuels said on the Alaska Public Radio Network's Talk of Alaska program Tuesday morning.

In Persily's Tuesday briefing on pipeline progress he said provided an upbeat assessment of the state's chances of getting a natural gas pipeline, talked about the impact of plentiful shale gas in the Lower 48, and addressed Parnell's primary challengers' quest for more information.

Persily said FERC regulations that govern pipelines don't require the bids be made public, and that companies aren't likely to want their competitors to know what they're offering.

By federal law, no one gets a copy of the bids, he said.

Persily declined to say whether Alaskans would benefit from having the information sought by Walker and Samuels.

"I do not want to get into the governor's race," he said, but acknowledged that "some people are going to take it that way."

Persily continued to say he expected bids to come in during the open seasons, but that they'd almost certainly come with conditions.

And plentiful shale gas, which some have feared would scuttle both pipeline efforts, might have benefits as well.

To make a pipeline viable, he said, new demand from power plants and other big users must switch to gas. Shale gas will prevent the price spikes that made companies unwilling to switch to natural gas, he said.

"Shale will cut the top off those price spikes," he said.

• Contact reporter Pat Forgey at 523-2250 or patrick.forgey@juneauempire.com.

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