Former governors pan AGIA

Hickel, Knowles have own ideas about how to develop state's gas

Posted: Tuesday, July 29, 2008

Two former governors provided sharply contrasting views Monday on Gov. Sarah Palin's Alaska Gasline Inducement Act, though neither Republican Wally Hickel nor Democrat Tony Knowles supported it.

Brian Wallace / Juneau Empire
Brian Wallace / Juneau Empire

Hickel urged a vote against the gas pipeline project brought forward under AGIA, a line across Alaska and Canada to the U.S. Midwest. He said that project would put Alaska's gas under the control of a foreign country.

"Don't sell us out," Hickel urged the legislators, currently meeting in special session to decide whether to support TransCanada's $28 billion gas pipeline plan.

Hickel is notable for being Alaska's only two-time governor. He was first elected in 1966 and then again in 1990. He left his first term early to serve in President Richard Nixon's cabinet as Secretary of Interior.

He told lawmakers Monday the state should build its own gas pipeline across the state, the so-called "all-Alaska" gas pipeline, and export its gas in liquefied form to lucrative Chinese markets.

Letting Canada control Alaska's gas would give up the state's sovereignty, he said.

"This is the most important vote you will ever cast," Hickel said.

At least two liquefied natural gas proposals were submitted under AGIA, but neither was found to meet the state's requirements.

Knowles, who served two consecutive terms as governor starting in 1994, also urged rejecting TransCanada's application, but for a different reason.

A competing project proposed by two of the state's oil producers and natural gas leaseholders, called Denali, also would follow the Alaska Highway on its route through the Yukon and on to Alberta, where it would link up with pipelines that could carry it to the U.S.

That project, proposed by BP and ConocoPhillips Co., could be jeopardized by passing AGIA, Knowles said.

"There are those who say a vote for AGIA is a harmless vote," he said.

AGIA is too risky, he said, because it would bar the state from negotiating tax deals with the producers that could be necessary to make a deal economic.

"This project is still marginal," he said.

If the Legislature endorses the TransCanada plan brought forward under AGIA, provisions in AGIA would bar the state from offering tax breaks to the BP-ConocoPhillips plan, he said.

That could expose the state to triple damages if it violates the deal, setting up a "field day for lawyers," he said.

Knowles denied that he was backing the BP-ConocoPhillips plan.

Sen. Joe Thomas, D-Fairbanks, a member of the special Senate energy committee that heard the former governors' testimony, said it appeared that rejecting TransCanada would leave only the oil companies' plan. There is no all-Alaska pipeline plan and no developer, he said.

The Alaska Gasline Port Authority all-Alaska proposal is "a concept, not a plan," Thomas said.

Hickel could not explain to committee members how he'd convince oil producers to sell gas to the LNG export line he was proposing, if their own line was more profitable for them.

The 89-year-old Hickel instead told stories about how he got oil companies to drill for oil in Prudhoe Bay during his first term as governor in the 1960s.

"I opened up Prudhoe Bay," he said. "They weren't going to drill it, and I said, 'Drill it, or I will.'"

Under the provisions of AGIA, the Legislature has until midnight Saturday to give its approval to TransCanada. The House of Representatives already approved the plan 24-16, with the Senate now considering it.

• Contact reporter Pat Forgey at 586-4816 or e-mail

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