Murkowski drops plans for session

Legislators do not want to meet for a third time this year on pipeline issues

Posted: Thursday, September 07, 2006

JUNEAU - It will be up to a future governor to sign a contract for a $25 billion North Slope natural gas pipeline to Canada, Gov. Frank Murkowski's top aide said Wednesday.

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This past month saw Murkowski lose his re-election bid, BP shut down part of the Prudhoe Bay oil field and federal agents raid lawmakers' offices for their ties to an oil field services company. The effect of those events have effectively dashed Murkowski's hopes to be the governor that delivers a fiscal contract with the state's largest oil companies that leads to a gas pipeline to Canada and then Midwestern markets.

Murkowski Chief of Staff Jim Clark, Revenue Commissioner Bill Corbus and others on Murkowski's gas negotiating team met with several state senators Wednesday in Anchorage. The talk no longer centered on whether to meet in a special session this fall, but how best to prepare the past two years' pipeline negotiations for the next governor.

"We described to them that we're going to work to finish it so we have a package to hand off to the next administration," Clark said. "It's important that we leave a road map as a transition for the next administration that comes in."

Clark tried to leave a little wiggle room for Murkowski to call a new session anyway: "Obviously things can change, but that's essentially it."

That roadmap includes responding to public comments made about the contract, which could be presented in an interim meeting of the Senate Special Committee on Natural Gas Development at the end of September or the beginning of October.

It will also include new fiscal interest findings written by Corbus on whether the contract is in the state's best interests, plus the framework of partnership between the state and the three oil companies that would own the pipeline. That limited liability company agreement is still being negotiated.

State Sen. Hollis French, D-Anchorage, participated in Wednesday's meeting. He said a new session would have been a bad idea in the wake of the FBI

raid on six legislators' offices last week, with federal agents searching for any financial links to VECO and its executives.

"From my perspective, you just couldn't convene a Legislature under worse circumstances," French said. "The public perception, and rightfully so, would be that we're operating under a cloud."

Murkowski, who was duck hunting Wednesday, leaves office in December after coming in last in the three-way Republican primary on Aug. 22. Republican nominee Sarah Palin is up against former Democratic Gov. Tony Knowles in the Nov. 7 general election.

After the election, Murkowski said he would call lawmakers back to the Capitol for another try at a revised contract, which would set financial terms for BP, Exxon Mobil Corp. and ConocoPhillips to tap into the North Slope's 35 trillion cubic feet of gas reserves.

Legislators have twice failed to pass bills related to the pipeline, many of them saying they saw major flaws with the terms of the contract.

Murkowski later backed off, saying he would first seek lawmakers' input as to whether there should be a new session before calling one.

The answer came back as a strong "no" from the House. Speaker John Harris, R-Valdez, polled his members and sent the results to Murkowski in a letter dated Tuesday. Harris wrote that the voters had spoken for change in the primary election and that lawmakers are hearing from constituents that a new governor should continue the work.

Also, there should be a "cooling off period" after the FBI raids to distance the Legislature from the perception of corruption and learn what federal investigators are trying to accomplish, Harris wrote.

The FBI and the Department of Justice are mute on the purpose of the investigation and they have refused to release any of the search warrants that would provide a clearer picture of its scope.

"There is no doubt the FBI investigation of some legislators and dealings with VECO have had an impact on members," Harris wrote. "There could be a perception of influence by the public on earlier and possible future special session proceedings."

Harris also said after House leaders met with the three oil companies last week, the companies wanted concessions to offset the higher taxes passed by the Legislature last month when lawmakers approved a production tax rewrite.

"This would require further complex negotiations that the majority of members believe could not be accomplished in a 30-day special session," Harris said.

Clark declined to say what concessions the three companies were seeking.

French said Harris' letter was distributed Wednesday, but not discussed. Nor was the FBI investigation, he said. But the impression he got was that it was a foregone conclusion among his colleagues that there would not be another special session, he said.

Sen. Gary Wilken, R-Fairbanks, who listened in on the meeting from Valdez, said he encouraged Clark and the administration to finish their work so that the change in administration won't be a hurdle and the negotiations can resume as soon as possible in January.

"These distractions are distressing, but it doesn't change the fact that middle America needs Alaska's gas," Wilken said. "The worst thing that we could do is let all the work that has been done the last two years lay fallow."

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