Palin, Knowles offer similar pipeline plans

Candidates stress need for best deal, changes to governor's proposal

Posted: Friday, September 08, 2006

ANCHORAGE - Alaska's two leading candidates for governor presented their ideas Thursday for building a pipeline to market North Slope natural gas.

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Democrat Tony Knowles and Republican Sarah Palin presented similar proposals with both candidates stressing the need to get the best deal for Alaska.

Gov. Frank Murkowski, who lost his bid for re-election, has been criticized for making too many concessions to Big Oil in a proposed contract with North Slope producers to build a $25 billion gas pipeline.

Lawmakers made it known this week they are unwilling to attend a third special session to discuss Murkowski's proposed fiscal contract with BP, Exxon Mobil Corp. and ConocoPhillips. That leaves signing a gas pipeline deal up to the next governor.

Knowles repeatedly said Alaskans must come first when it comes to a pipeline deal.

"Alaska's future is on the line," Knowles said at a news conference at the port of Anchorage with running mate Rep. Ethan Berkowitz, D-Anchorage. "That means Alaska's gas on Alaska's terms."

Palin, a former mayor of Wasilla, echoed that theme at a separate news conference at a downtown hotel with running mate Sean Parnell, a former state senator. Both gubernatorial candidates said they would build upon work already done by the Murkowski administration while making changes.

Palin previously endorsed in television advertisements an all-Alaska gas line in which the gas would be liquefied in Valdez and shipped in tankers to the West Coast. She said Thursday what counts is that the project is best for the state.

"We are going to allow the free market to work," Palin said. "My preference is to see a project built - the best project for Alaska."

Independent candidate Andrew Halcro, a former Republican state legislator, said the only project worth discussing is the one with the three major producers. The all-Alaska liquefied natural gas, or LNG, proposal is based on false assumptions, he said, including that the producers would sell their gas.

"Why are you going to sell your gas at below-market rates to the LNG people so they can go out and make a profit?" he said.

Palin said long-term rates on oil taxes would not be part of her proposal. An oil tax freeze had been part of Murkowski's proposed contract, a provision that received the most criticism by state lawmakers and the public.

"Locking up oil taxes for decades is not going to be a concession made," she said.

Knowles said oil taxes would not be part of his gas line contract.

Both Palin and Knowles said they would deliver a contract that would mean jobs for Alaskans and opportunities for Alaska businesses.

"We want the best deal for Alaska - that means jobs, business opportunities, revenue and natural gas for in-state use," Knowles said.

Palin also stressed the need for making the natural gas available to Alaska homes and businesses. Knowles said his plan would include a spur line to provide gas to Southcentral Alaska.

Both Knowles and Palin said they would open up the process to other companies besides the three big North Slope producers, which hold the leases to the gas.

"In my administration, all qualified applicants will have the right to compete," Palin said.

Knowles, who was elected governor in 1994 and in 1998, said he would expect gas pipeline proposals by Jan. 31, 2007. Palin plans to introduce a general application bill in January to set basic requirements for the project.

Knowles promised a more "transparent" negotiating process. Palin vowed to work more cooperatively with the Legislature.

"We are going to negotiate from a position of strength because this is Alaska gas," Knowles said. "We will act quickly but deliberately."

Halcro said his plan would require several things, including changes in the fiscal certainty terms, the right of the state to renegotiate those terms and project labor agreements to hire and train Alaskans.

It also should contain language allowing the state access to the gas if the project fails to go forward, he said.

Halcro favors a 20 percent state ownership in the pipeline.

"We need a seat at the table," he said. "Our 20 percent ownership makes the project a go."

Knowles said his contract would include certain elements, such as firm work and financial commitments, which critics have said Murkowski's contract lacks. The state would have the right to terminate the agreement if those benchmarks were not being met, he said.

"We want a real deal," Knowles said.

Palin and Knowles also said the state should retain the option of taking royalties either in gas or cash. Murkowski's draft contract would have had the state receiving payments in gas, which the state would then have to sell.

Knowles said the state would have the option of owning an interest in the gas line but would not be required to invest. Alaska companies and individuals also should have the opportunity to invest in the gas line, he said.

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