Murkowski revives possibility of a gas contract session

Governor says he was 'astounded' by news of handoff

Posted: Sunday, September 10, 2006

JUNEAU - Gov. Frank Murkowski says he returned from a duck hunting trip to the surprising news that he was simply going to hand off two years' worth of natural gas pipeline negotiations to his successor.

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Not true, he told The Associated Press on Friday.

Instead, his team will finish work on the contract for the $25 billion gas pipeline to Canada and only then will he decide whether to call a special session.

"I was kind of astounded that we left the impression that we were folding our tents and leaving it for the next administration," Murkowski said.

He said he will finish negotiating changes to the fiscal contract with BP, Exxon Mobil Corp. and ConocoPhillips, write the final draft and the accompanying fiscal interest findings, then hand it over to the Legislature. He left the question of calling a special session open.

"I'm not going to make that decision until I have a completed contract," he said. "There's just too much at stake here to risk losing a gas contract by unreasonable delay."

The governor's comments on Friday appeared to be another shift after his top aide this week said the gas contract would be a roadmap for the next governor to use. After meeting with several state lawmakers Wednesday, Murkowski's chief of staff, Jim Clark, said the administration wanted to have a package to hand off to the next administration.

Murkowski lost the Aug. 22 Republican primary to former Wasilla mayor Sarah Palin, who faces Democratic nominee Tony Knowles and independent Andrew Halcro in the Nov. 7 general election.

All three candidates on Thursday spoke on their positions on the gas pipeline contract. Knowles and Palin favor opening up the process to competing pipeline proposals, but say they would build on Murkowski's work; Halcro says the three oil companies' plan is the only one worth discussing.

Palin said if the revised contract shows the three oil companies were willing to address the various concerns about the original draft contract, Murkowski would be making the right call. But legislators still haven't seen the structure of the company that would own the pipeline and consist of the state and the three companies, and there is too much going on with election campaigns and last week's FBI raids, she said.

"The changes to his proposal must be good enough to win over the Legislature in a very short amount of time and in the midst of FBI probes," she said. "In that atmosphere, in that environment, how many are up for re-election? That's a lot on legislators' plates."

The FBI executed more than 20 search warrants throughout Alaska last week, including in six legislators' offices, with agents looking for ties between them and oil fields services company VECO Corp.

Ethan Berkowitz, the House Minority Leader and Democratic nominee for lieutenant governor, said no real possibility remains of the Legislature voting on Murkowski's contract, referencing the governor's recent hunting trip.

"Lame-duck hunting season is over. That duck has been plucked and cooked and maybe someone should tell the bird," Berkowitz said.

The FBI raids, the election results and congressional hearings into BP PLC and pipeline corrosion on the North Slope is an "apocalyptic combination" that translates into little or no political will to act on Murkowski's proposal, he said.

Speaker John Harris, R-Valdez, told Murkowski in a letter that most representatives believe that the voters had spoken for change and 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.

On Friday, Harris said he and his House members stand behind the letter, but the governor is entitled to call a special session if he wishes.

"I'd never tell the governor to fold up his tent," Harris said. But he did not sound hopeful that the cloud hanging over the Capitol would dissipate in the little time remaining in Murkowski's tenure.

"At this point in time, unless a lot of people change their minds, I don't think there is a favorable timeline, Harris said. "I have some legislators that want to go to Juneau, but not very many."

Murkowski said the FBI investigation was a surprise to him and is "a distraction to some extent," but he still plans to accomplish he set out do - deliver a gas contract to the Legislature.

The governor leaves office in December but he said he is not thinking of burnishing his legacy.

"My concern is there has been a lot of genuine, detailed work done," Murkowski said.

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