Gov. Murkowski's gas-line timetable unlikely to happen

Posted: Sunday, September 25, 2005

JUNEAU - Broken deadlines and continued wrangling have dimmed the chances that the Alaska Legislature will meet by the end of the year to consider the terms of building a North Slope natural gas pipeline.

Gov. Frank Murkowski pledged to call a special legislative session this fall so that lawmakers could approve or reject a deal on fiscal terms for a pipeline. The state delivered an offer to three North Slope oil producers more than a week ago, and Murkowski optimistically predicted that a contract proposal would be ready to go to the public by Friday or Saturday.

But by week's end, the governor's office was backing off that prediction.

"At that time, I think that was his hope," spokeswoman Becky Hultberg said. "I'm not sure exactly where we are today, but I do know that the hurricane has temporarily disrupted the functioning of the producers' offices in Houston."

Asked if that meant Hurricane Rita was to blame for the lack of a deal, Hultberg said no, but "there may be some delays in discussion because of that."

In a Thursday speech to the Alaska Support Industry Alliance in Anchorage, Murkowski said he planned to provide a short period of time for the producers to respond to the state's offer "once the storm clouds have cleared."

One political opponent was quick to criticize the governor. "To blame a hurricane for the failure of this administration to get a gas line deal over the last three years and particularly over the last year is just silly," said Rep. Eric Croft, D-Anchorage.

Croft, who plans to run for governor in 2006, says there won't be a special session this year. He said the failure to reach an agreement is Murkowski's fault for taking a weak position at the negotiating table.

"The reason this keeps getting delayed year in and year out is this administration has taken a very bad negotiating position and stuck with it. The oil companies know we're desperate and they're not," Croft said. "Frank has made it clear that it's vital to his re-election."

Murkowski has not announced whether he intends run again next year.

BP, ConocoPhillips and Exxon Mobil applied as a group in January 2004 to negotiate long-term fiscal arrangements to build a pipeline. The producers propose a 2,100-mile line that would stretch into Canada and connect with markets in the Midwest. The price tag was put at $20 billion.

Hopes were high the last legislative session that lawmakers would be handed a contract for approval. That session came and went without a deal. But since then, negotiators say, the talks have ramped up, particularly in recent weeks.

Dan Dickinson, the former state tax chief, said the state team has been working up to 17 hours a day, seven days a week, trying to wrap up the deal. As the major points are agreed upon, though, a flood of minutia arises.

"There's still hard flogging going on," Dickinson said. "There are many articles in the deal. In some, we are worried about misplaced commas, others we are not sure where the general idea is. "

The state's Stranded Gas Act isn't clear on how much detail is needed in a contract, and which details can be left for later.

"Anything as comprehensive and complex a project as this pipeline involves a lot of (details). Where do you draw the line? You want a pretty detailed contract," said Chuck Logsdon, a spokesman for the state negotiating team.

In a best-case scenario, it would take two months for a proposal to go from the negotiating table to the Legislature for a vote. First, there is the public comment period, which will last at least 30 days, and possibly longer. At the same time, the Legislative Budget and Audit Committee will hold its own review and hearings on the deal.

All the comments made during that period will be funneled to Revenue Commissioner Bill Corbus and must be reviewed, which also will take time. Any changes to the proposal must be brought back to the producers for approval. If there are changes, the negotiations that result could add months to the process.

That means in the best-case scenario, lawmakers would be called to Juneau after Thanksgiving. On the other hand, if changes are needed that must be approved by the producers, it could be back to square one.

More obstacles lie ahead in Canada even if an Alaska contract is agreed upon. The planned pipeline corridor goes through the Yukon Territory, British Columbia and Alberta. BP spokesman Dave MacDowell said the regulatory process the producers need in Canada exists and could provide a framework for the project.

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