Dept. of Revenue head rebuts Murkowski pipeline criticism

Galvin says AGIA making progress, despite former governor's claim

Posted: Friday, November 06, 2009

Offering a sharp rebuttal to former Gov. Frank Murkowski, without mentioning him by name, state Revenue Commissioner Pat Galvin said the Alaska Gasline Inducement Act is moving the state toward a natural gas pipeline.

Brian Wallace / Juneau Empire
Brian Wallace / Juneau Empire

Speaking to the Juneau Chamber of Commerce and following a recent visit from Murkowski, Galvin said the state's AGIA process is making significant progess.

"From my perspective, it's a huge success," he said.

The need for a natural gas pipeline to bring the state's extensive North Slope natural gas reserves to markets down south is critical as oil continues to decline.

Developing a large-capacity pipeline is "the single most important project for the future of our state," he said.

That's despite complaints from critics who call AGIA a failure, including from Murkowski, who recently told the Chamber Alaska should go back to his plan of negotiating with the state's oil and natural gas producers to get them to build a pipeline.

Under AGIA, Galvin said, the company chosen by the state, TransCanada Corp., is developing a pipeline with state support and the involvement of ExxonMobil Corp. As the AGIA process began, two other companies, ConocoPhillips Co. and BP PLC, began developing their own pipeline.

Those two pipeline efforts are both working toward "open seasons," during which they'll publicly seek commitments of natural gas from shippers. The current work is to develop detailed cost estimates on which to base those shipments.

AGIA critics have said the development of shale gas reserves and other unconventional sources of gas elsewhere in the United States and Canada is making Alaska's gas uneconomic, but Galvin discounted those concerns.

"The expectation is that the market will be there for Alaska's gas, even with shale gas and unconventionals coming in," he said.

The issue merits continued watching, however, he said.

Galvin declined comment to the Empire after Murkowski's chamber speech, and Thursday only referred to the "previous administration." Galvin's former boss was former Gov. Sarah Palin, who along with then Lt. Gov. Sean Parnell ousted Murkowski from office.

Gov. Parnell is continuing Palin's strong push for a pipeline.

Galvin said Murkowski's plan offered the companies holding the gas too much, including 35 years of fixed tax rates, which they call "fiscal certainty." And the companies wanted it on both oil and gas in exchange for looking at building a natural gas pipeline.

Now that Alaska is moving forward with AGIA, Galvin said, BP and ConocoPhillips decided they could also move forward without fiscal certainty.

The oil companies also wanted Alaska to agree to arbitration of all disputes, taking the courts out of the picture. That's something many in the Legislature, which refused to approve Murkowski's plan, found unacceptable.

Galvin said TransCanada is going to begin the open season process early next year, and complete it by midsummer. It's less clear when the BP-ConocoPhillips plan will have its open season, Galvin said, saying the companies were "kind of squirrelly" about dates.

• Contact reporter Pat Forgey at 523-2250 or patrick.forgey@juneauempire.com.



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