Alaska editorial: Governor should tell Alaskans more about gas line investment

Posted: Monday, December 05, 2005

This editorial first appeared in the Anchorage Daily News:

Confidentiality is overused in government. It's all too easy to cite some law, some legal point or some privacy issue as reasons not to answer questions and not to fully explain a decision. Too much confidentiality can spoil good policy by eroding public support. What we don't know may not hurt us, but it will make us skeptical and suspicious.

Such is the case with the governor's push for the state to make a multibillion-dollar investment in the proposed North Slope natural gas pipeline.

Gov. Frank Murkowski, in a recent speech before the Resource Development Council in Anchorage, said some things - but not enough - about his proposal for the state to invest $4 billion or more in the pipeline project. Being a part-owner of the world's largest private construction project sounds exciting - who wouldn't like to share in the bragging rights? - but Alaskans need to know a lot more about the financial risks and rewards.

Meanwhile, the governor, his commissioners and his press aides often quote the "confidentiality" of negotiations with North Slope producers when asked for more details about the possible state investment. They point to Alaska's Stranded Gas Development Act as the legal justification not to share more information with the public.

Sorry, but we disagree.

The law is very clear that proprietary information submitted by the private companies shall remain confidential. No argument there. But the state should be a little more giving in sharing with the public its own homework on the deal.

The law allows officials to keep confidential the state's work "relevant ... to a particular provision" in a gas line contract. While it makes sense for the governor to withhold analysis used in deciding whether the state should stand firm for X dollars or Y dollars in a particular contract provision, or the state's bargaining position on the formula for rewriting oil taxes as part of the gas deal, we can't see where it would harm negotiations for Gov. Murkowski to more fully explain the reasons, the risks and rewards, and the financing options for state investment.

How would it hurt negotiations to publicly discuss whether the state's equity share of construction costs would come from the Permanent Fund, general fund, budget reserve or future oil tax revenues? And why can't the public know what the state's financial advisers have said about borrowing a few billion dollars to make the investment? How would we borrow the money? What about repayment? What if pipeline revenues one year come up short of the loan payments?

The state has received advice from some of the biggest names in finance, including Citigroup, Goldman Sachs, Merrill Lynch and UBS. And a month ago the Department of Revenue signed a $400,000 contract with Challenger Capital Group of Dallas, to provide even more advice on a pipeline investment. What are they saying about the largest public investment in a private project in the nation's history?

The governor has talked about the risks and rewards of taking the state's royalties and taxes in the form of gas, not cash, and then selling the gas on the marketplace, just like any other energy company. But here, too, the details have been few while the governor awaits a final deal.

Without good answers, Alaskans are left to fill in the blanks with their own information, misinformation, perceptions and misconceptions. That's not good for anyone.

Please, no more overdone claims of confidentiality. Let's start hearing some details.



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