Palin consults gasline interests

Companies seem enthusiastic about deal, governor says

Posted: Thursday, December 07, 2006

New Gov. Sarah Palin said she would begin assembling a negotiating team as the next step in planning for a natural gas pipeline.

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Palin spoke with reporters Wednesday after spending the last two days in closed door meetings with 12 petroleum businesses and groups on a proposed pipeline for recovering the North Slope's 35 trillion cubic feet of natural gas reserves and delivering them to Midwestern markets.

Palin said she heard a lot of enthusiasm, especially from smaller energy companies that were not involved in the failed gasline deal that former Gov. Frank Murkowski hammered out with major oil companies, Exxon Mobil Corp., BP and ConocoPhillips.

"One thing we heard from pretty much everyone is that explorers are not going to risk exploration capital in Alaska if they don't believe they will be involved as participants in the gasline. They want access to the gasline," said Palin.

Acting Commissioner of Natural Resources Marty Rutherford said Alaska's gas still looks competitive in spite of the potential for massive imports of liquefied natural gas in the coming years.

Rutherford said LNG companies were having trouble lining up terminals to offload their gas, and that was helping Alaska's case.

She said most participants in the talks agreed there wasn't "any window about to close on the Alaska project," although she added that the big three companies were more cautious.

"They all indicated they were still very enthusiastic about the project so that would indicate to me they still thought it was an economic project. But obviously they still want a lot of state assistance on the project," Rutherford said.

Murkowski's proposed fiscal contract for an estimated $25 billion dollar gasline failed to win the support of the legislature and the public amid criticism that it favored the oil companies too heavily.

Lawmakers also complained about being left out of the negotiating process. Palin said she heard from companies that they wanted to be sure the Legislature was on board with any new deal.

"My intention is to work with the Legislature, not against them, and that too has been confirmed over these last two days," Palin said.

Palin said she and her gas team will go over the information from potential project sponsors. She plans to introduce a bill seeking a law of general application on the first day of the legislative session.

The bill would replace the Stranded Gas Development Act, the law under which Murkowski negotiated his deal.

Palin said her bill would open the field to smaller producers, as well.

Rutherford said the smaller companies complained that their proposals were not seriously considered in the early negotiations, leaving them feeling they were being used as leverage against the big companies.

Palin said the work done so far by the Murkowski team has been valuable, however.

"We don't have to start from ground zero. There's a lot of information out there," Palin said.

Palin said she wants to hire a combination of state and outside experts for a negotiating team. She said she does not plan to include Pedro van Meurs, one of the lead consultants on Murkowski's team.

Although Palin has pledged to have a more open process, the meetings were private; however the documents the companies gave them were made public.

Palin said she wanted the meetings to be candid, and the sessions were closed so the groups could speak freely.

Palin met with five groups Wednesday: the Alaska Gasline Port Authority, Conoco Phillips, BG Group, Chevron and Semco.

On Tuesday, she met with BP, Shell and Exxon Mobil, pipeline companies TransCanada, MidAmerican Energy Holdings and Enbridge Inc. and the Alaska Natural Gas Development Authority, a state agency that hopes to play a role in bringing North Slope gas to Anchorage and Matanuska-Susitna Borough consumers.

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