The governor appears to be close to announcing an agreement between the three primary North Slope producers ConocoPhillips, ExxonMobil and BP Transcanada and the state of Alaska on a contract to move our gas to market.
There also is the potential for two additional proposals: the Alaska Gasline Port Authority to bring gas from the North Slope to Valdez and construction of the gas pipeline with no involvement by the producers by Transcanada, with purchase of the gas to be negotiated separately.
The contract will be available for comment from the public and other North Slope producers for a period of at least 30 days, but more than likely 60 to 90 days.
Following the comment period, changes may be incorporated into the contract before it is submitted to the Legislature. The only input the Legislature will have is a vote to accept or reject the contract.
One difficulty facing the Legislature is timing. The gas line is the most important issue to come before us in three decades. The decision we make will have an impact on Alaska for the next 25 years. Addressing the contract during regular session could be costly as the potential for some legislators to hold it hostage for capital projects is a real danger.
The ideal method of handling an issue of this importance is a special session after adjournment of the regular session. Committee hearings and preliminary studies can be accomplished during regular session and should enable a special session to be of short duration. The gas line means too much to Alaska to combine it with budget, personal legislation and partisan politics.
You may wonder why the governor is only considering one of the three proposals. The proposal from the North Slope producers is the only one conforming to the Request for Proposal released by the governor’s office. The so-called all-Alaska line of the Alaska Gasline Port Authority does not have contracts to sell the gas, has Jones Act problems, and the gas would be shipped to British Columbia and Mexico for re-gasification after being rendered to a liquid state in Valdez.
The only company working with the Port Authority for possible gas purchase is Sempra Energy, who withdrew from negotiations early in the year but apparently resumed contact recently. Sempra currently is involved in several lawsuits amounting to $30 billion for alleged price fixing during the last California energy crisis. One of the co-defendants has paid $5 billion to be released from the suit.
Our governor and attorney general are aware of the Sempra’s problem and reputation, and one could reasonably assume this is the reason the Port Authority’s proposal is not receiving serious consideration.
Last month, California Attorney General Bill Lock stated, “Sempra ranks as one of the worst of the bad actors who ripped off businesses and consumers during the energy crisis.”
Sempra would supply the gas to California, rather than the Midwest, where the demand is greatest.
From my prospective, the four most important issues the contract must address are:
1. Will it bring gas to Cook Inlet?
2. Will it provide jobs for Alaskans to the limit of the law?
3. Will it contain a definite startup and reasonable completion date?
4. Will in generate additional revenue at a higher rate when gas prices are high?
Additionally, as goods and services will be required from companies in the Lower 48, I believe we should limit our dealings to firms domiciled in states that support the opening of ANWR. That would automatically rule out Washington, Oregon and California. The same should apply to recruiting workers from hiring halls for labor not available in Alaska. We need to support those who have supported us, not those who would lock our resources up forever.
Thanks for taking the time to read this. I look forward to working for you on this important issue.
Kurt Olson, a Republican, is the representative for House District 33. He lives in Soldotna.
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