Is this deal any better than the last one?

Posted: Wednesday, July 09, 2008

During "King Murkowski's Reign," I publicly criticized him severely in the media for his proposed pseudo-contract with the oil/gas producers for a natural gas pipeline from the North Slope to the Lower 48. Since it really wasn't a contract but promised fiscal certainty and other give-aways to the oil/gas producers for 40 years, and allowed them to start building the natural gas pipeline when they felt like it, it just didn't seem appropriate for Alaska. Our Legislature agreed.

Recently, I was enlightened by an unnamed legislator that Alaska's Gas Inducement Act (AGIA) and it's discussions with TransCanada (TC) might even be worse. The facts are: 1. Governor Palin and the State of Alaska Legislature may be willing to give TC $500 million as an inducement (incentive) to obtain a license TO THINK ABOUT contracting with our state to build a natural gas pipeline to the Lower 48 SOMETIME (date to begin construction not stated); 2. TC has yet to secure all the necessary natural gas pipeline rights-of-way through Canada, which could be delayed in litigation for years; 3. Neither Alaska nor TC has negotiated with Alaska's oil/gas producers, which control the natural gas, for any existing Alaska natural gas reserves to be shipped in the "phantom" yet-to-be-built natural gas pipeline; and 4. There are no provisions in any of these discussions for any Alaska natural gas reserves to be sent through any North Slope yet-to-be-built natural gas pipelines to Alaskan markets.

Alaska seems to be awash in money right now, and Gov. Palin seems to want to find ways to spend it (to improve her popularity?) whether it's productive over the long term or not. She and her administration are truly beginning to show their naivete and lack of program management experience. Why would anyone want to build a $30 billion natural gas pipeline, when the natural gas supply to the pipeline cannot be assured? Seemingly, neither Alaska nor the proposed pipeline builder control the natural gas reserves. At least, "King Murkowski" was talking to the Alaska oil/gas producers, who could assure natural gas for the pipeline!?

The Legislature, in a new special session beginning July 9, is getting to vote on TC's "noncommittal license application" and pay TC $500 million for what? There is nothing in AGIA for Alaska or Alaskans, i.e., no construction contract and no date to begin, no natural gas for THE PIPELINE, no natural gas or natural gas pipelines for Alaskans, and no completely secured pipeline rights-of-way to the Lower 48. Our governor and Legislature are now contemplating spending $500 million for nothing. To me, that is mind boggling! And I thought we had progressed beyond Murkowski?! NOT!

Richard Hahn


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