Croft seeks fair pipeline deal for state

Posted: Wednesday, November 23, 2005

Gov. Frank Murkowski may be dangerously close to giving away the farm and costing Alaskans dearly as he negotiates with three major oil producers, Rep. Eric Croft warned Monday.

The Anchorage Democrat is a candidate for governor and was interviewed in Homer on Monday during a three-day campaign swing on the Kenai Peninsula he is calling his his “no jet” tour.

Ensuring Alaska pens a fair deal and locks in a firm commitment to build a pipeline quickly is one of the reasons he’s running, the five-term Alaska House member said.

Other reasons, he said, included reducing school class sizes in K-3 to no more than 18 students, protecting Alaskans’ dividends from raids by lawmakers, and restoring ethics to the Legislature.

North Slope gas reserves must be developed as soon as possible. Alaskans have been patient long enough, Croft said.

“We’ve been waiting for a gas pipeline for 25 years. I don’t know of any landowner in the world or any government that would stand for that,” he said.

State lawmakers, however, have been willing to drag their feet, largely because of the influence the oil industry exercises with campaign contributions, Croft said. The three oil companies with whom the governor is negotiating have the state over a barrel and are seeking concessions not only on gas taxes, but on oil taxes, as well, and actually may not be interested in building a pipeline anytime soon, he said.

Exxon has overseas investments and projects that it can’t delay for fear they’ll be nationalized for lack of progress, Croft said.

Alaska should not be the only place on the planet where there is no penalty attached to delaying construction.

To ensure a project is built soon, Croft, along with Reps. Harry Crawford, D-Anchorage, and David Guttenberg, D-Fairbanks, have launched an initiative to place a 3-cent tax on gas reserves held by leaseholders. The tax would pay the state $1 billion a year, providing more than enough incentive to build a line quickly and market Alaska’s gas here and abroad.

So far, the initiative has gathered about 27,000 of the 31,451 signatures needed to put it on the ballot next year, he said.

Given the right set of circumstances, a pipeline could be operational by 2012 or 2013, Croft said, adding that ExxonMobil was talking 20 years or more.

Croft argued that Gov. Frank Murkowski was making a fundamental error in deciding to sole-source a pipeline contract. He and other Alaska Democrats have called on the governor to continue talking not only with the big three — ExxonMobil, BP and ConocoPhillips — but with other players proposing pipeline projects like transCanada, which would build a line to hook into a Canadian system at Alberta, and the Alaska Gasline Port Authority, which would build an all-Alaska line to Valdez.

Murkowski’s decision has limited the pool of choices. Beyond that, Croft said he fears the oil companies may view the governor as politically desperate, putting Alaska in a weak negotiating position. Croft said the governor appeared willing to make concessions not only on gas taxes, but on oil taxes, as well. There is no need.

One need look no further than the comments of Tom Irwin, former commissioner of the Department of Natural Resources, Croft said. Irwin warned the governor — and was fired for it — that the negotiations could lead to a bum deal for the state.

“Tom Irwin, a nice Republican, conservative businessman, knows a bad deal when he sees one. It’s not like he suddenly got hit with a liberal stick,” Croft said.

He called Irwin a watchdog.

“When your watchdog wakes you up at 2 a.m. you can check out what’s wrong or you can shoot the watchdog. Frank decided to shoot the dog,” Croft said. “There are two problems with that. It’s not fair to the dog, and you’re more likely to get robbed.”

Irwin’s dismissal was followed by the resignations of several high-ranking DNR staffers.

When the governor eventually brings a deal to the Legislature, Alaskans will learn how far the oil industries’ influence extends, Croft said.

“We are going to have the answer as to who really owns Alaska,” he said. “It’s the year that we decide whether we are a fully owned subsidiary of the Exxon Corp.”

Croft promised to support “a good deal” if Murkowski puts one before state lawmakers, but he doubts that’s what they’ll see. Should the Legislature buy into one, and if he becomes governor, Croft said he’d try to get Alaska out of any bad deal.

A good deal, he said, wouldn’t have to mean Alaska getting everything it wanted and the oil companies nothing of what they wanted. First, that scenario just isn’t likely. But further, a good deal might mean “leaving money on the table.” Croft offered an analogy: If you pay $1,000 too much, but get a really good car, it is something you can accept. Get a lemon, however, and the equation becomes far less attractive.”

“The real danger is getting a contract that doesn’t guarantee a gas pipeline at all,” Croft said. “If you see that, you’ll know Frank did get desperate in the negotiations.”

It is expected that any gas line would provide gas to Alaska through a spur line. For his part, Croft said he supports an all-Alaska line to Valdez because it likely would mean more of that gas reaching Alaska homeowners, businesses and industries.

In any case, state lawmakers should insist on all options being on the table, that construction not be delayed, and that Alaska’s gas resources be developed and marketed, he said.

“Imagine the colossal failure of leadership if we end up 15 years from now and not only do we not have our own gas, but we are importing gas from Indonesia. A whole generation of political leaders will have to stand up and explain themselves,” he said. “I, at least, want to be in the camp that says I tried everything I could.”

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