Randy's Corner Deli Library

16 September 2008

Sarah Palin: Alaskans or Oil Companies First?

View from a booth:

Since Mrs. Palin and her supporters are touting her experience as Governor of the State of Alaska, let us look at what she has done recently. An exclusive license was given to a Canadian Joint Venture consisting of British Petroleum and Conoco Philips to build what is known as the Denali Pipeline. In turn, the State of Alaska has committed to spend $500 million in subsidies toward a project that does not commit BP or Conoco-Philips to do anything under the terms of the license. I will tell you that articles concerning the uproar that this created when the actual terms of the document were made public - really public - after the deal was done, are no longer available on the Anchorage Daily News website. Would YOU throw $500 million down a well you didn't know positively you would see a dime from, "just to get a seat at the table"? That's what Sarah Palin signed off on. I hope it works out.

Randy Shiner

TransCanada gets Senate's OK

LICENSE: Palin celebrates as company is granted the right to pursue building a gas pipeline.

JUNEAU -- Gov. Sarah Palin's natural gas pipeline license won final legislative approval Friday, and an executive for the Canadian energy company that will hold the license said his firm aims to start work right away.

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"We are all smiles and we are full of gratitude for our good lawmakers making a very, very wise decision for Alaska," Palin said in her Capitol conference room packed with applauding aides and supporters.

After two hours of sometimes animated debate, the Senate voted 14-5 to pass House Bill 3001, which gives the Palin administration clearance to issue the license to TransCanada Corp. The Calgary-based company is one of North America's biggest operators of gas and oil pipelines.

The license comes with a $500 million state subsidy -- which lawmakers still must approve in a separate bill -- to help plan the 1,715-mile pipeline from the North Slope gas fields down the Alaska Highway to an existing pipeline network in Alberta, Canada.

The megaproject, if built, could cost more than $30 billion.

The Alaska House approved the license on July 22, and Friday's vote in the Senate sealed the popular Republican governor's second major victory in two years against not only her opponents in the Legislature but also major oil companies Palin sometimes has poked publicly.

BP, Conoco Phillips and Exxon Mobil -- which control most of the Slope's prodigious 35 trillion cubic feet of gas reserves -- opposed the TransCanada license and last year were unable to stop Palin's push for higher oil taxes.

Leading the opposition to the TransCanada license was Senate President Lyda Green, a fellow Republican from Palin's hometown of Wasilla who in June abruptly ended her re-election campaign, saying her constituents had turned against her over Palin's pipeline plan.

Green predicted Friday the state license won't lead to TransCanada building a pipeline. She added that she didn't see the lopsided Senate vote as a personal defeat.

"It's just how people feel," she said. "They've been drawn to a conclusion I don't agree with."

Palin, who needed overwhelming support from Democrats to win the TransCanada vote, said in her press conference that the state never before had "commitments to build this line. Now we do."

That's incorrect.

TransCanada has not promised to actually build the gas line, one of the state's grandest and most frustrated economic development dreams.

The state license, awarded under the Alaska Gasline Inducement Act, or AGIA, which the Legislature passed at Palin's request last year, is not a construction contract and does not guarantee a pipeline will be built.

Rather, it's an exclusive deal under which the state will provide up to $500 million plus other incentives, such as a coordinator to speed up permits, in exchange for TransCanada doing its best to secure the customers, financing, and U.S. and Canadian regulatory clearances to build a line supplying not only Lower 48 gas consumers but Alaskans too.

If all goes according to plan, TransCanada wants to have the Alaska gas line up and running by late 2018.

However, if the current trend of high natural gas prices were to collapse, that could doom a gas line, the staggering cost of which has kept North Slope gas locked in the ground for more than 30 years.

Later in her news conference, after two of her commissioners made clear the many significant hurdles still facing a gas pipeline, Palin checked herself, saying: "We're not turning dirt yet."

Senators on Friday delivered impassioned debate on both sides.

They called it the one of the biggest votes in the Legislature's history and invoked names such as George Washington, Teddy Roosevelt and -- yes -- Dudley Do-Right, the cartoon Canadian Mountie who, according to Democratic Sen. Hollis French of Anchorage, looks just like Tony Palmer, TransCanada's jut-jawed point man in Juneau.

French, who voted for the license, called it a chance for the state to break from the old cycle of negotiating unsuccessfully with the oil companies to build a gas line, which could unleash a new economic gusher in the state.

"In one sense, we're drilling a $500 million well," French said. "We might hit a gas line and we might hit dust."

Opponents said licensing TransCanada might only lead to years more delay. They said the license doesn't require construction, could expose the state to lawsuits, likely will waste the state's money, and ignores the key question of how much the state will tax gas production -- a major sticking point BP, Conoco and Exxon want settled before they sign contracts to ship gas on TransCanada's or anyone else's pipeline.

"I did not hear a clear endorsement of this concept," said Sen. Charlie Huggins, R-Wasilla, one of the five senators voting no on the TransCanada license.

Lawmakers went on a unusual "road show" of public hearings around the state during two pipeline special sessions that began June 3. They had until today to approve or reject the TransCanada license.

Opponents in the House and Senate did succeed in blocking an immediate effective date for HB 3001, meaning TransCanada might have to wait an extra 90 days to actually receive the license.

Palmer, who took congratulatory handshakes outside the Senate chamber, said his company soon would begin fieldwork such as aerial photography along the pipeline route. It also will look to set up an Alaska office, and to woo the three oil giants as customers, he said.

"We do business with those folks each and every day," Palmer said. BP already is the biggest gas customer on TransCanada's North American pipeline network, he said, and Conoco and Exxon also are big shippers.

TransCanada isn't the only company proposing an Alaska Highway gas line. BP and Conoco are partners on a new joint venture called Denali. The oil companies did not apply for the state license and $500 million subsidy.

Denali President Bud Fackrell said his firm already has up to 80 people daily working on a $40 million fieldwork campaign.

Fackrell said the TransCanada license won't affect Denali, adding: "We hope the state will give us a level playing field on getting permits."

Anchorage Democratic Sen. Bill Wielechowski voted for the TransCanada license and said it might spur the BP-Conoco partnership to win the gas line competition.

"If they ultimately end up building it, fine," he said. "We just want a pipeline."

Find Wesley Loy online at adn.com/contact/wloy or call him in Juneau at 586-1531.

How they voted


Sen. Con Bunde, R-Anchorage; Sen. Bettye Davis, D-Anchorage; Sen. Fred Dyson, R-Eagle River; Sen. Johnny Ellis, D-Anchorage; Sen. Kim Elton, D-Juneau; Sen. Hollis French, D-Anchorage; Sen. Albert Kookesh, D-Angoon; Sen. Donny Olson, D-Nome; Sen. Gary Stevens, R-Kodiak; Sen. Gene Therriault, R-North Pole; Sen. Joe Thomas, D-Fairbanks; Sen. Tom Wagoner, R-Kenai; Sen. Bill Wielechowski, D-Anchorage; Sen. Gary Wilken, R-Fairbanks


Senate President Lyda Green, R-Wasilla; Sen. Lyman Hoffman, D-Bethel; Sen. Charlie Huggins, R-Wasilla; Rep. Lesil McGuire, R-Anchorage; Sen. Bert Stedman, R-Sitka


Sen. John Cowdery, R-Anchorage


Please log in to post comments.

35Monday, August 4, 2008 - 12:50pm | danamber

So now

that this AGIA approval nonsense is over with, what some have been saying on here finally comes to light in Transcanadas own words. Namely: 1) Transcanada doesn't see things going forward until Exxon is onboard, Duh... 2) Either Denali or Transcanada will have the open season but Transcanada doesn't see both, 3) Transcanada won't be breaking ground until 2015 because they have other projects in t ...

34Monday, August 4, 2008 - 12:13am | MystiMoon

Alaskan Jobs

Will TC be hiring Alaskans to build this Canadian Pipe line through Alaska? Or will this be a complete wooohoo for Canada? I haven't seen much mention about jobs for Alaskans. Seriously I would think who gets to work on the pipe line construction would be a HUGE issue. I wonder who is going to turn on the gas to this line after Palin has insulted and so rudely behaved to those oil companies who ha ...

33Sunday, August 3, 2008 - 7:38am | lgmninak

Intelligence test

Looks like our elected officials flunked basic economics. WHY give away a half BILLION dollars??? For nothing - no gaurantee of pipeline - no ownership interest - nothing but money for a foreign company. How do you think they will get financing without commitment from COP and BP to sell gas?? They can't even get right of ways resolved for the MacKenzie project in Canada.

32Saturday, August 2, 2008 - 7:37pm | silverspoon_not

AGIA was competitive bid

Alaskan̢۪s should be shamed at all this bash CANADA crap. AGIA was a competitive bid process and the only responsive bid came from a Canadian firm (more power to them). Makes you wonder how much further VECO (gate) really goes as no American firms could turn in a competitive bid (or did not think they had to?). Now that AGIA is passed and we have a firm that won the competitive bid process. The o ...

31Saturday, August 2, 2008 - 4:31pm | prudhoeman

way to go sarah

dont be disheartened by the ignorance of people who think BP and Phillips and the denali project are doing alaskans some kind of favor.

30Saturday, August 2, 2008 - 3:08pm | gmw2clw

Canada Greater Priority

Alaskans now know that Governor Palin and the legislature are more concerned about taking care of the Candians than Alaskans. Maybe our legislators will come to their senses before they give away $500 million to a Canadian company for nothing.

29Saturday, August 2, 2008 - 3:30pm | Wings

Darn Canadians

Always getting their way with our government. The last time they didn't get their way they surrounded the MV Columbia in Prince Rupert and wouldn't let her leave port. Guess we owed them a favor after that act of war so it's good their getting the half bill. You never know what they might do if they don't get what they want so thanks Sarah for saving our ship.

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