Alaska gov. plans third try at gas pipeline

By Yereth Rosen

ANCHORAGE, Alaska (Reuters) – Outgoing Alaska Gov. Frank
Murkowski said Wednesday he plans to call a third legislative
session to try to win approval for a more than $20 billion
natural gas pipeline deal that would pump badly needed fuel to
the U.S. Midwest.

Murkowski, whose re-election bid was ended by an
overwhelming defeat last week in the Republican primary, said
he wants to start the special session on September 19, giving
lawmakers enough time to approve the contract before the
November general election.

To make his pipeline deal more appealing, Murkowski said he
and the North Slope oil producers — BP, ConocoPhillips and
Exxon Mobil — have invited lawmakers to participate in a new
round of negotiations.

The lawmakers, to be selected for their committee positions
and other special expertise, will help rewrite contract
provisions that have drawn the most public criticism, Murkowski
said at an Anchorage news conference.

The provisions include promises for a long-term oil tax
freeze that critics believe violates the state constitution and
construction and labor commitments that critics consider vague
and inadequate.

“The producers indicated that, as far as they were
concerned, that these items were negotiable and they were
willing to pursue it,” Murkowski said.

The gas pipeline, a decades-long dream of Alaska officials,
would run about 3,600 miles from Prudhoe Bay to Chicago or some
other U.S. Midwest hub.

It would provide a means for shipping the known 35 trillion
cubic feet of natural gas reserves in North Slope oil fields,
primarily Prudhoe Bay. The pipeline would take several years to
build, according to state officials.

Murkowski’s proposed contract with the North Slope
producers, unveiled in May, establishes terms for taxes,
royalties, lease duration and a 20 percent state investment in
the project.

Critics say the deal’s terms concede far too much to the
oil companies and would surrender important state powers
necessary to protect the public interest, including the power
to take disputes to court. The critics include the GOP
gubernatorial candidate, former Wasilla Mayor Sarah Palin, and
the Democratic candidate, former Gov. Tony Knowles, who is
seeking a return to his old job.

Murkowski said Wednesday that even though he will be
replaced by a new governor in December, there is a need to
renegotiate and ratify the contract quickly.

That is because Alaska voters are likely in November to
approve a ballot initiative that would charge the oil companies
a reserves tax of nearly $1 billion a year for the known North
Slope natural gas that is not being shipped to market, he said.
The gas pipeline contract, if signed, would negate the reserves
tax and its associated threat of litigation by the oil
companies, he said.

Delays in getting the contract in force would also increase
the likelihood of natural gas from elsewhere displacing the
potential for Alaska gas in the U.S. market, Murkowski said.

“It’s certainly appropriate that we recognize that delay
could put this project in significant peril,” he said.

House Minority Leader Ethan Berkowitz, an Anchorage
Democrat, said chances for legislative approval in another
special session were slim. He noted that Murkowski has invited
only members of the Republican majority to participate in new
pipeline negotiations.

“If they’re intent on having an all-Republican pipeline
instead of considering an all-Alaskan answer, there’s no point
in having a third special session,” Berkowitz said.