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Alaska Gov. running out of time for pipeline deal

Posted on: Tuesday, 11 July 2006, 13:42 CDT

By Yereth Rosen

ANCHORAGE, Alaska (Reuters) - Alaska Gov. Frank Murkowski sees a natural gas pipeline as vital to the state's financial future, but his sagging poll numbers could force him from office before the $20 billion project gets a final go-ahead.

Nearly five months after the Republican governor reached a contract with the three major Alaska oil producers, the pipeline to carry natural gas from northern Alaska to the lower 48 U.S. states still does not have legislative approval and the pact is the object of public scorn.

Murkowski must now head back to the drawing board and renegotiate portions of the pipeline deal before he faces former two-term Governor Tony Knowles, the likely Democratic nominee, in the November general election.

That assumes the governor can make it out of his party's primary, where he faces stiff challenges from former Wasilla Mayor Sarah Palin and former state Sen. John Binkley.

Recent polls show him to be the nation's second-least popular governor and lagging both Palin and Binkley in the GOP primary campaign. But Murkowski will likely try to convince voters that he deserves reelection because of his gas pipeline efforts, one Alaska political expert said.

"He is the incumbent and he will make the argument, as he already has, that previous governors did nothing about the gas line," said Jerry McBeath, a political scientist at the University of Alaska Fairbanks. "I would definitely not write him off at this point."

The massive natural gas pipeline is a decades-old dream for state officials. Murkowski likens the pipeline to the discovery of the giant Prudhoe Bay oil field and ensuing oil boom nearly four decades ago.

"It's going to be that big. In fact, it's going to be bigger," said Murkowski, who served for 22 years in the U.S. Senate before becoming governor.

But for much of the Alaskan public, the gas pipeline deal the governor negotiated with ConocoPhillips, BP Plc and Exxon Mobil Corp. is a bust.

Critics, weighing in at public meetings, in newspapers and on the airwaves, have been vociferous, complaining that the Murkowski deal would convert the state into a powerless subsidiary of the oil companies.

"The decisions about our most important resources will no longer be made in Juneau. They will be made in London, England, and in Houston and Irving, Texas," former Gov. Wally Hickel, a famously pro-development Republican, said in a recent opinion column in the Anchorage Daily News. "If this contract is approved, those who sign it will sign away our future."

MURKOWSKI CAVES

In response to the criticism, Murkowski announced plans to renegotiate portions of the deal and present a revision by the November election.

The idea of a pipeline tapping into the North Slope's rich natural gas reserves goes back more than three decades. The reserve has the potential to provide at least 5 percent of U.S. gas needs for decades, but it has remained stranded without a transport system to bring the product to markets.

The Murkowski-negotiated contract proposes that the state invest in a 20 percent ownership of the pipeline, expected to cost over $20 billion. It would freeze oil taxes for 30 years and natural gas taxes for 45 years, but the governor now plans to shorten the tax freeze period.

Other unpopular points of the deal include granting the three giant oil companies more favorable terms on oil and gas leases and a provision preventing the state from taking pipeline-related disputes to court.

State lawmakers have given the contract a chilly response. The legislature adjourned a special session last month without passing any of the bills that the governor wanted to use to clear the path for his pipeline deal. Murkowski has called for a second special session to start July 12.

Murkowski's reelection hopes are tied to the deal.

"I'm not running against people. I'm running for this contract, which is in the interests of Alaskans," Murkowski said at a recent news conference.

The three oil producers have launched campaigns to convince the public and the legislature to sign off on the contract.

"The green light for Alaska's future is gas," said one recent BP newspaper advertisement. "Gas means go ahead' for Alaska's bright future."

Still, the pro-contract campaign may be counterproductive to Murkowski's cause, said Ivan Moore, an Anchorage pollster and political consultant. According to Moore's polling, the governor's disapproval rating is 73 percent.

"He's got the oil industry out there saying it's a great deal, and I think that makes people very nervous," said Moore. "It's a little bit like the fox saying, Come on in the henhouse."'

Source: REUTERS

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