Alaskan voters last Tuesday gifted the oil and gas industry with a Republican governor and defeat of a controversial tax on natural gas reserves.

Former small-town mayor Sarah Palin defeated former Alaska governor Democrat Tony Knowles, in his attempt at a third term in the governor’s mansion, and independent Andrew Halcro. Palin defeated Knowles 49% to 41%. Halcro had 10% of the vote. Earlier this year, 42-year-old Palin beat Gov. Frank Murkowski in the Republican primary.

After taking office, Palin will play a key role in negotiations for a natural gas pipeline to deliver her state’s abundant gas reserves to the Lower 48 states. Previously, she has said she wants to expand the competition for pipeline development. In September Palin said high gas prices mean North Slope gas is no longer stranded, which frees any pipeline negotiations from being under the umbrella of Alaska’s Stranded Gas Development Act. “The door to competition is wide open,” she said (see NGI, Sept. 11).

“The free market will work if we want it to. This market will include, but not be limited to, BP, ExxonMobil and ConocoPhillips. However, I will not allow them a monopoly, nor will I accept that huge concessions are the only way to get the line built.”

A controversial ballot measure to spur development of a natural gas pipeline by taxing the undeveloped gas reserves of major oil companies failed at the polls Tuesday by a 2-1 margin.

Ballot measure 2 — the Alaska Gas Line Now initiative (see NGI, Oct. 30) — had little organized support, but the oil industry spent heavily on advertising to counter the measure, which it said would not speed pipeline progress and only add to the cost of the $20 billion project. Had it passed, the measure would have imposed an annual tax on North Slope gas reserves until they flowed through the pipeline. The oil industry would have been eligible for credit for some of the tax paid after production flow depending upon how long it took to get the pipeline in service. Estimates of how much the tax would have raised ranged from $400 million to $1 billion/year.

In other gasline news, a federal judge ruled that lame duck Gov. Frank Murkowski must have legislative approval in order to finalize a draft fiscal contract with producers for development of Alaska’s gasline. Murkowski had refused to say that he would not sign the contract without legislative approval, which prompted a lawsuit by lawmakers.

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