As expected, the changing of the guard in the Alaska governor’s mansion has brought with it a rethinking of plans for a natural gas pipeline to carry production from the state’s gas-rich North Slope to the Lower 48. The state has thrown open the doors to new proposals for monetizing its gas resource, and one project backer is calling the change in approach “a breath of fresh air.”
The state’s newly sworn-in Republican governor, Sarah Palin, last Wednesday wrapped up two days of meetings with potential gas pipeline project sponsors. Negotiations under former governor Frank Murkowski had come down to an unratified draft fiscal contract between the state and BP, ExxonMobil and ConocoPhillips when the clock ran out on the Murkowski administration (see NGI, Nov. 13).
Those three industry players are at the table with the Palin administration. Joining them is the Alaska Gasline Port Authority (AGPA), the backer of a combined pipeline and natural gas liquefaction project that had been essentially shut out of talks by Murkowski (see NGI, Sept. 11). Palin’s administration also has been talking with the Alaska Natural Gas Development Authority, Enbridge, MidAmerican Energy Holdings Co., Shell Oil, BG Group, Chevron, SEMCO and TransCanada.
“This is a breath of fresh air, and I’ve got to tell you it’s as genuine as they come,” Bill Walker, AGPA project manager told NGI. “Gov. Palin doesn’t come in with any hidden agendas. It’s clear she wants what’s best for Alaska, and she comes in without any campaign baggage.”
For her part, Palin described last week’s meetings as positive and productive.
“Sitting down one-on-one with potential project sponsors proved an excellent opportunity to not only gauge the number of parties interested in getting our natural gas to market, but also how they propose to do it,” said Palin.
Palin’s gas team is made up of Lieutenant Governor Sean Parnell, Department of Natural Resources Acting Commissioner Marty Rutherford, Revenue Commissioner Pat Galvin and Kurt Gibson of the Division of Oil and Gas. Meetings began Tuesday morning and by Wednesday afternoon had included 12 different entities, all with ideas on how to move forward on getting Alaska’s gas to market.
Walker predicted that the Prudhoe Bay leaseholders will be handled differently by the Palin administration, as will the AGPA and other project contenders. A significant change is that Palin’s administration won’t be negotiating under the state’s Stranded Gas Development Act (see NGI, Sept. 11), which allowed for certain concessions to project developers.
“Murkowski viewed us [AGPA] sort of as the enemy,” Walker said. “I think we were really just focused on what was best for Alaska and not so much what was necessarily best for the leaseholders in Prudhoe Bay. He had a philosophy that what was good for them was good for Alaska and the time frame for the leaseholders would be whatever’s best for them and we just didn’t see the world that way.
“The leaseholders are conflicted with other projects throughout the world, and they have to prioritize what they do, and we understand that. But we don’t think Alaska should necessarily be in a queue on that. [Murkowski’s] philosophy on negotiations was to have people who were interested show up and then pick one before the race starts and say, ‘you’re going to win this race’ and [and we’re going to] do all we can to drive others away from the field. He insulted MidAmerican out of the state twice. He certainly did everything he could to discredit what we were trying to do.”
Although it happened on Murkowski’s watch, Walker said he believes Palin’s influence had a lot to do with the state’s revocation of decades-old leases in the North Slope’s Point Thomson field. Barring a lawsuit, the natural gas-rich acreage could be opened to newcomers in a state lease sale scheduled for October 2007 (see NGI, Dec. 4).
“The volume of gas we need initially [for the AGPA project] is very close to what’s in Point Thomson,” Walker said. “We’re very interested in seeing what happens on the former Point Thomson unit.”
Still, AGPA is one of many potential contenders in the decades-long struggle to turn Alaska’s gas reserves into dollars.
“The scenarios are endless,” said Palin. “That’s why these meetings are so important. One of the themes that surfaced several times over the last two days was the appreciation from potential project sponsors that their views on a gas pipeline project were actually being considered.”
Proposals will be reviewed over the next few weeks, and then Palin will introduce a bill seeking a law of general application on the first day of the 2007 legislative session. In it she will outline several key requirements for a natural gas pipeline project, Palin’s office said.
“Our bill will provide for all proposals to be considered in a more open, competitive manner,” said Palin. “That’s the process Alaskans have asked for and one I believe will deliver the very best gas pipeline proposal for Alaska.”
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