Alaska Gov. Frank Murkowski has written state House leaders to pitch for a third special session to ratify his gas pipeline fiscal contract with a trio of producers before he leaves office. The lame duck governor’s chief of staff said earlier this month that he had dropped plans to call for a third special session (see Daily GPI, Sept. 8).
“…I am writing to request that you reconsider your opposition to a special session,” Murkowski last week wrote House Speaker John Harris and Majority Leader John Coghill, with a copy to Senate President Ben Stevens.
In a press release Friday Murkowski’s office said he has not issued a call for another special session but would “leave that option open.”
Murkowski warned lawmakers that unless the contract with producers BP, ExxonMobil and ConocoPhillips is completed now, it will result in further delays to the gasline project that will hinder the state’s transition from an oil-based revenue stream to one based on natural gas production. He also said that ratification of the fiscal contract is the best way to forestall a measure on the November ballot that would tax producers on their unproduced reserves.
“A reserves tax will kill the project economics and move the state from a negotiation to a litigation posture with the producers with attendant litigation delays.”
Further, Murkowski warned that natural gas prices are falling, making the gasline project less economic, and that Alaska gas that comes late to mid-American markets will compete with liquefied natural gas (LNG).
“There are 6,000 Tcf of gas at tidewater from Qatar and other areas around the world,” he wrote. “The longer the gas pipeline project remains uncertain, the more likely other sources of energy could replace Alaska’s gas in the mid-America market.”
To the contrary, TransCanada CEO Harold Kvisle last week told NGI that 4-4.5 Bcf/d of Alaska gas would find a home in the North American market relatively easily and could back out some LNG imports (see Daily GPI, Sept. 25).
Murkowski lost in the Republican primary Aug. 22 to Republican Sarah Palin, former mayor of the city of Wasilla and former chair of the Alaska’s Oil and Gas Conservation Commission. He will leave office Dec. 4. Gasline efforts now fall to his successor: Palin, Democrat Tony Knowles or Independent Andrew Halcro. All three candidates have made it a top issue in the election. Palin and Knowles indicated they will start the process with an open competition among multiple pipeline project proposals. Halcro favors using the Murkowski-negotiated deal as a base but with significant modifications.
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