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Governor wants roads to rev up economy in ’05 Murkowski’s package includes roads to Point Thomson and the National Petroleum Reserve-Alaska; extended North Slope drilling season; exploration incentives for Bristol Bay areawide sale lessees; and $30 million for gas pipeline work Rose Ragsdale Petroleum News Contributing Writer
Gov. Frank H. Murkowski’s aggressive plans to rev up resource development in 2005 may encounter opposition in the Alaska Legislature on both sides of the aisle unless he is careful to craft fiscally and environmentally conservative strategies for achieving his goals, lawmakers say.
Murkowski outlined his energy agenda at a news conference in Anchorage Dec. 3. He told reporters and Alaska labor leaders that he will ask the Legislature for $20 million to begin preliminary engineering for new and improved roads designed to enhance oil, gas and mining resource extraction opportunities on the North Slope and near the Red Dog Mine in Northwest Alaska.
Reiterating his commitment to create new jobs by building a sound economy in Alaska, the governor said roads are a key part of his energy agenda for 2005. His administration plans to begin engineering work on the 75-mile Foothills West Road, which will run from the Dalton Highway at TAPS Pump Station 2 west toward the National Petroleum Reserve-Alaska, to continue analysis of a 50- to 60-mile road from Prudhoe Bay east to the gas-rich Point Thomson field and to resurface bad stretches of the Dalton Highway. In addition, he voiced the desire to complete the DeLong Mountain Port Expansion to better serve the Red Dog Mine.
“We mean business about access for Alaskans,” he told reporters and others who attended a news conference Dec. 3 held at the union hall of Laborers’ Local 341 in Anchorage.
The funding request will be made to the Legislature Dec. 15 when Murkowski unveils his fiscal 2005 budget and will be part of a larger and more regionally balanced roads package. Winter season to be extended Murkowski also said he is extending the winter oil and gas exploration season on the North Slope, beginning later this month. (See complete report at the Division of Mining, Land & Water’s web site:www.dnr.state.ak.us/mlw/tundra/) Despite warmer temperatures, explorers will be able to travel on the tundra and hunt for oil and gas deposits without harming the environment thanks to new technology, he said.
“We’ve seen the winter exploration season cut in half since the early 1970s as a result of regulatory changes and a trend of warmer weather. But a fresh look at the science is telling us that perhaps we can begin traveling on the tundra as much as three weeks earlier than was once thought,” Murkowski said.
Judy Brady, executive director of the Alaska Oil & Gas Association, said allowing the industry to gain access to exploration sites as much as three weeks earlier will bring immediate benefits to the state and is a very important step in keeping Alaska’s oil patch competitive with other places in the world. The state analyzed whether it would be possible to extend the winter season in a study that took a year to complete, Brady said. Approval depends on plans to fund Whether the Republican-majority Legislature approves Murkowski’s $20 million roads package will depend on how he plans to fund it, said Sen. Tom Wagoner, R-Kenai, who chairs the state Senate Resources Committee. “Sen. Lynn Hoffman, R-Anchorage, said it best when he described the Legislature as a ‘tight-fisted bunch’,” he said in a telephone interview Dec. 7. If Murkowski seeks a direct appropriation from state coffers he may encounter trouble from the fiscally conservative majority, Wagoner said.
“We’re not too much in favor of that because the average Alaskan doesn’t spend a lot of time driving around the North Slope,” he explained.
Rep. Eric Croft, D-Anchorage also questioned the wisdom of spending state funds on North Slope roads.
“The $20 million did seem a little steep,” he said Dec. 6. “I’d rather spend $20 million on a pioneer road beyond Lake Otis Parkway and Tudor Road to somewhere. In other words, I’d try to spend some of that money on roads to people.”
If Murkowski proposes to sell bonds to fund the roads package, especially bonds that the oil companies might pay back as they use the roads, Wagoner said the Legislature would likely go along with the plan.
Roads to remote areas of the state, including the North Slope, will be very important to Alaska’s economy in the long run, Brady said.
Other provisions of the governor’s energy agenda include seeking legislative approval to extend a 2003 exploration credit proposal to include upcoming oil and gas leases in Bristol Bay. The previous legislation opened an exploration incentive window of four years for oil and gas development that companies could use to reduce their state severance taxes. Bristol Bay areawide sale The state is expected to conduct an areawide oil and gas lease sale on the Alaska Peninsula near Bristol Bay by spring 2006, which would not give companies adequate time to take advantage of the incentive program, according to state planners. So the governor will ask the Legislature to expand the window of eligibility until 2010 for the Alaska Peninsula lease area.
Though oil companies have been pretty low-key about the proposed sale, Brady said the industry is intrigued by the idea of the state opening new areas to leasing. “It’s something we’ve always supported because we can’t find out what’s there if the areas aren’t open to exploration,” she said. “People weren’t all that excited when they first opened the North Slope to exploration either.” $30 million for gas pipeline work Murkowski also said he will ask lawmakers for $30 million to pay for ongoing work on the gas pipeline under the Alaska Stranded Gas Act, including gas line analysis and the state acquiring additional expertise in natural gas pipeline development.
“I’d be much more enthusiastic about getting the best people to work on gas pipeline development,” Croft said. “The state needs all the help it can get. If the governor is going to do that, then I will help with that.”
Murkowski invited labor leaders from a half-dozen unions to join him at the Dec. 3 news conference and commended them for training qualified workers in Alaska.
Thanks, in part, to the unions’ training programs, Murkowski said the state is ready and able to train Alaskans to fill the jobs that resource development will create in the state. Wagoner confident Kenai Peninsula will be taken care of Though the governor failed to include resource development on the Kenai Peninsula in his 2005 energy agenda, Wagoner said he’s confident Murkowski will provide for the region. “The Kenai Peninsula is going to starve death if we don’t get gas supplies for our industry, and the governor has a good understanding of what’s needed down here,” he said.
A spur line to Southcentral Alaska or a bullet gas line directly to the area from the North Slope will help Peninsula residents as well as other Alaska communities along the way, he said.
“The Alaska gas pipeline is going to spur development we haven’t even thought of yet. That means jobs … something we owe the next generation,” he added.
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