Special session on gas line contract unlikely

Petroleum News

It will be up to a future governor to sign a contract for a multi-billion dollar natural gas pipeline from Alaska’s North Slope through Canada to the U.S. Midwest, Alaska Gov. Frank Murkowski’s top aide said Sept. 6.

This past month saw Murkowski, a Republican, lose his re-election bid, BP shut down part of the Prudhoe Bay oil field, and federal agents raid legislators’ offices for their ties to an oilfield service company that has been vigorously lobbying the Legislature to approve a fiscal gas pipeline contract negotiated by the governor with the top three North Slope producers and a new oil tax regime tied into that contract.

The effect of those events has effectively dashed Murkowski’s hopes to be the governor that earns the stamp of approval for his gas line contract from the people’s representatives and senators.

Murkowski’s chief of staff Jim Clark, Revenue Commissioner Bill Corbus and others on Murkowski’s gas negotiating team met with several state senators Sept. 6 in Anchorage. The discussions no longer centered on whether to meet in another special legislative session this fall, but how best to prepare the past two years’ pipeline negotiations for the next governor, should he or she decide to take up the negotiations where Murkowski left off.

“We described to them that we’re going to work to finish it so we have a package to hand off to the next administration,” Clark said. “It’s important that we leave a roadmap as a transition for the next administration that comes in.”

To date, Republican and Democratic legislators alike have pointed to flaws in the gas line fiscal contract negotiated by the administration. Last fall, while in the middle of negotiations with the producers, Murkowski fired one of his lead negotiators, former Alaska Department of Revenue Commissioner Tom Irwin, who thought the administration was giving too many concessions to the producers. Six top level DNR officials, including the director of the Division of Oil and Gas, quit in protest of Irwin's dismissal.

Clark tried to leave a little wiggle room for Murkowski to call a new session anyway: “Obviously things can change, but that’s essentially it.”

That roadmap includes responding to public comments made about the gas line contract, which could be presented in an interim meeting of the Senate Special Committee on Natural Gas Development at the end of September or the beginning of October.

The roadmap will also include new fiscal interest findings written by Corbus on whether the contract is in the state’s best interests, plus the framework of a partnership between the state and the three oil companies that would own the pipeline. That limited liability company agreement is still being negotiated, Clark said.

Knowles will immediately revive gas line negotiations

After the election, Murkowski had said he would call legislators back to try to revise the contract.

Palin and Knowles have said they will look at all options for a gas line, but on Sept. 7 Knowles announced he had “concrete plans to revive” gas line negotiations “immediately upon taking office.”

—The Associated Press contributed to this report