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Vol. 14, No. 40 Week of October 04, 2009
Providing coverage of Alaska and northern Canada's oil and gas industry

Parnell chamber talk focuses on energy

Governor tells Fairbanks audience he’s optimistic about development at all scales; wants companies to combine gas line projects

Stefan Milkowski

For Petroleum News

Resource development and energy played large in a speech by Gov. Sean Parnell in Fairbanks on Sept. 29.

“I couldn’t give a talk about our economy without talking about resource development,” Parnell told a crowd of about 400 local officials and business people at the Greater Fairbanks Chamber of Commerce’s annual meeting. The new governor described resource development as the state’s past, present and future.

Parnell received a warm welcome and standing ovation from the Fairbanks crowd, many of whom are still getting to know the man who took over as governor just two months ago.

Parnell spoke optimistically of development happening at all scales — from the family-owned gold mining operations he saw on a recent moose hunt near Manley with Labor Commissioner Click Bishop to ExxonMobil’s work at Point Thomson. “Exxon’s doing good work at Point Thomson,” he said.

Parnell, who recently met with Interior Secretary Ken Salazar in Washington, D.C., twice mentioned concerns about federal regulatory actions. When asked about drops in cruise ship traffic, Parnell said he had just submitted comments to the Environmental Protection Agency challenging proposed regulations for low-sulfur emissions. “They’re using science, air modeling, from Long Beach to set Alaska standards,” he said. “It’s wrong. We have a totally different airshed here.”

The governor also repeated his support for development of the outer continental shelf, but warned that federal managers could designate certain areas as critical habitat for polar bear, which would increase restrictions. “The federal government can give with one hand and take with the other, but it needs to be done well,” he said. “The regulatory environment needs to work, and it needs to work well.”

Pushing for alignment on gas

Parnell said he remains “upbeat” about the prospects for a natural gas pipeline from the North Slope. TransCanada and Exxon, working together under TransCanada’s Alaska Gasline Inducement Act license, and ConocoPhillips and BP, working through the Denali partnership, are all spending “real money” to advance their projects, he said. “So think about it for a minute — four major, international companies all working on an Alaska gas line. To me, that’s good news. Now the challenge is to get them working on the same project.”

Parnell said he continues to talk with principals at all companies, and is encouraging them to work together. In a brief interview after his speech, Parnell said North Slope producers have not yet articulated to him what they need to make the project a success. “You always hear ‘fiscal certainty.’ You always hear those sorts of things,” he said. “But until there are specifics from a group of companies together, it’s difficult for the state to act on anything.”

In case a large-scale gas pipeline doesn’t move forward, the state is also evaluating the routing and costs of smaller, “bullet” pipelines to meet needs within Alaska, Parnell said. In-state gas project manager Harry Noah presented preliminary numbers to lawmakers earlier in September, giving the project an estimated $4 billion price tag. (See In-state costs by route, Sept. 20, 2009.)

Helping communities help themselves

Chamber of Commerce members asked Parnell his plans for reducing energy costs in rural Alaska. The governor replied that Gene Therriault, his senior policy advisor on in-state energy, is working to help rural communities take advantage of the energy inventory completed earlier this year, which offered preliminary feasibility and cost estimates for various energy options in each community.

Parnell added that he has asked officials in the Northwest Arctic Borough to evaluate whether natural gas resources in the area around Kotzebue could meet the needs of nearby villages. “They are within range of natural gas, but no company the size of companies we have here are going to explore for it because the reserves aren’t that big,” Parnell said. “They are big enough, however, we believe, to power those communities.”

Parnell said his overall approach to reducing energy costs in the bush is to provide tools to rural communities to help them “take their future in their own hands.”

Therriault, in an interview later, said he didn’t know what kind of funding the administration would seek this year for renewable energy projects. “At this point, I don’t know that they’ve made those decisions,” he said.

Saving energy starts at home

Parnell also promoted energy conservation, which he described as the “third tier” of the state’s energy plan. He said he recently had energy audits done on his home in Anchorage and on the governor’s mansion in Juneau, which was built in 1912.

“It took three times to inflate the house because it was such a leaky old house,” Parnell said. “So we’re going to have some work there to do that I’ll be talking with legislators about.”



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