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Vol. 12, No. 7 Week of February 18, 2007
Providing coverage of Alaska and northern Canada's oil and gas industry

Irwin back at DNR

Governor brings back former commissioner; Marty Rutherford to focus on gas

Kristen Nelson

Petroleum News

If more proof were needed that Alaska Gov. Sarah Palin is headed in a different direction on North Slope gas pipeline negotiations than that of the previous administration, Palin’s appointment of Tom Irwin as commissioner of Natural Resources is pretty conclusive evidence. Marty Rutherford, who has been acting DNR commissioner, returns to a position she held from 1992-2005 as deputy commissioner.

Irwin was DNR commissioner in the administration of Frank Murkowski from January 2003 to October 2005, and was ousted in a disagreement with Murkowski over the way gas pipeline negotiations were proceeding: Irwin questioned the legality of negotiations under the Alaska Stranded Gas Development Act since, he said, the gas is no longer stranded as defined under the act.

Palin concurs.

Most recently, in a Feb. 11 update on progress on the gas line, the governor said the Stranded Gas Development Act “is not a viable option; the SGDA requires a finding that the gas is stranded. Our gas is not stranded.”

The governor said if the gas were stranded, value for the gas would be “insufficient to support a free-market pipeline. Independent legal, commercial and engineering consultants agree that the current and expected value of the gas is sufficient,” she said. The governor also said that while the stranded gas act “did not allow for a competitive process … AGIA is based upon a transparent, competitive process.” The legislation being developed will also “establish what the state needs for the gas line project to work,” she said.

The Palin administration is developing new legislation, the Alaska Gasline Inducement Act, which the governor said would be ready to go to the Legislature by the end of February.

Irwin challenged negotiations under SGDA

Irwin was ousted after an Oct. 20, 2005, memo questioning whether the Murkowski administration was “operating within the limits of current law” in its negotiations “when all analyses indicate that the project as a whole — and particularly Prudhoe Bay and Point Thomson gas — does not meet the definition of ‘stranded gas’ contained within” the Stranded Gas Development Act.

Irwin also questioned conflicts between the proposed contract and the state’s oil and gas leases, including pressure DNR was under “to endorse terms governing Point Thomson development that are inconsistent with and materially weaker than” obligations to develop the field under the unit agreement.

The state has since terminated the Point Thomson unit, a decision that is under appeal in Alaska Superior Court.

Marty Rutherford, then deputy DNR commissioner, was one of six senior department officials who submitted their resignations in October 2005 following Irwin’s ouster.

She said in her resignation letter that she regretted resigning, “but I feel I have no alternative following the dismissal of Tom Irwin … and the position the administration has taken in negotiations regarding a North Slope gas pipeline.”

“Supporting the (Murkowski) administration’s position would require me to accept terms clearly not in the interest of the state,” she said.

Gov. Sarah Palin announced the appointments of Irwin and Rutherford Feb. 9.

“Tom has the experience, talent and know-how to manage Alaska’s resources and bring those resources, including Alaska’s gas reserves, to market,” the governor said in a statement. “His strong private-sector background will be a major asset to the department. I am confident that Tom will provide an invaluable resource to the state’s ongoing efforts to develop our natural resources.”

Irwin is currently vice president of government and public affairs for Golden Valley Electric Co. He led the Palin transition team for DNR. Irwin has a Bachelor of Science in mineral engineering-chemistry from the Colorado School of Mines.

“I consider it a real privilege and honor to be asked by Gov. Palin to join her team,” Irwin said. “The people of Alaska are the most fortunate people in the world with ‘all’ of our resources, but the resources must be maximally developed and managed, and in an environmentally sensitive manner. The core of our state economy is resource development. Our governor supports resource development and I look forward to working with her on the opportunities available for Alaska,” he said.

Rutherford will focus on gas

Rutherford has served as acting DNR commissioner since December 2006 and as deputy DNR commissioner from 1992-2005.

At the time she accepted the appointment to commissioner she hinted that she hoped Irwin would return to the position, leaving her time to concentrate on the gas line.

The governor’s office said Rutherford has been instrumental in drafting the Alaska Gasline Inducement Act, the legislation the Palin administration has been working on to negotiate an Alaska natural gas pipeline. Rutherford has a Bachelor of Arts degree from Pacific University.

“I am thrilled to have the opportunity to work with Tom again,” Rutherford said in a statement. “The development of the state’s gas reserves remains my top priority and working with Tom only strengthens our efforts.”

“Marty has a proven track record of working hard for the state on so many natural gas issues,” Palin said. “I am excited because Marty can now dedicate all her energies to lead our gas team.”

Palin said the gas line team “is meeting with legal experts, pipeline experts, members of the financial community, consultants, potential applicants,” while she is “discussing the gas line with federal officials and its significance to the nation.” The governor also said she is working with federal officials “on ways in which the federal government could help us to get the gas line built as quickly as possible.”

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