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Vol. 14, No. 28 Week of July 12, 2009
Providing coverage of Alaska and northern Canada's oil and gas industry

Changing of the guard

Parnell’s experience debated as Alaska’s lieutenant governor becomes governor

Stefan Milkowski

For Petroleum News

Alaska lawmakers and industry observers are hopeful that Lt. Gov. Sean Parnell’s diverse experience, including a stint as an oil company lobbyist, will give him the perspective needed to make progress on a natural gas pipeline.

“My hope is that because of his industry background, he’ll be a little more willing to sit down with industry and realize this is not the Evil Empire,” said Ken Boyd, an oil and gas consultant and former director of the state’s Division of Oil and Gas.

Parnell was thrust into the spotlight after Gov. Sarah Palin’s surprise announcement July 3 that she will step down later in July and transfer power to the lieutenant governor. And while Parnell himself is pledging to push forward with the administration’s effort under the Alaska Gasline Inducement Act, lawmakers are alternately hopeful that the new governor will be more understanding of the industry than Palin and concerned that he’ll be more accommodating.

Benefit of the doubt

“I’m going to give him the benefit of the doubt, but he’s going to have to answer some questions pretty soon,” said Rep. Les Gara, who noted that Parnell has not played a very public role in the AGIA process to date.

Rep. Beth Kerttula likewise argued that Parnell will have to demonstrate his commitment to AGIA and prove that his background is an asset rather than a liability. “This next session could decide whether AGIA actually becomes a pipeline project, or remains just a pipe dream,” Kerttula wrote in a response to Palin’s announcement. “The governor has decided to walk away from us at the very moment Alaskans need her most.”

Sen. Gene Therriault, a friend and ally of Parnell’s from their days serving together in the Alaska House in the mid-1990s, is more ready to accept the new governor’s background. “I think it’s just a matter of the chief executive of the state of Alaska taking the right position in negotiations with the producers, and that is to be protective of the state’s rights,” he said.

“I think he’s going to have the ability to understand everybody’s position,” Therriault added. “That doesn’t necessarily mean that he’s going to be automatically accommodating.”

Rep. John Harris noted that Parnell will still need legislative approval for major changes, such as any agreement to provide greater fiscal certainty to gas line shippers. “I think he’s probably more likely to talk to them about (fiscal certainty), but he can’t give anything to them,” Harris said.

Ten months ago, when circumstances first made a Parnell administration a possibility, Parnell suggested his approach would differ from Palin’s more in style than substance.

“We both have the view that our constitution is our foundation and the people are who we serve,” he told Petroleum News. “There may be differences in execution because we’re two different people.” (See Experience, constitution would guide Parnell in leadership role, in Sept. 7, 2008, Petroleum News.)

For one, Therriault said he expects Parnell will be more measured in his public statements. “What you won’t get from Sean is the comments like, ‘Don’t let the screen door hit you on the way out,’” he said.

A diverse background

Parnell, a lawyer, served in the Alaska House from 1993 to 1997 and in the Senate from 1997 to 2000. He sat on the House and Senate Finance Committees the entire eight years, and served two years as Senate Finance Committee co-chair.

From 2000 to 2003, Parnell worked for Phillips Petroleum Co. and ConocoPhillips. In 2002 and 2003, he was registered with the state as a company lobbyist.

In 2003, Parnell was appointed as deputy director of the Division of Oil and Gas, where he oversaw personnel and budgeting issues and helped negotiate a pipeline deal with TransCanada under then-Gov. Frank Murkowski.

In 2005, he became a partner at the Washington, D.C.-based law firm Patton Boggs.

Parnell was elected lieutenant governor in 2006 and in 2008 narrowly lost to Don Young in the Republican primary for U.S. House.

Parnell is by no means the only state official with oil industry ties. Several lawmakers work in the industry, and Palin’s legislative liaison, Jerry Gallagher, is a former ConocoPhillips lobbyist who worked with Parnell.

Boyd said it would be foolish to question Parnell’s allegiance to the state because of his industry background. “It’s too small a state, and oil is too big a part of it, for people to not have a background in it,” Boyd said.

Parnell, for his part, also dismissed the idea that he would take an industry position in situations where the state and industry interests are not aligned. “There’s no question,” he said in an interview July 8. “My allegiance is to the people of this great state and to the constitution of our state.”

A ‘seamless’ transition

In a statement July 3, Parnell pledged to keep on the course set by Palin.

“We’ve got an extremely talented team of commissioners, and I intend to keep them working hard for our state,” he said. “I will work with the governor to coordinate with the cabinet and staff on a seamless, stable transition.”

In the interview with Petroleum News, Parnell pledged his support for the AGIA process and said he is working to ensure the governor’s gas line team stays in place, although he mentioned that an announcement about staff changes is forthcoming.

“I support the AGIA process established by the governor (and) I intend to let the private sector continue its great work on coming together on a project,” he said.

Parnell said he hopes the various pipeline proponents will eventually join forces, and added that he is open to hearing from anyone interested in commercializing North Slope gas. But he said he doesn’t see the state negotiating a deal.

Parnell also said he has no plans to tweak the state’s oil and gas production tax, or to increase the fiscal certainty some argue is needed to get a gas line moving. “I would require any company that makes that claim to demonstrate it with facts,” he said.

Parnell said he has no plans to change course on Point Thomson.

He reserved comment on the governor’s in-state gas line effort, explaining that he has not yet been briefed on the effort.

Parnell added that his commitment to responsible resource development extends beyond getting a gas line to issues such as outer continental shelf development. “My job as governor is also to fight at the federal level these encroachments that hurt job creation and opportunities for Alaskans,” he said.

In an interview July 3, Revenue Commissioner Pat Galvin expressed confidence that Parnell is willing and able to pick up where Palin leaves off. “The lieutenant governor made it clear that he intends to continue with all of our efforts fairly seamlessly,” Galvin said. “And he’s well aware of the issues that we’re dealing with on all of the oil and gas concerns.”

A new approach to working with the Legislature

Lawmakers are hopeful that Parnell’s leadership style and legislative background will improve relations between the governor’s office and the Legislature. Tensions flared last legislative session, with Palin and lawmakers both criticizing the other for poor communication.

In a recent interview with the Anchorage Daily News, Palin predicted that lawmakers would attack her administration for political gain in the upcoming session. “I’m not going to let Alaskans go through a year of stymied, paralyzed administration and not getting anything done,” she told the paper. “I’m going to let Sean Parnell take this and we will see that things will let up.”

Therriault, who often defended Palin against legislative criticism, said in an interview July 7 that she did have a tendency to stake out positions without much thought to how they would be perceived by lawmakers, leaving others to figure out how to sell her ideas to the Legislature. “I think Sean’s well ahead as far as just understanding how the two branches interact with each other,” Therriault said.

“It’s been a difficult year for the entire Legislature and the governor,” added Kerttula. “It can’t help but improve with Gov. Parnell.”



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