Bishop optimistic about big-inch pipeline

Fairbanks Republican favors Valdez for terminal, hopes to see competing utilities work together on Interior LNG trucking project

Steve Quinn

For Petroleum News

Click Bishop has been in the Senate nearly one year and he has quickly found himself in some of the state’s heavier hitting debates be it a statewide issue of oil taxes or discussions in his own backyard over how to implement a liquefied natural gas trucking delivery system to Fairbanks.

He also has a ringside seat for the argument between Fairbanks Natural Gas and the Interior Alaska Natural Gas Utility, who recently engaged in a contentious debate during public hearings being held by the Regulatory Commission of Alaska, or RCA. The contention is rooted in which utility is best prepared to provide new gas distribution services in areas of Fairbanks with high or medium population densities. This includes the areas around North Pole and Eielson Air Force Base.

Bishop, a Fairbanks Republican, served two governors as the state’s Labor commissioner before stepping down and winning a Senate seat in last November’s election.

Bishop serves on the Senate Resources Committee and is co-chair of the In-State Energy Committee with Sen. John Coghill.

He was also considered the swing vote in the Senate which passed Senate Bill 21, 11-9, before sending it to the House.

Bishop spoke to Petroleum News about his first year in office and the issues facing the state and the Interior region.

Petroleum News: Let’s start close to home. You’ve got a very heated debate about who should take the lead in developing the Fairbanks area for the LNG trucking. Does this concern you?

Bishop: It is heated. You’ve got two sides very passionate about their positions and they both believe they are right. At the end of the day, it’s in the RCA’s hands. If we lived in a perfect world I would hope people on both sides of the issue can find some common ground and come together because the bottom line is we here in the Interior and rural Alaska need the cheapest energy possible. That’s the goal. That should be their goal as well. I understand they need and want a profit, but also they have to have a project that’s attractive for people to hook up as well.

Petroleum News: Should the Legislature continue to have a role, or is it a case where you’ve done your job and it’s the RCA’s turn to take over?

Bishop: That remains to be seen. I will not say our role is done. As things progress, RCA’s decision comes out, from a layman’s perspective, I could see the potential for funding when it comes to build out. To me, that’s a very important piece of this puzzle not only for the LNG gas truck project, but down the road we are going to have piped gas. The more people we can have on gas, the better, not only for the Interior energy users but also to make piped gas become a reality.

Petroleum News: Do you have any concerns about how divisive this has become and how quickly as well?

Bishop: Yes, I have some concerns. But I’m hoping at the end of the day, cooler heads will prevail and the participants will come together. Of course, I’m concerned. I think anybody with a pulse would be concerned, and I don’t mean that flippantly, either. If you listen to talk radio up here and you listen to other lawmakers, we’ve still got the wood stove debate going on, and we’ve still got air quality issues going on and at the end of the day, we’ve got people writing checks for $1,000 a month. We can’t continue with business as usual here.

Petroleum News: Still on natural gas, what are your thoughts on Nikiski being the frontrunner for being the terminus?

Bishop: My first priority is still a Prince William Sound terminus for the project, then pipe the gas from Glennallen to Southcentral Alaska. Who am I to say where the project is going to go. Private industry is going to come up with a lion’s share of the capital from the bond markets. It makes some sense. Nikiski is the frontrunner, I’m glad you said that because it didn’t leave Prince William Sound out of the equation. There is still a lot of engineering to be done; they still have to get across Cook Inlet and across to Nikiski. There are some advantages. They have been in the LNG market for 40 years and there is Agrium, so there is infrastructure there, too.

I did take a little exception from an article I read. I’ve been around a while, too. Thirty years ago, a contractor cleared 1,000 acres in Valdez for the Alpetco (Alaska Petrochemical Co.) plant. At that time the Yukon Pacific gas line was going through. A spinoff was to build a chemical plant there. I was taken aback for someone saying there’s not enough acreage along Prince William Sound to put a facility along there. Part of the argument is being above the tsunami level and Prince William Sound brings that to the equation as well. At the end of the day, I want what’s best for Alaskans. We need to bring a gas line to fruition and I’m going to do what I can to bring it over the top.

Petroleum News: What would you like next to advance a project, be it a small diameter line or a large diameter line?

Bishop: I’m a proponent of the large-diameter line. I still say the cheapest gas for the consumer is going to be moved through a large volume pipeline. I hope and pray the two projects can come together. I believe there is going to be only one pipeline off the North Slope and I’m optimistic that it’s going to be a big-inch pipeline.

Petroleum News: Is it time for the executive branch to enter into negotiations for long-term fiscal policy for the natural gas taxes, or does the producer group need to bring a more firm project to the table?

Bishop: I think it’s a little too early to enter into that discussion. But, I’m not opposed to it.

Bishop: First the referendum. That’s the public process and I won’t deny anybody the right to institute the referendum process. It’s just another check and balance. I had a couple of individuals come into my office after my oil tax vote. They weren’t totally happy. I spent a couple of hours going over SB 21 in my layman’s perspective. I was told, “You make a lot of sense.” I’m a little bit confused on which way to go on the referendum. It’s not for me to tell you which way to vote on the referendum. It’s between you and your gut. I’ll tell you straight up personally as someone who has been in Juneau for seven years — six years with the administration and one year as a legislator — when you’re inside the bubble, and you’re working it and see it go to this point, it leaves you questioning the process a little bit. At the end of the day, it’s going to educate people better on SB 21 and they will be able to make up their minds.

Petroleum News: OK, on to the second part, finding definition of new oil.

Bishop: Having worked with people in the administration, like DNR and DOR, I wasn’t really that concerned about new oil. I felt fairly confident about metering the oil. I was glad to see DOR Deputy Commissioner (Bruce Tangeman) take a hard line on metering the new oil. I’ve been to Prudhoe Bay. I’ve been to a drill rig. They can drill multiple wells off of one pad. It’s amazing for the layman who hasn’t seen drilling or who hasn’t been there. You can drill a two-and-a-half inch drill bit 12,000 to 14,000 feet horizontally and hit a seam of rock that produces new oil. You would think you could meter that new oil. At what cost, that remains to be seen. I’m glad to see that Revenue is taking a hard line on the metering and holding everyone accountable. It gives the public confidence in the process and it shows that the administration is doing the right thing for the people.

Petroleum News: When you voted for SB 21, you stated it was a leap of faith that the change will produce increased investment.

Bishop: It’s like I told the industry, the burden of proof is on you. I’ll go back to Barry Pulliam’s testimony in Senate Finance, when he said this bill makes Alaska competitive, right on the middle. I’d be shocked and stunned if they didn’t invest. The jury is still out. Actions speak louder than words, so we’ll see.

Petroleum News: So what’s the difference between being in the administration then going over to the legislative branch?

Bishop: I always tell the difference is you play more offense on the other side of the fence.

Petroleum News: How did being Labor commissioner help you with what you’re doing now?

Bishop: For starters, I’m a people person and a consensus builder. Having spent six years working with the Legislature and building relationships with people who are now my peers, I think that’s a huge step forward. There’s a learning curve you don’t have to worry about if you can hit the ground running. Getting things done is all about relationships with people who trust you. I would like to think my track record speaks for itself and I’m able to bridge across both sides of the aisle with lawmakers and have their respect. I always tell people there is no “I” in team. Have that respect with the lawmakers and knowing how the process works, those are two big steps.

Petroleum News: OK, so let’s talk more about your first year in office, starting with being co-chair of the In-State Energy Committee?

Bishop: It was a little new. My transition wasn’t seamless, but it was a lot easier than a freshman legislator because I’ve spent so much time testifying in front of legislators as commissioner. So the process was a little easier for me. Running a committee is a little different. You learn along the way. You make mistakes and hope you don’t make them again.

With the Energy Committee, the one telling thing for me was a report I read, an energy report. It listed everything from Susitna Dam to bringing gas to the Interior to intertie upgrades — the whole gamut. The funny thing about it was this report was 50 years old. There’s nothing new under the sun. I sat there and struggled and talked to people. I asked how do we coordinate, unify and get everybody pulling in the same direction, then execute it and lower everybody’s energy costs to the user.

That’s the challenge. That’s something I’m going to continue to work on that.

The Resources Committee, that was an interesting committee because there are a myriad of issues coming across your table. You learn a lot — everything from board of fish and game appointments to oil taxes and everything in between.

Petroleum News: You share this role as co-chair with Sen. Coghill, also of the Interior. Do you see a problem with two Interior lawmakers running the committee?

Bishop: I don’t think so. I think if you look at the membership of the rest of the committee, you’ve got a good cross section of Alaska. I might be from Fairbanks, but I’ve got a lot of ties to rural Alaska. As somebody who has grown up here, and lived around the state and worked construction all over the state, I’ve got a lot of friends in a lot of communities. Some of my friends from Kotzebue and the Kobuk River area invited me back and I said, I might be a senator from District C, but I’m your senator also.

Petroleum News: What value do you believe the In-State Energy Committee brings to the Legislature? It’s a special committee that isn’t necessarily in the thick of things like oil taxes.

Bishop: I think it brings a breadth and depth of working knowledge of the state. The two of us with our assets with who we know we were able to bring in a great number of people. It was an overarching makeup of people moving electrons, people moving gas, people involved on renewables and get people on the record of what’s out there in the world of energy.

I’m looking forward to going back this next session to look at how we can better utilize the intertie, maximize our electrons coming out of Bradley Lake and look at the gas fired units in Southcentral, and bring cheaper energy through the Railbelt and into the Interior.

Petroleum News: Speaking of a wide range of projects, an Outside analyst noted at LB&A’s recent LNG symposium that Alaska is investing in three major projects and to some, it appears that the state doesn’t know what it wants. What are your thoughts on that?

Bishop: It’s easy to armchair quarterback when you aren’t writing a check, but I’m saying on some of these projects that make sense, I’ve always been a believer that take a little leap of faith, put your money where your mouth is, take a stake in the game.

I made this statement on TAPS: If Gov. Egan had his way and we had an ownership position on TAPS, we wouldn’t have a tax overhaul every eight years in this state.