Millett: Sally Jewell wrong about Alaska

House majority leader urges feds to clean up legacy wells; concerned about governor’s views on LNG project, new AGDC appointments

Steve Quinn

For Petroleum News

House Majority Leader Charisse Millett has been a busy lawmaker and the workload doesn’t get any lighter.

She recently spent time in Kotzebue with her colleagues for a meeting with Interior Secretary Sally Jewell whose recent decisions on Arctic exploration - both on the coastal plain and offshore - have caused lawmakers enough pause that they took a last-minute trip to the state’s Northwest region.

In a few weeks, Millett, an Anchorage Republican beginning her fourth term in office, will head to Washington for the annual Energy Council meeting, hoping to rally support for the state.

Millett spoke Petroleum News about these developments plus Gov. Bill Walker’s decision to expand the scope of the state-backed Alaska Standalone Pipeline and his new selections to the Alaska Gasline Development Corp. board.

Petroleum News: You folks in the Legislature have repeatedly said you’re going to be very careful with spending, especially when it comes to travel. With that in mind, was this trip worth it?

Millett: Absolutely. The visual that Sally Jewell got, and not only the visual, but the feedback that she got, having every single one of the congressional delegation there, the governor, the lieutenant governor, commissioners, a special assistant, then having House and Senate leadership there, there was no mistake in her head that this was a serious issue for us. Not only that, the trip to Kivalina was also something beneficial for house leadership to look at the Kasayulie lawsuit and see the Kivalina school replacement and see what Kivalina is facing as far as erosion goes, and what it all means for Kivalina.

Petroleum News: So what was the Legislature’s approach when it came to approaching and ultimately sitting down with Sally Jewell?

Millett: We came back from Kivalina and we met with Sally Jewell at NANA. Sitting around the table were all the legislators (North Slope). Mayor Charlotte Brower was with us. I think maybe the feeling that she got was that we were circling the wagons around her when it was really our opportunity to have a conversation with her because when we go to Washington, D.C., we don’t get to have that meeting with her.

We always meet with her under secretary or someone who is in charge of BLM for Alaska. We never get very high up the food chain for DOI. So this was an opportunity to have the person we need to talk to right in front of us and to have an hour with her with all of our House leadership there, giving her a message that a) we didn’t like what she was doing to ANWR and that she was already managing it as wilderness, which there was no legal precedent for doing that because that’s only something Congress can do and b) talking to her about the legacy wells.

Now we see that she is adding the mitigation cost to ConocoPhillips for Greater Moose’s Tooth, that wasn’t anything we had a conversation about. Those wells and that data from 1941-1981, the data is so minuscule. You’ve got to remember it’s 2-D data. Some of the wells were drilled only 500 feet. Some of them were drilled 1,000 feet.

So when she comes back and says there is value of that data to those oil wells, there is not. There is no intrinsic value of 70-year old data. It negates the entire responsibility that the federal government damaged our land and they are the ones who need to clean it up and not pass it on as another form of regulation or requirement that increases the cost of drilling in Alaska.

It seems her saying yes is actually saying no, because she will add another layer of regulation or some type of mitigation costs. It’s a little insulting that she is passing that on as a plan of production that they have to mitigate legacy wells. Nobody ever dreamed that would be a possibility.

Petroleum News: So are you saying she wants to hold the state accountable but doesn’t want to hold the federal government accountable?

Millett: Absolutely. I don’t think the state has ever required any kind of land lessee to mitigate any of the state’s messes. I think we’ve always taken responsibility for them. We found money to clean it up. For her to pass on a federal damage to a private corporation based on you can’t produce wells unless you clean up our mess - that’s not right. No one sees that as a way to get our oil to market and clean up our lands. They are not cohesive.

Petroleum News: I was told you were among the most assertive lawmakers in the conversation with the secretary, while being respectful. Was this the topic?

Millett: I started talking to her about the wilderness designation for ANWR and talked about little or zero consultation with Alaskans. She had told me she had 600,000 respond to comment on the wilderness designation. When I pushed her on who those 600,000 were, she said it’s federal land. It was from all over the United States. I was curious and wanted to know how many of those were produced from the Centers for Biological Diversity, how many came from WWF and how many were from Alaskans.

I know as a legislator, when I get responses on a certain issue, some of them are manufactured. We’ve seen that happen. The Alliance is a good example. During SB 21 they brought us 2,000 comments on SB 21. Granted those were all handwritten, but some of the ones I get were just cards that people fill out, sign their name and someone else mails them in. So I wanted to see the depth and the knowledge on the consultation that she got from Alaskans. She didn’t have that information for me. Then we started talking about legacy wells and the hypocrisy on her coming and the stewardship of the land, while negating her stewardship of cleaning up the land.

You’ve heard me testify on the legacy wells in front of the (U.S.) Senate.

It’s an incredible hypocrisy when she says she is the best steward of the land and I say no she’s not. Alaskans are the best stewards of the land. We haven’t made a mess that we haven’t cleaned up and taken full responsibility for.

Her administration has failed us with the legacy wells. We’ve been talking about this for a couple of years now. She pleads poverty and we are giving her an opportunity to make some money by drilling in ANWR. There would be federal revenue coming from that. So I’m glad we had the discussion. I’m glad we had other people around the table to hear the tone of how the secretary feels about Alaska. Obviously she feels Alaska needs to be protected from Alaskans. We feel the exact opposite. We feel we need to protect the land from the federal government. That’s the dichotomy. She doesn’t understand what environmentalist we are. I’m part Alaska Native (Inupiaq) and I’ve been taught and told that we eat off the land, recreate off the land and leave it better than we found it.

Petroleum News: The legacy wells became important to you almost the minute you were sworn in six years ago. How did that happen?

Millett: It was a fluke. I was having dinner over at a girlfriend’s house. I was talking to someone who was an intern at AOGCC and she started talking to me about the legacy wells. I was a little floored at the time. I thought you’re an intern. You must be wrong. But she wasn’t. So I called Cathy Forester and of course she’s been championing this issue longer than me. She just needed to find a legislative champion to get the message out to a broader group. I just decided that was my mission. If I was going to be so pro development, I also had to show people I was pro environmentalist too. That those two can go hand in hand. It’s been one of my pet projects. Sen. Murkowski needs a champion to raise the tenor of the conversation. I testified during my fourth year. I was incredibly nervous. No one had testified in front of the Senate Energy Committee since John Torgerson (former state senator) 20 years ago. It went very well. A lot of U.S. senators had me in their office. It was another example of Sally Jewell not showing up. She brought her guy from BLM Alaska to testify the same time I did. It’s been a struggle. I think the only thing that is making her pay attention now is having Sen. Murkowski overseeing the department’s budget.

Petroleum News: Will you be going to Washington for Energy Council in two weeks?

Millett: I’m one of two people the House will be sending. Just the two people who are on the executive committee, me and Kurt Olson. We always end up getting a couple of states putting in resolutions to open up ANWR. It’s always an opportunity to network with other state legislators. Sen. Murkowski wanted to know who was coming and when we are coming. She’s helping us - making appointments with her energy committee and her appropriations committee. We’ll be talking about the legacy wells and the issue of the mitigation costs. The awareness level of that will be raised. It’s not unique to Alaska. Any state that has land managed by the federal government has this.

One of the things we find when we go to Energy Council, we get the world view of oil and gas. It gives us a view of how Alaska fares. It gives us an opportunity to talk to other states about their oil and gas tax climate, about their production expectations, the troubles they are having with infrastructure, how to gain access to pipelines, how to gain access to gas lines, how to build roads and how to work with industry to better their opportunities around the United States.

It’s a first-rate education that you can’t get here in Alaska. You have national speakers coming down talking to the executive committee, talking about outlooks and outcomes and how you can change those by working with other states. Globally looking at where we are competing with for mega projects. Daniel Yergin spoke one year on how globally oil and gas is transpiring, how OPEC works and how we fit into that picture.

You end up with a close group of senators and representatives from around the country who I can call on a moment’s notice and ask what’s happening. Here is what’s happening in Alaska. We have an opportunity to talk about all sorts of issues. They are pretty beneficial. We have endangered species issues that are so similar to North Dakota and Wyoming. When we go down to meet with federal agencies, they can’t just say well this is not something you need to worry about. Well we do. These are issues that we know are a pattern from the federal government. It’s more difficult for federal agencies when you are armed with information from other states.

Petroleum News: Closer to home, the governor, as he said he would during his campaign, dropped the lawsuit on the Point Thomson settlement. What are your thoughts on that?

Millett: I’m pleased he chose to fulfill his campaign promise and drop his suit. I think it created a lot of insecurity within Alaska not knowing what would happen with the Point Thomson lawsuit and getting more molecules into the pipeline. Now we have a known quantity of gas that is not under litigation and it’s not going to cost us 20 years in court.

Petroleum News: Have you visited Point Thomson?

Millett: I have. I’m pleased with the progress that Exxon has put forward. I believe it’s $6 billion they have and will invest, which to me that tells me they are on track and they are motivated to get those molecules to market.

Petroleum News: So the governor drops Point Thomson as promised, then you seemed to be caught off guard with the announcement that he wants to increase the scope of ASAP. What’s your reaction to that?

Millett: Just from reading his op-ed and watching his press conference, I have a feeling he’s picked a winner, maybe. When you put the state in a position that is competing with what we thought were our partners, this causes confusion. AGDC and AKLNG had been working on parallel paths with no duplication in their process at all.

Now you are putting them at odds with each other, so that brings up issues of confidentiality. I’m not sure that sends a good message to the people we partnered with to get our gas to market. I’m not sure the path he is going down of a 51 percent ownership in a pipeline is something we agreed to.

We’ve spent five years I’ve been here talking about what’s the right balance between us owning part of the pipe and not owning part of the pipe. We’ve heard testimony over testimony from every single one of our consultants that owning the amount of pipe that you put gas molecules in is the right balance for Alaskans. That’s how most gas projects in the United States and the free world are done. In socialist countries they might own the pipe, but they own the gas also and have a gas company. Alaska is not done that way. We are an owner state. We also agree to lease that land for someone to produce that gas for us and we take royalty gas and we have the ability to tax.

Petroleum News: What about the governor’s appointments to the AGDC board? There is a sense among your caucus that these people do not fit the bill under state statute.

Millett: It’s unfortunate that the governor chose to take off some folks from the AGDC board who were incredibly talented and had actual experience in putting pipelines together and putting packages together in building a pipeline. The governor said, “they’re Alaskans.” I agree that they are Alaskans. The amount of expertise that we exchange with those changes, I don’t know if that’s valuable anymore. Also in the same conversation, he said they don’t need to have technical expertise, the administration is going to do that.

We get back into a situation where we are building grain silos and we are building fish plants when this should be experience driven, market driven and knowledge based driven and numbers count. So that gives me pause. It gives me a lot of unrest in what direction he’s taking AGDC in.

Petroleum News: You heard from producers and (Deputy Resources Commissioner Marty Rutherford) tell the resources committees that the AKLNG project is progressing on time. With that in mind, did the governor’s announcement surprise you?

Millett: It confuses me. It absolutely confuses me. I wonder if Marty knew this was coming when she testified. It was just such a surprise, the timing of it. Everybody in resources was testifying that everything was on track, we were meeting deadlines, we were going forward. Everything seemed to be incredibly positive. The next minute, there has been a fundamental shift in how we were going forward. He has talked a lot about having buyers for gas. I think the next step would be to see his gas contracts. Until you have a contract signed and in hand - a firm commitment to buy, ship and sell gas - I’m not sure you can say you have a successful project.

So I would like to see more details. I’d like to know about confidentiality between the two competing projects and how he is going to manage that. If he is on a path to stop AGDC, I think we need to have an honest conversation on that. I have spent every year working on a gas pipeline. It seems with this new governor instead of looking back to the past on what we’ve done, embracing that, moving a project we have in place forward, I’m worried that it’s his way or the highway.

I don’t think that’s a good mentality to have when Alaskans are hungry for gas. The energy costs are horrible. We are resource and energy anemic in this state. The urgency for me is that in my six years I’ve been here we’ve been Band Aiding it and Band Aiding it. The surgery we need to fix a problem is an in-state gas line so I hope to see some more answers and some plans, and some honest conversation about what his expectations are for the state.

Petroleum News: Along those same lines, what do you want to hear from those three appointees to give you some confidence for a yes vote?

Millett: Well, I would like to know if they have ever put a pipeline project together. I would like to know if they have ever gone out for a huge financing package like this. I’d like to compare their resumes to the three who left and let that stand on its own. I’d like to see if they are as knowledgeable and have the technical expertise as the three past board members did. Maybe they do. But if the governor has taken away their ability to have any technical conversations and read confidential documents, then I guess maybe we’ll rely on our state people with the technical expertise and the knowledge of putting together a gas pipeline. I don’t know anybody in the state who has done that and is still here. It was nice to have that technical expertise and someone who had actually put together projects and had gone out for financing on projects. It gave me confidence going forward.