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Menge says gas pipeline deal complex New commissioner of Department of Natural Resources urges Alaskans to evaluate gas contract carefully when it becomes public By Kristen Nelson Petroleum News Editor-in-Chief
Mike Menge took over as commissioner of the Alaska Department of Natural Resources Oct. 27, replacing Tom Irwin who had been dismissed by Gov. Frank Murkowski earlier that day. Menge’s first job was to replace the six department officials who resigned in protest over Irwin’s dismissal. (See story in the Oct. 30 issue of Petroleum News.)
Menge told Petroleum News Nov. 4 that the department’s employees kept things running smoothly over the transition, and said the commissioner’s office was in business Oct. 31. Menge filled positions left vacant by the resignations with promotions, most announced Nov. 1; the acting deputy commissioner responsible for oil and gas was named Nov. 4.
“My goal here is to get past the disruptions … as quickly as possible.” To do that, he brought “people up from the ranks, known commodities, well respected and trusted by both their peers” and industry.
The gas pipeline negotiations remain the department’s No. 1 priority, Menge said.
Other major projects include oil and gas lease sales, new mines under construction or in planning, the municipal land entitlement program, evaluations of last season’s fire program and planning for next year and completing a major rewrite of the state’s coastal zone consistency policy. Nothing new for oil and gas Menge said he didn’t see the need for changes in the way the department runs oil and gas: “I think we have a good, solid policy base,” with “goals that are important to the state and for the industry and we’re going to pursue them with a high degree of enthusiasm and intensity.”
The Alaska Peninsula is an area of focus for oil and gas development, he said, as is Cook Inlet. State Geologist Bob Swenson has background in Cook Inlet, Menge said, and “he believes, as I do, that there’s a lot of untapped potential there and so we’re going to put in a lot of effort” in that basin.
There is continuing activity on the North Slope, and Menge said the state has “a lot of responsibility to new entrants,” both independents and “that little mom and pop operation, Shell Oil.”
The gas line is the biggest project on the state’s agenda, he said. The trans-Alaska oil pipeline is running half full or less, partly because it takes such a large discovery “to cover the cost of the infrastructure and get it to market.” With a gas pipeline, “a lot of prospects that would not otherwise be developed will be…”
In addition to the known North Slope gas resource, “I think all of us believe — particularly all of us geologists believe — there’s still a tremendous amount of gas up there.” NPR-A and ANWR Menge is not new to Alaska. He has worked the North Slope from the federal side, both the National Petroleum Reserve-Alaska and the Arctic National Wildlife Refuge.
He moved back to the state in August 2003 when he joined the Murkowski administration as the governor’s senior advisor on energy, mining and the environment, but he first came to Alaska with the Bureau of Land Management in 1980, and through 1991 worked for BLM, the Minerals Management Service and the U.S. Geological Survey in Anchorage, before joining the Alaska Department of Environmental Conservation in the second Hickel administration.
Menge started his career as a coal geologist with USGS and his first work in Alaska “was on the North Slope coals, the Deadfall Syncline, in the area that (Arctic Slope Regional Corp.) is now … trying to commercialize.”
When coal activity declined, “I simply recreated myself as an oil and gas geologist for BLM,” Menge said. He led the 1980’s effort in NPR-A to do the first three lease sales there, and then moved to ANWR “and my team did a couple of the resource assessments for the 1002 area.”
Menge said that was when he got his first exposure to Washington, D.C., testifying on the 1002 area before Congress. “They wanted to put a field geologist face on the resource evaluation so they hauled me out of the field and put a tie on me and a sports coat and I sat before Congress testifying.” Taps and Tags and DEC Menge has also been involved with pipelines in Alaska: he was the federal officer in charge of the trans-Alaska oil pipeline at the time of the Exxon Valdez oil spill, and co-founder with Jerry Brossia (then on the state side) of the Joint Pipeline Office. Menge led the federal permitting and right-of-way effort for the trans-Alaska gas system. The JPO permitting effort, he said, “worked like a charm,” but unfortunately that gas pipeline project — a pipeline to Valdez for gas liquefaction and shipment to the Far East — fell through. “So I’m highly motivated to get this gas line through,” Menge said. “We’re going to get this one to market.”
Menge was director of the Division of Environmental Quality in the Alaska Department of Environmental Conservation in the early ‘90s, and then moved to New Mexico with BLM, where he was associate district manager.
He went to Washington, D.C., in the mid-‘90s and was on the professional majority staff of the Senate Energy and Natural Resources Committee. Menge, who retired in 2002, was appointed as a member on the Board of Earth Sciences and Resources within the National Academies of Science. He returned to work in 2003 as Gov. Murkowski’s senior advisor. Bringing everyone along Menge said he learned a lot working at DEC. “There was such an integral connection between resource development and environmental permitting I came to a profound appreciation for how the two work together and since then I’ve been able to understand the fact that nobody in Alaska … works in a vacuum … As you execute your duties, you have to understand and incorporate the needs of all of the other permitting agencies … you can’t operate in a vacuum.
“I know at times people get a little frustrated, but the ability to bring everyone along at the same time is crucial to succeeding,” Menge said.
He said his time working at the Senate “taught me … the benefit of building coalitions. You can do nothing in the Senate without bringing everyone along.” Even if you don’t agree with them, “you can’t just ignore them: their needs and influence have to be factored into what you do as well.
“The arrogance I might have ever had as a youth has been sanded away long ago in the harsh winds of reality,” he said. Pipeline negotiations Menge said he was lucky Ken Griffin agreed to serve as his deputy — Griffin was named acting deputy commissioner for oil and gas Oct. 4 — because “he’s been in the gas line negotiations with me since day one.”
Those negotiations still take all of Griffin’s time, “and my spare time,” Menge said, but “we’re through all the major issues that have to be resolved” and while the remaining issues are important, “we’re done all of that real heavy lifting.”
When a contract is made public, evaluate it and draw your own conclusions, he said.
He urged people not to “buy into simple explanations.” The deal is complex, he said: “you can’t stick this thing on a bumper sticker.”
Menge compared the contract to “a tightly woven tapestry: every thread in there has a connection to every thread…”
He said the administration expects to be tested “on each and every issue and we’re prepared to meet that test. But I would also suggest that you do the same thing with all the various ideas that are out there and don’t accept any snap or one-line response.”
The revenues involved are hundreds of billions of dollars to the oil companies and the state, he said, “and it’s far too important to us to simply come up with a snap decision: Look at the whole thing and draw your conclusions.”
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