Johnson: Alaska is pawn in bigger game

Anchorage Republican says federal government has broken statehood agreement, cites ANWR wilderness designation; overreach in OCS

Steve Quinn

For Petroleum News

Most may see Rep. Craig Johnson as someone entering his third term as Rules Chairman, a key leadership post.

But the Anchorage Republican is also entering his fifth term as a member of the House Resources Committee. He served as co-chair for the first two terms, the first with the late Carl Gatto and then with Rep. Mark Neuman, now the co-chair of the Finance Committee.

Johnson is back on Resources, but he’s also a member of the House Economic Development, Tourism and Arctic Policy Committee. The committee has already had one hearing on House Bill 1, the state’s Arctic policy bill.

Like most in the Legislature, Johnson found himself somewhat blindsided by the Obama administration’s decision to withdraw sections for offshore development and designate ANWR as a wilderness.

He discussed those concerns with Petroleum News earlier this week.

Petroleum News: Let’s start with the news from over the weekend. President Obama announced his decision to give ANWR a wilderness designation, further removing that area from the prospects of development. What was your initial thought?

Johnson: It’s probably different from most. I’m not surprised at what this is. This is payday for the extreme environmentalists that got Obama elected. I think he is paying them back with this withdrawal. I think that’s been the target of extreme environmentalists from inside and outside of Alaska well, since ANWR has been announced. He is a lame-duck president paying his debts to those groups. So I’m not surprised at all. Am I disappointed? Absolutely. Do I think the rule of law has been honored? No. The contract with Alaska has not been honored, so once again I’m not surprised but disappointed it.

Petroleum News: Would you have predicted it?

Johnson: You know, I wouldn’t have predicted it. In light of the battle I think it would cause as a result of the Senate changing. I thought that might have given us a stay. Had the Democrats retained control, I think it would have been predictable. But I didn’t think he would take it on as an issue with Congress the way it is now. I don’t know the rules of that body, but to say there are irritated legislators today would be very much an understatement.

Look at someone like (House Resources co-chair) Bennie Nageak is a perfect example of that, and he’s got the distinction of being the only legislator born in ANWR.

Petroleum News: Now, he’s one of these people who the administration believes it’s protecting? Does that strike you as odd?

Johnson: That depends on your definition of protection. If you are protecting people from having a livelihood, from having a job, from being able to educate their children, from being able to send your kids to college, then my definition of protection is maybe a little different from the Obama administration.

I think you give people an opportunity to work, to utilize the resources. I think that is the greatest protection, when you don’t need government to do this kind of stuff. So I think we differ on our definition on protecting those people

Petroleum News: So if there are not a lot of legal options for the Legislature, what do you do?

Johnson: Well, I’m not sure there aren’t legal options. We are exploring it quite frankly. If there is a law passed, we want to make sure that we can as a state have standing in that, so it’s important that the Legislature continue to work with the governor to protect the state’s sovereignty to prevent these things from happening. We can use the environmentalists’ tack by suing. We actually won a couple of lawsuits. Now we are in the 9th Circuit with the ringed seal and bearded seal. This is a little bit different declaring this a wilderness area.

To me, it’s pretty cut and dried, even though I’m not an attorney. They violated a contract (ANILCA, the Alaska National Interest Lands Conservation Act). We had a contract with them and they have been violating it forever - they being the federal government. I think they are in clear violation of ANILCA and the Statehood Act. It doesn’t do any good to convey wilderness. That’s not the reason we are a state. We were given the lands to fund our government and to support ourselves so we wouldn’t be a burden on the federal government. That was kind of the premise. That was the main objection for voting against Alaska’s statehood because they didn’t think we would be able to take care of ourselves and we would be a burden on the treasury. They are just reneging on the contract. Honorable people keep their agreement. I’ll just leave it at that. Honorable people keep their agreement.

Petroleum News: And now you got more news about the feds withdrawing more areas of the Arctic waters while opening up sections of the Atlantic. Did it surprise you that the administration chose the Atlantic over the Arctic?

Johnson: More federal overreach. I have a prediction that may or may not come to fruition. I think he may not veto Keystone and we are the tradeoff. He’s telling the environmentalists, don’t beat me up on this and I’ll give you Alaska. I think we are being served up as a pawn in a much bigger game.

Petroleum News: Still, did you find it surprising the Obama administration allowed drilling in the Atlantic?

Johnson: Yeah, I’m surprised by that. I really don’t know what to make of this administration. I’m to the point of being numb. It’s like here we go again. So surprise is probably not a word I would affix to it. It’s a little curious. The East Coast has got valuable resources: fisheries that are troubled; recreation opportunities, probably more so than the Arctic.

Petroleum News: The U.S. takes over as chair for the Arctic Council in April. There have been concerns that the Obama administration’s agenda for this leans toward climate change while Alaska’s leaders would prefer an economic development agenda. Given what happened over the weekend, how do you see it?

Johnson: Anyone who thinks the state of Alaska could have even a miniscule impact on climate change, well until we bring in countries like China and until you get everyone on board, Alaska shouldn’t bear the burden for the world. If we shut down all the development in Alaska, it wouldn’t be a blip on the radar for the climate change. We can’t be the whipping boy for the world when it comes to climate change.

We do happen to be a great fundraiser for a lot of the environmental groups, because you see a nice polar bear - even on the release from the (Obama) administration, I saw a polar bear. To think by shutting down ANWR, maybe it’s a moral victory, but it’s empty. It’s not going to have a long-term effect on the outcome of climate change. Once again until you bring in the other countries who are burning coal - dirty coal - it’s just lip service.

Petroleum News: Do you think Alaska will have a meaningful seat at the table to help advance the nation’s Arctic policy?

Johnson: I was hopeful. Quite frankly I was hopeful that we could have someone from Alaska chair that. We have very capable people who are involved. Let’s not forget the only reason the United States is an Arctic country is because of Alaska. North Dakota although sometimes seems like an Arctic country but it’s not. So again the only reason we are an Arctic country is because of Alaska, and that’s what we’ve been positioning for. You’ve seen resolutions from chambers to make sure we have a seat at the table.

We will have a voice because of the indigenous people, but I think it’s important that we be there. To go back to your original question, I’m not optimistic at this point. What I saw over the weekend, I think Al Gore has got a better chance of chairing that Arctic Council.

Petroleum News: OK, looking ahead at the next two years, as someone who will have been on the House Resources Committee for nine then 10 years, what do you believe the priorities are for the committee?

Johnson: I think that we have to continue to advance a natural gas pipeline. We’ve worked very hard on that. We’ve done some very good work on that. That’s one of my top priorities. I think it’s important to the committee and the Legislature as a whole. I’m a little concerned that there is a perception that it’s being slowed down We have to keep an eye on the future. Budgeting is tough - budgeting is going to be very difficult. It’s going to be the weight round everyone’s neck. We can’t abandon our children. We can’t abandon future generations. We’ve put away money for occasions such as this. As the governor says, I don’t think we are in a crisis either but I think we ought to be very concerned that we spend money wisely, and we do govern the right way. Once again we can’t abandon projects that are going to be a revenue source and a source of reasonable energy for the Interior and hopefully all of Alaska, and diversify our economy. The industries are available once you get a dependable energy source. I see it as a way to diversify and we can’t abandon them. If you go back to the ’80s, Susitna Dam was abandoned because of the price of oil. The Knik Arm Bridge was abandoned because of the price of oil. If we had a Susitna Dam and were paying less for electricity, who knows what industries could have sprung up. It’s important to me that we not lose vision of the future while being very cognizant of what’s going on today in terms of money.

Petroleum News: Have you heard enough from the governor yet on his vision for the gas line?

Johnson: No I haven’t. I’m concerned about his continued lawsuit for Point Thomson. If you talk to anyone who has been around in this building for a while they will tell you that without Point Thomson, there will be no gas line. That is a given. There is not enough gas up there to continue to bring the oil up and fuel that pipeline. So without it, it’s gone. I’m concerned that the governor is still involved in that lawsuit.

Petroleum News: Now, he did say last week that it will be resolved. He did say yes when asked whether that meant out of court.

Johnson: Well, is that a settlement? Is that him dropping it? Is it going to be something that adds expense to it? So I don’t know the answer, so I’m still concerned. Is it settled on his part because he’s turned it over to someone else? I want to know the definitions of settled. Is it for him or is it really going away? So those are things I want to see. He uses terms like tidewater. Now he explained that. He also said he’s been working on a pipeline for 37 years. Those kind of things.

And when you remove that kind of experience from the AGDC board - that concerns me. The two projects run parallel. They are designed to come together. Basically north of Fairbanks is the big line; south of Fairbanks is ASAP. If the big line fails then the information from Prudhoe to Fairbanks goes to the small line.

If it goes then the information from south of Fairbanks to Nikiski goes to the big line, so we are not wasting money. Everyone says you can’t have two pipelines. Well, everyone knows you can’t have two pipelines. It was designed to work together and merge.

Those confidentiality agreements are very important to that process. It concerns me that he won’t let anyone but Marty Rutherford sign those agreements. It she going to be the only one making those decisions? It is going to be made in a vacuum? So those kind of things: not understanding how it was designed; what was done; the years of work quite frankly by the members of this body, members of the committee; the speaker (Mike Chenault) and Mike Hawker particularly designing it, putting it together and building it in such a way that it was a merger of the two.

I think that is something that the governor has lost or doesn’t understand that concept that concerns me. Now can he learn it? Absolutely. When he and his people start reading the bills and seeing what was done, will a light go off? Hopefully. He’s a smart man. So those are concerns that I have. Are they insurmountable? No. Am I pessimistic? No. But I’m cautious. I think we need to be ready to respond in the event that it goes in a different direction.

Petroleum News: The governor has brought two people onboard that in the past have differed philosophically with the Legislature: Mark Myers and Marty Rutherford. How is that working for you right now?

Johnson: I’m not sure Mark and Marty don’t bring different philosophies between themselves. Once we have a chance to talk to Mark and vet him, we’ll know. I’ve worked with Marty during ACES and AGIA, so I kind of know where she is coming from.

Also, she’s been in the private sector for a number of years. That has a way of changing someone’s attitude. I don’t want to say she has been a career bureaucrat but someone who has been in that game long enough to know what’s going on then stepping over to the other side. That’s a very enlightening opportunity for people. We don’t have enough private sector people in government. Hopefully she can merge what she knew and what she’s learned into something that will advance the state in a project that can help the state monetize our gas. In my conversations, I’m not as concerned about Marty. I think she has a pretty good handle on what we did in forming the standalone pipeline project, the bills and legislation that enabled the creation. I think she sees that maybe there is some merit to it. But that remains to be seen. I don’t want to put words into her mouth. I am cautiously optimistic that she gets it.

Petroleum News: It sounds like you’re willing to listen and offer a benefit of the doubt still.

Johnson: That’s absolutely it. I wouldn’t be doing my job if I wasn’t. I’m not the smartest in this building. I’ll tell you that right now. There are people who know a lot more than me. So I depend on those people. I’m pretty hard to fool. I’m really hard to fool twice. I’m going to give them the benefit of the doubt, but I’m not going to wait very long if I see things going off track before I start screaming and hollering and using what little power I have to bring it back. The ultimate goal is to monetize that resource. Every delay and every bit of lack of confidence in a partner, that indecision causes great consternation in board rooms. I can just see the boards of Exxon, BP and Conoco are sitting around and saying what’s he going to do? I’m sure they are saying that a lot. I hate to use the term alignment because it’s over used, but unless we have a certain alignment, this isn’t going to work.

Petroleum News: On to the topic that never seems to go away: oil taxes. I know oil taxes didn’t cause the budget shortfall the state faces, but the issue of getting it right prevails. What’s your take on that?

Johnson: The budget shortfall is because of oil prices. And we have a spending problem. And we have a revenue problem. The way you solve that problem is the price of oil going up and getting more oil in the pipeline. I think SB 21 gets more oil in the pipeline. Will it go away? No. But there will be disingenuous people out there who had a different agenda. They lost the vote saying we need to change it. I think that the production tax is one element of SB 21. Now, are there elements of that package that may not have been perfect, but have we given it a chance? No. If we don’t have a healthy oil industry we will not have a natural gas pipeline. If the oil companies decide they don’t want to continue to develop and continue to invest, you’re not going to have a bunch of companies coming in here saying let’s invest in gas. It’s not going to happen. So we have to have that healthy oil business to keep TAPS going and I think SB 21 is our best shot so far. Time will tell, but I’m very reluctant to start tweaking some of those levers.