AD Main Menu

Our view: New day, new gas pipeline

Gov. Sean Parnell has for the last few years counseled patience on the gas line development headed by TransCanada. Apparently his patience is running out. The governor now says he'd like to see the major North Slope producers -- Exxon Mobil, BP Alaska and Conoco Phillips -- join in a project to pipe Alaska's gas to Valdez, where it would be liquefied and shipped in tankers to Asian customers.

Before you listen for a heavenly "Amen" from the spirit of Wally Hickel, consider that the governor's conversion doesn't go so far as to include abandoning the Alaska Gasline Inducement Act (AGIA), by which the state has reimbursed the efforts of TransCanada to the tune of almost $100 million to date, with an obligation to cover up to $500 million in development costs.

Gov. Parnell wants the all-Alaska line proposed in the context of AGIA, with additional potential for tax and royalty relief if the producers come up with a solid proposal. All-Alaska line proponents -- most notably Bill Walker, one of Parnell's Republican opponents in the 2010 governor's race -- have argued that AGIA simply will not get Alaska's gas either to market or to Alaskans. Walker campaigned on getting out from under AGIA and having the state take responsibility for building the line, thus "unstranding" North Slope gas and forcing the issue, rather than waiting for the producers to move at their own pace.

But Parnell's change is a start. Lower 48 shale gas and the long-sustained low price of natural gas have changed the equation. A pipeline through Canada to Lower 48 markets doesn't make the same sense it seemed to make a decade ago, despite up to $21 billion in federal loan guarantees.

What Parnell has yet to do is propose to put the state in the driver's seat. He's still leaving it up to the producers to come up with a project, and to the extent they'll talk at all, they're not saying much. No surprise there.

It's a complicated business -- and, further, a confidential business where AGIA is concerned that has kept Alaskans in the dark. But we don't have to be privy to negotiations to know that current gas prices argue against a major pipeline from the North Slope, unless the state takes some initiative and gives up the passive role.

The governor understands that Alaskans are tired of waiting to enjoy the benefit of the natural gas they own, tired of being warned of deep winter power failures, outrageous Bush fuel prices and narrowing windows of export potential. He's changed his tune -- but it's not clear how forcefully he's willing to play it.

BOTTOM LINE: Governor talks an all-Alaska line. OK, what's next?