Special session ends after House adjourns

Lisa Demer

JUNEAU -- The special session called by Gov. Sean Parnell to lower oil taxes and develop a natural gas pipeline was rocky throughout and fizzled to an end Monday evening with no legislation passed on either topic.

The state House said it saw no hope of moving the only item still on the agenda, a gas pipeline project pushed by House Speaker Mike Chenault, and adjourned at 5:26 p.m. on the session's 13th day.

The Senate had declared it over on Thursday after the governor yanked his troubled oil-tax proposal from the agenda and Senate leaders said they saw little support in their chamber for the contentious gas pipeline project.

Lawmakers did pass a sex trafficking bill sought by the governor.

"The frustration that you may hear in my voice is not frustration about the process we used. It's about the issue that the Senate has refused to take up or to consider in a meaningful way -- the long-term energy crisis in the state of Alaska," Chenault told news reporters in his chambers moments after the session ended. Interior Alaskans in particular are hurt by extraordinarily high energy prices, he said.

Members of the GOP-majority packed the room and made statements one after the other about their sadness over the lack of progress on a gas pipeline. Rep. Steve Thompson, R-Fairbanks, teared up over his disappointment.

"This was moving in the right direction, moving forward where we could see some long-term relief," Thompson said.

While backers said the project would serve as a fallback in case a big pipeline to bring North Slope gas to commercial markets -- and Alaskans -- never materializes, critics questioned whether it was needed and whether it would lead to higher natural gas prices. Questions about whether the state would end up on the hook for the estimated $7.5 billion cost also arose, though backers insisted that the Legislature would get to decide whether any state dollars went into construction.

The push to build the line came even as independent oil companies are bringing rigs to Cook Inlet in response to tax credits from earlier legislation -- and geological reports showing increased gas prospects there, far closer to the state's biggest markets than the North Slope. Senators saying the state should move cautiously on the House's gas line proposal often cited Cook Inlet prospects.

But State Rep. Mike Hawker, a Republican from Anchorage who co-sponsored Chenault's House Bill 9, sputtered in disbelief during the House press conference over a Twitter message that had just been sent out by Sen. Bill Wielechowski, D-Anchorage.

"HB 9 dies. It would have cost the state billions and doubled or tripled heating costs," Wielechowski tweeted.

Hawker retorted that none of that was true and, looking into the camera airing the briefing live on public television's Gavel to Gavel program, invited Wielechowski to come there and talk to representatives directly.

Wielechowski said later that senators supported earlier stages of the pipeline project because of concerns that Cook Inlet was running out of natural gas to heat Southcentral homes and generate power. But the U.S. Geological Survey and gas explorers both have recently announced new estimates of huge stores of gas there. Conoco Phillips, which owns a liquified natural gas plant in Nikiski -- in Chenault's district -- has been exporting Cook Inlet gas to Asia.

Chenault's bullet line project no longer makes sense, Wielechowski said.

The special session began April 18 and could have gone 30 days.

"Instead of problem-solving with the House, the Senate ignored the bill," Parnell said in a written statement.

His administration has been embattled throughout the special session. His aides were unable to answer senators' questions on whether the big oil-tax cuts he proposed would generate new investment.

Senate President Gary Stevens has said senators also had serious concerns with the gas pipeline proposal, as did House Democrats.

Chenault, R-Nikiski, and other supporters said House Bill 9 was intended to arm a new agency, the Alaska Gasline Development Corp., with powers and tools to fast-track a pipeline from the North Slope to Southcentral Alaska. The goal was to elicit commitments by next year from potential shippers that are needed to finance construction.

At the least, Chenault said, the Legislature needed to pass something allowing the state gas pipeline company to spend $200 million already set aside for planning, permits and engineering. The agency also needed authority to receive confidential information from other projects, in particular studies done by TransCanada, which already is receiving up to $500 million from the state for its work toward a big pipeline.

"By failing to consider HB 9, the Senate Majority has delayed shipping gas from the North Slope to Fairbanks and the Railbelt for at least one to two years," the governor asserted in his written statement.

Bullet-line critics including House Democrats and key senators questioned whether the Chenault project -- centered on a 24-inch line carrying no more than 500 million cubic feet of gas a day -- would hurt prospects for the more commercial, 48-inch pipeline being pursued by TransCanada and Exxon Mobil. They had questions about natural gas prices, ownership and expansive powers granted to the new state agency.

"I do not want to see the super powers. I do not want to see the open-ended pricing, which could drive up the price to where no Alaskan could buy it," said Rep. Beth Kerttula of Juneau, the leader of the House Democrats.

Chenault's bill passed the House last month during the regular session. It faltered in the Senate, where it had been holed up since March 28 in the Community and Regional Affairs Committee without the votes to pass, according to Sen. Donny Olson, a Democrat from Nome and the committee chairman.

Earlier on Monday, the GOP-led House majority met behind closed doors for two hours to discuss whether it was time to exit.

When the House members emerged, leaders said they saw hope of securing key elements of a gas pipeline project in a new bill still being worked on. They said it should be ready Tuesday. House Democrats, who said they could accept a stripped-down bill, decided not to force the issue and didn't call for adjournment.

Then the House suddenly reversed course. Chenault said many troublesome areas added up. First, Stevens told Chenault on Monday morning any new gas pipeline proposal would land back in the community affairs committee.

"I'm not going to roll the chairman," Stevens said in an interview.

The clincher, Chenault said, was a Senate-written statement sent out Monday afternoon that he characterized as saying, "We don't care what you do."

The lack of legislation doesn't kill the Alaska Gasline Development Corp. The Legislature provided it with $21 million for the coming year, and it will likely make progress on environmental studies, Chenault said.

Reach Lisa Demer at ldemer@adn.com or 257-4390.

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