Politics

Walker and Parnell debate mega-LNG project, economy

The two leading gubernatorial candidates tangled over energy and the economy at a crowded debate in Anchorage on Monday, with the proposed mega-LNG project often taking center stage.

Republican Gov. Sean Parnell tried to depict independent candidate Bill Walker as a two-faced challenger promising big cuts or more spending, depending on the audience. Walker, running as an independent, blasted Parnell for creating record deficits and few jobs.

Parnell touted his accomplishments to kick off the Anchorage Chamber of Commerce event, including launching the liquefied natural gas project, overhauling the oil-production tax so it's worth $200 million more than its predecessor at current low prices, and creating an economy since 2009 that has led to more than 2,000 new businesses in Anchorage and 16,000 new jobs in Alaska.

Walker slammed Parnell's statement about job creation, saying 16,000 new jobs is the worst performance of a full-term governor in 32 years. Walker also said Alaska is the only state in the nation to lose jobs in the last year and provided materials to reporters to back up the claim.

"Tell that to the families that are now hired because of the policies that we have," Parnell shot back. "Tell that to the people who can now afford education and can afford to feed their families because of those 16,000 jobs."

Much of the discussion before the crowd of 300-plus centered on the young but advancing Alaska LNG project -- a $45-billion-plus proposal that's considered key to the state's future and involves the state, pipeline builder TransCanada and oil companies ExxonMobil, BP and ConocoPhillips.

Parnell, pointing out that Walker has called the project "fatally flawed," said Walker will renegotiate the terms and kill the current deal. Parnell said the project partners are buying land on the Kenai Peninsula for the project, and pressed for an answer on how Walker would advance the project if he believes it is so flawed.

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Walker said he isn't planning to start over and will get the job done, even if he has to dig the ditch with his own hands. He said he needs to see the details to truly know if the state is giving up too much. He said he won't proceed if it's not a good deal for Alaska, and said he won't agree to confidentiality terms that have kept key details secret.

"You're going to know what's going on because we'll tell you what's going on," Walker told the audience. "It's your resource and I'm tired of things being done behind closed doors in this state."

Parnell said this is the most transparent gas line project Alaska has ever seen, with independent experts who have spoken before the Legislature and with public guidance documents that have ensured local hire and other benefits. Parnell said the project will return for legislative approval -- expected in early 2016 -- before it can advance to its final engineering and design phase.

Debate moderator Andrew Halcro, chamber president, also questioned Walker about the LNG project. Halcro pointed out that Walker has said he wants the state to boost its ownership interest in the project to a controlling, 51 percent stake. Halcro asked Walker why investors would accept a minority interest in the biggest oil and gas project in U.S. history.

It's been done all over the world, Walker said, including in Qatar, Norway and Canada. Walker, who has long supported an LNG project and has worked to line up Asian buyers, said it's unusual for the host government to sit back and hope companies do something good for them. Alaska needs to be in the driver's seat to bring back some $419 billion to Alaskans.

"These companies are wonderful companies, don't get me wrong," Walker said, adding that he would work with them to advance the project. "But they have competing projects all over world" that will impacted by a decision on gas in Alaska.

Putting Alaska in the driver's seat is what the Alaska Gasline Inducement Act attempted to do but it failed, said Halcro. Parnell terminated the state contract with TransCanada this summer.

It didn't fail, said Walker. Under the contract, Asian companies, such as Tokyo Gas and Kogas from South Korea, expressed interest in buying twice as much natural gas as the project could provide. The state didn't respond, Walker said.

"We just didn't engage, never responded back, never picked up the phone, never said thank you to the world's largest LNG buyers," Walker said.

Instead, Parnell decided to start the project over, Walker said.

"In my administration, we're going to finish the job," Walker said.

On educational issues, Parnell attacked Walker for telling the Great Alaska Schools group that Walker supported raising the base-student allocation and inflation-proofing educational funding, while also telling a radio show host early last month the budget needed to be cut 16 percent.

Would Walker slash spending or increase funding? "Which Bill Walker will show up?" Parnell asked.

Parnell, however, did not mention that Walker provided a caveat when he shared his educational goals with Great Alaska Schools. Walker cautioned in his response to the group that he supports those changes contingent on a growing state economy and not the current one, where the state is borrowing millions of dollars daily from its savings accounts to pay the bills.

Asked for their fiscal plans, Parnell said his plan centered on reducing spending, something he's already done including by requiring that departments take steps such as absorbing salary increases, a move that he said saved up to $40 million.

Walker said he would ask department heads to achieve a 5 percent reduction.

Playing off Parnell's "road to resources" program, Walker said Alaska now has "roads to re-election," where everyone with a project gets what they want. He said the governor, despite the state facing its largest budget deficit ever -- more than $2 billion if oil prices stay low -- didn't veto one item this year.

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Parnell called that a "ludicrous" attack. He said he led the effort by the Legislature this year to move $3 billion from the state's savings account into the fund used for retirement payments. That addressed the budget's largest cost driver and he said reduced annual payments by $420 million.

Halcro asked when the state should start winnowing down all the megaprojects being studied, such as the Susitna-Watana hydroelectric dam, the road out of Juneau and the Knik Arm crossing.

Parnell's reply addressed the Alaska LNG project and the dam. Parnell said the state can afford the $70 million it has put up for this stage of the Alaska LNG project as well as the millions for the dam. Both projects might bring lower-priced energy to Alaskans. "We need to push forward both until we get certainty on one," Parnell said.

Walker said megaprojects would start getting winnowed the day he's elected. He'll support projects that lower energy costs, save Alaskans money and create legacy jobs. The state is engaged in projects that compete with each other, such as the small-volume gas line project with the Alaska LNG project, he said. "We are doing studies upon studies upon studies," he said.

Alex DeMarban

Alex DeMarban is a longtime Alaska journalist who covers business, the oil and gas industries and general assignments. Reach him at 907-257-4317 or alex@adn.com.

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