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Timeline: Key events in Alaska's quest for another pipeline boom

Amanda Coyne
Aaron Jansen illustration

It's been a roller coaster year in the state of Alaska's decades-old quest for a natural gas pipeline to deliver reserves from the North Slope to U.S. markets.

Talk of the gasline has been going on since workers struck oil at Prudhoe Bay in 1968. In the late 1970s, President Jimmy Carter went so far as to sign legislation that made Alaska's natural gas a centerpiece of the nation's quest for energy independence. But since then, the project has in many ways been seen as big a bust as Carter's foreign policy. 

Here's a timeline, beginning in 2003, of Alaska's most recent efforts to get a pipeline built. 

2003: The time seems ripe for a pipeline. Oil and natural gas prices are steadily climbing, and with a Republican-dominated Alaska Legislature, Republican Gov. Frank Murkowski at the helm, and a Republican president, the stars are aligned for tapping the North Slope's vast natural gas reserves and building a big pipeline, perhaps all the way to Chicago. The project was initially estimated at around $20 billion.

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2004-2005: To get an agreement, Murkowski initiates closed-door talks with Exxon Mobil, BP and ConocoPhillips, which hold leases to develop much of the Slope's gas. The discussions range from the state taking an ownership stake in the gas pipeline to locking in oil and gas tax rates for decades. Murkowski’s popularity is decreasing, Sarah Palin is on the rise, and the public begins to wonder whether Murkowski is giving away too much to get the pipeline.

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2005: The Energy Policy Act prohibits the regulation of hydraulic fracturing, a process to produce shale gas in the Lower 48, under the Safe Drinking Water Act.

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October 2005: Lots happens this month. Sarah Palin announces she's running for governor. Weeks later at a press conference, Frank Murkowski stands beside Jim Bowles, president of ConocoPhillips' Alaska division, and announces the company planned to sign Murkowski's pipeline contract -- a document the governor still had not released to the public. "The journey has started" Bowles says. Department of Natural Resources commissioner Tom Irwin writes a memo to Murkowski's attorney general, questioning the "legality" of the negotiations. Murkowski passes out the memo after the press conference with Bowles. Shortly thereafter Murkowski fires Irwin. Six other DNR employees quit their jobs in protest. They are dubbed "The Magnificent Seven." Palin refers to their courage repeatedly in her stump speeches. Murkowski's approval numbers plummet.

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August 2006: The Alaska Legislature passes an oil tax hike, but does not take action on Murkowski's proposed gas pipeline contract with the three major oil companies. Sarah Palin beats Murkowski in the Republican gubernatorial primary election.

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November 2006: Voters elect Palin governor. She hires many of the DNR employees who quit under Murkowski.

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March 2007: The Palin administration releases the proposed Alaska Gasline Inducement Act (AGIA), a plan that would separate the oil and gas producers from owning
the pipeline itself, thereby breaking the potential hold the companies might have over the development and transportation of the gas. AGIA also included a set of demands for any company that wanted to build a gas pipeline in the state. In exchange for going along with the state plan, a pipeline builder would get up to $500 million in state subsidies to pursue the project. The Alaska Legislature approves AGIA.

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 January 2008: The Palin administration winnows down a stable of five contenders for a state natural gas pipeline license to one company. TransCanada Corp., a Calgary-based pipeline company, is deemed the only applicant that meets the state's bid requirements under AGIA. The cost of the line at this time is estimated at about $26 billion.

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 April 2008: BP and ConocoPhillips announce Denali --The Alaska Gas Pipeline, promising to spend $600 million to pursue a successful project.  

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August 2008: The Alaska Legislature awards the AGIA license to TransCanada. The line is now estimated at about $30 billion, according to news reports at the time. Presidential candidate John McCain picks Sarah Palin as his running mate. At the Republican National Convention, she claims Alaska is embarking on a "nearly $40 billion natural gas pipeline to help lead America to energy independence."

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June 2009: Exxon Mobil announces its partnering with TransCanada on the state-backed pipeline under AGIA. As a TransCanada partner, Exxon stands to benefit from the state subsidies under AGIA.

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July 2009: Sarah Palin abruptly resigns as governor. Lt. Gov. Sean Parnell takes the reins.

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March 2010: A widely touted IHS CERA study is released, saying that technological advances could allow shale gas supplies in the Lower 48 to supply enough for 100 years.

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 November 2010: Parnell wins the election, and signals continuing support of AGIA.

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January-May 2011: Lawmakers, many of whom were against AGIA from the start, begin to talk about breaking the state's contract with TransCanada

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May 2011: BP and ConocoPhillips announce the death of Denali, saying the project is uneconomical. Parnell says that it is time to negotiate a "fiscal framework," as in, time to "negotiate with the producers." Former Gov. Frank Murkowski writes in an editorial about his effort to negotiate a pipeline, bemoaning the Legislature's failure to pass his plan, and the Palin administration's insistence of going in a different direction. "So much for lost opportunities," he writes.  

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August 2011:  Another big month in gasline negotiations and developments. First, the state of Alaska announces that it's reached an agreement "in principle" with ExxonMobil to settle a lawsuit dating back to the Murkowski administration over the Point Thomson oil and natural gas field. Point Thomson, on the North Slope, is considered a major hurdle that needed to be resolved before an Alaska gas pipeline could become economically viable.

Two days later, Tony Palmer, a TransCanada Corp. vice president, reports to state lawmakers that despite a year of negotiations, the project has yet to line up any customers. Palmer claims  several uncertainties had made the major shippers gun-shy: chief among them, the ongoing Point Thomson litigation between the state and Exxon, a glut of shale natural gas that's flooded the U.S. energy market, and the unsettled question of what type of long-term tax and royalty regime the state might demand on gas production.

A week later, the Office of the Federal Coordinator for Alaska Natural Gas Transportation Projects published a report on alternatives to the TransCanada project.

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Oct. 27, 2011: Gov. Sean Parnell announces that he'd like oil and gas companies and TransCanada to pursue construction of an pipeline from the North Slope to an Alaska deepwater port. A Parnell spokeswoman says the port could be in Valdez, on the Kenai Peninsula, or in the Matanuska-Susitna Borough. Parnell says the Lower 48 may no longer be the main customer for Alaska gas; Asian markets may be more interested. 

Alaska Dispatch staff contributed to this article. Contact Amanda Coyne at amanda(at)alaskadispatch.com.