Anchorage Daily News

As fifth-grader at Lake Otis Elementary School in 1975, I elected to do my class report on the construction of the trans-Alaska oil pipeline. I remember riding my bike from my home on Needle Circle to the offices of Alyeska Pipeline on Bragaw Street. I remember the security guard handing me a stack of brochures. I remember thinking to myself, how am I going to ride home with all of this information.

Almost 35 years later, many of us have immersed ourselves in the debate about Alaska's next great project, the Alaska natural gas pipeline.

Last Monday, at a glorious press conference, Gov. Sarah Palin announced plans for a bullet line to be built within five years. For energy-starved Alaskans facing soaring costs, it was a welcome message.

But two days later in Juneau, Rep. Mike Doogan pulled back the curtain as he described the governor's proposal.

"As I understand it, what's different between today and the day before there was a press conference is that there has been the announcement of a partnership that has yet to be formed, to ship gas that has yet to be discovered in what seems to be the wrong direction, in a pipeline that has yet to be built and details will follow," Doogan said.

This is what I call rah rah rah policy making. Let's hold a pep rally type press conference, promise Alaskans things that aren't realistic or issue statements that defy legal or fiscal realities.

Alaska's natural gas pipeline project is being plagued by this same approach.

As lawmakers get closer to awarding TransCanada an AGIA license, the rhetoric in defense of granting exclusive rights to the company is getting dangerous.

One of the arguments in defense of TransCanada is that the North Slope producers will be forced to commit their leasehold gas because of a legal theory called the duty to produce. The argument is based on the theory that if you hold leases with commercial amounts of oil and gas on them, you must produce.

But the fatal flaw of this argument is the North Slope leases are hydrocarbon leases. The lease language does not distinguish between oil and gas. So given the fact that the producers are meeting their duty to produce by producing hundreds of thousands of barrels of oil per day, the state has no case to argue the producers are not producing. In addition, they're moving forward with their own gas pipeline project.

On June 8, when asked by the Fairbanks Daily News-Miner about the fact that these are hydrocarbon leases that are producing, DNR Commissioner Tom Irwin stated "that's a real argument." Of course it's a real argument. And it's one that negates the theory that the state is going to march up to the North Slope and take back the leases on 30-year-old working oil field.

Another argument in defense of TransCanada is that it'll be an insurance policy to keep the producers and the Denali project honest. But I always thought insurance policies were designed to protect you, not punish you.

In Kenai on June 26, Revenue Commissioner Pat Galvin testified that if a future Legislature realizes it is necessary to adopt either new tax rules or fiscal certainty terms to move the gas pipeline forward and Denali also moves forward, it will trigger the treble damages clause and the state would be forced to pay TransCanada more than $100 million.

"Yes. We do owe them treble damages. Absolutely. We're not going to try to advance a competing project. We brought them into this process and we're going to stick by them or we're going to pay them treble damages", Galvin told lawmakers.

I guess you could call this the Thelma & Louise insurance policy; we join hands with TransCanada and it ensures we drive off the cliff.

The public needs to be aware of the reality of risk that exists down the road. Too many public policymakers are making half truth based statements based on rah, rah, rah rhetoric.

Andrew Halcro is a former Republican legislator who ran for governor as an Independent in 2006. You can read his blog at www.andrewhalcro.com.

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