Anchorage Daily News

About a year ago, the state of Alaska cut a deal on natural gas with two big Cook Inlet suppliers, Conoco Phillips and Marathon. The two firms export Cook Inlet natural gas to Asia and they needed federal permission to continue those exports. The state agreed to support two more years of exports in return for two concessions.

Each company agreed to drill five more gas wells in Cook Inlet, which they are doing. And each agreed to negotiate in good faith with Southcentral utilities to offer gas supply contracts that the state's utility commission would approve.

Note that terminology: contracts that the state's utility commission would approve.

That's the crux of a big dispute that will affect future gas prices for customers throughout Southcentral.

The utility commission wants an important change in the recent contracts brought forward by Enstar, the firm that supplies gas for heating homes and businesses. Pegging local prices to indexes in the Lower 48 was OK, the commission said. That's a key condition that the suppliers, Conoco Phillips and Marathon, want. But the commission said the contracts should include price caps to ensure Alaskans don't get gouged if gas markets in the Lower 48 get tight.

So the next step would seem pretty simple.

Conoco and Marathon would honor their commitment to the state and get with Enstar to produce modified contracts that meet the commission's terms.

Ah, but the companies have been steadily working to raise Cook Inlet gas prices as close to Lower 48 prices as possible. Cook Inlet, they note, still has far and away the lowest priced natural gas in the country.

Though the companies are too polite to say so, they might well ask the state utility commission, "Where do you get off telling us what price we have to charge for our gas?"

Here's where. While Cook Inlet customers are scrambling to get enough natural gas, Cook Inlet is the only place in the United States that ships natural gas overseas. Cook Inlet gas producers get a huge premium for that exported gas in Asian markets.

Under those circumstances, you'd think the producers can afford to cut Alaskans some slack on the local price.

Naturally, the producers say doing so would not be a sustainable long-term arrangement. They look for natural gas all across the world, and they can put their exploration dollars where they get more money for whatever they find. If they can't charge higher prices here, eventually drilling stops, and Cook Inlet will run short of gas.

To which Alaskans would say: If you're not exporting our gas to Asia, supplies here would last longer.

True, but Conoco and Marathon have a trump card.

Their LNG export facility is where we store the gas we need for those huge spikes of use on cold winter days. It would cost local consumers upward of $200 million to build peak gas storage facilities if the LNG export plant wasn't there.

And that's a fair point. We are the only place in the country with this unusual storage arrangement.

But we're also the only place that lets natural gas producers cash in on those astronomical prices in the Asian market.

So Conoco and Marathon should realize -- if they want permission to keep exporting Cook Inlet gas after 2011, they have to make sure Cook Inlet has the supplies we need at a price that's fair to local consumers. They should resist the temptation to play chicken with the utility commission and come forward with a contract on terms the commission has already said it will approve.

BOTTOM LINE: Cook Inlet gas suppliers and exporters should remember enlightened self-interest, keep Alaska prices within reason.

Numbers revisited

Pollsters took a beating on Election Day.

Turns out there was more than one Election Day.

Even with the long count of votes that weren't cast on the first Tuesday after the first Monday in November, the Young-Berkowitz numbers bore no resemblance to what pollsters had found.

But in the case of Begich-Stevens, they were closer.

Closer is a relative term; one DailyKos poll that had Begich up 58-36 couldn't have been calling voters in Alaska. What's the area code for the state of wishful thinking?

But there was one poll, Ivan Moore's, that had Begich up 46-45 based on calls made Oct. 17-19, right before the start of early voting.

One percent was just about the margin of victory for Begich.

Having delighted in the defiance of pre-election numbers, I figure it's only right to note where the pollster was on the money.

And I wonder how this will change campaigns now. Candidates may have to make tactical adjustments, if people keep up the habit of voting early. In Alaska close to a third of the electorate didn't cast their ballots Nov. 4.

Candidates will have to close the deal sooner.

And pollsters may become exit pollsters, even before Election Day.

Here's for an electorate that can't quite be pinned down, no matter what day they vote.

-- Frank Gerjevic

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