Here is another in a long, twisted line of bad ideas: Gov. Bill Walker thinks maybe Alaska should seize control of the massive Alaska LNG Project because its industry partners, hammered by lousy oil prices and a global gas glut, are taking a cautiously slow approach to the perhaps $65 billion effort.
Two questions Alaskans should ask: Should the state be a partner in the project? Should it lead or take over? The short answers are no and no.
The megaproject — now in a deciding-whether-to-decide-to-build phase — aims to daily move up to 3.5 billion cubic feet of North Slope gas south via an 804-mile pipeline to the small Kenai Peninsula community of Nikiski for liquefaction and shipment to Asian markets.
If construction started this minute it would be a decade before the system was operational. It is superlatively complex and almost indescribably colossal, with more tiny pieces than a crate of broken china and plans rivaling D-Day preparations. When — make that if — it was completed, it would rank among the world's largest energy projects. It is detailed in a descriptive report to the Federal Energy Regulatory Commission.
The work would touch every port, road, railroad, barge operation, airstrip and airport in Alaska. It would mean as many as 30 construction camps, 53 pipeline storage areas, 10 contractor yards and eight short rail spurs to the Alaska Railroad. There would be about 340,000 truckloads of equipment, pipe, supplies, gravel and dirt, the project's report to FERC says, along with 15,000 rail-car loads of pipe and construction materials.
Alaska is a partner in the project with ExxonMobil, BP and ConocoPhillips, and now the Walker administration — galled by industry caution — is making noises as if it wants to shoulder ExxonMobil aside and take control or go it alone. Walker says the companies think it is a swell idea. They say, "Huh?"
Walker's long, combative relationship with the oil and gas industry evolved over the years as he pursued his white whale, a government-controlled gas line. Nowadays, he appears to think the state's partners are sandbagging, planning new projects elsewhere to the state's detriment.
He is not bashful about locking horns with the industry and Legislature over just about anything and everything pipeline-related. He bolstered the $10 billion Alaska Stand Alone Pipeline to prod producers into action. He bought out TransCanada to increase Alaska's project share He fought them on confidentiality and oil tax credits. He threatened to tax gas reserves and in January warned he would "consider other options" if the companies did not get hustling on the project.
Now his administration is holding up approval of Prudhoe Bay's 2016 development plan until the producers cough up marketing data they refuse to provide. Consider: Walker demands they provide marketing details 10 years into the future for gas shipped through a pipeline nobody has even decided to build.
For most of his adult life, Walker has pursued his quixotic quest for a gas line owned or directed by government. He has surrounded himself with people he worked with at the Alaska Gasline Port Authority — represented by his law firm — which backed another gas line project that went unbuilt. His administration was home for Palin administration true believers who thought the major producers should butt out of gas line decisions.
In all that, Walker never tripped over the obvious: Government is not business. The two have differing, competing interests and responsibilities. Business is about profit. Government is about governing and is constrained by regulations and laws — records transparency laws, for instance — that, were they applied to businesses, would bankrupt them.
Legitimate government tasks include taxing and regulating business; ensuring fairness in the economic sphere; and making it easier for businesses to succeed, bringing jobs and attendant wealth creation and revenue.
How can government even pretend to be a partner in a business, much less be in charge? How would its partners know whether they were dealing with a sovereign taxing authority, a regulatory master or a business partner? How would citizens know necessary regulations were being enforced, or taxes collected, or inspections completed? Who would check?
Then, consider competence. Who knows more about gas pipelines or their economics: ExxonMobil, BP and ConocoPhillips or the worrisome revolving-door bureaucracy in Walker's administration — or any other — that has absolutely no skin in the game? How many more bureaucrats and consultants and engineering companies would we have to hire to make this thing fly? At what cost?
Then, there is this: What happens when Walker is out and the next governor wants to chase a different white whale? Frustrated ExxonMobil CEO Rex Tillerson once observed that Alaska has a history of flip-flopping after elections, and he opined, "Alaska is their own worst enemy."
He was absolutely right.
Paul Jenkins is editor of the AnchorageDailyPlanet.com, a division of Porcaro Communications.