By Sen. Hollis French
November 07, 2005
Keep in mind that no one outside the group of negotiators has seen the exact terms of the proposal. But Irwin's memo, which should be required reading for all Alaskans, throws an indirect light on what has been a shadowy process. Here are some of the concerns outlined by former Commissioner Irwin.
The governor's proposed gas line deal will have provisions that violate the Stranded Gas Act itself, the very piece of legislation that authorized the governor and prospective gas suitors to create a contract in the first place. That's called getting off to a very bad start. Irwin states that our North Slope gas isn't really "stranded," as it cannot be shown that it's uneconomical to get it to market. No stranded gas, no Stranded Gas Act contract.
Even if this hurdle is cleared, Irwin's memo outlines other legal conflicts. The memo states that future legislative changes to the act will be necessary to make this coming contract with the producers legal. How can that be fair to the other two entities that have been competing to build a gas pipeline? (The Canadian company TransCanada is vying with the producers to build a gas line to Alberta, and the Alaska Gasline Port Authority, of course, is the sponsor of the popular all-Alaska gas line.)
If TransCanada and AGPA have been operating under the quaint belief that the rules as they stand now are really the rules, while the Murkowski-producer deal envisions the benefit of future statutory changes, then there hasn't been a free and fair competition among the bidders. It's elementary that all the players should be working off the same rule book. Result: Expect numerous lawsuits.
Another major issue with the Murkowski-producer proposal is that it apparently cuts a deal on oil taxes. Putting that promise in the gas line contract is indefensible. The state's take from North Slope oil production is already a bargain for the oil industry. Without a complete overhaul of our oil tax code, Alaska roads and schools will continue to be second-rate for the next generation.
Worst of all, the governor's deal looks like it simply gives too much away to the producers. Irwin's memo says, "DNR is concerned that no modeling can show the need for the proposed fiscal support from the state to the producers." This jibes with the analysis done by Econ One, an independent consulting company whose senior economist recently testified that the proposed gas line is "a profitable venture, certainly very economically viable. It would not appear concessions would be necessary."
The producers' record profits also show that they don't need any financial help. In the third quarter -- a 90-day period -- the three producers made more than $20 billion in profit, enough for them to build the entire project out of pocket.
The importance of the gas line contract cannot be overstated. This generation of Alaskans will be judged 30 years from now based on our stewardship of the resources we all were given in common at statehood. Like every Alaskan, I badly want to see a new pipeline built and our gas shipped to market. But whether we in the future are a rich state or a poor one hangs in the balance. No legislator should vote to support a contract that doesn't get us every penny that we deserve.
Senator Hollis French (D-Anchorage)
is a member of the Alaska Legislature.
and do not necessarily reflect the opinions of Sitnews.