Gas line memo fuels talk
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SIGNIFICANCE: Some lawmakers criticize Irwin; others fear "giveaway."
By WESLEY LOY
Anchorage Daily News
(Published: October 23, 2005)
Republican lawmakers Saturday downplayed a memo from the state's natural resources commissioner, who said he and his staff were being pushed by the administration of Gov. Frank Murkowski into supporting a natural gas pipeline contract in conflict with the law and the state's best interests.
The memo by Commissioner Tom Irwin raises no new issues and doesn't threaten a year's work toward a contract laying out tax, ownership, labor and other terms should the oil trio of Conoco Phillips, BP and Exxon Mobil someday build a $20 billion pipeline, the lawmakers said.
But one Republican legislator, Rep. Mike Hawker of Anchorage, said he was disappointed that Irwin wrote the memo to Attorney General David Marquez asking for legal advice on whether the commissioner and his staff faced personal liability in signing off on the contract.
"This memo did not bring up anything new that those of us who have been working on the inside for well over a year were not cognizant of," said Hawker, an accountant and business consultant. Lawmakers have, and will, deal with all the issues and the memo is a "tempest in a teapot" that should not derail the pipeline contract talks, he said.
Irwin raised eight major worries with the contract, which remains confidential as negotiations with the oil companies continue. Irwin said it would give the companies unnecessary financial concessions and it might weaken lease obligations the companies already have to produce the gas beneath state acreage.
Irwin suggested in the five-page memo that people in the Department of Natural Resources who "seriously question the legality" of administration efforts toward a pipeline deal might resign.
"You have a petulant commissioner who didn't get his way. You can quote me on that," Hawker said.
Irwin did not return messages left on his cell phone seeking comment.
As a member of the Legislative Budget and Audit Committee, which would be the first to review a contract should the governor submit one for legislative approval, Hawker said he's received confidential briefings all summer from the Murkowski administration on the status of contract negotiations.
Rep. Ralph Samuels, R-Anchorage, declined to criticize Irwin but agreed with Hawker that the memo shouldn't have much impact.
"There's no big bomb there," Samuels said. "Those things have all been discussed. Some are problems, some are not problems."
The governor's office remained silent Saturday on Irwin and the memo, which Murkowski mentioned and released late Friday during a Fairbanks news conference to announce that one oil company, Conoco, had agreed to "base fiscal contract terms" with the state.
Becky Hultberg, Murkowski's press aide, said Saturday the governor's office wouldn't have any further comment on the Irwin memo until Monday.
State Rep. Les Gara, D-Anchorage, said the Irwin memo reveals cracks in Murkowski's approach with the oil giants.
"What Commissioner Irwin said fed all my worst fears -- that this could be a huge giveaway," Gara said.
Instead of giving the oil companies unnecessary incentives to produce the Slope's huge gas reserves, the memo lends credence to the idea that the state should "take the leases back and give them to somebody who really wants to develop the gas, rather than hold it in the ground," Gara said.
All the lawmakers interviewed Saturday from both parties said they were caught off-guard Friday when Murkowski gave out copies of Irwin's memo.
Gara said Irwin's memo shows his convictions and fears are "so great that he had to do something extraordinary."
"You have to admire the governor," Hawker said. "He made it immediately available to assure the public of the integrity of the process here."
As for Irwin's suggestion of possible resignations, "the governor should regretfully agree to accept the resignation of all those people who have offered to resign," even if they include Irwin, Hawker said.
Murkowski, a Republican, is the latest in a string of Alaska governors who have tried to persuade oil companies to build a pipeline to carry the Slope's long-dormant trove of about 35 trillion cubic feet of natural gas to domestic or overseas markets. The oil companies historically have cited the high cost of a pipeline as the main impediment.
In recent years, however, the landscape has changed, with natural gas prices spiking to painful highs in the Lower 48 and once prolific North American gas fields now tapping out.
Last December, the trio of oil companies submitted a joint proposal to the state for a contract laying out tax and other terms should they decide to build a gas line. Since then, the state and hired experts have been negotiating with the companies, and on Oct. 6 the governor announced he had offered them a contract and urged them to snap it up as a good deal for all parties.
Now Conoco, the state's top oil producer and most aggressive exploratory driller, has broken ranks with the other two companies and agreed to base terms with the state, Murkowski and the company's Alaska president, Jim Bowles, said Friday.
Samuels said it's not surprising that the three companies aren't in lockstep on the deal. People tend to perceive the oil industry as a bloc, when in reality the companies are global competitors, each with its own business priorities, he said.
"It's good one of them finally said, 'It's good enough for us.' The logjam broke," he said.
Murkowski's press aides worked hard Friday to stoke media interest in Friday's Conoco announcement, calling reporters with newspapers from Los Angeles to Denver to Chicago to New York. Murkowski called it a "significant milestone."
But the Irwin memo, which Murkowski mentioned as an aside, ended up overshadowing the Conoco announcement.
"Unfortunately, the governor mismanaged the moment," Hawker said.
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Daily News reporter Wesley Loy can be reached at wloy@adn.com. |
