A Citizen’s Guide

JUNEAU–The Alaska Gasline Port Authority’s pitch last week to lawmakers could be a little too little, a little too late, according to members of the Senate committee reviewing the proposed gas pipeline contract with BP, ConocoPhillips and Exxon Mobil.

“I don’t know if there’s a chance to give their proposal any consideration at all,” said Sen. Thomas Wagoner, R-Kenai.

While officials from the group impressed some lawmakers with a detailed analysis of the project’s economics and viability, it’s unclear what effect, if any, their presentations will have on the progress of the proposed contract.

“I think they made a very good presentation,” said Wagoner. “(But) it’s quite late in the game–we’re in the process of negotiating a contract.”

Sen. Gary Wilken, R-Fairbanks, said he too was impressed by the port authority’s arguments, but said the group was “hiking into a headwind.”

“This presentation is late,” he said Friday.

The port authority was invited by Republican Sen. Ralph Seekins of Fairbanks, chair of the Senate Special Committee on Natural Gas Development, to present their proposal to the committee.

“We will do everything that we can do to make sure that our discussions are full, fair, complete,” he said.

Jim Whitaker, chair of the port authority and Fairbanks North Star Borough mayor, and two other officials spoke before the committee for about five hours Thursday and the same on Friday, when administration officials had a chance to respond.

Whitaker acknowledged the group faced roadblocks, but said it could overcome them.

Radoslav Shipkoff, the port authority’s financial adviser, used detailed fiscal analyses to demonstrate the viability of the proposal to ship natural gas from the North Slope to Valdez and from there to markets on the West Coast.

Project manager Bill Walker described the port authority’s existing permits and business arrangements for liquefied natural gas tankers and receiving terminals. The port authority project would bring the state more money than the one the oil companies propose, they said.

Shipkoff challenged the administration’s claim that North Slope gas would not be economical to develop without concessions from the state.

Sen. President Ben Stevens, R-Anchorage, challenged the group’s claims that its project was ready to proceed and did not require any concessions, and questioned why the project was even being discussed when it did not have access to gas.

“It’s amazing to me that everything you say, you don’t need it,” he said, laughing. “It’s just a phenomenal presentation you’ve given us.”

Committee members and others asked specific questions–on the fuel systems of LNG tankers, for example–and challenged the port authority’s claims on issues relating to federal regulation and project financing. Pedro van Meurs, the governor’s lead adviser on oil and gas issues, debated Shipkoff on the nature of natural gas markets.

“They put forth an argument that can’t be ignored,” Wilken said.

But it was unclear how committed lawmakers were to hearing the port authority out.

At times, the presentation won the audience of lawmakers not on the committee or even in the Senate. But few of those on the 12-member committee attended the entire presentation and only two remained when the port authority finished late Friday afternoon.

Wilken was one of those who stayed until the end.

“I’m disappointed,” he said. “Sometimes the Legislature doesn’t exhibit very good manners.”

Wagoner said he came and went in part because he had heard parts of the presentation before. Some committee members had other commitments.

It was also unclear what the group was asking for.

“They’re really not asking us for anything,” Wilken said.

The port authority officials asked lawmakers for consideration and only implicitly for a delay in moving ahead with the oil companies’ project.

That project could be added in later, they said, but if lawmakers approved the proposed contract, the all-Alaska line might never happen.

The port authority said that the proposed contract does not force the three big oil companies to build a pipeline. Because they will want to take advantage of every profitable opportunity around the world, they will move first on those with firm deadlines.

“The Alaska project will always be developed last,” Shipkoff said.

Jim Clark, the governor’s chief of staff and chief pipeline negotiator, said the order should be flipped. Nothing in the proposed contract would stop the port authority from bidding into the Alaska Highway project, he said.

“We’re not antagonistic to what they’re trying to do,” he said. “We just don’t believe it can be done.”

On Saturday, he said the contract under consideration in the Legislature would get the state a pipeline.

Rep. Jay Ramras, R-Fairbanks, who sat in on the port authority’s presentation Friday, agreed with Clark despite being openly critical of the proposed contract.

“Their project has an enormous amount of merit,” he said of the port authority, “but it’s a better back-end project.”

It’s better to build the Wal-Mart on a piece of property first and fit the smaller, albeit profitable, McDonald’s on it later, he said.

“Let’s go follow the money,” he said, even if it takes two years to get a better contract.

Wagoner questioned why the port authority had even come to the Legislature, which is only considering the oil companies’ proposal because the contract was negotiated under the Stranded Gas Development Act.

“They’re pushing kind of to us,” he said, “but the people they have to work with is the administration.”

The group needs the administration because, according to the port authority, the oil companies have so far refused to sell gas for the project despite an obligation under state regulations to accept offers that would provide a reasonable profit for the companies.

Whitaker said Saturday that working with the administration had proved to be a “dead end.”

Clark said Saturday he didn’t see any role for the administration in forcing the oil companies to sell gas to the port authority.

Legislative consultants are completing a study of the port authority proposal.

Stefan Milkowski can be reached at smilkowski@newsminer.com or 459-7577.