JUNEAU — Gov. Sarah Palin said Tuesday she was “more committed than ever” to the Alaska Gasline Inducement Act and the requirements it imposed on potential pipeline builders.
During a news conference at the governor’s mansion, she and key members of her gas pipeline team defended the approach and explained their refusal to consider ConocoPhillips’ alternative.
“We are very confident that our process will get us a gas line,” Palin said.
Some lawmakers have expressed doubts about the AGIA process in recent weeks, arguing that it failed to produce the competition lawmakers expected when they approved the law last year. Others have defended the process and argued that it did spur competition and resulted in a good proposal.
Palin’s team announced early this month that only one entity — pipeline company TransCanada — had submitted an application that met all the requirements under AGIA.
ConocoPhillips, one of the state’s three major producers, offered an alternative proposal outside of the AGIA bidding process, and lawmakers in both bodies are reviewing the proposal, along with the Alaska Gasline Port Authority’s and TransCanada’s.
“We are going to hear — and I predict much more — ‘The sky is falling,’” said Tom Irwin, commissioner of the Department of Natural Resources, at the news conference. “The sky is not falling.”
Irwin described the “must-have” requirements in AGIA, which deal with the permitting, building, and expansion of the pipeline, as part of a “program to protect Alaskans.”
He argued that ConocoPhillips’ push to promote its proposal showed just how much the state stood to lose by giving up the requirements under AGIA.
The ConocoPhillips proposal does not meet the AGIA requirements.
Irwin also addressed the main concern ConocoPhillips vice president Brian Wenzel expressed during a Senate committee hearing last week — that the AGIA process didn’t provide the tax and royalty incentives needed to get leaseholders to make long-term commitments to use the pipeline.
Irwin said the AGIA process allows the state to tweak the fiscal system for gas producers as it develops a better sense of what the pipeline will cost and how much shippers will have to pay to use the pipeline. But he added that it was still too early to know whether gas producers, including ConocoPhillips, would need incentives to make the project attractive.
“What right do we have giving away the state’s value [when] we don’t even know what the bottom line is?” he said.
Revenue Commissioner Pat Galvin noted that AGIA already provides some incentives for gas producers. Neither commissioner specified what kind of additional incentives the administration would consider.
Galvin said the administration was unwilling to negotiate a deal with ConocoPhillips because the company was asking for private talks and had not been clear about what incentives the company needed and why.
“They want to engage in a public discussion about their alternative, but they’re not willing to talk about what their actual proposal is,” he said.
Palin said former Gov. Frank Murkowski’s negotiations with ConocoPhillips, Exxon Mobil, and BP led her administration to where it was now.
“Where we are is more committed than ever to sticking to the rules in AGIA,” she said.
But Galvin also described a need for a public evaluation of pipeline alternatives. He said the administration has not yet made a decision on the Alaska Gasline Port Authority’s request for reconsideration, but would ensure that Alaskans got a chance to consider an “all-Alaska” pipeline, such as the port authority’s, in addition to a pipeline through Canada, such as TransCanada’s.
Irwin and Galvin are scheduled to provide a gas line update at a Senate Resources Committee hearing this afternoon.
Lt. Gov. Sean Parnell also defended the AGIA process Tuesday at a Greater Fairbanks Chamber of Commerce luncheon in Fairbanks.
“We remain committed to promoting competition,” he said. “AGIA remains the only plan focused on competition rather than control.”
At the news conference, Palin and her administration also discussed a court filing relating to the Exxon Valdez oil spill, federal earmarks, the governor’s supplemental budget proposal, and other issues.
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