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Alaska must play hardball with gas.

Editor's Note: This article was first published in the Anchorage Daily News on Nov. 27, 2005. Former Gov. Walter Hickel and the Anchorage Daily News have given Alaska Business Monthly permission to reprint the editorial column.

In the weeks ahead, Frank Murkowski has his greatest challenge and opportunity as Alaska's governor. The legacy issue, as he clearly recognizes, is how to produce and market Alaska's North Slope natural gas. There are tens of billions of dollars at stake. And beyond the revenues that can pour into Alaska's general and permanent funds, there is an even bigger issue.

Will this resource simply generate cash and dividends? Or will it be the key to a healthy and sustainable Alaska economy well into this century?

I faced a similar situation regarding North Slope oil and the trans-Alaska oil pipeline in 1969 and 1970. It required a showdown with the Exxon Corp. (then Humble Oil) because it didn't want an all-Alaska line.

Now, as then, we welcome the involvement of the producers. They have contributed greatly to Alaska. But while they negotiate on behalf of their stockholders, it is up to the governor to make sure that the real beneficiaries of these resources are the Alaska people. It's our land, won in our battle for statehood, and our gas.

If asked how to proceed, this is what I would recommend:

* Announce that there will be no more secret gas line negotiations. As North Slope gas is no longer stranded, all future discussions will be transparent and conducted in the full light of day.

* Tell the producers that we are going to develop our gas on our terms. Don't ask them what they will do. Tell them what they must do.

* Announce that in order for our gas to be used instate for the maximum benefit of our people, as mandated by our constitution, the state of Alaska will build an all-Alaska pipeline from Prudhoe Bay to Valdez.

* Explain that the state's 4 trillion cubic feet of royalty gas at Prudhoe plus Point Thomson's 8 trillion cubic feet are enough to make a gas line economic, and litigation is not required.

* Thoroughly examine the Alaska Gasline Port Authority proposal to build an all-Alaska line, which so far has been dismissed by this administration without a proper review. If the benefits to Alaska are as outstanding as I believe them to be, give them the go-ahead. This does not take legislative action. The governor can make the decision.

* If, however, the Alaska Gasline Port Authority proposal is inadequate, announce that the State of Alaska will build our own gas line. Invite America's pipeline construction companies to bid on a 48-inch diameter gas line to Valdez, designed to meet the highest engineering standards.

* Invite the major U.S. financial institutions to finance the all-Alaska line. With an $18 billion federal loan guarantee, and our own supply of gas, there will be no shortage of takers.

* Guarantee that a spur line from the main line will be built to Southcentral Alaska to meet the growing needs here.

* Inform Alaska's rural communities that high-priced diesel can be replaced by propane produced from the gas liquids from an all-Alaska line.

* Notify the petrochemical industry that our feedstocks will be available to create high-paying, long-term jobs for Alaskans. Invite them to participate (as we did on the Kenai in the 1960s) according to our terms, including strict environmental standards.

* Retain the best attorneys in the nation. If the producers challenge in court our right to develop our own gas, instruct the legal team to take our case to the Supreme Court.

* Address the national media and challenge the greed of those who would litigate and delay rather than provide the energy our country urgently needs.

* Invite the producers to hook into the all-Alaska line at Delta and build a second line through Canada, if and when they can resolve U.S.-Canada treaty restrictions, permitting obstacles, aboriginal land claims, and the legal battle between Canadian pipeline companies Enbridge and TransCanada.

* And, finally, celebrate the fact that Alaska has lived up to the promises and pledges made at statehood by using our resources for the benefit of our people and not buckling to Outside interests.

Walter J. Hickel served as governor of Alaska from 1966 to 1968 and 1990 to 1994 and as U.S. secretary of the interior from 1969 to 1970.
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Author:Hickel, Walter J.
Publication:Alaska Business Monthly
Article Type:Reprint
Date:Jan 1, 2006
Words:731
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