WASHINGTON, Aug. 23 (UPI) -- The future of an Alaskan natural gas pipeline is in limbo with the project's biggest proponent, Gov. Frank Murkowski, a lame duck.
The question to be answered now is whether he will force through his controversial proposal before leaving office in December and, if not, how his successor will mold the terms of the deal.
Murkowski lost his re-election bid for the Republican Party nomination to Sarah Palin Tuesday by more than a 30-percent margin.
Although the primary vote wasn't solely a referendum on the pipeline -- Murkowski irked many during his four-year term -- Palin and Tony Knowles, the Democrat Party nominee, weren't quiet about it.
Murkowski's $25 billion pipeline, which would send gas through Canada and into the lower 48 states, would be 20 percent state-owned, with the remaining 80 percent controlled by BP, Conoco Phillips and Exxon Mobil.
Joseph Benneche, an analyst with the U.S. Energy Department's data arm, the Energy Information Administration, said it would funnel 8 percent of U.S. natural gas supply and at least buffer against rising prices, if not help push them down.
Prices are rising -- consumption peaked at 23.45 trillion cubic feet in 2000 and hasn't dropped below 21 tcf since 1993 and the capacity to consume has grown, he said.
An estimated 35 tcf will be shipped south over the estimated three-decade life of the northern Alaska gas fields, but "there's great potential beyond that as well," said Benneche, who said he doubts the pipeline will open before 2015.
Although Murkowski's project may never be built, a pipeline of some sort will be. Alaskans of varied political stripes want it -- both for the state budget and in their pocketbooks -- but the two leading candidates remaining for governor have called for renegotiating the Murkowski project.
"In all practicality, the deal is dead," said Rebecca Braun, editor and publisher of the state policy publication, Alaska Budget Report. Although gas resources are viewed as "the next great savior of Alaska," with oil production -- and thus revenue from it -- declining, Alaskans are "wary of (Murkowski's) plan that gives away the farm."
Oil revenue is expected to make up 89 percent of Alaska's budget this year. Money from oil is also returned to citizens via dividend checks. And there is no income or sales tax in Alaska, evidence of the state's end-all be-all attitude toward its natural resources, including ownership of them.
Some saw the 20 percent stake in the project as an unnecessary expenditure on a pipeline that would have been built anyway, because of the proven reserves, with only one-fifth of the power to decide how it operates (though within government regulations).
Murkowski's deal doesn't even ensure the pipeline would be built; only giving incentives to do so.
The project was passed over in two special legislative sessions he called this year, though a new oil and gas tax was passed in the 11th hour of the second session. That bill included tax breaks and incentives to oil and gas companies -- up to 42.5 percent, in some instances. It was seen as an inducement in best light, a giveaway in the worst, to the big three oil companies to invest in the gas field and pipeline Murkowski has been pushing.
After his stunning defeat Tuesday, it may now be more of a pull for the embattled former U.S. senator. His controversial term began with his nominating of his daughter, Lisa Murkowski, to fill his seat in Washington. He then purchased a gubernatorial jet after state and federal agencies told him not to. Now the tax and pipeline negotiations are seen as too oil-industry-friendly.
And yet Murkowski's plan isn't 6-feet-under, not until the new governor takes office in December. He's waiting for a past-due report from his appointed revenue commissioner before renegotiating a new contract with the oil companies.
Murkowski plans to call a third special legislative session by the end of September to vote on it, said Press Secretary John Manly.
But approval isn't likely, considering Murkowski's lame duck status and general displeasure with the pipeline deal he's negotiated. Manly said the governor hasn't ruled out just signing the contract regardless, a move whose constitutionality is unknown. As the Nov. 7 general election draws closer, Palin and Knowles may flash the anti-Murkowski deal card more, endearing them to skeptical voters and further deteriorating public support -- thus legislative support -- for the pipeline.
"I pray to god that he won't sign the gas line bill" without legislature approval, said Palin. If elected she'll restart negotiations by totally opening up pipeline bidding -- unlike Murkowski's behind-the-scenes selection -- and then rely on input from the legislature.
Democrat gubernatorial nominee Tony Knowles didn't return calls from United Press International Tuesday, but on his Web site he concurs largely with Palin's gas pipeline approach.
--
(Comments to [email protected])
