Palin, Parnell intend to get to work right away on gas pipeline;
BYLINE: By WESLEY LOY Anchorage Daily News
Sarah Palin's election Tuesday as governor signals yet another new start for one of Alaska's fondest but most stumble-prone economic development dreams -- a natural gas pipeline.
Like the eight men who served as governor before her, Palin faces a popular mandate to achieve an objective that has flamed out several times through the years.
She and running mate Sean Parnell vowed to go to work right away.
"When we are sworn in, we can officially begin negotiations to get a gas line," Palin said. She hopes to meet as soon as possible with oil giants BP, Conoco Phillips and Exxon Mobil, the North Slope's three biggest producers, she said.
Outgoing Gov. Frank Murkowski, whom Palin defeated in the Republican primary, this year came as close as anyone to reaching a deal with the three oil companies to at least seriously plan for a pipeline, expected to cost more than $20 billion.
But critics including Palin panned Murkowski's proposed contract, which would set tax rates and other terms, as too generous to the oil companies.
Palin has vowed to hold a wide-open competition for anyone with a pipeline proposal.
That could bring in Canadian pipeline operator TransCanada Corp. and the Alaska Gasline Port Authority, which have project ideas or routes that differ from that of the oil company trio.
The port authority proposes an "all-Alaska" pipeline that would extend from the North Slope to a tanker port on the southern coast, rather than crossing into Canada as the oil companies have proposed.
Early on, Palin seemed to support the all-Alaska idea.
More recently, she seemed to become more neutral, said Ken Boyd, a former state oil and gas director now working as an industry consultant.
Palin hasn't laid out a timeline for her gas pipeline plan.
But she did outline her early intentions. When the Legislature begins a new session in January, Palin said her administration would introduce a bill laying out key requirements as well as incentives for any pipeline applicant.
Palin also has vowed to leave oil taxes out of the equation. One of the most controversial clauses in the Murkowski contract would freeze oil taxes for 30 years to comfort companies fearful of an oil tax hike after they invest billions in a gas pipeline.
Ken Boyd, a former state oil and gas director now working as an oil industry consultant, said that before much work can get under way on the gas line, Palin will have to assemble her cabinet as well as a team of experts who can evaluate the pipeline proposals.
Hopefully, the new governor won't discard two years of number crunching and expert analyses that went into the Murkowski contract, Boyd said.
"There are a lot of problems with that thing, but my God, to spend that kind of time and money on that work, I think you gotta at least look at it and cherry-pick it," he said.
The idea of removing oil taxes from the bargaining "sounds good as a slogan," said Dan Dickinson, a former state tax director who worked as a consultant on the Murkowski contract. But the new governor will soon learn the economic reality that oil and gas come out of the ground together from the same wells.
Another reality is that only the oil companies, and not a Canadian pipeline company or some other contender, has lease rights to the gas, Dickinson said. So if the oil majors feel uncomfortable with a pipeline proposal, even one blessed by the state, they won't make the risky commitments to ship their gas through the pipe, he said.
Regardless of how quickly the new administration works, construction isn't guaranteed, nor is gas likely to be flowing anytime soon. "Certainly not earlier than 10 years," Dickinson said.
Ken Konrad, BP's vice president for natural gas, said BP is eager to work with the new governor.
While stopping short of advocating that the 460-page Murkowski contract be salvaged, Konrad said it "would be disappointing to throw everything away" and start over.
Daily News reporter Wesley Loy can be reached at wloy@adn.com or 257-4590.