Sarah Palin has only been in the governor's office a month, but ran on a campaign that negotiations with the big three oil companies will expand to include any organization interested in the $25 billion-plus project.

The day after her inauguration in December, and as promised, Gov. Palin held talks with several interested parties, assuring each they will have equal opportunity to propose building a coveted gas line.

That's what worries business, said Marc Langland, president and chief executive officer of Northrim Bank. If the state doesn't get an agreement in the next few years, Langland predicts the economy will slow and the state will enter a phase of stagnation.

“I'm afraid we'll spend an inordinate amount of time revisiting everything and not focus on taking advantage of the progress that was made so far, and then not come to any conclusions,” he said. “We need to take advantage of what we already know.”

The administration is still sorting out the process and the methods it will take for pipeline negotiations, said Marty Rutherford, acting commissioner of the state Department of Natural Resources. She wasn't willing to guess on how long it will take.

Rutherford said she and the Palin administration are also concerned about too much of a delay, but it's more important to get the best deal and not to rush it.

“It's a challenge,” Rutherford said. “It's in the best interest of the state to encourage efforts to get the project as quick as possible. But it has to be done in such a way that has reasonable tariffs and reasonable options for expansion and a way that all exploration companies can have the opportunity to effectively explore and get new gas to the pipeline.”

Rutherford said she and the Palin administration are aware of the idea that Alaska only has a short time to get a contract, or else liquefied natural gas (LNG) or coal gasification plants will pounce on the delay to replace Alaska gas as a resource around the nation.

“There has been speculation for many years about windows of opportunity that close, but I've never seen one close,” she said. “The project is economic. Producers have shown themselves reluctant to move forward, but we hope the producers and the current administration can find the right balance.”

Former Gov. Frank Murkowski spent much of his term negotiating a deal with the major oil companies of BP, ConocoPhillips and Exxon Mobil. He called the Legislature into two special sessions in hopes of getting the deal approved before he left office. It didn't work.

Murkowski was criticized from the beginning by legislators and a large portion of the public for holding secret talks with the producers. The issue became a major theme during the election that saw Murkowski trounced at the polls.

The state has enjoyed 18 years of consecutive growth in terms of jobs and in the economy, according to state economists. The oil and gas industry, which funds the vast majority of the state's operating budget, has remained strong since the 1980s.

In 2006, oil for the first time in the past five years saw a strong recovery, especially on the North Slope, said economist Neal Fried.

Economists and industry leaders predict continued growth in 2007, but beyond that, the future becomes murky. Decisions to build or expand business will depend largely on when, or if, Gov. Palin comes to terms on a gas line project.

“The kicker will be the oil companies and what they put into the market. That all hinges on what happens with the gas line,” said Dick Cattanach, executive director for the Associated General Contractors of Alaska, a construction trade group. Once a deal is made, private-sector businesses will feel better about investing millions of dollars in Alaska, he said.

“Private sector may be cautiously waiting to see what happens with the gas line,” Cattanach said. “If the pipelines goes, if it moves to the next phase, businesses will say, we've got to move forward. If we don't get a contract soon, you will see a lot of businesses pull back and not invest in the state.”

Langland, a longtime friend of Murkowski, said several things came together to defeat the former governor's efforts.

“First there was Frank's inability to communicate properly and then the timing of the political world, with the elections,” he said.

Also, Murkowski waited too late in the campaign season to announce he was running for re-election. Add to all that last summer's shutdown in Prudhoe Bay due to pipeline corrosion and the fact that the Federal Bureau of Investigation is looking into questionable activities of several lawmakers, he said.

Everyone was at fault, he said, including legislative leaders.

“There were a lot of agendas going on, and we didn't have the leadership to work it out,” Langland said. “It could have gotten done, even with how Frank presented it. There were not many items out of that huge contract that they couldn't agree on if they had eliminated all the prejudices.

“That all took precedence over what was best for Alaska,” Langland said. “But saying all that, they made some significant progress.”

Those involved with the contract defined what the citizens and the key legislators opposed in the contract, and identified ways to move it forward after the political winds died down.

“(Frank's) heart was in the right spot, it's not like he was doing something bad for the state or do something just for himself. He laid it on the line and got whipped,” Langland said.

DNR's Rutherford said it was best that Murkowski's proposal didn't go through.

“That proposal was a worse problem than you could imagine,” she said. “It was an option contract.” She said it gave the producers the option on whether to move forward on construction and when.

Another continuing concern is the state's fiscal gap, Langland said. The state is relying heavily on surplus wealth provided by the oil companies, through taxes, thanks to recent record-high oil prices. Without those surpluses, the state would be operating in the red.

Langland served on the Fiscal Policy Council, an effort to balance the state budget in the early days of the Murkowski administration. He said bank presidents worry about the psyche of business owners come 2008 and 2009, when they consider a budget gap with the potential for a delayed gas line deal.

“If there's no gas line deal and a budget gap, people worry about the economy,” Langland said. “A big concern on the part of business is the unknown with the new administration. If we dribble the ball in the next year, we'll see a slowing in the economy; people will hold off.”

Mike Tibbles, Palin's chief of staff, said Palin is aware of the gap and took steps in her budget proposal to bring spending down while still saving surplus money for hard times.

The governor based her operating budget on available revenues, a completely different approach over the previous Murkowski administration, and she proposed directing department commissioners to find $150 million in cuts, Tibbles said.

Palin also set a goal to develop a fiscal plan for the state budget for the long term.

Langland questioned the wisdom of putting more than $2 billion into the state's savings accounts.

“It gives up liquidity, takes away the option to use that money,” he said. “How do you pay for the budget gap? The state already stuck it to the oil companies by taxing the heck out of them. That leaves taxing the public, and you can't tax them enough to cover the gap.”

Tibbles agreed that the move would take money off the table for annual appropriations, but that was the point.

“We're confident that if circumstances do come up where we need access to that money that we could work with the Legislature to meet those needs,” Tibbles said.