EDITORIAL: AGIA is buried, but the pipeline dream lives on
The Alaska Gasline Inducement Act is dead, six years, 10 months and 14 days after the publication of this column by then-Gov. Sarah Palin, who put forward the act three months after taking office:
“We are confident that the AGIA will induce a project. We have done the homework, we have done the legwork, and now we are ready to roll up our sleeves and work with the Legislature to get this process moving.”
AGIA didn’t work.
Gov. Sean Parnell, who was Gov. Palin’s lieutenant governor at the time, announced on Jan. 10 that the state and pipeline-builder TransCanada have agreed to terminate their working relationship under AGIA but remain engaged in pursuit of a pipeline. TransCanada was the winning company chosen under the AGIA process, which was approved overwhelmingly by the Legislature — 37-1 in the House and 20-0 in the Senate.
Rep. Ralph Samuels, the Anchorage Republican regarded as knowledgeable on oil and gas issues in the Legislature, was the only dissenter in the AGIA tidal wave. He now looks pretty prescient.
Mr. Samuels, no longer in the Legislature, remained critical of AGIA in a 2010 column during his campaign for governor. Here’s how he saw it then — and presumably still sees it today: “The path we are now on under AGIA is based on the notion that government can dictate the terms of construction, shipment and economics of a gas pipeline through Canada to Lower 48 markets. The current governor says AGIA is the answer. I believe it is a dead end.
“Now, three years after that vote, we find ourselves in a starkly different energy world. Technology has vastly improved the opportunity to develop shale gas. There are large shale gas formations across the United States, Europe and China. The world is now awash in gas and prices have fallen dramatically.
“This is bad news for Alaska.”
Gov. Parnell, who for years was a faithful public supporter of AGIA, has turned the page. The project that it was designed to induce — a gas line from the North Slope and into Canada, where the gas would then find its way into a network to the Lower 48 — has fallen out of economic favor. ConocoPhillips, Exxon Mobil and BP, which hold the North Slope gas leases, never liked AGIA and opposed it in the Legislature.
The companies have since lined up, at Gov. Parnell’s prompting, behind a project capable of exporting liquefied natural gas, but they haven’t fully committed to it. This pipeline would run from the North Slope to a point in Southcentral Alaska and could cost $45 billion to more than $65 billion.
Of some irony here is that Gov. Parnell is proposing that the state become a part owner in the project. Gov. Frank Murkowski, during his term from 2002-2006, proposed the state take a 20 percent equity share in a gas pipeline.
Gov. Murkowski reached a pipeline agreement with ConocoPhillips, Exxon Mobil and BP in 2006 that included the equity share, but the proposal came under heavy public criticism over its tax provisions. The Legislature declined to act on the agreement, and Gov. Murkowski was defeated in the Republican primary later that year — by Sarah Palin.
Alaska’s leaders have been talking up a natural gas pipeline for decades. We all need to hope that Gov. Parnell’s burial of the Alaska Gasline Inducement Act and his ideas for how to proceed ultimately bring to fruition the pipeline we dearly need.