Gasline battle heats up in homestretch

In one of the final debates before the Nov. 4 election, Gov. Sean Parnell and his challenger Bill Walker jabbed at each other over the gas pipeline, health care, the state budget and in-state energy policy.

Parnell, a Republican, is seeking his second full term. He won election in 2010 after finishing out the term of former Gov. Sarah Palin, who resigned in July 2009.

Walker is an attorney and former Valdez mayor, and a long-time Republican who changed his registration to undeclared in order to merge his campaign with Byron Mallott, the Democrat who won his party’s nomination for governor in the Aug. 19 primary but joined Walker as his lieutenant governor running mate.

The major point of contention in the Anchorage Downtown Rotary Club debate Oct. 28 was over Parnell’s gas pipeline plan. (The debate was moderated by the author of this article.)

Walker said he’ll ensure that the project gets built if he is governor and that he doesn’t want to stop the project or even slow it down.

“I’d just like to see where we are. Much of it we can’t see because it is confidential,” he said. “We’ve started over many times on this. I’ll make sure we finish.”

Walker added, though, that until there is a final investment decision, or FID, the effort underway now is “just another study.”

A summer field season took place this year studying the potential pipeline route from Prudhoe Bay to Cook Inlet, funded by the state and the three major North Slope producers, land acquisitions and surveying are being done at the site of a future LNG plant at Nikiski, and an export permit was filed with the Federal Energy Regulatory Commission.

In August, Department of Energy Secretary Ernest Moniz said the government would expedite the application process for the Alaska LNG Project permit, putting it on a faster path to approval than the backlog of LNG export permits from Lower 48 facilities.

Parnell said Walker’s statements critical of the project have been unsettling for the state’s partners — the North Slope producers — at a time when decisions are pending on larger expenditures.

“You said the project plan was ‘fatally flawed,’” Parnell said to Walker, quoting a September Associated Press article. “On Nov. 5, if Bill Walker is elected, they (the producers) aren’t going to know what he’s going to do. Their spending on the pre-FEED (pre-front end engineering and design) goes to a stop.”

Later, Walker fired back during the part of the debate where the candidates could ask each other a question, asking why Parnell keeps “starting over” and passed up earlier opportunities to move a gas pipeline and LNG project forward when Walker said Asian buyers came to Alaska during the Alaska Gasline Inducement Act open season expressing interest in purchasing gas.

Parnell responded that the state is better off aligning with the gas suppliers (producing companies) than buyers, which is the concept Walker pushed.

“We haven’t started over,” Parnell said. “We’ve made more progress with the companies than ever before. You don’t start with the market. You start with the owners who supply gas. Alaskans own the gas. The markets want it as cheap as possible. If state aligned with markets, you’re going to get the cheapest gas possible. That would not maximize the benefit to Alaskans. We are aligned with leaseholders who also want maximum value for their gas just like we want.

The bottom line is we don’t change courses now and risk stalling or delaying this gas line.”

Walker countered this.

“That’s not the way any other large (gas) project is done,” he said.

In his question to Walker, Parnell cited a 2005 Institute of Social and Economic Research evaluation of Walker’s previous concept for a gas export project that found it to be “inherently unsettling and troubling” and that it would reduce income to the Permanent Fund.

Walker responded that the biggest obstacle he encountered in the concept he led for the Alaska Gasline Port Authority was lack of engagement at the governor’s level.

A particular concern Walker has is whether the project will stop if one of the other partners pulls out before or at the Final Investment Decision, which could come in 2018.

“I’ll follow the process in place now,” he said. “You bet I will. But the first time someone slows down, that’s when we need a governor who knows what to do and has the guts to say we’re going to step up and finish this ourselves.”

On Point Thomson, a large North Slope gas project now under construction, Parnell said an appeal in a lawsuit by Walker opposing the deal is pending before the state Supreme Court.

If Walker wins the lawsuit, the settlement Parnell negotiated over a complex lease dispute at Poiht Thomson would be voided, and so would the state’s development plan on the project. At that point the companies stop work, Parnell said.

“Bill Walker would shut down Point Thomson,” Parnell said. “In 2016, they are obligated to put liquids into TAPS. That is the anchor for the gasline.”

Walker, an attorney by profession just like Parnell, said he doesn’t think his lawsuit would shut down Point Thomson work if successful, and his reason for bringing the case is that the settlement was negotiated in secrecy and is overly broad by establishing terms beyond the original dispute.

The two actually agree on some things. In an Oct. 28 debate before Rotary Club members in Anchorage both were supportive of roads and workforce training.

Walker said he is excited about training and career education.

“When you incorporate this into the regular (school) curriculum, graduation rates go to 90 percent,” he said.

Parnell touted his recent proposal to allow high school students to acquire trade certifications and skills before graduation, and potentially to even receive associate’s degrees at the same time to start their careers at age 18.

There was sharp disagreement on health policy issues, however, particularly an expansion of Medicaid, the joint federal-state program of health care for low-income Alaskans.

Walker said he opposed the federal Affordable Care Act, as did Parnell, and would have sued to overturn it, as did Parnell and 25 other state governors, but he supports an expansion of Medicaid, which the act permits, and which Parnell opposes.

Denying thousands of low-income Alaskans the benefit of health insurance, particularly paid for by the federal government, is untenable, Walker said.

“I’ve met people who aren’t covered (with health insurance),” Walker said. “I couldn’t live with myself if we didn’t.”

Parnell replied the cost of Medicaid expansion is unaffordable, no matter who pays for it.

“We now pay about $11,000 per year,” per Medicaid recipient, he said. “The Obamacare expansion cost goes to $44,000 per year. There are solutions we’re looking at such as a large group pool.”

Parnell also said not expanding Medicaid affects fewer people than many believe. It would grant coverage to single adults who are not disabled. Children in low-income families are now under Denali Kid Care, a form of Medicaid, and disabled adults are now eligible for Medicaid, he said.

Walker although he opposed the Affordable Care Act, the Supreme Court upheld it and it is the law of the land. Parnell countered that the Supreme Court decision upholding the individual mandate also rejected the part of the ACA requiring states to expand Medicaid eligibility or lose all their Medicaid funding.

“I didn’t think Medicaid coercion was right,” Parnell said. “I fought that because states should have those kind of choices.”

The two also disagreed on in-state energy policy and continued state support for a plethora of major projects the state is pursuing in addition to a large gas pipeline and liquefied natural gas project.

Walker said an example of a project he would shelve is a smaller state-led gas pipeline that is seen as an alternative to the big project.

“There is no reason we can’t finish a large-volume gas line,” which will bring lower-cost gas to Alaskans. “We need economies of scale,” with a big project, Walker said, to lower the gas transportation costs form the North Slope to Alaska communities.

Walker also said the state is building too many things without any planning for long-term sustainability.

“Maintenance is important,” he said. “We need to take care of what we have before building more.” 

Parnell disagreed. The state stlll has the resources to keep options like the state-led gas pipeline and the Susitna hydro project on the table.

“We don’t have to make billion-dollar decisions yet (to build one). However, if oil prices stay at $82 per barrel we may have to do some prioritization with legislators,” Parnell said. “Until we have to make that decision we can’t set one (option) aside and hope the other one goes.”

Ambitious state capital construction programs in the 1980s and 1990s, years when little attention was paid to long-term maintenance needs, led eventually to a $2 billion backlog of deferred maintenance. Parnell said his policies have taken a chunk out of that through a five-year program of appropriations, which the Legislature supported.

On lowering the cost of in-state energy, Walked said he favors the state selling royalty oil to in-state refiners at a discount with a requirement that the savings he passed on to consumers, an idea Parnell has not embraced.

“Why do we sell (royalty oil) at a premium (at a markup)? We need mid- and long-range solutions on energy. It has to be the highest priority,” Walker said.

Parnell replied that his Interior Energy Project aimed at getting liquefied natural gas to Fairbanks is now underway, an accomplishment of his administration.

“Pipe is being laid (in Fairbanks). A pad is built on the North Slope for the LNG plant,” he said. “Once we get the backbone (of the system) to Fairbanks, it can go to the river system and highways.”

Parnell also said the state’s renewable energy grant program, which mainly helps renewable projects in small communities, is making a difference in reducing the use of diesel for power generation, and said such projects have displaced $65 million in fuel oil use around the state.

Updated: 
10/29/2014 - 1:20pm

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