During the 60-plus days that Alaska Gov. Sarah Palin was part of the Big Show of American politics, one of the cornerstones of her success in office — a contract to build a natural gas pipeline off the North Slope — took a bit of a beating.
| Will this lonely oil pipeline ever have a natural gas mate?
Cratering energy and stock markets raised question marks about the likelihood of such huge projects moving forward. The Associated Press wrote a piece highly critical of the process Palin used to award a state license to Canadian firm TransCanada. And Palin’s defeat and a Democratic presidency could raise more question marks about federal support for the pipeline.
First, a quick recap:
An Alaska gas pipeline has been discussed ever since oil started flowing through the Trans Alaska Pipeline in 1977. It looked like the three major producers (BP, Exxon Mobil and ConocoPhillips) finally had a deal in 2006 after closed-door talks with former Gov. Frank Murkowski, but he was defeated by Palin in large part because the agreement was seen as too generous.
So, after taking office Palin created an open bidding process for a state concession (including $500 million in matching funds) to build the big pipe. It attracted a motley crew of applicants that left some underwhelmed and baffled. Conoco decided to launch its own effort on the same day and later BP joined in. Canadian pipe powerhouse TransCanada was chosen by the state.
TransCanada has been pretty low key as it goes about some initial survey work. This may be because they can’t begin to tap any of that $500 million from the state until after Nov. 25 (a provision some Palin foes in Alaska put in place), so they may be holding off on big ticket spending.
But the other project, known as Denali, has put out regular press releases announcing items like the beginning of survey work and the leasing of office space in Anchorage. They’re minor events, but the message they’re trying to send is clear: “Denali is the real project and we aren’t going away.”
When Palin was picked by McCain as a running mate the state-sponsored gasline bidding effort was touted as proof she, too, was a maverick in that she stood up to Big Oil. But as Palin attracted national media attention so too did the pipeline. An Associated Press report released in late October on the bidding process described it as ” flawed” and said it “narrowed the field to a company with ties to her administration …” State legislators, including Democrats, defended the process used to pick TransCanada, however. (Here’s a critique of the AP piece, btw)
And the recent collapse of oil prices and the ongoing financial crisis has some companies announcing plans to cut back spending. TransCanada said in its most recent financial report it was in good shape, as did ConocoPhillips and BP, but the slide down doesn’t appear to be over.
And could President-Elect Obama’s lack of enthusiasm for more drilling slow negotiations over pipeline rights-of-way through Federal lands? Never mind the fact that having two competing projects makes the prospects somewhat confusing. The pipeline is mentioned as a priority on his pre-election energy policy, but could the state-backed plan be snubbed in favor of Denali?
But the state and the companies remain optimistic. One Alaskan pipeline project official told a University of Wyoming gathering this week he thought the companies would ultimately end up working together on the project.