Leaders speak out: candidates, legislators weigh in on natural gas contract.

Building a natural gas pipeline to take Alaska's natural gas to market is considered by most Alaskans to be a good idea. The gas pipeline will bring jobs to the people, revenue to the state, and a crucial resource to the needy markets.

As the idea moves forward, however, growing dissension is taking place on many fronts about how, exactly, this gas will make it to market. What route will it take? Who will be responsible for specific parts of the pipeline? How can the state guarantee that it will provide Alaskan jobs? Who will build it and when?

One answer, proposed by outgoing Gov. Frank Murkowski, was an agreement negotiated with the three big oil producers--BP, ConocoPhillips and Exxon Mobil--that was submitted for legislative review and public comment in May. According to the Legislature, and the people of Alaska who responded in a number of public forums, the "contract" as it stands raises even more questions and a number of volatile issues. These include a lockup of oil and gas taxes for 30 to 45 years, a lack of a construction commitment by the industry, and weak language concerning Alaska hire and business preference.

During two special sessions this summer, the Legislature failed to pass legislation that would enable the contract to be signed, and Gov. Murkowski went back to the negotiating table. In late August, he said that he would call the Legislature back into session in September for another try to approve the contract, providing that House and Senate leaders decide that there is enough support for the controversial deal.

At the time of this story, it had still not been decided if there would be a special session called. In the meantime, we asked a few of the legislators, and two gubernatorial candidates, to share their thoughts on the current contract and what they think needs to happen to bring the gas pipeline to fruition.

GUBERNATORIAL CANDIDATE TONY KNOWLES SPEAKS OUT

"The contract as it stands now is at high center; it's not moving anywhere. The Legislature and voters are clearly not happy with it, if you judge the results of the primary election.

Further business has to be done. What Gov. Murkowski has done, to give him due credit, is get producers to come forward with a proposal for an option. We clearly need to set Alaska terms and to look at all valid proposals. We need to have confidence as Alaskans that when a proposal is selected, it is the best possible one for Alaska.

The stakes are very high. The gas line is projected to provide work for Alaskans for the next 50 to 75 years. Clearly, the benefit, if we do it on our own terms is jobs, business growth and providing funds for the state to invest in critical programs like education. This is an opportunity most places and people can only dream about, and we have the chance to make it happen.

There are a number of terms that need to be met. First, there needs to be real projects. These need to be very specific with time deadlines on work commitments and money spent to take it to an open season, then to a construction date. If these terms are not met, the state has to have the ability to cancel the contract and to proceed with another party.

The next item we must insist on is a very strong Alaska-hire provision, as well as preference for Alaska businesses. Specific things can be done, such as an Alaska-hire project/labor agreement. We need to heavily invest in and get industry support for an expansion of vocational, technical and university programs. We need to ensure that Alaskans are the most qualified to fill the good jobs available.

We need a commitment to use Alaska businesses by contractors. We have very talented companies here, on the leading edge of construction, engineering and design, and they should be involved in every phase of the project. We also need a process by which these accomplishments can be monitored, so that we can make necessary corrections as needed.

We next need provisions for a gas line to Southcentral Alaska. We want to build the economy; not just our balance books. This provision would include a mandatory expansion of the line, and access to facilities by independents. We want to ensure that the gas that comes to Southcentral only pays a tariff on the mileage it comes--that it is not part of the gas that pays a tariff to Alberta.

Finally, I do not believe that there is any place in the contract for concessions on the oil tax. Clearly, if another party, not a producer, were building the line, they would not require an oil-tax concession. The project is profitable enough to stand on its own merits without a state subsidy.

In terms of moving the contract forward, we need to set a deadline for when people interested in developing this project have their proposals on the table. Both the Legislature and the public need to be thoroughly briefed on all of the options, and the administration should begin multiple negotiations with all of the parties without first selecting a winner. They need to put together the best package with transparency and full disclosure to the public and legislators. I believe this could be done in a matter of months.

I don't believe the upcoming election should direct Alaska to make a bad bargain. We want to make the best possible deal for Alaska, and any new contract needs to meet certain terms that the current contract doesn't address."

GUBERNATORIAL CANDIDATE SARAH PALIN SPEAKS OUT

"The previous contract was full of deficiencies, and based on a shaky premise; that only the three big oil companies should be given the right to tap Alaska's resources. We need to recognize that markets crave our resources and that there will be entities competing to provide it.

Problems with the previous contract include a lack of a work commitment, and the duration of a fixed rate on taxes. It is unconstitutional to lock in a fixed rate for decades and to fie one Legislature's hands when it comes to tax rates. I am also concerned with the risk and cost of taking gas in-kind, as well as concerned with the lack of alternate proposals considered at the same time as the producers' proposals.

I don't know why Gov. Murkowski decided that only the three big oil producers should be considered. It is obvious that other proposals should be considered, such as TransCanada, AGPA, MidAmerican, and maybe others that we were not privy to. I believe that the Legislature was put in an unfair, untenable position when they were asked to vote on the gas line deal without having all of the information up front. They were not able to compare proposals of all of the viable entities on the project, which I believe is what led to the contract's failure.

At this point, I am waiting to hear what the governor has taken from the public comments. Everyone wants the project to go forward, but changes have to be made. I trust the governor won't sign off without legislative approval as some in the administration have alluded. I have faith that he will work with the Legislature and not against it.

I don't believe that we should scrap what successes we have so far. That includes the fact that Alaskans now understand that it hasn't been determined that the oil is 'stranded.' The price is right to finally develop it. As we negotiate under the Stranded Gas Act, Alaskans are asking 'how applicable is this Act to the development of the pipeline?'

There are other ways to get the pipeline built and to feed Southcentral Alaska, which includes ways that don't require developing the pipeline under the Stranded Gas Act. This opens the door to other viable proposals. For other proposals to be eliminated based on the fact that they don't fit under the Stranded Gas Act is hypocritical, as the current contract does not meet the Act as it stands.

I am thankful that Gov. Murkowski wants a third special session. It is obvious with the change in administration that there is no time to waste. We don't know what provisions he has chosen to focus on, but time is of the essence. The reality is, when we haven't even seen the LLC, we don't know how the operation of the gas line will work, and we need to assess Alaska's risk and cost as 20 percent partners in the deal. There's not much time in a special session to receive the LLC, absorb it, and make the public understand how the operation will work.

What I'd like to see is the deficiencies in the contract settled--a work commitment agreed upon; and the Legislature to have the opportunity to consider all proposals. I want to see the locking up of taxes for decades amended for something more reasonable.

It's so important that Alaskans believe that a new administration will be trustworthy, and to do this, they must have all of the information possible. Maybe the big three oil companies can build the project best, but we will not know that until the Legislature is given information on all of the proposals."

SEN. RALPH SEEKINS, REPUBLICAN AND CHAIRMAN, SENATE SPECIAL COMMITTEE ON NATURAL GAS DEVELOPMENT, SPEAKS OUT

"I haven't seen any revisions since the public comment period, so I am reserving my opinion until I see the changes made or renegotiated. I have also not seen the final product of the LLC agreements. It is very difficult to evaluate at this point without some sort of rough draft.

Very few people who looked at the preliminary contract were in agreement on all of the terms. I'm in wait-and-see mode. If Gov. Murkowski brings something back that is good for the state of Alaska, its economy and people, I'm willing to go forward with more hearings. But that's the big gorilla--what has been revised in the contract? There are changes necessary. By the time the public comment period was over, I don't believe that even the governor himself wanted that particular contract.

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