Friday, October 10, 2008

How Governor Palin Won The 30-Year Pipeline Battle

For three decades Alaskan oil companies ignored natural gas that was on their leased property. Alaska has hundreds of trillions of cubic feet of natural gas and the government wanted to process the gas to create revenue and jobs. A few years ago the government decided to give billions of dollars of tax breaks to the oil companies to encourage them to develop the natural gas. Big Oil took the money but didn’t deliver the gas.

Governor Frank Murkowski arranged a deal behind closed doors with the oil companies to process natural gas, but the public was wary of the deal which favored the oil companies. Gubernatorial candidate Sarah Palin promised to block that deal if she got elected governor. She was elected, scrapped the previous deal and immediately began to fix the bureaucratic nonsense that for 30 years had kept Alaska from exporting its gas to the other 48 states.

Governore Palin introduced the Alaska Gasline Inducement Act which creates competition to bid to build a natural gas pipeline. The government would be the driving force behind the bidding and would create inducements for bidding. Gov. Palin invited Alaska’s oil companies to place open bids to build a pipeline but they refused because they didn’t get the terms they wanted. Undeterred, Gov. Palin brought other companies to the table and TransCanada, North America’s largest pipeline builder, made a bid.

Gov. Palin contacted the President and President Bush sent an envoy to Alaska to help get the project going. The approval process was a winding road. Gov. Palin told Fortune she had to navigate "many federal agencies and permitting processes."

Gov. Palin got support for the deal despite opposition from the state's big oil companies such as Exxon Mobil, BP and ConocoPhillips. When the oil companies realized Gov. Palin might bypass them to build the pipeline they finally proposed a pipeline to the Alaska legislature but in order to do that they convinced the legislature that it was economically viable. Senator Kim Elton said that Alaska oil companies, “have endorsed the fact that the economics are there for the pipeline." Once the legislature was convinced the gas pipeline would help the economy they were even more motivated to approve the TransCanada deal. So the oil companies' plan to block TransCanada backfired.

Gov. Palin went to Washington to get Senate and House approval for the 1,750-mile pipeline, the largest infrastructure project in the history of the North American continent. Gov. Palin was able to get bipartisan support. The Senate voted 14-5 to approve the pipeline deal with TransCanada Corp. and the House voted 24-16 to approve it.

map of pipeline

Gov. Palin said:

As governor, I pushed for the largest infrastructure project in North America, the natural gas pipeline that will provide new supply and price relief from Alaska to Americans in the Lower 48. We are maximizing the recovery of resources and minimizing waste, helping lead to less dependence on foreign supplies. Our dependence on foreign energy must end, and Alaska, with all its resources, will play a major role. It’s been great being able to tell that story to America and world leaders who are excited about Alaska’s role in our world.