Lets not be dependent of gas interests

Just how timely was it for Gov. Walter Hickel to talk about Alaska’s need for independence at a recent Anchorage Chamber of Commerce luncheon? Consider American history 229 years ago today.

On July 3, 1776 Admiral Lord Howe was assembling the largest military force ever gathered on the North American continent. With 25,000 British troops landing on New York’s Staten Island, King George was knocking on the door. Meanwhile, a little more than a hundred miles away in Philadelphia, America’s founding fathers answered.

On that same July day, the Continental Congress put the finishing touches on the Declaration of Independence. As John Hancock wrote after passage, “That our affairs may take a more favorable turn, the Congress have judged it necessary to dissolve the connection between Great Britain and the American Colonies, and to declare them free and independent states”.

Today, Alaska doesn’t need to defend its independence it needs to exercise it.

For thirty years, the economic benefits of a natural gas pipeline have been elusive. Today, with declining oil production and substantial stranded gas reserves - not to mention the profitable current market price - it appears more economically feasible than ever before.

Alaska’s three major oil producers, Exxon-Mobil, Conoco-Phillips and BP are entering the final stages of negotiating fiscal and regulatory terms. Some policy makers are demanding a construction guarantee be included in the agreement. Some have accused the industry of stalling. However that’s an unfair generalization. It’s Exxon that appears to be stalling.

With a stranded natural gas portfolio in neighboring Canada, Exxon’s President Lee Raymond was quoted in Natural Gas Week as saying “There isn’t going to be an Alaska gas pipeline before there is a Canadian gas pipeline”. If that’s right, that means delays for Alaska’s pipeline.

In Canada, legal disagreements over native land claims and disputes between contractors about construction rights have stymied progress. That means the Alaska pipeline -albeit   a separate project- is caught in the same bureaucratic fray until the Canadian government sorts it all out. Nonetheless, Gov. Murkowski has promised to deliver a pipeline contract this fall.

And while potential economic returns on a highway line are highly touted, that doesn’t mean Alaska’s best interests are served by waiting for Canada or anybody else to dictate our development timeline. Unfortunately, the state has been reluctant to embrace a two-track strategy.

All things considered, it’s time we scratch a fifty-year itch.

The fight for Alaska’s statehood in the 1950’s was fueled by a desire for independence from powerful outside mining and fishing interests that controlled the political machinery. Since achieving statehood we have hesitated to take a lead role in steering our resource development destiny.

In rural Alaska, sustainable economic development will be elusive without affordable energy supplies. In South central, large employers on the Kenai Peninsula face economic uncertainty as they exhaust affordable energy supplies. In major urban centers the cost of energy at the pump and thermostat has risen dramatically.

Over the last five years, natural gas customers in Anchorage and the Mat-Su have seen gas prices double. According to estimates, tighter gas inventories could cost the Alaskan economy $500 million a year in additional energy costs. In February, Dave O’Reilly, the chairman of Chevron Texaco said “The time when we could count on cheap oil and even cheaper natural gas is clearly ending.”

With a growing in state demand (Enstar alone added 3,500 customers in 2004) the State must fulfill its constitutional responsibility to utilize our natural gas resources to provide maximum benefit to Alaskans. That doesn’t just mean selling the resource downstream, it also means making the resource available to all Alaskan communities.  

Today, our responsibility as an owner state requires an honest accounting of all possible ways to deliver the next generation of energy to Alaskans. From spur lines to bullet lines, state government has an obligation to its shareholders to take a greater lead in developing our natural gas resources.

It’s time to start exercising our independence. And since we currently own 35 trillion cubic feet of natural gas, we’re already half way there.