Jay Hammond "If there has ever been a greater waste of energy and economic potential than what Alaska and the nation paid for the All-Alaska pipeline route, I don't know what it might be."

A little history is always helpful and this view of the Alaska pipeline from Jay Hammond's Tales of Alaska's Bush Rat Governor (1994) seems useful in its succinct and clear description of how Alaska built an all-Alaska pipeline (instead of a Canadian pipeline) which had some short-term benefits, but had, in Hammond's view, much, much bigger long term costs.

He frames this argument as a clash between people who have diametrically opposed narratives about the human mission on earth.

"One type are folks who, fed up with environmental degradation and people pressures found elsewhere, flee to Alaska believing it the last redoubt of pristine wilderness and broad horizons.  Here they can indulge in lifestyles which, if not long since lost elsewhere, are at least suppressed in their native states.  Those people have read Robert Service and Thoreau.  They arrive with romantic notions of life in a remote homestead cabin away from the urban rat race.
Along with those would be rustics, however, comes another type of 'pioneer' no less determined to find a different kind of 'good life.'  Jobless or discourage by conditions 'back,' and hearing tales of common, unmanned folk striking it rich in Alaska, they flood north intent upon exploitation.  It's inevitable that the shovels and picks of those treasure seekers often bruise environmentalists' toes." (p. 167)

[I'd note these two views are highlighted in the play The Ticket which is an imagined conversation between governors Wally Hickel and Jay Hammond. It's having its world premiere run in Anchorage through October 9.  But it's so good, I'm guessing it will be extended.  But don't count on it.]

While Hammond says he sees both sides, he acknowledges that he leans with the environmentalists.

Hammond is adamant about how wrong it was to build an all-Alaska pipeline instead of sending the oil through Canada to the midwest by pipeline.  And you could hear the words on the page getting louder as he explained why.

"Almost no one in Alaska, save of course, 'preservationist extremists' dared suggest we even look at a Canadian route for fear of being branded a 'crackpot conservations like Hammond' by the state's most powerful newspaper and labor union.
Clearly, Alaska would experience far less environmental trauma with only six hundred overland miles of pipeline construction across its wilderness than nine hundred miles to Valdez - not to mention the pollution hazards of tankering via Prince William Sound and down the Pacific coast.  The fact that the planned pipeline terminal at Valdez would be erected on a major earthquake fault was also not mentioned, as I recall.
In any event, transporting our oil through a single, 2,100 mile trans-Canada line to the Midwest would clearly be less costly than tankering past  West Coast ports - which is precisely what happened when the southern pipeline fell through and inadequate West Coast refining capacity required North Slope crude to be shipped to the Panama Canal.  There, supertankers had to be unloaded onto smaller vessels able to navigate the isthmus.  These took the oil another 1,500 miles north to the gulf of Mexico, to refineries in Houston.  From there, of course, the product was piped north and east to the marketplace.  Some Alaska oil didn't ship north to Houston, but went all the way to the East coast for refining and sale.
If there has ever been a greater waste of energy and economic potential than what Alaska and the nation paid for the All-Alaska pipeline route, I don't know what it might be.  It has already cost uncounted billions of dollars and has been a major contributor to the nations's enormous trade deficit.
Most economists in 1970 agreed;  only if Alaskan oil was shipped to neighboring Pacific Rim nations, did the longterm economic impacts on the state become a wash with piping it via a trans-Canada route.  There's no doubt this was intended.  Japanese interests admitted such negotiations were under way.
This revelation only further infuriated Midwestern congressmen who wanted Alaskan oil to flow to their refineries.  When Congress threatened to halt pipeline construction until assured no Alaska oil would be sold to the Japanese, pipeline owners and proponents of the trans-Alaska route, scuttled negotiations and gave their word not to ship Alaska oil abroad.  Instead, they'd just ship it twice that distance around the coasts of North and Central American - each additional mile of transportation costs deducted from the wellhead price of the oil.  Since severance taxes on oil extraction are based on the price of oil at the wellhead, less transportation costs, obviously the lower the transport, the higher the tax revenues.  Don't even mention the additional energy wasted in this most inefficient boondoggle." (pp. 176-7)

He does acknowledge that building the All-Alaska route provided jobs for Alaskans and for Valdez, but with caveats.

"Certainly the one-third greater pipeline construction costs expended in Alaska might have provided more jobs and contracts for locals, as proponents promised.  However, since most pipeline workers were imported, and many of the bigger contracts went to Outside firms, it's hard to quantify how much more Alaskans benefited in the short term - if at all - than had much of the pipeline gone through Canada.
True, the greater length of pipe in Alaska, and the number of capital projects located in the Port of Valdez, are values added.  Yet countering these are the costs of state services required to offset population explosions in communities like Fairbanks and Valdez.  Both played for the trans-Alaska route, but were the first to come begging the state for multi-millions in 'impact money' to offset spiraling demands for government services that came with the 'boom.'  .  .  .
"Economic studies financed by Alaska Legislators John Sackett, Al Adams and Jan Faiks, indicated by 1987 Alaska had lost an estimated $15 billion as part of the price paid for the all-Alaska Pipeline.  Since Alaska crude sells at a lower price than imported oil, the higher price would bring on the world market has cost the national treasury many billions as well. " (p. 178)

Hmmm  With a $4 billion deficit this year, that $15 billion would have come in handy.

And he's not done.  He talks about the delays - he says he predicted - caused by court injunctions because of failure onto comply with EPA standards.  A delay he says that added to the national problems caused by the OPEC oil embargo.  BUT . .

" . .  rather than blame 'environmental preservationists,' far greater blame should be laid at the feet of those 'developmental preservationists' who would preserve every exploitive, 'damn the torpedoes, full speed ahead' environmentally insensitive despoiling technique of the 19th Century.  By ignoring laws of the land and the forewarnings of those who promised to force legal compliance, they, not the environmentalists, caused the costly delay.
Forgotten by many who still curse environmentalists for those woes is the fact that during the delay, construction techniques were upgraded and engineering problems resolved.  Now, even some of the pipeline's most ardent promoters admit that, without those improvements, the line might well have proved a disaster.  today they point with pride to what the environmental activists compelled them to do." (pp. 178-9)

Hammond was the Senate President for some of this period and writes about how he tried to get the legislature to require reviews of all the alternatives - basically the Canadian route.  But he was clobbered by Bob Atwood's Anchorage Times.  He does acknowledge that some of the decisions made sense when you understood the financial interests of those pushing for the all-Alaska pipeline.
He concludes talking about the ban on exporting the oil to Japan.

". . .Alaska oil, on its way eastward through the Panama Canal to Gulf states and beyond, passes Mexican oil, on its way westward to Japan.  This is ridiculous.  What we should have done, of course, is simply swap, from for drum, Alaskan oil for Mexican - and enrich the treasures of both nations.  This issue, I regret, once more demonstrates the ability of politicians to subordinate our nation's well-being to demands of local constituencies." (p. 180)

As we deal with our budget deficits now, challenges to the Permanent Fund Dividend, oil credits, and a gas pipeline, it's useful to look back and see what happened 50 years ago and consider what parts of that history might be repeating themselves today.

24 yeas - 16 Neas - AGIA Passes

AGIA yes.

There was a call for reconsideration and the vote changed to 28 yeas 12 nays.

AGIA Hearings On-Line Now

You can listen to the legislator is debating AGIA still now this evening. You can watch or listen here:

http://www.ktoo.org/gavel/stream.cfm

click on watch or listen. You can use windows media player.

They should be voting before they go home tonight, unless the anti folks stall this long enough to prevent a vote.

7:09 - Recessed until 8:15pm

8:20 - People are back in the chambers, but the sound is background music. They aren't back in session yet

8:26pm - they are back on - Rep. Samuels

8:33pm - Rep.Ralph Samuels has gone through all the failed business projects that the State of Alaska has invested in. Now he's saying that Trans Canada's interests are only to take care of their shareholders. They have no interest in our State Interests. Trans Canada needs the gas in their hub. We're going to guarantee them a price in their hub instead of negotiating them on the cost of the gas.

It would be interesting to make a list of the predictions these legislators are making so we could see who was right down the line.

Samuels: The oil companies are making business decisions and we're making a political decision. Time is on our side now. We can wait. No customers, No Credit, No pipeline.

Gardner: I want to clarify. Eagle River rep said TC will go to the FERC and try to get the highest price they can, but so will all the others.

Seaton: Some are forgetting why we're in this position we're in now. We could see declining oil production that would lead to huge budget gap in a few years. We have money now because of high oil prices. The probability is that oil prices will fall back down and before we get a project going we'll be looking at budget deficits. So were here. Stranded Gas Act problem was that we had to prove it was stranded. The process we're in got us around that big hurdle. We now have a licensee who guarantees...??? ...we don't have to prove anything.
What is the difference between AGIA application and DEnali? The must haves: Denali people didn't like the must haves. They put them in their powerpoint, but when we asked them here, if they would commit to expand if there was nominated gas, etc. He said no we can't do that - goes back to owners - Conoco and BP. That's the point that makes the most difference to us. Why would C and BP say they want to spend all this money to ship someone else's gas? They wouldn't. Of all we talked about the only thing that was different - they didn't want an open pipeline and rolled in rates. These companies are shipping every day in Canada that have rolled in rates. What's the difference between ehre and Canda? Ak has the upstream. We'd be left with a monopoly pipeline producer group. That's why we're here - the must haves.

Cissna: I wasn't going to talk, but I've had so much time I wrote a long speech. One of my early Alaska jobs was working for an independent oil company and got to learn about oil companies very well. What I learned - saw the huge power of people who came to the state. These huge multinational corporations saw us as tiny weak player. That was 40 years ago. That power was nothing then. Also, see how Alaskans have grown more and more dependent on oil and federal money and separation of government and the people. We've become like dependent people do. We don't see the choices we could make, we got locked into how things are. What I see with AGIA - we have many issues going down hill as we focus on one thing - our relationship with these multinational corps. AGIA brings a card into the picture. It makes a statement about our being sovereign. ARe there problems? I gotta tell you. We have huge problems no matter because Alaska is very small. AGIA gives us one card that we can play here. We have a chance to really take some control. I think this is the chance to do something really good for the state.

Coghill wrap up.

Vote coming up 8:49pm

8:50
Rep. Coghill - let me tell you why I'm going against some of my friends and for AGIA. Over the years we've had oils. We've given out leases. Those who got the leases were the winners. Our life has been prosperous because of those leases. We picked some winners to do those leases and we began.
Here we find ourselves again with those leases not being produced. Timing and econonocs paly a big role.
When we put out the rfa based on conditions we set up. If nobody showed up - I would have said, a competitive process, we asked too much. But Trans Canada showed up. We picked the winner based on the application process we put forward. Is that picking a winner? As far as TC and their credibility? Yes. But getting it all done? No, because no gas going to market. We're picking someone who will work with us to get us to market. We have to pick a partner. we're defining who's at the table and what they look like. Aligns 1) what we think the state should have getting the oil to market. 2) gets us lined up with a pipeline dealer who knows how to do this.
Some people called this buying something. It has costs and rewards. Rewards for us, knowing what it will cost to get our gas to market at reasonable terms. Negotiating complete? No. STill have to find alignment. I think our case stronger knowing who the pipeline builder is and how they get to their costs. Or we could wait for the producers who have their leasers - owners of lease, of oil, of pipe - going before FERC. Who are we then? We aren't surrendering our ability to tax etc. - we know at least one part of what's going to hapen is agreed upon. That's good. ARe we getting at tax deal right away? I don't think so. Still under negotation. If you go in under position of strength, you have a little more....
Some people spoke elequently about why we shouldn't own it - and some spoke eloquently against owning. This just gives us a good partner that helps us understand things we don't know. This forces information out into the open. Should they walk out because it wouldn't work with us, we get the work project so we can see all the costs. It might be worth it for us to walk out sometime. But not looking for way out. How do we get the parties lined up to get Alaska guys sold for value beneficual to us, the oil companies, the pipeline, and the customers. There may be better ways to do this, but this is the best we have available.
Through a competitive process we got ourselves a good partner who can help us get that alignment we need to be successful. I hope you join me in granting this license so we can go together in a certain timeline with a certain product for the benefit of Alaska.

Voting now

More on AGIA - Responding to Trip1050

A little over a week ago, Trip1050 responded to my post AGIA (Alaska Gasline Incentive Inducement Act)- The Cliff Notes.

I responded to his comments and then he wrote back. Here's a link to the three comments.
Many Alaskans live in very separate worlds. I thought his second comment might be a serious attempt at dialogue. I didn't respond right away because I wanted to think about it, and then other things got in the way. Now, I think this is worthy of a whole new post, not just a comment on a post most people won't ever read again. I hope I haven't waited so long that Trip1050 doesn't see this response. Here's Trip's second comment before I give my response.

Trip1050 said...

It appeared to me that the tone of the article was very much against "Big Oil". However, If I have misinterpreted your context I apologize. I am, in fact, an employee of a major producer here in Alaska. I withheld that information because, in today’s society especially, I do not want to create a situation where my company is held liable for my opinions or statements. Its not that I am trying to be cagey, I just am trying to avoid any legal conflicts in the future.

Several comments you made seemed to imply that companies involved with the Denali project cannot be trusted. That is a very bold statement to make about major corporations that have invested billions of dollars in the state of Alaska to set the standard of environmental practices, safe operating, and community assistance. At no point have any of the companies tried to “hide who is behind the project”. When you are dealing with a joint venture of this size, a very smart business move is to spin the project off into its own entity in order to ensure it gets the resources and focus it deserves. I don’t believe that its intent was to hide anything at all.

As to your analogy about the house, how would you feel about the deal if the attorney and real estate expert told you that the final price of the house could be plus or minus $50,000; but you won’t know until you sign the deal? I wouldn’t sign that. With no tax structure in place, the oil companies have no idea what to expect once they access the reserves. The government could raise the tax at any point, ruining the economics of the project. As with any business venture, you need to fully understand your costs before you embark on a project. My final comment, business is business, these companies exist to turn a profit. However, not at the expense of the community they operate in. These companies have formed great relationships with cities around the world and have operated respectfully for many, many years. I would caution you in your trust of the government, maybe I am a cynic, but I feel that this administration will try to do what makes them look best, not necessarily what is best.

To you sir..

Fri Jun 20, 03:50:00 PM AKDT

Trip, sorry it's taken so long to respond. I wanted to wait a bit, and then other things got in the way. We come to this topic from very different places and it’s easy to have knee jerk reactions. You read my tone, perhaps, more than my words the first time. The second time it sounded like you had engaged what I said more. I’m trying to do the same.

As I read your words I hear, “why are you so suspicious of the big oil companies?” with a hint that I’m naively trustful of government. You tell me

That is a very bold statement [oil companies can’t be trusted] to make about major corporations that have invested billions of dollars in the state of Alaska to set the standard of environmental practices, safe operating, and community assistance.

At this point some of my blogger friends would laugh and say that you are in the pocket of the oil companies, how could you be so naive? I’m trying to understand your position. I see two possibilities:

1. This is a totally cynical piece of oil company propaganda and you aren't here to seriously engage me; or
2. You really believe this.
   

I’m going to assume the second option and try to respond

• first why
  
• a) I don’t trust the oil companies and
  
• b) why I’m skeptical about what good citizens the oil companies are;
• second, to your response to my comments about the oil companies hiding behind the name Denali; (this really is a minor topic, but I don't want you to think I'm dodging);
  
• third, your comments on my faith in government and your high praise of oil companies;
• fourth, your response to the house buying analogy.
  

First, Trusting Oil Companies
a) My skepticism about oil companies' altruism - or any large company - comes from reading about business, history, and personal experience.

Starting with The Prize a Pulitzer Prize winning book that is an incredibly detailed history of oil starting about 1850, and going through a slew of books and articles including Confessions of an Economic Hit Man, there is a lot of evidence that oil companies (and other multinationals) have a lot of power and they use it primarily to their own benefit. And they’ve been led by men who had had their countries start wars if necessary to protect their interests.

And I know that oil companies take very good care of their employees - as long as the employees follow the written and unwritten rules and until they are no longer needed. Sohio employees were rudely shown this when Sohio made quick and paltry (by oil standards) severances before leaving. I've also watched friends of mine get their salaries doubled and tripled when they moved from government positions into oil industry related positions. I see it this way:

1. Oil companies pay so much above the local market that it is hard for their employees to match their income and corporate life style in other jobs except in other similar large multi-national corporations.
   
2. So it is in the employees’ best interests to be good corporate employees and good for their consciences to believe that their companies are wonderful and benign.
   
3. Now, it’s in every organization’s best interests to have loyal employees who identify strongly with them.
   
4. But oil companies have the money, unlike government agencies, to be more effective at this.
   (I know that this could push your buttons, but tell me specifically what is untrue in what I’ve said. Go sentence by sentence (1-4 above) and tell me why it is false.)

I also listened carefully to the oil company threats last year that the window was closing on the gas pipeline if we didn't go with the deal that Murkowski had worked out. And now, suddenly, that window seems to be wide open again. Explain to me once more why you think the oil companies have the welfare of the people of Alaska in mind? Actually, you asserted it as if it were an undisputed given, but you didn't explain why they are or demonstrate it.

I sat through the political corruption trials last year - all three of them - and listened to the tapes, watched the videos, and heard the witnesses. It was made very clear that Bill Allen was doing everything he could to impact the legislature - through means legal and illegal - to vote in ways that would be in the best interest of the oil companies. There is no reason for Allen and Smith to have made guilty pleas if they were not guilty. Each received $500,000 for legal fees as part of the sale of VECO. And each has many millions on their own. It was equally clear from those trials that the oil company executives were either aware of what he was doing specifically, or knew generally and were careful not to know specifically.

b) You write, "major corporations that have invested billions of dollars in the state of Alaska to set the standard of environmental practices, safe operating, and community assistance.",

Yes, oil companies make billion dollar investments because their projects bring them even more billions in return. And they make what appear to be large contributions to the community. But these are not out of the goodness of their hearts. I'm sure the various executives who decide where to give the money are happy to be able to help the opera or the university. And I'm sure the organizations treat them very well. But it isn't their money. And the gifts always come with the company’s name prominently attached.

These are corporations whose purpose is to make profits for their shareholders. Their job is NOT to give away money, UNLESS that charity is an investment in greater profits for their shareholders. It pays to make people in a community feel that the company is a generous, responsible corporate citizen. But a $10,000 donation to the Anchorage Opera by Exxon (based on their 2007 profits) would be the same as if a person earning $100,000 before taxes donated two and half cents! So these can sound like staggering amounts of charity, but they really are nothing in Exxon’s big picture. If I sent the Opera three cents, they would laugh at me. When Exxon does the equivalent the Opera publicly salutes them. You can say, but Exxon gives money to different organizations. So do I, but not three cents per organization. I won’t get into the oil spill settlement because I really don’t believe that punitive damages should go to the plaintiffs or their attorneys anyway; they already should have gotten compensated in the original payments. (Though I’m not sure they were, simply because proving much of the damage was not necessarily easy.)

The oil companies fought hard against the environmental standards that the environmental lobby forced on them before the pipeline could be built. Now they embrace them and write about protecting the environment in their ads as if they invented the environment. But despite, BP's green logo and environmental ads, we’ve now been told that BP refused requests for money to protect their pipes from corrosion leading to a significant spill not long ago.

And what oil companies are doing in Nigeria, Burma, or Central Asia where they haven’t been forced to maintain US level environmental or social standards seems to me to be in stark contrast to your statement that

These companies have formed great relationships with cities around the world and have operated respectfully for many, many years.

Well, I'm sure that the organizations that receive the oil companies largesse have good things to say. I'm sure the leaders of Burma and Nigeria have high praise for their international oil partners. But few in Alaska today think that Exxon was respectful of the community.


Second, your response to my comments about oil companies hiding behind the name Denali.
You write

At no point have any of the companies tried to “hide who is behind the [Denali] project

OK, I can see how you read this. That was part of my response to the oil companies taking an Alaskan icon - Denali - and making it the name of their plan AND then trademarking that name. By calling it Denali, it sounds like an Alaskan plan, not the plan of companies headquartered in Texas and London.

I wasn't trying to say that they literally were concealing who was behind the plan. Anyone who pays attention should be expected to know who is promoting this. But most Alaskans, or other US citizens, are not keeping close track of what’s happening. When they see “Denali Plan” they don’t instantly go, “Oh yes, that’s the Conoco-Phillips/BP plan.” It would have been more honest to call it the CP/BP plan. That was the sense I intended when I said they were hiding. (And I've heard critics of the Trans Canada Alaska proposal who said that by referring to it as TC Alaska, the State wasn't simply trying to make it easier to write and say, but trying to hide the Canadian link. That may be true, but it's not nearly as blatant as taking the name Denali.)

This may seem trivial to someone like you who would not for a moment mistake the supporters of the Denali plan, but for people who aren't close to this project, it isn't nearly that obvious. And I can't imagine that the people who named the plan Denali didn't think it through very carefully. I would be surprised if they didn't test it in focus groups even.

Third, my faith in government.
You write:

I would caution you in your trust of the government, maybe I am a cynic, but I feel that this administration will try to do what makes them look best, not necessarily what is best.

If you've read other parts of this blog, you'd know I don't blindly put my faith in government. Whether Republican or Democrat, the politicians have many interests to balance and I have to look closely to determine to what extent one option looks better than another. I look at the people who are doing particular things and evaluate who is likely to be most trustworthy.

Sometimes the choices are pretty grim. But in this case, the State team has offered us an enormous amount of data they’ve developed with the help of hired experts. The history that I know of the State people tells me that their honesty and dedication to the people of Alaska are as good as the oil companies’ executives dedication to their shareholders’ interests. In fact, the original post had a fairly long section on that.

While there are things the Palin administration has done that raise giant question marks in my mind, there is nothing to point out that the Governor would sell out the people of Alaska to maker herself look good. Whether she's making the right judgment is another issue. But my leaning toward TC Alaska is based on Tom Irwin's staff and experts, not on the governor's judgment of this.

I can't help but find it ironic that you question MY faith in government at the end of a paragraph that basically says the oil companies would do absolutely no harm.

My final comment, business is business, these companies exist to turn a profit. However, not at the expense of the community they operate in. These companies have formed great relationships with cities around the world and have operated respectfully for many, many years.

I've addressed my reasons for not buying that in that in the first point above.

Fourth, the house buying analogy.

You write:

As to your analogy about the house, how would you feel about the deal if the attorney and real estate expert told you that the final price of the house could be plus or minus $50,000; but you won’t know until you sign the deal? I wouldn’t sign that. With no tax structure in place, the oil companies have no idea what to expect once they access the reserves. The government could raise the tax at any point, ruining the economics of the project. As with any business venture, you need to fully understand your costs before you embark on a project.

My response:

• When we buy a house, we know the exact price because this is a relatively simple exchange - a house for a sum of money. The parties agree, and you make the exchange. But few brokers are able to foretell the political, natural, or economic events ahead. They won’t tell me whether future zoning changes, or highway construction, or mortgage scandals are going to lower my future property value. Nor will they likely tell me a wetland nearby is going to flood my basement. We go into all business deals with a certain level or risk.

• Like most metaphors, my house buying one, works at one level, but not at all levels. The issue of whether I should trust my broker or the seller’s broker has relevance in both the house buying situation and the public policy decision. Sure, I have to consider that the more I pay, the more commission my broker gets. And I have to be sure that my government representatives aren't taking bribes, and that they are smart and powerful enough to make the best deal.
  
  But comparing the uncertainty one faces in buying a house and the uncertainty faced in building a multi-billion, multi-year, international pipeline is not a good analogy. The political, economic, and technical uncertainties in such a pipeline are infinitely greater than those in buying a house.
  
  And because of the many uncertainties, the larger and longer term the project, the less likely a company can “fully understand your costs before you embark on a project.” But they do make best and worst case forecasts and decide the probability of each, and then decide whether to take the risk.

• But you also change the actor in the same line. In answer to the question of whether I would take a deal with a $100,000 (plus or minus $50,000) uncertainty, you write

  I wouldn’t sign that. With no tax structure in place, the oil companies have no idea what to expect once they access the reserves.

  “I wouldn’t sign” that, relates to what you were saying about trusting MY experts with that much uncertainty. But then you go on to say the oil companies shouldn’t sign an uncertain agreement either. But in this case, the people they would have to trust are the other party. Of course, they should listen to their own counselors. If they don't like the conditions the State is offering, well, they don’t have to sign on.
  
  As I understand it, Conoco and BP haven't signed. They are proposing to build their own pipeline. Trans Canada decided the state's deal was worth the risk. All the producers really have to do is decide whether to put gas into the pipeline. They don't have to build a pipeline. If they need to transport the gas one day, well then TC is going to build a pipeline. While there is economic risk still there, I see this more as a power play. If it were economically infeasible to use the gas, then why offer the Denali Plan? It sounds to me that when they didn’t submit a proposal, they really didn’t expect anyone else would submit a credible proposal. But TC Alaska did. And now they are trying to get back into the game. There are lots of reasons that owning the pipeline, on their own terms, would give the producers lots of benefits.
  

At least that's how I understand things. The point of posting this on the blog is NOT to convince others, but to have others point out where my reasoning and/or facts are flawed.

I don’t have a vested interest in either TC Alaska or the oil producers. I never heard of TC Alaska until a few weeks ago. I’m just an Alaskan who is trying to figure out what the best deal is for the state. I could be totally wrong, but this is my way of seeing it.

I’m sure, Trip, that nothing I’ve written here has changed your mind in any way. But I’ve addressed your questions in detail. Tell me where my facts and/or assumptions are wrong. And give me your evidence and reasoning to support your contentions.

Or anyone else out there.

Oil Companies S(p)end Their Messages Through ADN

The AGIA plan had its mini
state tour with stops in Anchorage, Juneau, Barrow, Fairbanks, Kenai, Matsu, and Ketchikan. Since it doubled as a legislative information session as well and legislators traveled around the state to be present, the costs of presenting the state's findings to the people of Alaska were pretty high. Wesley Loy wrote in the Anchorage Daily News

Nobody has an overall cost estimate for the trip.
Legislators and legislative support staffers say they won't know the full tally until after all the travelers file for payment of their expenses.

The most expensive destination is Barrow, a predominantly Inupiat village of more than 4,000 people about 725 miles north of Anchorage.

As of Tuesday, 37 lawmakers had signed up to go to Barrow for a hearing on July 1. At about $800 for a round-trip ticket, airfare alone for the group will total some $30,000.

[Double click any picture to enlarge it.]





And now the various oil companies and oil support groups are paying to give their side of the story. But while the State provided days and days of information all backed up on the internet, the advertising campaign by the oil companies - at least what is covered in the ADN ads - is long on pictures and feel good text and short on information.
















Only one of the ads offered a website address - www.allalaskapipeline.com was on the Alaska Gasline LNG ads. But if you link to it, you'll see it is just a bunch of oil industry related links. Even the link to gasline map has no map.
So, the most popular links on the AllAlaskaPipeline.com site are for computer notebooks, music downloads, and online dating? This is a serious attempt to educate the public on the gasline issues I see.




























All of you who have heard of Udelhoven raise your hands.











Here's how I figured the costs from the ADN's NAA quick fact sheet.

2 The information and statistics contained in this document are intended to provide a general overview of our products, their market and their readers. These rates only represent an overview of rates and ad units this newspaper accepts. Please contact a sales representative (or refer to the Media Kit) for a complete listing of all category rates, ad units and other specifications. While the data is correct overall, a salesrepresentative should be contacted for further details and/or clarification.

As footnote 2 suggests, there are lots of contingencies for determining the cost of ADN ads. The ones I could calculate directly were: weekday v. Sunday; color or black and white; and size. Well, there are prices for full page ads, but less than full page ads I had to approximate with square inch comparisons. Other contingenices that I had no way to figure were related to discounts for multiple ads. There are other pages with tables and numbers that I can't figure out at all. I'm sure if you're in advertising you've learned the code, but there is not enough information on the web to make sense out of it. And footnote 2 seems to acknowledge that the numbers in the chart are just general numbers.

AGIA Forum Commissioner Tom Irwin

[Blogging on the fly here, so I may give up a little accuracy to get this up quickly. At least the video is exactly what they said.]

Commissioner Tom Irwin gave a brief introduction of the project and then introduced the various experts the State has hired. The videos show that introduction.



[I'll get the second part of this video up later. It is only a few more minutes but Viddler has a ten minute limit so I couldn't do it all in one video]

(6pm - OK, here's the second part of the video)




The report is billed as over 2000 pages - including all the appendices. Essentially, today's presentation came off to me as a sales pitch to the legislature. The pitch is to pass the AGIA legislation which will authorize the pursuit of permission from regulators to build the pipeline.

When I say sales pitch, I do need to qualify this. The State's job is to get the best deal for the State - for the people of Alaska. I believe that the Department of Natural Resources team is dedicated to that goal. I've had the pleasure of a couple of meetings with Marty Rutherford, who is in charge of this project, a number of years ago when I as working as a professor of public administration. They were hour long open ended meetings in which she impressed me as bright and a dedicated public servant.

Additionally, the team working on this is essentially the team that resigned their jobs during the Murkowski administration because they believed the Murkowski administration was giving away the store in its negotiations with the oil companies. My sense, given that history, and listening to them this morning, is that they strongly believe what they are doing is in the public's interest.

Key points the presenters have made are:

The heart of the AGIA - the must haves, our obligation to

• Expandable pipeline
• Low tariffs
• Allows explorers an open basin

Our birthright to protect open access.
For these rights we were willing to give something

• Move with fixed timelines
• Put up $500 million - not a giveaway, our investment to get the gas to market. Most comes back to the state in lower tariffs. Tells them we are serious.
• An AGIA project coordinator
• Stable production tax rate for ten years - it makes sense from a business perspective

They also spent time comparing the AGIA proposal to the Producer Proposal and to the LNG options.
They discussed why the Producers, who control the gas, are likely to release the gas eventually. Rep. Mike Dugan pursued this question when the legislators had a chance to ask question.s

All this will be available on the Gavel to Gavel tomorrow.(The link gets you to Gavel to Gavel, they don't have the link to today's sessions up yet.) I think this morning's session gives a good overview of the areas the state thinks are important and their rational for why this is the best path.

Watch the first couple of hours. They start with an overview. Then the repeat that overview with more detail. Then they open to questions from the legislators.

At one point Irwin responded with something like,

"If we get the state resolve - to protect open access - the companies will adjust to the new realities."

Open access refers to a pipeline where all producers have open access to get their gas onto the pipeline which is different from the current oil pipeline situation as I understand it.

I'm going to stop here so I can get this posted and return to the afternoon session.

AGIA Public Forum - Gov. Palin Introduction

The AGIA discussions began this morning at the Sheraton Hotel. The tables in front were reserved for legislators and most were there. Governor Palin opened the meeting with a short talk.