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Episode 26: Governors and gas lines

By KTVA Alaska 5:25 PM October 26, 2015

Almost immediately after the Trans-Alaska Pipeline was built, governors began talking about building a natural gas line. It seemed like it was the natural next step. But no one envisioned the challenges along the way – that oil producers would need the gas to maintain pressure in the oil fields to produce the oil, which has much more value — or, that the market for gas in the Lower 48 would dry up, due to fracking technology, which made supplies of gas and oil plentiful and Alaska gas no longer necessary.

So we set our sights on the market in Asia and came up with a new plan. Instead of shipping our gas across Canada to the Lower 48, we would send it down a pipeline to Cook Inlet, liquify it and ship it out on tankers across the Pacific.

Although prices in Asia have dropped — enough to make us wonder whether our latest plan pencils out — we still dream about a gas project and its potential to bring the state about $2 billion in annual revenue, as well as pump millions into the economy through new Alaska industries, which would be made possible by the abundance of gas.

This is what’s at stake as the legislature meets in special session on moving the Alaska Liquified Natural Gas Project to the next phase.

On Frontiers this week, given this backdrop, we thought it was a good time to look back on governors and gas lines, and how they approached working with the industry.

There are basically two types of leadership – the get-tough governors, who thought they needed to ride herd on the industry, versus those who sought partnerships with the industry and took more of a courtship approach.

Just so there’s no confusion, our program was recorded on the morning of Friday, October 23, a few hours before the governor announced he was pulling his gas reserves tax off the table. Please keep that in mind as you listen to the discussion.

I interviewed Governor Bill Walker on Wednesday about the gas line, and he said nothing about this possibility.

It reminded me of the Alaska Journal of Commerce’s cover page before the start of this year’s legislative session in January – with the Governor’s and legislative leadership’s faces photo-shopped into that famous “dogs playing poker” painting. It would seem our governor is the type to keep his cards close to his vest, while seeming open and accessible.

Our guests are two longtime observers of this kind of political poker, especially on gas and oil — Larry Persily who currently works for the Kenai Peninsula Borough as an advisor on AKLNG issues – and Christopher Clark, who has worked as both a journalist and legislative aide. Persily has also worked for three governors – Knowles, Murkowski, and Palin — and was Alaska’s Federal Pipeline Coordinator.

We also spent time with Al Bolea, a retired BP oil executive. Gov. Sean Parnell appointed Bolea to the Alaska Gasline Development Corporation as an industry expert. Governor Walker removed him from the AGDC Board, shortly after taking office. Bolea now teaches leadership courses at the University of Alaska Anchorage. The combination of both perspectives – that of an insider in the oil industry and a leadership trainer – made for an interesting discussion.

SPECIAL THANKS: Much appreciation to two public television stations — KAKM-Anchorage and KTOO-Juneau – for use of their archival material, which included an interview with the late Gov. Walter Hickel and excerpts from a 2006 Republican gubernatorial debate.

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