Early Reaction Favorable On Parnell's Shift to Liquefied Natural Gas
Apparently no one saw this coming.
A day after Governor Sean Parnell's speech on the natural gas pipeline, legislators are calling it a game-changer on how to commercialize Alaska's untapped resource.
There now appears to be new momentum for an all-Alaska gas line -- providing gas in-state, as well as exporting it to Asian markets, rather than the Lower 48.
Apparently no one saw this coming.
Parnell had been standing by the project pursued by Transcanada and ExxonMobil under the Alaska Gasline Inducement Act.
The governor isn't abandoning AGIA as a framework, but now he says the pipeline route and marketing strategy probably should shift.
And he's getting a good bipartisan response.
Parnell told the Alaska Oil and Gas Association an abundance of shale gas in the Lower 48 market, along with a post-tsunami collapse of Japan's plans for more nuclear power plants, means the market for Alaska's gas has shifted.
"If TransCanada, ExxonMobil and other potential major shippers get better alignment under AGIA over an LNG line to tidewater in this state, we are going to be flexible."
With that, Parnell might have jump-started the once prominent but lately dismissed project for liquefying natural gas in-state and then shipping it abroad.
Says Sen. Bill Wielechowski, D-Anchorage: "This is the first time, I would say, that we've seen that from someone in the governor's office. Governor Knowles, Governor Murkowski, Governor Palin, Governor Parnell all were very heavy on pushing the gas line down to the Lower 48. Maybe this is a recognition that the Lower 48 is not the market we need to be; the Asia market is where we need to be."
For Bill Walker, whose campaign against Parnell in the 2010 republican primary was focused on the so-called all-Alaska line, the governor's speech was a welcome development.
"I'm just very pleased that the governor has acknowledged the market shift and recognizing that we also have to shift as Alaska."
Originally, AGIA did contemplate the possibility of taking gas to tidewater and shipping it to Asian markets. But now that TransCanada has the license, is it simply a matter of the legislature changing the law?
"I don't know if TransCanada would agree with that, because I think they probably do have a market in Canada for our gas," said Sen. Kevin Meyer, R-Anchorage.
A company spokesman declined an interview, issuing this statement:
"TransCanada, as the AGIA licensee, has regular conversations with different levels of the state administration on matters pertaining to the Alaska pipeline project. Those discussions are held in confidence under the terms of the license. Transcanada is continuing its efforts to advance the Alaska pipeline project to successfully transport North Slope gas to market."
ConocoPhillips and BP also issued similar boilerplate statements.
Walker wants the state to stop trying to attract companies to the gas line project and instead build the infrastructure itself.
"If we're going to be an owner state, we need to act like owners. And owners don't sit back and hope somebody goes out and harvests their wheat and takes it to a market."
The governor's speech shook things up.
But the dust could be a long time settling.
A big question in the next legislative session is whether gas line issues can be separated from the governor's strong push for a reduction in oil production taxes.
The senators I spoke to hope they can address each on their own merits, but they acknowledge that might not happen.
The conflation of oil and gas issues in 2006 contributed to then-Gov. Murkowski's failure to get the Legislature to consider a contract for the gas line.