Governor and House majority leaders square off over gas line legislation
Updated Tuesday, March 3 at 6:30 a.m.
The philosophical divide between the governor and the Republican majority was already huge — but with the introduction of House Bill 132 Monday, the gap grew even wider.
Five members of the House leadership sponsored HB 132: House Speaker Mike Chenault, House Majority Leader Charisse Millett, Legislative Budget and Audit Chairman Mike Hawker, Rules Chairman Craig Johnson, and Majority Whip Bob Herron.
Their bill is the latest salvo in the battle over two natural gas pipeline projects — the larger Alaska Liquefied Natural Gas project and the smaller Alaska Stand Alone Pipeline project, the fallback plan in case AKLNG doesn’t work out.
In the last two weeks, the governor shook up the status quo by announcing he’d like to expand the ASAP project and even put it in competition with AKLNG, the main project the state has focused on since last year’s passage of Senate Bill 138, which laid out the steps for how the state, three oil and gas producers and a pipeline construction company would pursue AKLNG.
The sponsors of the bill admit their goal is to rein in the governor — to prevent him from displacing AKLNG with the ASAP project.
Gov. Bill Walker reacted in anger. At a hastily called news conference following the introduction HB 132, he waved a copy of the bill.
“This is why I ran for governor. This is why we don’t have a gas line today, because we refused to stand up for ourselves,” said Walker, who called the bill an attempt to tie his hands to carry out the directives of the state constitution.
“This flies in the face of everything the state stands for. Alaskans should be outraged,” Walker said. “I am outraged.”
Walker said he was shocked at the number of sponsors on the bill.
“I really question who these people work for. They’re certainly not reading the same constitution I’m reading,” Walker said.
Rep. Mike Hawker said he’s disappointed in the governor’s reaction.
“The questioning of motives was incredibly disheartening,” Hawker said. “The governor says he’s shocked. I’m shocked the governor would use such words.”
Hawker believes the governor owes legislative leadership an apology if he was implying that House leaders worked for corporate interests.
Hawker said the purpose of the bill was to flush out the sharply divergent views on how to get Alaska’s stranded North Slope gas to market — to bring them to the public through the committee process.
“There is a fundamental difference between the governor and us,” Hawker said.
Part of the reason for that, Hawker said, is that the governor was not involved with the long process that led to SB 138, which its supporters say has kept AKLNG on track and on schedule.
“The governor wants to back up, change horses in mid-stream,” Hawker said. “He wants us to step off a horse that’s galloping back into the stream and start off in his own direction unilaterally.”
Walker says that’s not true, that he supports AKLNG, but he doesn’t want to gamble on one set of companies alone.
The governor says the flaw in the AKLNG process might be the lack of emphasis on finding a market for Alaska’s gas. He says oil companies have had plenty of opportunity over the years to find Asian buyers for Alaska’s gas but have not done so. He believes it’s because they have gas from other projects they’d like to market before Alaska’s.
The governor said if a market can be found for the gas, the producers would have a legal obligation to produce.
“They must sell, if there’s a reasonable expectation of profit,” Walker said.
Hawker worries this type of approach would only lead to litigation. He also says the governor’s market-driven approach might hurt the state’s ability to get a good price for its gas.
“Their motive is to acquire our gas at the lowest possible price,” said Hawker about prospective buyers of Alaska gas. “You can play us against ourselves and drive down the price even further.”
As a partner in AKLNG, Hawker said the state would be better aligned with the industry, which wants to sell its gas at the highest prices.
The Alaska Gasline Development Corporation is caught in the middle of this political infighting.
Hawker and other House Republican leaders created the independent state corporation to shepherd AKLNG, while at the same time keep the ASAP project in stand-by mode.
“We have that project parked and sitting there, and we are ready to ramp it up and go like crazy if something happens to the other project,” Hawker said.
Senate majority members also echoed House leaders. They don’t like the idea of the ASAP competing with the bigger project.
“I fundamentally struggle with competing against yourself,” said Sen. Peter Micciche of Soldotna. “It requires a mirror, and it requires saying some crazy things to yourself in that mirror.”
Senate leaders also worry about another reason the governor likes an “up-sized” ASAP project — that it would be 100 percent state-owned.
“If we own 100 percent of it, Alaskans are 100 percent at risk,” said Sen. Anna MacKinnon, co-chair of the Senate finance committee. “We have to work in a global market that is moving all the time.”
“Certainly if we take all the risk and we succeed, we will have everybody cheering,” MacKinnon said.
But if Alaska can’t produce the gas at a competitive price, the state would lose value in the project, she added.
Sen. Bill Wielechowski, a Democrat, has been watching on the sidelines as the chasm continues to grow between the governor and the Republican majority.
“I think we need to give Gov. Walker some latitude on this and try to move forward with his vision of how we get a gas line,” Wielechowski said.
“Every session I’ve heard how we’ve been making progress,” Wielechowski said. “You can go back to Gov. Knowles, Gov. Murkowski, Gov. Palin, Parnell. Every single one of them said this is the plan that’s going to get us a gas line.”
Wielechowski says the governor is right to be skeptical.
“It’ been like Lucy and the football. We’ve got the producers promising to build a gas line and at the last minute the football is pulled away,” he said.
As for the governor, HB 132 seems doomed from the get-go.
“Today, I’ll say I’ll veto this in a minute,” Walker said. “This is the most un-Alaskan thing I’ve ever seen put together.”
Walker did say he had consulted with Exxon executives last Thursday about upgrading the ASAP project and had no negative feedback.
He also said he met with Dan Fauske, who is president and CEO of the Alaska Gasline Development Corporation. He said Fauske is enthusiastic about plans to expand ASAP if that becomes the better option.
One thing everyone seems to agree on, the political bickering won’t help get the state a gas project.
The governor says he’s tried to reach out to the Republican majority and will continue to make himself available.
Even Hawker, who has been one of the governor’s most strident critics, concedes there are costs to controversy.
“When we fall apart on the rock of internal politics, it hands the upper hand to everybody else,” Hawker said. “I’m not saying I’m right. I’m not saying the governor’s right. I am saying we need to be talking about his concerns in an open and public forum.”
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