Sarah Palin, AGIA and TransCanada, is this the final good bye?

Last year Sarah Palin was still talking about her gas pipeline as a major achievement and part of her vision for energy independence.



Alaska lawmakers are not so keen on the idea anymore. From Alaska Dispatch, February 4, 2011:

House GOP leaders say the state should bail on the proposed Alaska natural gas line project by mid-July if pipeline backers can't prove that it is economically viable.

House Bill 142, introduced Friday by House Speaker Mike Chenault and four other key Republicans, seeks a way out of the contractual agreement put in place between the state and TransCanada under the Alaska Gasline Inducement Act. AGIA obligates the state to reimburse TransCanada up to $500 million for pre-construction studies and other work on the project, which envisions a large-diameter pipeline from the North Slope to either Valdez or Canada or possibly both.

But lawmakers are growing increasingly disenchanted with the pipeline's prospects and are not inclined to spend much more of the state's money on something that may never get built.

I must confess that I always found the topic of AGIA slightly boring and didn't write too much about it in the past.

This is AGIA in a nutshell:

Frank Murkowski had a plan to build a gas pipeline but was said to be in cahoots with some oil companies.

This is from an article on ADN about Sarah Palin's campaign for governor:

Tacked up prominently on a wall in Sarah Palin's downtown campaign headquarters is a newspaper clipping with a picture of two signs beside the trans-Alaska oil pipeline.

The first one reads, "Canada my ass, it's Alaska's gas." Underneath it, the second sign says, "Sarah Palin."

Variation on the above slogan, on a t-shirt

Murkowski lost the election to Sarah Palin and she proceeded to promote her AGIA plan, making deals with democratic lawmakers in order to have it approved (how very bi-partisan!). The oil companies favoured by Murkowski were excluded from Palin's proposals and went on to form their own company, Denali, with their own alternative plan to build the pipeline. They own the North Slope gas and were potential customers of Sarah's pipeline.

The whole project hinged on who was going to finance it and the estimates were that it would cost at least a whopping $30 billion to build the pipeline. Sarah Palin awarded TransCanada a very nice contract (for them) to study the feasibility of this massive enterprise. They pocketed $500 million of state of Alaska money... ("Canada my ass, it's Alaska's gas.")

Just before her resignation, Sarah Palin went to Texas and met with Exxon and TransCanada executives to discuss AGIA. (EyeOnYou and AustinTxx researched an interesting post regarding some AK money awarded to Texan oil & gas companies just after the above meeting)

It appears that there is a get-out clause in the contract with TransCanada and Alaska can rescind it if the project proves not to be financially viable.

The deadline is next July 15. That may mark the day when Sarah Palin will have to stop talking about her greatest achievement: The gas pipeline and all that blah blah blah about the hungry markets in the Lower 48.

July 15 can't come soon enough.

UPDATE

Barb Dwyer offered another view about the AGIA saga and put it into the context of the discussions regarding a gas pipeline in the past 35 years. Thank you for this, Barb.

This is not something new, Alaskans have been on this merry go round for over 35 years now. AGIA is confusing and boring by design, it isn't important and was never going to happen, that was the plan all along. There's huge amounts of misinformation out there about the gasline and Halcro just adds to the mess. He really has no idea what he's talking about, he repeats what is being fed to him from the oil companies he's in bed with, which just adds to the confusion and helps to stall the process which is exactly what the oil companies want.

The bottom line is this, the oil companies do not want any type of gasline built until the technology exists to go over the polar ice cap. That way they can keep the profits all to themselves. Until then they will do anything in their power to make sure one is never built through Alaska.

When the pipeline was built in 1974, the agreement was that a gasline would be built right next to it within 5 years. The permits were secured back then through Yukon Pacific for the land next to the pipeline to be used and those permits are still valid. The route for the gasline was set in 1974 and it's the only route that can be done today. The began stalling this 35 years ago and they're still doing a masterful job of it by buying off Governors.

The reason voters were mad at Murkowski is because in 2001, the gasline bill (from Prudhoe Bay to tidewater Valdez) was voted in to law and the AGPA was formed. Frank ignored this and began his own plan that would never work which was just another stall. Then we had Sarah running around the state saying I'm not Murkowski and I will build the Alaska gasline. That bumper sticker she had in her office was on cars all over the state. Voters were saying build the gasline that WE voted on.

The "Denali" line is the biggest scam you can imagine and it just mystifies me how anyone can think this is plausible. There isn't a chance in hell they could EVER secure the permits to build a gasline through Denali National Park and they know this. It makes the oil companies look like they are doing something but the fact is it's just a smokescreen. They will never have any permits or any access to any of the land involved. They haven't even applied for any of it because it's all a myth.

Buyers have been lining up ever since the vote in '01 to build the gasline. Foreign buyers like Mitsubishi Heavy Industries have bent over backwards to try and get the Alaska gasline built so they can sell it to foreign markets, that's where the demand is. The AGPA plan was on the table for Palin and if she had done what she said she was going to do, Fairbanks would already be getting gas. The AGPA has had all the permits in place for years and land has already been cleared for the terminal. The only hold up for building this line for over 35 years now is getting a Governor to sign what the voters have already approved. Big oil doesn't want that to happen.

So Palin had three choices basically, the Denali line which has no permits and no rights to the gas. The TransCanada route which has no permits, no rights to the gas and no buyers. The third choice was the line the voters approved which has all the necessary permits intact, buyers lined up AND rights to purchase the gas. Since Marty Rutherford (former lobbyist for TransCanada) was Palins lead dog on this fiasco of course the contract was awarded to TransCanada. Things didn't go too well when they announced this though, people were REALLY pissed off. So they backed off and said they would look over the proposals again and take public input from the web on this matter and set up a public comment section on the state website for 2 weeks to hear what people had to think.

It's a shame I didn't keep screenshots of that public gripe session because it was rich. There were even tribal leaders in Canada writing in saying there's just no way in hell you're building that gasline through OUR land, but it didn't stop them. The public raised hell but instead of reconsidering, Palin decided to stick it to all Alaskans by announcing AGIA again with the added 500 million to TransCanada now with a treble damages clause. The website was scrubbed after 2 weeks and then the Legislature cut our throats by approving it.

Until Alaskans stand up and demand the gasline is built according to the bill that was voted into law 10 years ago, the oil companies will keep stalling until they can go over the ice cap. If they manage to pull this off for another 15 years they will get their wish and Alaska will get nothing.

Barb included a link to the actual proposed bill, dated 2001.

You may wish read Andrew Halcro's latest post about TransCanada. The search term "TransCanada" yields many pages of results. Halcro wrote extensively about this topic, so it makes sense to read his posts about it if you wish to find out more from the viewpoint of a person sympathetic to the big oil companies.