July 11, 2008
Friday

Last year when the Legislature passed sweeping oil tax reform we finally ensured a fair deal for our resources and created a simpler, more transparent process - but we also did much more. By taking a strong stance and fulfilling our constitutional mandate to maximize the benefits of our natural resources, we turned a crucial corner for resource development in Alaska. We put Alaskans in the driver's seat, and as we prepare to vote on the TransCanada gas pipeline proposal, we are determined to protect Alaskans' right to steer our own course.

We approached this gas pipeline special session with open minds and a commitment to make the choice that best serves Alaskans' interests. After traveling around the state to the TransCanada proposal hearings, and barring some completely unforeseen circumstances, we believe the TransCanada proposal is the best way to advance a pipeline project. It will protect us from the pitfalls of a producer-owned pipeline; it will not preclude other options, such as an all-Alaska LNG project or a bullet line, and it will produce good terms for Alaska. Even experts who do not favor this approach admit it can only move us closer to a pipeline, saying: "It can't hurt and it might help." The TransCanada plan is our current best hope to turn yesterday's pipe dreams into tomorrow's financial security.

The producers say they'd prefer a producer-owned pipeline. Our experience with the Trans-Alaska Pipeline System (TAPS) is a great lesson in the dangers of granting the producers monopoly control of our resources. If the producers own the pipeline, they'll also control the tariffs ­ the cost to use the pipeline. By keeping tariffs high, the producers can decide how much of our gas goes to market and when. Worse, they can price new explorers out. Artificially high tariffs also hurt Alaskans, because the state collects taxes and royalties on our resource after subtracting the tariffs.

Those who favor a producer-owned pipeline want us to believe federal regulators (FERC) will take care of everything ­ that they'll look out for the state's interests, but that's simply not true. The FERC's mandate is to get Alaska's gas to market, period. The mandate of every legislator who took an oath of office is to maximize the benefit of our gas. We should not expect the federal government to do the work we're sworn to do. AGIA's rules require the pipeline owners to apply to FERC with terms favorable to Alaska. We can't control the FERC's decision, but we can be certain we won't get the best deal if we don't even ask for it.

Some have questioned the $500 million investment AGIA allows from the state. They're missing the big picture. In our opinion this is a case of spend a nickel to earn a dime. Not only will the state get that money back in the form of reduced tariffs, but that small investment gets us to the first open season and beyond, on terms that will be attractive new explorers and investors, and will be the engine that drives huge revenues for the state in the future. Once the producers are on board, AGIA's terms will apply to them, and that's great for Alaska.

Finally, some say AGIA has already done its job by forcing the producers' hand and bringing them to the table, and that we should let them take it from here. We don't agree. It's nice the producers are finally talking about a pipeline project, but it's still just talk. Even their much-touted FERC filing is little more than window dressing.

AGIA demonstrates that our gas is not stranded, and it puts Alaskans at the head of the table, instead of chasing after crumbs. TransCanada has the experience, the expertise and the resources to actually move forward with a project. Keeping them in the picture strengthens our hand in every way. In the end, the producers will be a part of any project, but this time it will be on our terms.

About: Rep. Beth Kerttula is the House Democratic Leader and represents district 3 in Juneau, and Rep. Berta Gardner represents District 24 in Anchorage.

Received July 11, 2008 - Published July 11, 2008

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