Frank Murkowski’s recent push to close a pipeline deal with the North Slope producers is a poignant reminder that money talks, and BS walks.
The Alaska governor rallied the troops in Juneau this month, calling the state’s 20 senators back into the legislature for a special summer session, to vote on two pieces of pipeline legislation.
The first is a bill that would replace the current oil tax regime with a net profits tax for the North Slope oil and gas producers, and freeze the new tax rates for decades.
The second bill would make key parts of Murkowski’s deal with BP, ExxonMobil and ConocoPhillips — the holy trinity of fossil fuel production in Alaska that controls the 37.5 tcf (trillion cubic feet) of natural gas buried beneath the Beaufort Sea — legal and binding.
The deal gives the North Slope producers rights to build the 2,810-kilometre pipeline between Prudhoe Bay and Alberta — a construction project worth more that $20 billion, by current estimates.
That Canada could be left out of the deal seems inconceivable. Most of the pipeline would cross Canadian soil.
Furthermore, Canadian federal law dictates that TransCanada Pipelines Ltd., a Calgary-based company, holds rights to build the Canadian portion, under the 1978 Northern Pipeline Act.
Seemingly, Murkowski isn’t too worried about Canadian sovereignty.
“Nobody’s walking out of here without taking a position and standing up and being counted,” he said at a news conference two weeks ago.
At last check, the senators were still debating. Some are worried Alaska is giving too much to the corporations, while Murkowski has been adamant he wants the deal to go through.
Regardless of the outcome, the pipeline project is not going to happen without “maximizing benefits for Yukoners and mitigating all the social challenges,” according to Yukon Premier Dennis Fentie.
“Alaska is obligated, under their own laws and legislation, to negotiate fiscal terms with the producers, and in that process these types of things are evolving,” Fentie said in a news conference last week.
“That’s his government and his position and that certainly won’t be something Canadians would entertain and, more importantly, it won’t be something Yukoners would entertain, period.”
A Canadian leader, talking tough.
It would be nice to be able to believe him.
But it’s doubtful that Murkowski, governor of a 627,000-constituent red state and seeking re-election, is going to even remember to make an attempt at not offending Canadian sovereignty.
Or vet his plans with the leader of 33,000 Yukoners, regardless of the cozy relationship both men have often professed.
For instance, Hal Kvisle, CEO of TransCanada Pipelines Ltd., has his doubts.
Kvisle sent a letter to Murkowski last week, reminding him that “TransCanada holds valid property rights to build and own the Canadian section of the project, and we have no option but to defend those rights on behalf of our Canadian shareholders.”
It’s possible that Murkowski’s deal will include the option of contracting the Canadian portion of the pipeline to TransCanada, or any other company with a legitimate interest.
One Republican senator, Ralph Seekins, who chairs the Alaska senate special committee on natural gas development, said he would invite TransCanada to make its case.
Kvisle is banking on it, since he also told Murkowski that TransCanada is “generally supportive of the gas pipeline agreement which you have reached.”
But there’s no guarantee Canada will have any stake in the deal, as far as Alaska is concerned.
Canada isn’t in the cards. Not this hand, anyway.
Nevertheless, Fentie’s not worried.
“On the Canadian side, the Canadians will dictate what transpires there,” he said.
“I don’t think we are at a stage where any conclusion can be drawn here.”
Perhaps Fentie knows something the rest of us, including Kvisle, do not.
Perhaps he’s got the political chops to protect Yukon’s interests. One would hope so.
But it’s an election year in the Yukon as well, and Fentie will have to fight to hold power in a race that, at present, appears anyone’s for the taking.
He doesn’t need a concluded Alaska pipeline deal exclusive of Canadian interests at the moment. But that’s a real possibility, and a dangerous one for Canada.
Too bad this deal is going down before a feasibility study has been solicited. Fentie was quick enough with the purse strings in 2005, when Alaska asked the Yukon to chip in $3 million for a jointly funded feasibility study for another proposal, the Alaska-Canada rail link.
Those tax dollars seem to have bought some respect, since the study’s head office is located in Whitehorse.
But nobody has asked Fentie to open the territory’s purse strings for any pipeline proposal.
Previous agreements to work in partnership with Alaska notwithstanding, nobody from Alaska is asking Fentie, or Ottawa, much of anything at the moment.
A few years and likely a few Yukon premiers will pass before construction on an Alaska Highway pipeline actually begins, but the paperwork is getting done today.
When the North Slope producers finally come knocking, loaded for business with trucks full of pipe, Yukon’s relationship with Alaska had better be at least as strong as Fentie would have people believe it is now, if Canada is to get a piece of the action. (GM)