Gov. Murkowski's Loss in Alaskan GOP Primary Roils Pipeline Plan

What does Alaska Gov. Frank Murkowksi's (R) loss in yesterday's GOP primary mean for the long-delayed Alaska natural gas pipeline plan?

That question, never far from his now-rejected bid for a second term, is front and center as observers mull how the political shake-up will affect efforts to build a $20 billion-plus pipeline to bring North Slope gas to the lower 48 states.

Murkowski -- who lost yesterday's GOP primary to Sarah Palin -- has been negotiating with BP, ConocoPhillips, Exxon Mobil Corp. and state lawmakers over a final contract to allow future construction of the project to tap the slope's 35 trillion cubic feet of reserves.

The governor, according to published reports, said he will continue working with the state's Legislature to try and complete the plan despite his lame-duck status. But the two politicians left standing yesterday -- Palin and Democratic primary winner Tony Knowles -- also support the pipeline but have said they will take different approaches should they become governor.

Palin, according to comments in the Anchorage Daily News, said she is willing to discuss a pipeline project with other potential partners. "We'll deal with the oil companies and their plan to study if they want to build a gas line. At the same time, we'll open it up to other entities that are interested in this project. We'll start weighing those objectively and fairly, and I'll work with the Legislature, not against them, in the process," she said, according to the paper.

Palin won yesterday's primary easily, garnering over 50 percent of the vote, while Murkowski finished a distant third with 19 percent. Knowles, a former two-term governor who served from 1994 until 2002, easily won yesterday's Democratic primary.

Knowles, in campaign materials, said the Murkowski proposal gives too much away to the producers -- he argues the state should not go "hat in hand" to the industry but rather lay out the state's terms and "invite all interested parties to submit proposals."

The new uncertainty over the pipeline negotiations comes as the Bush administration is pressuring Alaska state officials to complete the long-planned effort. Energy Secretary Samuel Bodman recently warned that further delays could close the window of opportunity for the project (E&ENews PM, July 6).

A BP spokeswoman declined to predict what the political changes mean for the effort. "It is too early to tell," spokeswoman Sarah Howell said this morning. "We would not want to speculate on how it would affect anything.

"We hope to continue negotiating with whoever is in office," the spokeswoman added. ConocoPhillips and Exxon Mobil did not provide comment by press time.

One analyst predicts that changing governors could slow efforts to secure a final deal on the project. "He [Murkowski] has been a very vocal supporter of this throughout his entire political career," said Peter Beutel, an energy analyst with Cameron Hanover, a Connecticut-based energy consulting firm. "To have anyone else at the helm would mean a less aggressive policy."

On the other hand, Murkowski has to date failed to secure a final package. Knowles last night said yesterday's events could move the plan forward. "This is a positive vote to get the [gas] pipeline off high center. It's been stuck," he said in news accounts.

Another analyst told Greenwire today that whoever is in the governor's chair is unlikely to allow the project to slip away. "I don't think it would be in any governor of Alaska's interest to try and muddy up the waters too much," said Phil Fylnn, an analyst with Chicago-based Alaron Trading Corp. "Alaska's economy is so dependent on the energy industry, especially this deal, for continued growth. I doubt anyone would try and stop the deal or slow it down. I don't think it will have that big of an effect."

Copyright 2006 Greenwire. All Rights Reserved. Visit E&E Publishing for a free trial.

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