Candid candor--A senate committee recently experienced a breath of fresh air. While hearing SCR18, a resolution asking the Regulatory Commission of Alaska to act quickly on a pending case, the RCA chair was asked if she had any concerns with the passage of the message embodied in the resolution. She responded: "As long as I keep within the yellow lines, I think you all are free to wander where you will." The subtext is, she'll follow the laws that govern the hearing process. When asked if she thought the resolution could be read to favor one side in the case more than another she said: "no" and added if it did she'd ignore us.

Close but no cigar--Last week was double-hull tanker week. BP brought its brand new tanker to Juneau to show it off to state policy makers. One particularly notable feature was the admonition "No Smoking" plastered in two-story-tall red letters across the bridge superstructure. Legislative staffers joked about the need for the reminder in such a dramatic fashion. Another quipped there ought to be lettering across the front that said "No Drinking" given the infamous Exxon oil spill. Of course, given the discussion about drinking in our building, we also could put that sign up on the capitol.

Historical pause--Use or non-use of the permanent fund earnings, or sub-accounts of the permanent fund, or earnings of sub-accounts is a hot topic. In debate on one of the proposals, Anchorage Rep. Mike Hawker rejected the argument that a 'one-time' use isn't a big deal and doesn't set up recurring spending from permanent fund earnings. He noted "we only landed on Omaha Beach one time but we kept going from there."

I visited the 941 foot long, 164 foot wide Alaskan Explorer when it tied up downtown last week. The ship spanned the dock from Taku Smokeries to just shy of the downtown library. This is the second of four double-hull, state-of-the-art tankers BP will use to transport North Slope crude between Valdez and west coast refineries.

     Get two teams of high-powered and expensive lawyers together, representing two different clients, pull up a chair, watch the rhetorical fireworks.
     Usually.
     But not last week. Two teams of lawyers, one team representing the port authority group that wants to build an all-Alaska (North Slope to a liquification plant in Valdez) gas line and one team doing some contract gas line work for the Department of Law, did a yawner. They told legislators the state need not accede to risky concessions demanded by North Slope multi-nationals before those hydrocarbon behemoths participate in a natural gas line that takes Alaska natural gas to markets. Instead of word-parsing and verbal jousting over a huge paradigm shift in our relationship with the multi-nationals, the lawyerly presentations were as boring as watching the Smith Bros. argue the merits of cough drops.
     But boring as the presentations may have been, the message was extremely important. Too many Alaska leaders assume the state has no leverage when it comes to pushing construction of a gas line. In fact, there is an assumption that we have to beg and plead and offer concessions to the North Slope producers.
     That assumption was exploded last Wednesday. The message to the legislature last week is we do have leverage to compel a gas line. That leverage already has been confirmed in an Alaska judicial ruling on the nature and language of the oil and gas leases inked between the companies and Alaska. Similar language in other states has also been upheld in those states' courts.
     Under state lease provisions, the multi-nationals assumed a legal obligation to develop and market the gas if they could do it and have an expectation of a reasonable profit. The lawyers said they, the multi-nationals, can't be allowed to define "reasonable" solely to their benefit and deprive Alaska of the value of the assets leased.
     We all want a gas line--elected Alaska officials, Alaska workers, and Alaska business owners are focused on accomplishing a pipeline that moves state-owned, stranded natural gas to lower 48 markets hungry for a stable supply of energy. We all believe our natural gas resources can and should be converted in the energy markets to cash that can sustain generations of Alaskans.
     But the multi-nationals keep telling Alaskans the state has to "participate" by assuming risk. They keep saying that Alaska's problem is that the multi-nationals can get a better rate of return by investing in gas projects in other parts of the world. Any investment they make in an Alaska gas pipeline must compete with their other projects. They want us to assume some pipeline costs and risk so that our gas line project becomes as profitable for them as investments they might make elsewhere.
     But what they want ain't necessarily so.
     They don't legally have the right to demand an Alaska gas line that assures a 30 percent rate of return on investment just because that's what they may be able to get if they put their investment dollars elsewhere. No! No! Au contraire. Under the lease agreements they signed with the state to get access to our hydrocarbons, the lawyers say the state can demand that they build a pipeline with a far lower rate of return or they can be compelled to sell the gas they have lease rights for to a pipeline company that will build a line.
     Alaska can point out the leases' legal obligations to the multi-nationals and say the same thing my grandma used to tell me when she whipped me at cribbage: "Put that in your pipe and smoke it."
     Now, there may be good policy reasons for the state to lower gas line costs by taking an equity position in any gas pipeline. In retrospect, I can make a great case that Alaska should have 'bought' an equity position in the TAPS oil pipeline. If we had, we'd have been at the table as transportation rates are set and we could make sure the rates didn't unfairly lower the value of Alaska's oil by raising transportation costs. But we, according to the lawyers, don't have to buy an equity stake in a potential gas line just to "incentivize" that line.
     The multi-nationals--who have been given a license by the state to develop and market Alaska's gas--want us to also assume risk by guaranteeing we will ship some of our gas regardless of future gas prices. Of course they do. The more cost and risk we assume, the better for their stockholders.
     But, if they insist they won't build unless the state assumes risk or cost, or if they say they won't put gas in a pipeline if one of the pipeline companies eager to build goes forward, we don't have to take it anymore. We've waited decades for them to help "unstrand" our gas as their leases provide for when it is reasonably profitable.
     State remedies could include going to court for injunctive relief or for compensation. We could cancel the leases and sell them to someone not looking for stratospheric profits--just reasonable profits. We could implement a reserves tax on the value of gas they are not making an effort to deliver and market.
     We could also just wait for them to say the time is right for them. But that would be wrong. It's our gas, it's our oil, and we don't need to wait until they get a return on investment that meets their goal.
     The return on investment only needs to be reasonable and not gargantuan. And that's the law.