Conoco blows hot air about gas production

The Alaska Gasline Inducement Act (AGIA) remains the subject of a lively debate. While many see it as a brilliant strategy, some critics assure us that no project can move forward without the consent of North Slope producers. Time will prove AGIA’s merits and one thing is for certain: During her first year in office, Governor Palin has blazed the trail for Alaska ’s first truly open and competitive process for building a natural gas pipeline.

In the broadest sense, AGIA is designed to do two things: move a project forward on a predictable timeline and ensure an open-access pipeline. Nothing prevents ConocoPhillips from building a gasline, nor has anything prevented this for the past several decades. And yet, it has chosen not to. In the company’s current public relations tour, Conoco makes it very clear that it does not require any of the incentives offered under AGIA. Why would the state want to give away $500 million when ConocoPhillips will consider moving a project forward right now? Never mind that this is all contingent on a number of preconditions.

ConocoPhillips only wants one thing for this seemingly irresistible offer — to sit down again and discuss fiscal terms. But, company officials do not suggest this in their proposal of what these terms might be. When this was pointed out in the governor’s recent letter to CEO James Mulva, ConocoPhillips responded that it does have some terms in mind and would be happy to share these in private just as soon as the governor is ready to sit down and negotiate. Although the governor goes on to explain in her letter why this is no longer a viable alternative, Conoco chooses to ignore it.

The governor also asks in her letter why Conoco chose not to commit gas to its proposed project. What is interesting about Conoco’s answer is that officials do not answer the question. Instead, Conoco takes the opportunity to point out that TransCanada hasn’t committed gas in its AGIA license application. Never mind the fact that TransCanada is not a gas producer and has no gas to commit, and never mind the fact that a gas commitment is the single-largest thing Conoco could do to lessen the project risk and move a project forward.

The questions people should be asking begin with “why?” Why would ConocoPhillips choose to keep the project risk high? Why, if ConocoPhillips needs none of the state incentives to move forward, would it make no effort to do so? Why would ConocoPhillips choose to make its “proposal” public just the day before AGIA’s application deadline?

In my mind, the answer to all is clear: fear. Conoco does not want the state to issue an AGIA license. It does not want a project to move forward on the state’s aggressive timeline and does not want an open access pipeline.

In reality, I do not believe Conoco is at all surprised its “proposal” has not been taken seriously. It would be quite clear to anyone who has actually taken the time to read the document. Compared to any of the serious AGIA applications received by the state, it is a grade-schooler’s guide to gasline risk. ConocoPhillips is engaged in nothing more than an expensive campaign to obfuscate the AGIA process and fuel the public’s hope that after so many failed negotiations and stonewalling, the producers are finally ready to build us a gasline.

Unfortunately, ConocoPhillips’ effort has been quite successful in its attempt to take attention from the AGIA process. Radio hosts, former statewide candidates and other critics are swept along in the frenzy, using their positions to level personal attacks on AGIA supporters rather than debate the true merits of public policy. As this chapter continues to unfold, I would encourage Conoco to work with the Palin administration toward our mutual goal of getting Alaska ’s North Slope gas to market. And as for the rest, let’s keep our dialogue civilized.

Ivy Frye is a lifelong Alaska and Palmer resident. She resides in Juneau and serves in Gov. Sarah Palin’s administration.