State Government

The federal coordinator for Alaska Natural Gas Transportation Projects says Alaskans need to stop thinking of natural gas as the next oil.

Larry Persily says the difference between the gas that would go into a line from the North Slope, and the oil currently filling the Trans-Alaska Pipeline, is that the state needs a natural gas project more than producers or world markets need Alaska’s gas.

“We need the gasline for the decades of affordable fuel it’s going to provide to Alaskans – natural gas for railbelt communities, hopefully propane for everyone else,” says Persily. “We need to accept that we need a line for the jobs, for the tens of billions of dollars in investment that it will bring along, and for the additional barrels of oil that it will put into TAPS that will accompany all of that exploration and development for gas. And after all those good things, there will be some tax and royalty dollars too. Not nearly as much as oil, but it will be a thick icing on the sweet cake.”

Right now Persily says economics and Alaska politics are standing in the way of a line being built.

When the legislature passed the Alaska Gasline Inducement Act in 2007, the idea was that North Slope natural gas would be sold in the continental United States. But with cheap and plentiful reserves of shale gas now available in the Lower 48, some state leaders – including Governor Sean Parnell – have decided to refocus efforts on exporting liquefied natural gas to the Pacific Rim.

Persily says just because the bottom fell out of the U.S. market, doesn’t mean Alaska will suddenly be able to export its gas. For one thing, there’s just as much competition in Asia as there is domestically. For another, there are certain restrictions placed on exports.

“You have to get an Energy Department license. Anybody who’s followed the battles in Nikiski, where Cook Inlet gas, ConocoPhillips has been fighting with the Department of Energy to get their license renewed over the years. You have to show the Department of Energy that you can take those BTUs, ship them overseas, and it will not hurt American consumers, it will not hurt the American economy,” Persily says. “Alaska gas needs a second approval under federal law. You also have to show, to export gas off the North Slope overseas, you have to show that it is not going to harm what’s called the Alaska natural gas transportation system – the pipeline route along the highway to the Lower 48. That’s the law that passed Congress in ’77. There’s that protection in there. It doesn’t mean you can’t, it’s just these are the hurdles you face.”

Persily says it’s time for state leaders to decide the best way to get Alaska’s vast supply of natural gas to market. The problem is that those same leaders keep falling in love with different projects.

“I’m sort of surprised we don’t have a collective case of sexually transmitted disease because we’ve hopped in and out of bed with our favorite project over the decades so many times,” he says.

Persily dismisses talk that Alaska has missed its window of opportunity as far as gas is concerned. He says the market is constantly evolving, and demand for Alaska gas will be realized one day.

“As to which market? Where it goes? I think we need to petition ourselves, get certificates, get designs, position Alaska for a couple of years, see how the markets play out,” says Persily. “And then hope that the state can work out a fiscal deal with the producers to let them take the risk to get it built into long-term what will be a profitable market.”

Persily spoke last night (Thursday) to the Juneau World Affairs Council.

Governor Sean Parnell on Thursday made his first public comment on the resignation of controversial state wildlife official Corey Rossi.

Parnell said he agreed with Fish and Game Commissioner Cora Campbell’s decision to keep Rossi on the job, even after she learned that he was questioned as part of a criminal investigation.

“Each case is going to be different in who knew what, when, and all that. So, my view is that when a person is charged with a crime that directly relates to their job, they need to be removed. Anything short of that is dependent on a case by case basis,” Parnell said at a press availability in Juneau.

Rossi was charged last week with 12 misdemeanor counts related to an illegal black bear hunt that took place in June 2008. Prosecutors say he lied on state hunting reports to cover up who shot three of the four bears killed in the hunt.

Parnell and Commissioner Campbell say they knew that Rossi was to be interviewed, but did not know the nature of the investigation until after the charges became public.

Rossi was director of the state Division of Wildlife Conservation. His lack of qualifications and advocacy of controversial predator control policies made him a divisive figure within the Department of Fish and Game.

Gov. Sean Parnell Wednesday night set out a “road map” for getting access to North Slope gas.

In his annual State of the State address to the Alaska Legislature, Parnell said he talked with the CEOs of Alaska’s major oil producers within the previous 24 hours and it was clear they have not reached agreement on key issues. So he delivered what he calls a “road map” for an Alaska natural gas pipeline.

“First, these companies need to agree to resolve the Point Thomson litigation,” he said. “If no settlement in the state’s interest can be reached with all parties, the state will fight for Alaska’s interest at the Alaska Supreme Court hearing on February 8th in Anchorage.”

Parnell said he also expects the companies to align under the framework of the Alaska Gasline Inducement Act (AGIA) and consolidate all gasline projects. By the third quarter of the year, he wants financial estimates and work schedules for a large-diameter Liquified Natural Gas (LNG) pipeline through Alaska to tidewater.

“If these milestones are surpassed, the 2013 legislature can take up gas tax legislation designed to move the project forward,” he said. “The path ahead is better defined, and benchmarks for progress are in place. And while a lot more work remains, Alaska is closer to the day when our gas can move from the ground to Alaskans and to markets beyond.”

Parnell also took time during the speech to promote the budget he made public last month, saying it holds the line on government spending while adding nearly $4 billion to the state’s savings accounts. He also repeated his call for reducing oil taxes in an attempt to increase North Slope oil production.

“For many years, the TransAlaska Pipeline has provided a pathway to prosperity for Alaskans. But where more than 2-million barrels of oil per day once flowed through the pipeline, less than 600,000 barrels now inch through. And unless we act to reverse this decline, we will pay a stiff price in lost jobs, lost state revenues and lost opportunities,” Parnell told legislators.

Oil taxes promise to be one of the most controversial issues during this year’s session. After the speech, Senate President Gary Stevens said the governor’s tax plan table is flawed and he would like the Senate to introduce its own plan.

Minority Response

House Democrats pledge to fight the governor’s plan to reduce oil taxes.

In the House Minority response to the governor’s State of the State address, Minority Leader Beth Kerttula called Parnell’s plan a “give-away.”

“Alaskans are already investing hundreds of millions of dollars every year in the oil industry in tax credits – three billion dollars in the last four years. Through these credits, actually, we are the biggest investor on the North Slope,” she said.

Kerttula said Alaskans should know where their money is going.

House Democrats voted against Parnell’s bill last session when it passed the House. The caucus this year supports legislation that would increase reporting requirements for oil companies claiming tax credits, including the number of jobs created and the number of Alaskans employed in those jobs.

Democrats also advocate legislation that would invest $10-billion of Alaska’s nearly $13-billion surplus into the state’s Permanent Fund.

“We’ve got to save some of our surplus in the Permanent Fund. That’s what that fund does. It turns a resource that’s not renewable into a future resource for future generations of Alaskans,” she said.

Kerttula also called for investment in education and job training. She criticized Parnell’s education budget, which includes money for rural school construction and college scholarships, but the amount districts receive for operations is the same as last year. Districts across the state stand to lose revenue.

House Democrats are calling for legislation that would require the state to annually adjust the base student allocation for inflation.

The group behind a citizens’ initiative to re-establish an Alaska Coastal Management Program spent more than 100-thousand dollars on its nearly month-long signature gathering effort. Casey Kelly has more.

Juneau Mayor Bruce Botelho is chairman of the Alaska Sea Party and a primary sponsor of the initiative.

“While we still have some bills coming in, rough estimate is 100- to 105-thousand dollars,” says Botelho.

From the time it was founded in October to the end of December, the Sea Party reported more than 67-thousand dollars in income to the Alaska Public Offices Commission. It spent more than 59-thousand dollars. Revenue and expenditures for this month (January) are not yet available.

The North Slope Borough gave the Sea Party campaign 25-thousand dollars. Other major donors included the Bristol Bay Borough, the Bristol Bay Native Association, the cities of Valdez and Aleknagik; two Community Development Quota groups: The Western Alaska Community Development Association and the Alaska Pribilof Island Community Development Association; as well as the Alaska Municipal League and the Alaska Conference of Mayors.

The Sea Party’s APOC filing shows the group paid Anchorage consultant Scott Kohlhaas 50-thousand dollars – by far the group’s largest expenditure. Botelho says Kohlhaas – a 2010 candidate for state House as a Libertarian – organized the petition drive in Anchorage, Fairbanks and the Mat-Su, which included using paid signature gatherers. He also provided verification services. Elsewhere in the state, the Sea Party used about 250 volunteers.

The group delivered 34-thousand signatures to the Division of Elections on Tuesday. By turning them in before the legislature convened, the group achieved its goal of giving lawmakers an opportunity to pass substantially similar legislation during the 90-day session. Botelho admits part of that is a desire to avoid a costly campaign to get voters to approve the initiative.

“We’ve been told that we should expect to be looking at a campaign of about a half a million dollars. And of course, that doesn’t take into account the extent to which there might be an organized opposition,” he says.

Lawmakers on Tuesday gave no assurances that they would consider a coastal management bill this session.

The federally funded program, which helped industry and communities navigate the complicated federal and state permitting process for coastal development projects, closed last year after the legislature and Parnell administration failed to work out a deal to reauthorize it.

Backers of a citizens’ initiative to re-establish an Alaska Coastal Management Program have submitted nearly 34,000 signatures to the state Division of Elections. The Alaska Sea Party held a news conference in Anchorage on Tuesday to announce the total, which is about 8,000 more than the group needs to place the measure on this year’s statewide ballot.

But as Casey Kelly reports, the Sea Party hopes the legislature is able to resolve the issue before it goes to a vote.

Alaska Sea Party Chairman and Juneau Mayor Bruce Botelho says about 250 volunteers spread across the state collected the signatures in record time.

“We received our booklets 27 days ago, and the task that we had before us was an arduous one,” says Botelho.

The Division of Elections now has 60 days to determine if there are at least 25,875 signatures of valid Alaska voters. The Division will also make sure the Sea Party collected signatures from at least 7 percent of registered voters in 30 of the state’s 40 House districts. Botelho expressed confidence that both thresholds will be met.

“I would put it this way: We would not have filed if we thought that we did not have the requisite distribution,” he says.

The Sea Party set out to collect the required signatures before the legislature convened, in order to give lawmakers an opportunity to pass “substantially similar” legislation during the 2012 session. Botelho – a former state attorney general – said Lieutenant Governor Mead Treadwell will make the initial decision on what “substantially similar” means. But the Sea Party expects any bill would have the same basic elements as the initiative.

Botelho said that includes a policy board made up of coastal residents.

“Which makes sure that there’s a role for local districts in the formulation of that statewide policy,” he says.

The initiative also would make the Alaska Department of Environmental Conservation part of the coastal management structure. Former Governor Frank Murkowski removed DEC from the program to make the regulatory process easier on industry. Botelho said the Sea Party wants a comprehensive program.

“We would expect all regulatory agencies that work within the coastal zone to be a part and at the table in the implementation of coastal management,” says Botelho.

Before closing down last year, coastal management helped developers navigate the complicated state and federal permitting process. It also allowed the state to comment on proposed federal regulations or projects that affect Alaska residents and businesses. Initiative co-sponsor and Kodiak Island Borough Mayor Jerome Selby said Alaska’s small businesses suffer most from the lack of a program.

“I found it pretty interesting the number of people that I talked to – contractors, small business people, others – who are already encountering difficulty in getting their federal permitting and the coordination that’s missing without this program,” says Selby.

If the legislature adjourns in 90 days without passing a similar bill, the measure will go on the August primary ballot. If the legislature takes longer than 90 days to adjourn, the initiative will appear on the November ballot.

Last year, the Parnell administration and some House Republicans fought efforts by rural lawmakers and Democrats to give local communities a voice in the program when it came up for reauthorization. House Speaker Mike Chenault – a Nikiski Republican – isn’t sure about the prospect of “substantially similar” legislation passing this session.

“We can make decisions today based on if there’s enough signatures or if there’s not enough signatures. But what decision can we make?” Chenault says. “There may be two or three different ways to go at coastal zone, and we’ll just have to look and see what options are available.”

But Juneau Democrat and House Minority Leader Beth Kerttula, says lawmakers need to recognize the Sea Party’s impressive feat and the 34-thousand Alaskans who signed the petition.

“It’s going to be to people’s detriment if they don’t recognize that. So, I hope that we do our job and lead on this issue and bring the program back,” she says.

Governor Parnell’s Spokeswoman Sharon Leighow said the administration would have no comment on the initiative today. In the past, Parnell has said the state can live without a coastal management program.

The administration estimates it would cost about 5-million dollars a year once it’s up and running. A significant portion of that would be paid for by federal grants. Any program requires federal approval, a process that could take up to two years after it is submitted by the state.

The second session of the 27th Alaska State Legislature begins Tuesday. The House of Representatives will gavel in at 1 p.m. The Senate comes in at 1:30.

Juneau will formally welcome legislators Wednesday at a Centennial Hall reception from 5 to 6:30 p.m. At 7 p.m., Gov. Sean Parnell will deliver his annual State of the State Address.

Juneau Republican Rep. Cathy Munoz says she’s glad to be back to work.

“Looking forward to having everybody back in town,” she says. “We’ve developed really good camaraderie with people from all over the state and I’m really looking forward to seeing them again.”

Munoz, Rep. Beth Kerttula, and Sen. Dennis Egan, both Democrats, work well together. At the start of the session, Kerttula says, they have a lot of optimism.

“It’s one of the great things about Juneau and one of the great things about the beginning of session,” she says. “Everybody does come in, I think, with a sense of optimism for the next year. You know that we really can join together to do good things for the people.”

Kerttula is beginning her sixth year as leader of the House Democratic Minority. She expects oil and gas and retirement issues will be major policy arguments this session.

Kerttula has introduced one bill – HB 257 – which would give the Violent Crimes Compensation Board more flexibility to help cold case victims.

“That kind of pain doesn’t go away and it shouldn’t matter whether the case gets resolved one week after the crime has happened, or 10 or 20 years later,” she says. “It’s still important that the state and Violent Crimes Compensation Board can be there to help victims.”

Kerttula says she was inspired to sponsor the bill after getting to know the mother of a victim of a case that was not resolved for many years.

Munoz also has introduced legislation this session inspired by Alaskans – naturopaths, pharmacists, realtors and homebuilders.

One bill sounds like it was written expressly for Juneau, with its lack of affordable housing. Munoz says HB 264 would let municipalities defer property tax increases after lots are subdivided.

“Once a developer comes in and subdivides land and puts in all the improvements – the sidewalks, water and sewer, — the city then reassesses that land at fair market value, according to state law,” she explains.

Munoz calls that a disincentive. “The developer is taxed with this higher assessment immediately, even before the lots have sold,” she says.

She believes if cities could defer the tax, it would encourage housing development.

Munoz and Kerttula’s bills are among those filed prior to the start of the session and will be assigned to committees today.

Lawmakers now have 90 days to complete their work.