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Is Parnell snubbing Japanese gasline investors to please Big Oil?

Alex DeMarban
A start-up group of municipal Japanese governments and business groups has said it would like to import some natural gas from Alaska's North Slope for use by Japanese utilities, and has even offered to invest in a natural gas project. Aaron Jansen illustration

Was Alaska Gov. Sean Parnell "rude" when he was too busy to meet potential Japanese investors interested in supporting Alaska's mega-project to export natural gas -- requiring former Gov. Frank Murkowski to step in and smooth ruffled feathers?

Is Parnell worried about offending the state's top three oil producers and taxpayers -- BP, ConocoPhillips and ExxonMobil -- who are pursuing their own project?

Those are some of the thoughts you'll likely have when you read a troubling Journal of Commerce article by reporter Tim Bradner, who notes that Gov. Sean Parnell has exhibited a "standoffish attitude" toward the proposed Japanese consortium, Resources Energy Inc.

The start-up group of municipal Japanese governments and business groups has said it would like to import some of the state's North Slope natural gas for use by Japanese utilities. It has offered to invest billions of dollars in the project in the hope it can acquire a long-term gas supply contract that helps wean Japan from nuclear power.

Backing state-subsidized project 

Parnell has in fact met once with REI's top officials, in Tokyo last fall, said Sharon Leighow, spokeswoman for Parnell, on Friday afternoon. A variety of state officials, including Natural Resources Commissioner Dan Sullivan, have also had at least 40 meetings with REI officials.

Sullivan, a Marine reservist who just returned to Alaska from a brief deployment for the U.S. Marine Corps, is also headed to Tokyo next week for another meeting with REI officials and others, Leighow said.    

"That's pretty substantial," said Leighow, who recently compiled records of all the state officials meeting with REI.

The Journal article was "dissapointing" and "mischaracterized" the administration's approach, which has not been "standoffish," Leighow said.

Critical to the economy

Tapping Alaska’s natural gas, considered one of the largest reservoirs in North America, has long been considered critical to the state's economic future, particularly as oilfields that support most of the state economy continue to dwindle with no major turnaround in sight.

Parnell has backed the state-subsidized project that involves BP, ExxonMobil, ConocoPhillips, and pipeline builder TransCanada. The companies are studying construction of a pipeline to carry gas to a port, where a plant would super-chill gas into a liquid for ocean shipping. The project could cost more than $65 billion.

Many Alaskans question the commitment of those companies, given their record of studying and abandoning similar proposals in the past. Adding to the doubt, the companies recently failed to meet a Parnell-imposed benchmark to conduct preliminary work on the project that would have cost several hundred million dollars. The companies instead committed to spending between $80 million and $100 million on the project this summer, pushing off the bigger work to next year.

So why would the governor not meet with REI's top brass in July? Is Parnell worried about offending the Big Three, the state's top taxpayers by far, who are working on the state-subsidized LNG project? Is he worried about unintentionally leading the Japanese on?

Symbolic importance of meeting governor

Parnell, a former ConocoPhillips lobbyist, offered a substitute for the meeting with REI. Deputy Natural Resources Commissioner Joe Balash met with REI officials. 

The refusal to meet in July is just one way Parnell has distanced himself from REI, according to the article, which spells out other rebuffs by Parnell, including foot-dragging by the administration to sign memorandums of understanding showing the state's interest in working with the Japanese.

Former Gov. Murkowski, noting the symbolic importance to the Japanese that a meeting with Parnell would hold, held a reception with the group to help Alaska save face.

"I’m concerned over the lack of willingness to really evaluate what these people have to offer,” Murkowski said, according to the Journal. “Here the Japanese are coming in with a willingness to spend their own money and are not asking for anything,” in the form of a state subsidy.

Republican governor candidate Bill Walker immediately jumped on the Journal article, issuing a press release saying Walker twice had met with REI officials in Tokyo.

"Thank you, Governor Murkowski, for being the statesman who afforded REI the respect and professional and international courtesies they deserved. Governor Parnell continues to prove to Alaskans that his leadership and statesmanship are sorely deficient," Walker's release said.

Jerry Gallagher, campaign manager for Parnell, and himself a former Conoco lobbyist, said "the campaign has no comment."

'Long-standing, respectful relationship'

Spokeswoman Sharon Leighow, in the Journal of Commerce article, said Parnell was busy when REI was in town and can't possibly meet with everyone who wants to meet with him. She said there were other reasons why Parnell didn't show up, but stopped short of explaining what she meant, according to Bradner. She said that information would be revealed when emails between REI and state officials are released. 

“Japan continues to be a major trading partner with Alaska and the governor appreciates our long-standing, respectful relationship with the Government of Japan,” Leighow wrote, according to Bradner. “In the past year, Gov. Parnell has met with government officials of Japan as well as senior executives in Japan’s energy, utility and mining companies,” including REI officials.

Contact Alex DeMarban at alex(at)alaskadispatch.com