Exxon and TransCanada: Back to the future

HALCRO: After two failed open seasons in 2010, the next chess move in the quest for an Alaska natural-gas pipeline will land right back to where Frank Murkowski left us four years ago -- negotiating a fiscal framework with those that will assume the risk of building the largest oil and gas project in the world. And it took us how long to get back here? Four years.

State of Alaska photo

Gov. Palin celebrates the agreement between TransCanada and ExxonMobil to partner on Alaska’s proposed gas pipeline. Palin, center, is joined by (left to right) Marty Massey, Joint interest Manager for Exxon Mobil; Alaska Department of Natural Resources Deputy Commissioner Marty Rutherford; Rich Krueger, President of Exxon Mobil Production Company; Hal Kvisle, President and CEO of TransCanada Corporation; and Dennis McConaghy, Executive Vice-President of Pipeline Strategy and Development.

Welcome to the strange days of pipeline politics, offering a twist to the old saying, "there are no permanent friends, only permanent interests."

 

OPINION: In April 2007, I sat in an airport conference room with Department of Revenue Commissioner Tom Irwin and Deputy Commissioner Marty Rutherford so they could explain their AGIA concept.

During the two hour sit-down, I asked Irwin why he didn't believe Gov. Sarah Palin was capable of sitting down and negotiating with the producers pipeline terms. After all, the governor would be the perfect ambassador coming to negotiate, armed with a reservoir of goodwill and trust from fellow Alaskans and the desire to strike a deal.

Irwin's face went blank, almost as though I'd said something unkind about his mother.

"Do you know how they negotiate?" Irwin replied. They're the worst, he said. They squeeze and squeeze, they keep asking for more and more. When they don't get what they want, they'll get up and walk away from the table. Then, to dramatize his point, Irwin abruptly stood up from his chair and walked away from the conference table, thus punctuating the message.

It was clear from our two-hour meeting that whatever dynamic existed between Irwin and Exxon, his dislike for the Houston-based oil giant was personal. It was also clear that Irwin's AGIA was specifically designed to avoid face-to-face negotiations with companies like Exxon.

The ongoing war between Exxon and the Palin administration escalated over the last year, with heated rhetoric regarding both AGIA and the litigation surrounding Exxon's Point Thomson oil and gas leases. In April of 2008, Commissioner Irwin rejected Exxon's proposal to bring Point Thomson under development, saying he couldn't trust Exxon. He accused the company leaders of misleading Alaskans about their Point Thomson intentions.

The intense dislike held by the Palin administration for Exxon was well documented in emails released as part of a legal proceeding in the Point Thomson court case. Internal DNR emails revealed state oil and  gas officials were slow rolling Exxon's permitting requests, while at the same openly mocking the company's commitment to develop Point Thomson. Gov. Palin also criticized Exxon, saying the company shouldn't let the door hit them on their way out.

Meanwhile, Exxon was critical of Palin's gas pipeline plan, AGIA.

During the two years of legislative testimony on AGIA, Exxon repeatedly warned the Palin administration that AGIA would not work.

"AGIA does not provide for a commercially viable project," Exxon's Marty Massey testified over and over again during hearings on AGIA.