Alaska Dispatch

Since taking office, Palin has led efforts to raise taxes on oil producers, revoke leases at the Point Thomson oil and gas field, and provoke competition in the industry to jumpstart the long-sought natural-gas pipeline project. But speaking at an industry gathering in Anchorage, Palin's tone was mostly nonconfrontational, stressing cooperation between the state and industry to show "the lower 48 we protect our environment up here."

"The last few months have been an amazing experience...  The time went so quickly... I got to briefly expand my wardrobe. I got to meet a few VIPs, you know, those that really impact society, like Tina Fey."

Palin said it's a critical time for the state, between oil prices dipping to $50 and mounting pressure within Congress to reduce spending and earmarks. "We're seeing that Alaskans may not be recipients of such largess of federal dollars as before," Palin said.

Yesterday's defeat of Alaska's U.S. Sen. Ted Stevens, the longest-serving Senate Republican in history, by Anchorage Mayor Mark Begich will likely mean reduced federal funds for Alaska. The state has long benefited from Stevens' seniority and ability to steer billions of federal dollars to Alaska.

Palin, who was Sen. John McCain's vice-presidential running mate, said the future of Alaska hinges on developing its resources and the proposed multibillion-dollar natural gas pipeline. (Alaska has the largest proven natural-gas reserves in North America.)

In August, the Alaska Legislature approved an exclusive state license and a subsidy of as much as $500 million to Calgary-based TransCanada Corp. for a pipeline. BP Plc and ConocoPhillips are moving ahead with a competing project. But no construction dates have been set, and neither pipeline project is guaranteed to move forward.

Senate-elect Begich also spoke at the industry meeting Wednesday, but didn't say much about his victory or what he plans to do as senator.

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And officials from the top oil companies operating in Alaska gave presentations, predictably talking about the hardships of exploring for crude now that oil prices are dropping. Still, BP Plc, a giant in Alaska oil, is planning to increase its capital budget.

Doug Suttles, president of BP's Alaska unit, told industry officials that the company plans to spend $1.2 billion in 2009 on capital projects in Alaska, up from $900 million this year. He said about $400 million of next year's budget will go to advancing an offshore oil development called Liberty, a heavy-oil project, work on a proposed natural-gas pipeline from Alaska to Alberta, Canada, and proposed development of Alaska's Point Thomson oil and gas field.

Jim Bowles, president of ConocoPhillips' Alaska operations, said the company plans to focus on exploration in the National Petroleum Reserve-Alaska and offshore in the Chukchi Sea. He said the company is still coming up with its capital budget for next year.

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