Oil & Gas

April 30, 2007

The Honorable Sarah Palin
Office of the Governor
P.O. Box 110001
Juneau, AK  99811-0001

Dear Governor Palin:

At the unveiling of the Alaska Gasline Inducement Act (AGIA), I committed the diverse membership of the Resource Development Council (RDC) to helping make a gas pipeline come to fruition, and I stand by that commitment.  This letter outlines RDC’s current position on AGIA and reiterates our willingness to help.

RDC is a statewide private economic development organization with the mission to grow Alaska’s economy through responsible resource development. RDC’s membership encompasses all of Alaska’s basic industries  — oil and gas, tourism, fisheries, mining and timber. Our membership also includes construction companies, labor organizations, Native corporations, local communities and a wide variety of industry support firms. 

From the producers to the independents to the pipeline companies, our members stand to be directly affected by any forthcoming legislation.  Therefore, we did not take the responsibility to develop a position on AGIA lightly. We all agree Alaska needs a gas pipeline and needs it soon. The gas pipeline project will generate tens of billions of dollars in new tax and royalty revenues, countless jobs and business opportunities, and a new gas economy for decades to come. 

Recently, RDC board members held an all-day meeting where they were briefed by various potential stakeholders that may be affected by AGIA.  Presentations were made by the Department of Natural Resources, the Department of Revenue, BP, ExxonMobil, ConocoPhillips, Anadarko, the Alaska Natural Gas Development Authority, Enbridge, TransCanada, the Alaska Gasline Port Authority, and Representative Ralph Samuels.  Mid-American was invited, but did not return calls.

As this diverse group of presenters demonstrates, the development of RDC’s position did not occur in a vacuum.  Following the work session, the RDC board engaged in a lengthy meeting finalizing our position on AGIA.

RDC members, like you, strongly support a gas pipeline and see it as vitally important to Alaska’s future. We applaud your administration for moving forward in an expeditious manner and concur with many of your guiding principles, including your insistence on a transparent process. Unfortunately, RDC believes AGIA does not get Alaska a gas pipeline, unless amendments occur prior to passage.

Several important points of consensus were reached by our statewide Board:

AGIA should strive to maximize the number of bidders: In order to maximize applicants, RDC suggests individual bidders be given as much flexibility as possible. This will encourage competition and allow the free market to work and generate the greatest quantity and quality of proposals. A flexible bidding process is likely to generate bids that will provide the foundation for a successful project.

• AGIA should maximize transparency in the process: Alaskans can better evaluate the resulting ideas in each proposal through an open and transparent process. It is likely that new, more creative ideas will be advanced from such a process. We believe AGIA achieves this goal.

• Bid requirements set out in AGIA are too prescriptive and should be replaced with broad objectives: The number of bid requirements should be minimized and flexibility should be maximized. AGIA should be amended to establish broad objectives the state needs to achieve and allow applicants to compete on how best to meet those objectives. Such modification to AGIA would encourage creativity in meeting the state’s needs.

During its deliberations, the RDC board refrained from considering specific modifications to AGIA’s many key elements as each of our affected member companies, and in fact, each legislator, will have different perspectives as to how best amend the proposed law.

Lastly, we would like to express our appreciation to Commissioner Pat Galvin, Commissioner Tom Irwin, and Deputy Commissioner Marty Rutherford for the time and effort they have devoted to educating our board about AGIA.

Thank you for your consideration of RDC’s comments.  We look forward to continue working with your administration and the Legislature to improve AGIA so that we Alaskans will benefit from the construction of a pipeline and the resulting gas economy.


Jason W. Brune
Executive Director

Cc:       Members of the 25th Alaska Legislature
            Commissioner Tom Irwin
            Commissioner Pat Galvin