A Look at Palin's Role in Alaska's Big Natural Gas Pipeline Project

Two days before she was picked as John McCain's running mate last week, Gov. Sarah Palin of Alaska presided over what she called "one of the most historic and exciting events" in Alaska since statehood when she signed a bill that could clear the way for a massive natural gas pipeline. Standing in a hotel ballroom in Anchorage, flanked by labor leaders, nurses, electricians, and other union members, Palin inked legislation to spur what analysts say could be the largest private capital project in U.S. history—the construction of a new pipeline to carry natural gas from Alaska's resource-rich North Slope to the rest of the country.

It's an ambitious project. The price tag for the planned 1,715-mile pipeline is an estimated $26 billion—and it's been a long time in the making. Alaskans have been eyeing their vast natural gas resources and attempting to sell them to buyers for decades.

McCain's campaign team, along with Alaskan Republicans, has been quick to credit Palin for overcoming past obstacles and pushing the project through. But with support for the proposed pipeline cutting across party lines, she was in part the beneficiary of lucky timing, with high energy prices driving demand for some kind of a deal. Indeed, the pipeline's promise has even been trumpeted by Democratic presidential nominee Barack Obama, who, in a speech this summer (given well in advance of Palin's selection), praised the project's potential for "delivering clean natural gas and creating good jobs in the process."

The pipeline will take at least a decade to build, so it will be years before the project can be judged a success or failure. But by almost any measure, its potential energy contribution is large. Alaska's North Slope contains about 35 trillion cubic feet of recoverable natural gas reserves, most of it in Prudhoe Bay. The pipeline, which is scheduled to be completed by 2018, is expected to carry about 4.5 billion cubic feet a day—the equivalent of about 8 percent of the country's current natural gas production. (Today, in fact, the eight largest natural gas-producing shale fields in the U.S. yield a combined 6.6 billion cubic feet a day, according to a recent private report.)

On top of that, Alaska officials say an additional 220 trillion to 230 trillion cubic feet may be recoverable with further exploration. "Alaska has tremendous reserves and resources," says Marty Rutherford, Palin's chief adviser for the pipeline. "We've always wanted to move this gas to market." At least one oil exploration company, Anadarko, was exploring for untapped natural gas in Alaska last winter.

The timing couldn't be better. As gas prices have climbed and energy independence has become a chief concern, natural gas is being billed as a promising domestic alternative, both for electricity and for fuel. Today, it already provides about 23 percent of the country's energy (mainly as electricity), and recent technological advances have led to a production boom of a scale not seen in several decades. Though natural gas is still a fossil fuel, it burns much cleaner than coal or oil, and everyone from Democratic House Speaker Nancy Pelosi to Texas oilman T. Boone Picken's has suggested it as a transition fuel to allow other technologies, like wind and solar, to come up to scale.

Alaska, officials there say, has been pushing to sell its natural gas since the 1970s, but it's taken a number of complementary factors—Palin being just one of them—to ignite the necessary effort to build a pipeline. Three well-known oil and natural gas companies—BP, ConocoPhillips, and ExxonMobil—control most of the North Slope's natural gas, and they've long used it to boost their own oil production, reinjecting it down into oil-and-gas wells to force out any remaining oil. Without the gas, their oil recovery would have been abysmal, says Cathy Foerster, the engineering commissioner at the Alaska Oil and Gas Conservation Commission.

But in recent years, production in Alaska's aging oil fields has dropped off. The value of natural gas, meanwhile, has increased, and state officials have been increasingly eager to find a way to sell it to the lower 48 states.

Politics, however, has frequently gotten in the way. Palin's predecessor, Gov. Frank Murkowski, tried to get the legislature to sign off on a gas pipeline plan that he had hammered out with the big oil companies, but the deal quickly unraveled. "The gives [to oil companies] were way in excess of what the economics required," says Alaska's Department of Natural Resources Commissioner Tom Irwin. (Irwin, who held the natural resources post under Murkowski as well, was fired at the time for opposing the deal, and six other top state officials resigned in protest.)