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

She signed the deal into law, but it was pushed along by high energy prices and bipartisan support.


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.)

Under Palin, supporters say, the state has taken a much different—and ultimately more fruitful—approach. In 2007, she pushed the legislature to pass a law laying the groundwork for a new pipeline. This summer, after a long, open bidding process, the state awarded a license to TransCanada, a Canadian pipeline company, to build it. The company will spend the next year and a half doing field work and environmental assessments. Then, in 2010, it will try to line up gas suppliers (BP, ConcoPhillips, and ExxonMobil, mainly) before applying for the final nod from the Federal Energy Regulatory Commission. The next eight years would be spent building the line, which would cut from the North Slope down to Fairbanks and over toward Alberta, and then into the U.S., probably terminating near Chicago. As part of the agreement, the state has pledged $500 million to help move the project forward.

But the state's project could still run into trouble. Earlier this year, BP and ConocoPhillips got together and formed their own pipeline company, Denali, to build a competing Alaska natural gas pipeline. "It is clearly in our interest as gas lease holders and prospective shippers to make sure this line is done right and managed efficiently," says a BP spokesperson.

The upshot is that there are now two natural gas pipeline projects in Alaska, and analysts say that only one of them will get built. Some critics see the Palin-TransCanada plan as a gamble, because, to succeed, it will need the cooperation of the big oil companies that have the gas—in other words, their competitors.

There are also other concerns, such as whether TransCanada, even though it has laid some 36,000 miles of pipeline elsewhere, is up to the challenge, or whether the people of Alaska will benefit from the gas sales. Perhaps the biggest question is whether the state is forfeiting half a billion dollars by betting on a pipeline that may not get built. The plan's backers remain unfazed. "None of those parties have committed their gas to any pipeline at the moment," says TransCanada Vice President Tony Palmer. "We will be doing all we can to attract potential customers."

Palin's backers say her support for the TransCanada project underscores her effort to limit oil companies' influence over the state's affairs—a common refrain from the McCain campaign. Many Alaskans, they say, remember all too clearly the oil spill in the North Slope in March 2006, the largest such spill in that region's history. More than 200,000 gallons of oil were released from BP-operated pipelines, which investigators later said were corroded because of lack of cleaning and inspection.