July 19, 2008 - 12:02pm | rfn

The sooner AGIA goes away

the sooner the (non)producer's scheme will fade into the nothingness it always has been.

Then with both "pipeline fantasies" behind us we can get on with an All-Alaska solution focused on filling Alaska's energy needs and build up a petro-chemical industry in Alaska. LNG be damned; we can use all the gas right here, thank you.

Sidelight: "Forces For Good" in a dying Massachusetts (former) mill town have managed to have the U.S. House of Representatives designate the industrialized Taunton River as "Wild and Scenic" in an effort to prevent building of an LNG terminal. Two major employers (shipbuilding) along the river immediately announced they are shelving plans to add jobs and one is working toward relocating entirely. Also appears an existing power plant may shut down leaving the areas subject to "rolling blackouts" when summer electricity demands peak. This further proves that the lower-48 is best at shooting itself in the foot and does not deserve a drop of Alaska's oil or a whiff of our gas. Natural or otherwise.

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  July 16, 2008 - 1:44pm | tlamb775

Educate yourself Stags

http://money.cnn.com/news/newsfeeds/articles/djf500/200807161235DOWJONESDJONLINE000703_FORTUNE5.htm

UPDATE: TransCanada Advances $7 Billion Keystone Oil Line To USGC

"The largest shippers who've made the longest commitments have been given the option," Girling said.

If exercised, the stake won't come equally out of TransCanada and ConocoPhillips' interests, he added, but at a minimum, TransCanada would hold 45%."

Why not try throwing more criticism at the Legislators like Doogan who you thought was sliced bread, Hollis (tax them to death) French, Les (is more) Gara and the other Dems.

The Legislature gets to vote on the license and could have amended the law and taxes on Aces.

After all, we are represented by districts. One woman does not make a dictator..... or a Hugo Chavez.

Doogan and Hollis represent me and they certainly know how I feel. How about yours? Hmmm?

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  July 15, 2008 - 1:47pm | yujump

The Stagcrow is still in search of a BRAIN!

Once again, inflamatory rhetoric - and not even your own this time. You are stooping to using others so that your inadequacies can't be criticised. But, you are such an easy target given the constant whining, the tasteless and unfounded criticisms that go way beyond free speech. Suggest using your free time to actually try and understand what you read and give us some original thought........ooops. sorry.. the snowball melted!

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  July 15, 2008 - 2:01pm | rayrocks

Begich's baggage

It's not "free" time, it's muni time. Stags works for Begich -- or, more accurately, is a liability for Begich, whose credibility shrivels further with each Stags post.

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  July 14, 2008 - 9:51pm | fayce

That's the Problem

That's the problem with the AGIA contract. The state wants TransCanada to work directly with the producers/shippers? It's not about concessions. It's about fiscal certainty. The oil and gas taxes had four increases over a four year period. TransCanada will have no risk as they will get a set rate-of-return. However, TransCanada will have to enter into 25 year plus ship and pay committments. The producers are suppose to enter into ship and pay commitments (contract) to provide gas while the state says "trust us on future taxes"? We now have the largest marginal tax rate in North America - possibly the world - and the producers are suppose to just "trust" the state?

I don't understand why the state can't spend a little of that $500 million to hire some top negotiators and perhaps some mediation to negotiate fiscal terms. I'm talking world experts - not state of Alaska administration officials.

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  July 14, 2008 - 10:07pm | schwebb7

They will do that

AFTER (if) they pass AGIA. TC is free to work out the risk with the producers. The 500 million is basically to buy a timeline. TC is liable if they don't meet benchmarks. The producers can stall as long as they want to get the terms they want. The 500 million is also to ensure open access and voluntary expansion (which will encourage indepedent North Slope development). The producers make out better by limiting competition. If the state were to sit down and negotiate now, they'd have absolutely no leverage. That's why the Murkowski deal was crap. If you can get the pipeline company, which is likely to be part of any project anyway, to agree to terms you're in a much better position. TC will want to get this done with the producers if they get the license. The state will also want to get it done and will give some on fiscal certainty if that's what it takes. But if you negotiate now, the Producers hold all of the cards and can wait and wait...

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  July 14, 2008 - 10:47pm | fayce

I See Your Points

How will the producers limit competition? AGIA wants 115% rolled in rates and - I believe - Denali is offering 105%. Either way, ultimately, FERC will determine to rolled in rates. What I think is unfair about the rolled in rates is that sure it benefits the state, but it's telling to initial shippers to foot the bill for future explorers. Even with higher tariffs for future shippers, it won't offset the capital costs. In fact, it would be wise for indepedants and Shell to not participate in the open season and come in at a later date.

Ultimately, I would like to see the producers/TransCanada/state all partner in the gas line. If the project is so profitable as we're hearing from the administration, why not invest a percentage of state dollars in the ownership? This way the state can actually participate in this poker game and put money towards an actual development as opposed to a potential ~$900 million exposure that the state could face for treble damages under AGIA.

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  July 15, 2008 - 6:06am | yujump

Let's complete the story and present some facts.

I for one am tired of the Producer's cry about rolled in rates subsidizing others while at the same time complaining about not having enough gas for even the first build. You can't have your cake and eat it too!

As proposed, by AGIA or Denali, about 40 TCF of gas is needed for a pipeline. To get to the point where rolled in rates EXCEED th einitial rate we are at 150% of original capacity - that means before an expansion would "subsidize" a new shipper we are talking about over a 100TCF being discovered and over 60 TCF of firm commitment.

I don't know about the rest of you but I live for the day we have expansion tariffs starting to exceed original tariffs as that means we have had explorers active, Alaskans working, money flowing in to our communities, new players and new offices, etc. I agree, let's worry about TOO MUCH GAS!!!

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  July 14, 2008 - 11:53pm | schwebb7

If Transcanada

negotiates with the producers and they reach a deal...say rolled-in-rates in exchange for greater equity ownership or less risk and then they go to FERC with that deal, FERC isn't going to negate it. They just want it done. They'd rather have the companies work it out so they don't have to play the arbiter. Also many companies, like Anadarko are exploring but still won't be able to bid during the open season. So I think it's still beneficial to push for the rolled-in-rates. 15/20 years from now, lower rates will ensure that new explorers can get their gas in the line.
I just think it makes much more sense...if you're going to hire mediators....to hire a pipeline company that has negotiated with the oil industry. I'm not sure how partial state-ownership would pan out...interesting idea though.

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  July 15, 2008 - 12:17am | Emperor

I've predicted all along...

...that the legislators will vote to give away the farm to TransCANADA. The majority of them are gutless worms. They are afraid of being accused of being "bought off" by big oil if they vote against TransCANADA. (just like Eddie implies above) The same way that this garbage legislation was passed in the first place.

Two years from now at the end of Queen P's term we'll be no closer to a gas line and 500 million less in the bank. Everyone will wonder what happend to all that competition that AGIA was going to provide with multiple qualifying bidders for Alaskans to choose from. Instead, we get one weak sister proposal that has little to no chance of making this work.

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  July 16, 2008 - 9:15am | hey_georgie_girl_98

it's fallout from the "Corrupt Bastards Club"

MidAmerican didn't want to submit a bid under AGIA. Remember why? You can thank the Alaska Legislature and the ongoing FBI corruption investigation(s) a big red flag for MidAmerican Energy.

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  July 14, 2008 - 10:39pm | TheSdog

Grunt

Not too many people said it would not get this far.

Most critics believe it will fail 2 or 3 years from now which is far more damaging than failure now.

When pipe is actually being laid then you can say "I told you so."

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  July 14, 2008 - 11:02pm | Cartman3_15

Keep moving those goalposts

What crap, Dog. Plenty of people have been sounding the AGIA obit since day one, and you were leading the parade, every step of the way.

Remember "AGIA will attract no bidders"? Remember "No bidders will be compliant"? Remember (my personal favorite) "AGIA was pre-ordained for MidAmerican"?

What a bunch of whining, fabulously and consistently wrong naysayers, eh?

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  July 15, 2008 - 10:26pm | TheSdog

Cartman

The facts:

I said AGIA would not attract many bidders. It did not. It attracted 4 for a line to get it out it out of state plus Scotty boy's optimistic plan for a bullet as an add-on. One wasfrom the Chinese that was politically unrealistic, one from a company that was a phantom, the LNG/ANGPA/Wally World fantasy consotium and TC.

After it all, we had one bid that was "compliant" (even though it was not and still is not) so "competition" got you a grand total of one. Some choice, eh?

I never said it was pre-ordained for Mid-American. It was a Halcro point. That always seem far-fetched to me. Looking back it is my suspicion that Warren Buffet was a lot smarter than Wally World and figured out that Palin and her people had no idea what they were doing. Hence, he decided pulling strings that could be cut at any moment was not a good investment.

Care to explain why the only bid that did get sent on despite being non-compliant was from a company that once employed Marty Rutherford?

If you look back at the blogs you will see people like Emporer and myself and even the gender bending stags have said all along that if we follow this path it will get bogged down when the leaseholders have to commit.

Now, if the leaseholders commit, you have passed a point that would surprise me. It could happen just lie the Clippers might eventually win an NBA title. The way things are going the Clips may have two or three decades to win one before we get a gas line at this pace.

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  July 15, 2008 - 12:31am | Emperor

AGIA....

....shouldn't have been approved in the first place but legislators were intimidated by the burgeoning corruption investigation.

It only received a single qualifying (sorta) proposal. Not the several competing proposals that were promised.

Even when the legislators give away 500 Million dollars there is nothing in that agreement that states that TransCANADA will be fined if they don't build the pipeline, they just have to go through the motions. Even when the get no response in their open season, they just have to keep playing like they are going to build a gas line.

It's a shameful waste of time and public money.

I'm glad that CP/BP are moving ahead with their plan in spite of Palin and her anti-oil industry underlings. Hopefully Alaskans will see through Palins shell game and realize before the next election that there isn't a pea under any of the shells. It's just a show and she's the star.

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  July 15, 2008 - 12:32pm | rfn

While some may find it frightening

the fact remains that, without AGIA, there would be no (non)producer scheme. Yes, the advertising has moved ahead and that's a very good thing for The ADN and various TV stations in this, their time of need.

Now it's time for AGIA to go away and with it the pretense of the (non)producer PR campaign. Get 'em out of the way so we can get on with building in-state industries and end the captive-colony mentality. I know it's going to be painful for some to give up that security blanket and some may clutch it forever.....

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  July 15, 2008 - 1:06pm | LilysDaddy

An issue, rfn,

that I've often wondered about:

here in the northern hemisphere, do newspapers going down the financial drain circle
clockwise or anti-clockwise? Well, I'm sure the infusion of Obama-ad dollars will also help, some, in the coming months.

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  July 15, 2008 - 1:15pm | rfn

In electronics there's this thing

called "The Left Hand Rule". Has to do with the direction of flow of electrons in a conductor. So, for TV, I guess it's anti-clockwise. As for print? Perhaps anti-everything?

Still, imaging how much more time would have to filled with actual programming if all oilie advertising went away. Better for print, though, as it would just command the sacrifice of fewer saplings.

OTOH, if all oilie advertising went away from print media then they could get rid of all those delivery people and just use carrier pigeons. Or mocking-birds.

But that'd not entirely true. There's still be mining shutdown (pro and con) ads to keep things rolling. Or is that "roiling"?

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  July 14, 2008 - 9:39pm | fayce

Murkowski Plan

Eddie, you continue to talk about the Murkowski plan which hasn't been on the table since the last administration. There are three primary plans (TransCanada, Denali and all-Alaska LNG) that are being touted today. Please explain why you continue to talk about a non-existent proposal?

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  July 14, 2008 - 10:37pm | Cartman3_15

Redundant, repetitive, superfluous, irrelevant Stags

Do you never tire of spewing the same crap over and over and over and over and over and over and over and over and over and over and over and over and over and over and over and over and over and over and over and over and over and over and over and over and over and over and over and over and over and over and over and over and over and over and over and over and over and over and over and over and over and over and over and over and over and over and over and over and over and over and over and over and over and over and over and over and over and over and over and over and over and over and over and over and over and over and over and over and over and over and over and over and over and over and over and over and over and over and over and over and over and over and over and over and over and over and over and over and over and over and over and over and over and over and over and over and over and over and over and over and over and over and over and over and over and over and over and over and over and over and over and over and over and over and over and over and over and over and over and over and over and over and over and over and over and over and over and over and over and over and over and over and over and over and over and over and over and over and over and over and over and over and over and over and over and over and over and over and over and over and over and over and over and over and over and over and over and over and over and over and over and over and over and over and over and over and over and over and over and over and over and over and over and over and over and over and over and over and over and over and over and over and over and over and over and over and over and over and over and over and over and over and ...

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  July 14, 2008 - 10:12pm | BunkerBuster

WAAAAAAAAAAAAAAAAAAAAAAA!

Stags is going to blow a gasket. AGIA is going to pass!!! A great week for Alaska. Didn't you say you were going to kill yourself if AGIA passes? It's time!

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  July 14, 2008 - 8:43pm | cat966

80% of LYDA'S Constituents support the Governor

Thats what Lyda said when she said she wouldn't run again--She didn't want to lose in the Primary race like Murky did--If she screws up this pipeline deal I'd say IMPEACHMENT would be in order for her and who follow,

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  July 14, 2008 - 9:55pm | rfn

"You go"?

Too late!

When the going got tough, the "tough" got gone!

But by all means! Grease the skids for an October special session so the housecleaning may proceed in an orderly fashion as voters remember who stood by the inheritor of Leona Helmsley's former title!

Ole' Leona called her Bichon Frise lapdog "Trouble". It is said to have had a genuine wolverine swimsuit....

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  July 14, 2008 - 8:07pm | rfn

I wouldn't be overly concerned

about the (non)producers continuing their scheme if AGIA goes away.

It'll be quickly back to warehousing as usual.

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  July 14, 2008 - 9:32pm | fayce

Warehousing?

I'm not sure what you mean by "warehousing"? Since AOGCC has testified time and time again that every bit of gas from Prudhoe Bay has been utilized... to the tune of an additional 3 billion barrels plus down TAPS.

So - just a guess - you must be refering to Pt Thomson? The state is as culpable as the producers. They approved 21 Plans of Development. Why? Because the economics finally panned out for major gas sales (MGS) in the 2004/2005 timeframe. Both the Pt Thomson producers and the state are right and wrong about the direction of Pt Thomson. What we need to ask is what is in the best interest of the state in terms of revenue? The short answer is that Pt Thomson gas needs to be committed with the MGS project (which ever you prefer).

The "warehousing" argument doesn't hold water when compared to the historical reality.

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  July 14, 2008 - 9:37pm | rfn

So the oil on the Pt. Thompson

leasehold, the oil that's still in the ground? That's not being warehoused?

Of course all that becomes moot when the courts get around to ruling. Nineteen years and counting! By then that oil should be worth $300/barrel. If the legislature has fixed the tax percentage ratchet to go that high then warehousing might prove to have been a good thing for Alaska!

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  July 14, 2008 - 10:40pm | TheSdog

Reality check

Dittman poll shows less than 3% support ANGPA's plan when compared to TC and Denali.

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  July 14, 2008 - 8:23pm | Thunder_Rolls

By the time it happens.......

An all Alaska gasline would be set for failure. The Sakhalin I and Sakhalin II projects will supply at least 60% of Japan's LNG by 2009. Alaska can not compete with the much lower shipping costs of Sakhalin to Asia. Neither can Alaska compete with a nationalist oil company who can reduce prices at any time. Nobody on the west coast of the USA has committed to LNG yet and won't because of its literal explosive factor.

We definitely need natural gas for Alaska and I bet 80% of the people support that. In the form of spur or bullet lines though. Was the 80% you refer to in support of an all Alaska line, with LNG as our major income source? I highly doubt the poll asked that question specifically. If it did please provide me the link.

I hope the senate kills AGIA, but for a line through Canada to the midwest. I hope something happens besides giving TC $500 million for nothing.

Why don't we use a spur line to accomplish the LNG project Wally and company want? Putting all our eggs in the LNG basket is not wise.

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  July 14, 2008 - 10:19pm | Stumpy10

Thunder

The problem with Sakhalin is.... the criminal Russian government. They simply steal assets under the guise of some made up problem.

That is why a country like Japan is doing business in Alaska. We've been selling gas to Japan for 40 years and have a great relationship. And we've never confiscated anyone's assets for the fun of it.

Remember- Japan needs security of supply. That is very important to a country that imports 99% of its energy. Alaska provides additional diversity.

The reason to build the line to Valdez is to export LNG- as well as to take care of Alaska's needs. What Dittman has not figured out is that a bullet line does not carry enough gas to build the liquefaction facilities. That's why a real (48") line is needed to Valdez.

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  July 14, 2008 - 10:56pm | Thunder_Rolls

Totally agree about the Russian Gov't.......

Yet it doesn't change the fact that shipping costs are less from Sakhalin and "the criminal Russian Gov't" can reduce prices below our cost if necessary to keep contracts.

Japan and China will buy from whoever supplies LNG at the lowest price. China prefers to develop resources on its own from what I see. Japan has already committed to contracts with the Russians. 60% of all Japan's needs from what I have read. There is still a lot of LNG production available from Sakhalin even after the 60% committment to Japan. It is my understanding that Sakhalin doesn't have contracts for all its LNG capacity yet.

Why can't smaller facilities be built? Why is it all or nothing? That just doesn't make sense to me. Maybe you can help me with that?

Do we have firm commitments from Asian entities to buy all of our gas? I haven't seen anything stating that. Sinopec wanted to do it all themselves, but we wouldn't go down that road. China seems like the best bet, but will they committ to long term contracts?

I Googled "Sakhalin LNG" and got some pretty interesting info. If we knew all our LNG would be bought that is one thing, but I haven't seen or heard of those committments yet. Do you know if we have those long term commitments? That would surely change everyone's mind.

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  July 15, 2008 - 12:33am | Stumpy10

Thunder

It is all about the economics determining the design/capacity consistent with analysis that takes into consideration probabilities of success (such as-upstream commitments) and AOGCC offtake limits as well as expectation of future gas exploration success and estimates of basin capacity.

You start with a reasonably sized pipe (48") and add compression as the field opens. The experts will always tell you that you NEVER open up a basin with a small pipe. Experience shows that you would regret that later.

The firm commitments come as the project advances- typically at the open season where upstream and downstream deals are made.

One of the strongest reasons for Alaska to get involved is to use its sovereign power to force the basin to be opened. Oil industry executives will push Alaska as hard as they can to keep the basin closed. Keeping the basin closed makes its other gas reserves more valuable.

That is one of the worries that many have with the Palin administrations plan with TransCanada. A big entity can come along and buy up TransCanada- paying its senior executives large bonuses to sweeten the deal, and we are back to dealing with an entity that will work to keep our basin closed. The top people with the Palin administration have been told this- but they refuse to change course.

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