Alaska Gov. Murkowski to Call Gas Pipeline Legislative Session

Gov. Frank Murkowski won't head into retirement quietly.

Murkowski plans to call state lawmakers into a new session to push through what would be the defining act of his term: A contract setting the terms to build a $25 billion North Slope natural gas pipeline.

It may be the governor's last chance to move the deal through a reluctant Legislature before he closes a career that spans 22 years as a U.S. senator and four as Alaska's governor. Murkowski finished third in the state's GOP primary this week.

The special session is likely to be late next month.

"We're going to let him go duck hunting but we're going to get him in here in September," Murkowski spokesman Will Vandergriff said Thursday. "He's very determined to get this contract moving now because he believes and we believe it's the best deal that's ever going to come down the pike."

Both parties' nominees for governor questioned the insistence by the lame-duck incumbent that the Legislature vote on his contract after voters rejected him. Murkowski's loss also represents a rejection of the contract, which was the center of his campaign, said Sarah Palin, who won the Republican primary.

Both Palin and Tony Knowles, the Democratic nominee and a former governor, have called for opening the negotiating process to include more pipeline proposals for consideration.

"I interpret the vote of the people to say we want a more sensible project to be considered," Palin said Thursday. She said she'll ask Murkowski to apprise her on the talks and to include her in future negotiations.

Knowles said Murkowski has the right to call a special session, but that the governor should release the revised contract before ordering lawmakers back to Juneau.

"This is clearly the 11th hour for his administration and the 11th hour for many people in the Legislature," Knowles said. "I think Alaskans will universally say 'Show me the contract."'

Murkowski's proposed contract sets tax terms and incentives meant to entice BP PLC, ConocoPhillips and Exxon Mobil Corp. to build the pipeline to Canada. But some provisions Murkowski's team negotiated in the first draft — including a long-term freeze on the companies' oil taxes and weak commitments for the companies to actually build the pipeline — have garnered unfavorable reviews among some state lawmakers.

Other disputed provisions would have the state taking its royalties and its 20 percent ownership share in gas instead of cash, meaning Alaska would have to turn around and sell that gas to fill its treasury.

The structure of the company that runs the pipeline, of which the state proposes to own 20 percent, is still being negotiated. That is a separate, but key, part of the deal that lawmakers want to see before voting on the contract.

Murkowski, stung by the Legislature's refusal to consider his deal earlier this summer, is revising it.

Revenue Commissioner Bill Corbus said he expects the revised contract, the final fiscal interest findings and the pipeline ownership agreement will be completed by the time the governor plans to call lawmakers into session.

State negotiators are still processing and making changes based on public comments about the first draft of the proposal, changes that will have to be agreed to by BP, ConocoPhillips and Exxon Mobil.

Ken Konrad, the gas business unit leader for BP's Alaska subsidiary, said his company's preference is to improve this deal with revisions based on the public comments and get started on the contract as soon as possible.

"If people decide they want to open (negotiations) back up and wait a few more years, that's not our choice," Konrad said. "If it doesn't happen this year, we'll work wherever and whenever because it's good for us and we think it will be good for Alaska and for the rest of the nation."

ConocoPhillips spokeswoman Natalie Knox said her company will also continue negotiating with Murkowski's administration, although the company recognizes that changes are coming.

"We look forward to working with whoever is the new governor and his or her administration to make it a reality," Knox said.