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Palin put Alaskans ahead of Big Oil, greens

Independent streak seen in energy policies

By Patrice Hill (Contact) | Monday, September 8, 2008

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Republican vice-presidential nominee Sarah Palin, now thrust into the heart of America's energy debate, has managed as Alaska governor to confound major oil companies and frustrate environmentalists with pro-drilling policies that put the interests of the state and its 670,000 citizens ahead of either powerful special interest.

Mrs. Palin is vilified by environmentalists for wanting to open up the pristine Arctic National Wildlife Refuge to drilling. But last year, some right-wing critics accused her of rivaling the spread-the-oil-wealth philosophy of Venezuelan President Hugo Chavez when she slapped a big tax increase on oil companies operating in the state and used the proceeds to send a $1,200 check to help cover the energy costs of every Alaska resident.

As if that weren't enough to sting the oil majors, one of Mrs. Palin's first acts in office was to tear up a deal negotiated between former Gov. Frank Murkowski, a fellow Republican, and Alaska's big three oil companies - Exxon Mobil, BP and ConocoPhillips - to build a 1,715-mile-long pipeline to carry natural gas from Alaska to the lower 48 states. She replaced Mr. Murkowski's backroom dealwith an open bidding process that awarded the state's pipeline license to TransCanada Alaska, a Canadian outsider.

Alaska's Legislature last month deemed the TransCanada deal to be more favorable in preserving the state's right to raise taxes on oil companies. The Legislature approved it overwhelmingly after having given a thumbs-down to the Murkowski deal and its guaranteed low tax rates on oil companies.

Republican presidential nominee Sen. John McCain is said to see a kindred spirit in Mrs. Palin, who has a strong independent streak that was on display when she appointed Tom Irwin as Alaska's natural resources commissioner during her first weeks in office. Mrs. Palin's predecessor had fired Mr. Irwin in 2005 for writing a memo saying Mr. Murkowski went too easy on oil companies in earlier pipeline negotiations.

"She is not pro- or con- big companies," Mr. Irwin told reporters last week. "Governor Palin didn't submit to the force and control of the large companies. She forced [them] into a fair, open competitive process."

Mrs. Palin also took Exxon Mobil to task for failing to develop one of Alaska's biggest untapped oil and gas fields at Point Thomson in Alaska'sfar north, threatening to revoke a development permit granted decades ago. The move prompted Exxon Mobil to announce in February that it is beginning a phased-in development of the fields with an eye toward eventually shipping the gas through the new TransCanada pipeline. Exxon Mobil also took pains to show that it is striving to find customers for the gas within Alaska.

"Exxon Mobil is committed to developing North Slope gas resources, and we are ready to work with the state of Alaska," said company spokeswoman Margaret A. Ross.

In another conciliatory gesture toward the Palin administration, Exxon Mobil dropped out of the consortium of oil companies that negotiated a pipeline deal with Mr. Murkowski and said it is prepared to work with TransCanada as well as the other oil companies on getting the pipeline completed. ExxonMobil said its Point Thomson project will provide about 8 percent of the gas going through the pipeline and its participation will be critical for the project to succeed financially.

BP and Conoco refused to bow to the new governor, however, and have not dropped their plans for a pipeline that would compete with Mrs. Palin's TransCanada deal.