More Critical Alaska LNG hearings today.  Tune in live, here!

Government Ownership: Mission Impossible

(Our Commentary)

ADN by Alex DeMarban.  Vincent Lee, director of major project development for TransCanada, said the company learned in late spring of the Walker administration’s “strong desire” to buy the company’s interest in the gas treatment plant and the 800-mile-long pipeline.

Comment: Lee represented TC well.  However, in reciting the history of TC's involvement in the Alaska gas project, he began with the 1978-79 U.S. and Canadian approvals of the so-called Alcan project, which TransCanada opposed before it owned it.  TC's first involvement with Alaska gas was with the Arctic Gas Project, begun by producers and pipelines shortly after the late 1960s-era Prudhoe Bay and Mackenzie Delta discoveries.  Former TransCanada president, Vern Horte became the President of Canadian Arctic Gas.  Former Alaska Lieutenant Governor Bob Ward served as President of Alaskan Arctic Gas.  Your publisher, Dave Harbour was Alaskan Arctic Gas Director of Public Affairs while NGP reader and prolific author Earle Gray was Public Affairs Director of Canadian Arctic Gas.  -dh

P.S.  While legislators lauded TC for its more recent work in Alaska (i.e. and we, too have the highest professional respect for TC), one notes that it may be more in TC's interest to terminate the Alaska LNG relationship than in Governor Walker's, based on current economic conditions facing TC in wake of the opposition to its Energy East and Keystone XL projects.  See our link here.

ADN by Nathaniel Herz.  … Wednesday afternoon’s hearing was so tense that Sen. Peter Micciche, R-Soldotna, twice insisted that lawmakers were not intentionally making administration officials uncomfortable.   ….

… Over the last few days, the finance committee has reviewed an organizational chart with 100 different boxes. It’s called in Attorney General Craig Richards to address a statement that he barred another state official from appearing in Juneau. And it halted mid-meeting Wednesday until that official, AGDC President Dan Fauske (NGP Photo), could be reached by phone to offer testimony.

In spite of the strain, Sen. Lyman Hoffman, D-Bethel, said members of his committee are ready to sign off on Walker’s request.

“They just want to know, with the buyout, that the state is there for a successful project,” he said.

One of the finance committee co-chairs blamed politics for what she deemed unsatisfactory answers from the Walker administration.

“I feel like I’m still back in November and it’s an election. I think there is a trust issue,” Sen. Anna MacKinnon, R-Eagle River, said in an interview. “We’ve been at arm’s length.”

Both MacKinnon and Micciche, in a separate interview, said they want Walker to succeed. But Micciche expressed his own consternation at the sprawling bureaucracy laid out in the organizational chart, saying that it appeared Alaska was trying to replicate the structure and expertise of the three oil companies that have partnered with the state on the pipeline.
GOVERNMENT OWNERSHIP: MISSION IMPOSSIBLE!  
 
Both with regard to the Alaska LNG and the Interior Alaska Energy projects, government ownership / management is virtually impossible to properly control.
 
Why?  Because a part-time legislative body, via its funding power, determines how the state is organized, usually once per year.  
 
Compare a government-owned enterprise operating with that constraint to a private company that can deal with temporal challenges on a hourly, daily, weekly, monthly basis without having to deal with hundreds of politicians, lobbyists, special interest groups and constituents–and all of the meetings / hearings attendant thereto–not to mention "public meetings laws".
 
Government owning and managing equity in one of the largest capital projects in world history requires that decisions and coordination be exercised every day by full-time bureaucrats whose missions may have been set into legislative concrete months ago by part-time legislators.
 
While legislators are part-time, that does not mean they lack dedication or good intent.  
 
Rather, our readers should appreciate the impossibility of running a complex, technical, competitive multi-billion dollar energy transportation business by having a legislative session adopt a budget by rigid law, accompanied by legislative intent, when it is complicated by bureaucratic turf battles after the legislative session concludes.  
 
This is why controlling the means, allocation and distribution of production in a socialist society has a failed track record throughout history.
 
Only private enterprises, operating as freely as possible FROM political/government interference, can be trusted to provide citizens with the maximum benefit of natural resource wealth production in their state.
 
So, what to do now?  We are deeply respectful of the honest due diligence now being undertaken by Alaska's legislature.  Thankfully, we see a great union of bipartisan, good-faith effort to identify honest answers.  
 
If the legislature decides that it must terminate the relationship with TransCanada Corporation (TC) for financial reasons (i.e. better interest rates), we will not be inclined to second guess that action even though it requires more government interference and control of the project — for the time being.  
 
However, we hope government ownership of any Alaska energy and/or transportation project is TEMPORARY.
 
Going forward, we believe that Alaska's elected leaders will be more familiar with the horrific processes and unintended consequences unleashed by government ownership.
 
We hope the decision makers will create a way for the state to quickly remove itself from public ownership of the Alaska LNG project and substitute a private owner — to join the existing producer owners — that is equally agile, experienced, expert and dedicated to make a profit for its shareholders.
 
In this way, Alaska will be able to maximize natural resource benefit to the citizens of the state; for by taking tax revenue and royalty revenue in value (RIV) it will eliminate costly and wasteful bureaucratic interference and receive a relatively simply managed revenue stream.
 
A side benefit of this evolution from bureaucratic inefficiency to private enterprise simplicity is that political struggles among the executive branch, legislators, and all manner of lobbyists and special interest stakeholders will be minimized as political life in Alaska returns to a more normal, though still challenging, pace.
 
In today's report, we provide a link enabling readers to monitorthe Alaska LNG hearings in Juneau, now in progress.
Sincerely,
 

*Note: Approximately 50% of our thousands of readers are Alaska influence leaders while 25% are Canadian decision makers with the last 25% hailing from other places in North America and the world — the majority of those living in Washington D.C. and Houston.

 

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