Saturday, October 07, 2006

Alaskans, not Exxon, own the resources

Let's stop living in fear of the day when Sen. Ted Stevens and Rep. Don Young retire from Congress. They are serving Alaska admirably, but the day will come for them to leave. When it does, we must face up to the promise we made at statehood.

The Alaska people struck a deal in 1958. Our Statehood Compact granted us 103 million acres and the subsurface resources beneath those lands. In return, we pledged to use those resources to pay for the governmental services the federal government had been providing.

Gov. Bill Egan wisely selected the lands at the North Slope. Several years later, I demanded that Atlantic Richfield drill at Prudhoe Bay when Exxon, BP and others had pulled out. "You drill, or I will," I threatened.

They drilled that historic well and discovered our young state owned an ocean of oil and a vast supply of natural gas. This is just the beginning. We have only begun to explore Alaska's sedimentary basins, and if used wisely, these riches will fill the gap that Ted and Don will leave behind, unless someone sells us out.

In spite of oil company pronouncements, they do not own the oil and gas on the Slope. It's ours. They have the right to produce what they find as long as they honor their lease agreements. But Article VIII, Section 8 in our constitution, requires that "Leases and permits shall provide ... for forfeiture in the event of breach of conditions."

Exxon holds the leases for the Point Thomson field, east of Prudhoe. Point Thomson is our second-largest field and one of the 20 largest undeveloped fields worldwide. It contains several hundred million barrels of oil and eight trillion cubic feet of gas and is the key to the prompt construction of a gas line.

Since Exxon discovered these resources, it has warehoused them to fit its corporate timetable. It has filed 21 successive development plans, none of which has been implemented, although the trans-Alaska pipeline is only half full and natural gas is urgently needed by both Alaskans and Americans from coast to coast.

When elected governor in 1990, I called Exxon CEO Larry Rawl to Juneau and told him, "Larry, I want Point Thomson back." My goal was a billion-dollar Exxon Valdez oil spill settlement, and I wanted to get his attention. Rawl replied, "Governor, could you give us a little time?" I replied, "Sure, I'll give you time, but you know the terms of the lease."

For oil spill damages, he estimated they owed us about $300 million. I replied that we wanted at least $1.2 billion. Sixty days later in Washington, D.C., we settled for $1.1 billion. But Exxon has failed since to develop a single barrel of oil or a cubic foot of gas from Point Thomson.

Last October Natural Resources Commissioner Tom Irwin and Mark Myers, director of oil and gas, found them in default and announced the state was taking Point Thomson back. This is not new in the oil and gas business. It's done around the world whenever companies violate their leases for their own benefit at the expense of the host countries.

Instead of commending Irwin, Gov. Frank Murkowski accepted his resignation. Six of Irwin's top departmental staff members, including Myers, resigned in protest, and the Alaska people were outraged.

The governor replaced Irwin with long-time aide Mike Menge, who immediately reversed Irwin's action. Now Menge has scheduled hearings in November so that Exxon can plead its case while the lame duck Murkowski administration is still in office.

One wonders who is pushing the governor's chief of staff, Jim Clark, and Menge to do this. Certainly not the people of Alaska. Who are they working for? Certainly not the people of Alaska.

Two weeks ago I wrote to Gov. Murkowski warning him against last-minute actions that will tie the hands of the next governor: "I strongly urge you to do nothing in the last days of your administration that would compromise the state's rightful access to the Point Thomson field. If you do, history will judge you very harshly."

Wally Hickel

former Governor of Alaska and Secretary of the Interior of the United States

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