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At the same time, BP and ConocoPhillips recently announced that they are embarking on their own $30 billion project to pump Alaska's gas reserves through a 2,000-mile-long pipeline. They say they don't need the state's $500 million and will proceed regardless if the state throws its support behind TransCanada.

The TransCanada proposal is born out of an attempt by Palin to force the hand of the big oil companies—BP, ConocoPhillips and ExxonMobil Corp.—to execute their gas leases, from which the state hopes to raise tens of billions in tax revenue. Uncertainties over natural-gas prices and state taxes have long left the companies skittish about committing to a project.

Palin's strategy is complex and fraught with all sorts of potential pitfalls, including the fact that any project depends on these same companies pledging their gas holdings to fill the pipeline. (TransCanada builds and operates pipelines but doesn't own any Alaska gas.) "The wrinkle in the pavement here is who tells who what to do when?" says Bill Gwozd, vice president of gas services for Ziff Energy Group, a Calgary-based consulting firm. "Oil producers don't appreciate somebody trying to force them to do something."

Alaska owns the natural gas; BP and Conoco, along with Exxon, hold most of the leases to develop it. The companies have long talked of tapping the reserves, but have consistently deemed the pipeline too financially risky without the state first agreeing to favorable terms on gas production taxes. Unlike Palin's predecessor, Gov. Frank Murkowski, who wanted to give the companies generous tax breaks, she has refused to budge.

Any multi-billion-dollar play in the energy business is a gamble, and Palin's adversaries are among the best at the game. Skeptics wonder if BP and Conoco are grandstanding to kill the TransCanada proposal, with no intention of developing their natural-gas holdings until the state gives them favorable terms on gas production taxes. To those wary of decades of dashed dreams and false promises, Doug Suttles, president of BP's Alaska operation, recently told reporters, "Watch, just watch."

"We are all watching carefully," Palin says, "but we won't sit by and wait either."

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Member Comments

  • Posted By: desh @ 09/09/2008 2:30:02 PM

    "Comment: Everyone wants to be "cured" of our oil addiction. We want to be able to hunt polar bears on the ice cap, not on bare ground. We don't want to see the beautiful Polynesian islands sinking under the waves. With the population set to double in the next few decades, there is only one question for the radical environmetalists:

    What is the alternative fuel and can we have it by 3:00 P.M. today? If there are none, then start working with the energy companies to find a way to clean up the fuel we need today and look for that special "clean fuel" you are so adament about, tomorrow. Every time you put in a law suit, you stop the "clean fuel" process 10 fold. "

    That clean full is hear like Europe's massive ocean wind farms, Spains sun towers, or plain old wind turbins.
    If everyone stop complain about how ugly they are you would wonder why don't they put one up in mine, i would like that check every month for a thousand or so for sitting on my fat a** and watching the wind blow. if we took even part of the roughly 1 trillion dollars we spend to other counties (mostly the ery one on our terror list for sponcerinf terrist that kill us in iraq) we could wuild massive farms that would power all major city and go from there and be done in less time than it takes to build new drill sites, which takes at best 10 years to start production, ya that sounds like a quick fix?

  • Posted By: delfairchild @ 06/12/2008 12:32:11 PM

    Everyone wants to be "cured" of our oil addiction. We want to be able to hunt polar bears on the ice cap, not on bare ground. We don't want to see the beautiful Polynesian islands sinking under the waves. With the population set to double in the next few decades, there is only one question for the radical environmetalists:

    What is the alternative fuel and can we have it by 3:00 P.M. today? If there are none, then start working with the energy companies to find a way to clean up the fuel we need today and look for that special "clean fuel" you are so adament about, tomorrow. Every time you put in a law suit, you stop the "clean fuel" process 10 fold.

  • Posted By: firstmental @ 06/09/2008 9:33:29 AM

    Its funny - we're a two continent family, and we just bought a new (our third) Chevrolet Aveo (or Kalos, since its sold under its original Daewoo name in Italy). It is LP gas powered, and CHEAP to fill and run! So why only over there?
    And BTW, its our BIG car! The Chevy Matiz which is our small car, would be great in cities here.

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