With new governor, a different take on energy development

In late November, incoming Alaska Gov. Bill Walker gave a short speech to a packed resource industry meeting filled with some of his most hard-line critics.

Walker, who won the Alaska governor's race by a scant 6,000 votes and takes office today, assured the group that he'll fight for increased oil and gas extraction in the state.

"You can't be anything but pro-oil development in this state to be a successful governor," he told the Resource Development Council's annual conference in Anchorage.

Walker also vowed to support construction of Alaska's long-awaited multibillion-dollar natural gas pipeline project, which would bring North Slope fuel to state residents and to a liquefied natural gas export terminal on Alaska's southern shores (E&ENews PM, July 21).

"The thought that I would do anything but expedite and move along the gas line is foolish," he told the conference.


"I'm not going in to try to fix something that's not broken. I'm not taking office to try to slow anything down."

Despite those calming words, Walker's election heralds a new era of oil and gas relations in Alaska. An energy attorney from Anchorage, Walker has a history of challenging the state's oversight of the major oil companies that dominate the North Slope.

Walker's approach will be far different from that of outgoing Gov. Sean Parnell (R), a former lobbyist for ConocoPhillips Co. who was often accused of having too cozy a relationship with the oil giants.

Walker and Parnell first faced off in Alaska's 2010 Republican primary contest for governor. That time around, Parnell beat Walker in the primary and went on to win the governor's seat.

In this year's gubernatorial election, Walker initially filed to run in the GOP primary but later decided to sidestep the early contest with Parnell by running as an independent.

However, when Parnell continued to dominate the race, Walker joined forces with Democratic gubernatorial candidate Byron Mallott. In September, the two candidates announced the Alaska First Unity Ticket, which featured Walker as the candidate for governor and Mallott for lieutenant governor.

With Democratic Party support, the newly composed team beat Parnell and GOP lieutenant governor candidate Dan Sullivan by a vote of 134,658 to 128,435.

Walker supports many of the same energy priorities as Parnell. But the new governor approaches oil issues with a strong belief that the Alaskan people, not the oil majors, should control resource extraction on the North Slope.

Walker has been critical of Parnell for giving the oil companies control of the Alaska LNG export project. He's also blasted the outgoing governor for agreeing to confidentiality agreements that limit public access to significant details about the expensive pipeline project.

During the campaign, Walker suggested that, if elected, he might renegotiate the gas line contracts to give the state a leadership role. Industry supporters warned that such a step could set the project back by a decade (EnergyWire, Nov. 6).

Continued tensions over the pipeline issue were apparent last month when Walker's team held a town-hall-style transition meeting in Anchorage to draft recommendations for the new administration.

During oil and gas panel discussions, industry representatives called for Walker to endorse the Alaska LNG contracts that Parnell signed with BP Alaska, ConocoPhillips Alaska, Exxon Mobil Corp. and TransCanada Corp.

But Walker supporters protested that the incoming governor shouldn't be asked to sign off on contracts that neither he nor the public has seen in their entirety. Instead, they wanted Walker to push the oil companies to guarantee they'll build the pipeline.

"We'd like to achieve a commitment to build because the agreements we have right now aren't binding," noted Anchorage energy attorney Robin Brena, who served as chairman for the transition conference's oil and gas panel.

Despite their differences, Walker spent the days after the final votes were counted reaching out to Alaska oil industry groups. He held private meetings with the Alaska Oil and Gas Association and the Alaska Support Industry Alliance.

He also invited several oil industry representatives to be delegates at his town hall transition conference.

One of those participates, Kara Moriarty, president of the Alaska Oil and Gas Association, later noted that Walker supporters and energy industry representatives "agreed on more than we disagreed with."

But she acknowledged that future conflicts are inevitable.

"There were some definite differences of opinion" at the transition meeting, Moriarty noted. "We can all agree that we want momentum and a commitment to build the Alaska LNG project. But the devil is in the details."

Walker's pipeline past

For Walker, 63, construction of the Trans-Alaska Pipeline System in the 1970s was one of the pivotal events of his life.

"I remember where I was standing when [former Vice President] Spiro Agnew made that tie vote on going to the Trans-Alaska oil pipeline," he said in his Resource Development Council speech.

"I knew that Alaska would change in a significantly positive way. And it has. And we will continue."

Born in Alaska, Walker and his family lived in Valdez and lost everything in the 1964 earthquake. Ten years later, the pipeline provided a new lease on life.

"All my family lost materially we regained as the Trans-Alaska pipeline boom hit our town," Walker said in a personal biography on his campaign website. "I worked as a Carpenter, Teamster, and Laborer each summer."

In the years that followed, Walker served as mayor, city councilor and city attorney in Valdez.

He rose to prominence in 1999 as the project manager and general counsel for the Alaska Gasline Port Authority, a coalition of local governments that sought to build a natural gas pipeline from the North Slope to an export terminal in Valdez.

The group was one of three teams that were competing for state support to commercialize Alaska's abundant reserves of North Slope gas.

However, then-Gov. Frank Murkowski (R) rejected that plan and instead negotiated an agreement with BP, ConocoPhillips and Exxon Mobil to build a pipeline from the North Slope through Canada to the lower 48 states.

Murkowski's approach was never approved by the state Legislature.

Walker hit the headlines again in 2012, two years after he lost the governor's race to Parnell. This time, Walker filed a lawsuit challenging a state settlement agreement with Exxon Mobil over natural gas development at the company's Point Thomson leases.

Walker charged that the pact was written behind closed doors and without required legislative and public input. He also protested that Parnell had given away the state's power to force Exxon Mobil to fully develop Point Thomson for the benefit of Alaskans.

The suit was dismissed in Alaska Superior Court, and Walker appealed to the state Supreme Court, which hasn't said whether it will consider the case. Now that he's governor, Walker is assessing whether to drop the case, according to his staff.

For its part, Exxon Mobil has moved forward with a $4 billion natural gas extraction facility that ultimately could ship fuel from Point Thomson to the proposed Alaska LNG project (EnergyWire, Sept. 2).

Filling the state Cabinet

Since the November elections, Alaska voters are getting to know their new sheriff and meeting a whole new lineup of state deputies.

Many of Walker's slate of top appointees have worked closely with him on energy issues and share his wariness of Big Oil's role in the state government.

Like Walker, most nominees also supported this summer's unsuccessful campaign to overturn Parnell's 2013 oil tax law, known as S.B. 21. That law cut the fees that energy companies pay on crude extracted from the North Slope (EnergyWire, Aug. 18).

Tax law opponents successfully added an anti-S.B. 21 referendum question to the August primary ballot. However, the initiative was ultimately defeated, and Walker has since said he'll respect the voters' decision to retain the new tax system.

Meanwhile, Walker has begun unveiling a roster of new state officials.

He named his law partner Craig Richards to serve as attorney general. According to Walker's staff, Richards' law career has focused on natural gas project development, oil and gas leasing, finance, and taxation.

With both principals moving into state government, Walker and Richards are selling their law firm to Brena, who chaired the oil and gas panel at Walker's town hall transition conference. Brena, who owns the Anchorage law firm Brena, Bell & Clarkson, confirmed the sale.

Walker has selected Jim Whitaker as his chief of staff. Whitaker, a former Fairbanks North Star Borough mayor, worked with the incoming governor on the Alaska Gasline Port Authority.

To lead the powerful Alaska Department of Natural Resources, Walker appointed Mark Myers, former director of the U.S. Geological Survey and currently vice chancellor for research at the University of Alaska, Fairbanks.

Myers, who opposed S.B. 21 and supported Walker in the campaign, served as director of Alaska's Division of Oil and Gas under former Gov. Murkowski and was involved in state pipeline issues during former Gov. Sarah Palin's term.

As the DNR commissioner, Myers is expected to be Walker's team leader in discussions with BP, ConocoPhillips, Exxon Mobil and TransCanada on the Alaska LNG pipeline partnership.

During the Parnell administration, outgoing DNR Commissioner Joe Balash served as the governor's voice on the state-industry group.

By statute, the Alaska Gasline Development Corp., an independent state corporation, is the state's designated representative in the Alaska LNG partnership. But Walker has taken a dim view of AGDC. During his gubernatorial campaign, Walker accused the agency of inflating staff salaries.

He also criticized the state's continued spending on a second pipeline, this one an in-state gas line that would ship fuel from Prudhoe Bay to major population centers around Fairbanks and Anchorage.

AGDC officials say only one pipeline is likely to be built. But by law, they're required to continue development of both projects (EnergyWire, Sept. 10).

Immediate action

After today's inauguration, Alaska's new governor will enjoy a very short political honeymoon. Walker is required by state law to submit his first budget Dec. 15. Insiders say that document will initially be based on the outline developed by Parnell's staff.

Walker also faces a daunting $2 billion state budget deficit left behind by Parnell. With oil taxes making up 90 percent of the state's unrestricted budget revenues, the deficit is destined to soar as world oil prices continue to fall.

As a former Republican who has teamed up with a Democratic lieutenant governor, Walker is promising to take a bipartisan approach to governing Alaska. But the political realities are certain to hit when the state Legislature begins its 90-day session Jan. 20.

Parnell won passage of his initiatives by relying on the pro-oil Republicans who control both chambers of the Legislature. Walker is unlikely to have as many friends in either the state House or Senate.

After running for governor on a campaign of "Putting Alaska First," Walker now faces the question of whether Alaska will rally behind him as its new leader.

The new governor's ability to build public support and negotiate the state's tricky political roads will determine the fate of his energy policies and a host of other critical state issues.

Twitter: @hobsonenergywire | Email:

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