Energy Wire talked to Gov. Sarah Palin in May about her views on Big Oil, offshore drilling and a long-awaited, expensive and controversial natural gas pipeline for which she has been pushing hard. With McCain's announcement Friday, suddenly her comments seem a lot more interesting.
Many environmental and Democratic activists attacked her yesterday for being too close to Big Oil. They dislike her support for drilling in environmentally sensitive areas, her skepticism about alternative energy sources, and her opposition to listing polar bears as an endangered species. "Sarah Palin reinforces John McCain's plan to continue the Bush-Cheney big oil energy policies," said Daniel J. Weiss, senior fellow at the Center for American Progress. "Palin may be new, but her big oil energy agenda is very old-fashioned."
However, back in May Palin portrayed herself as standing up to the biggest oil companies in discussions over a new $30 billion natural gas pipeline, talks that have drawn out over many years. (When I talked to her then, she already knew that McCain was considering her for the vice presidential spot on the Republican ticket.)
First, some important context: Palin represents one of the few real petro-states within the United States. Big Oil is big business in Alaska, and the state relies on oil and gas tax and royalty revenues for more than 80 percent of its budget. The state's coffers runneth over; every resident of Alaska gets a check from the state, a dividend for his or her share of the oil and gas extracted from the ground. Oh, and Palin's husband works as a field operator for BP, one of the main operators on the North Slope. Oil interests are largely Alaska's interests.
Palin is aligned with the oil industry on two key issues. She favors drilling in the Arctic National Wildlife Refuge and many offshore areas. At the same time, she has bargained hard over the gas pipeline and seems to be pushing the long-stalled project forward. She has said that TransCanada can build the pipeline and has convinced the state legislature to back $500 million in grants and benefits for a company to get the permit and design process going.
Back in May, before Republican presidential candidate Sen. John McCain (R-Ariz) changed his position to favor offshore drilling, I asked Palin if there were any place she would consider off-limits to drilling. She said she supports drilling in the Chukchi Sea, where oil companies such as Royal Dutch Shell earlier this year bid to drill, but she wavered on Bristol Bay, which President Bush opened up for drilling early last year. She said that "the fear would be that our very rich fish resources would be put in jeopardy."
Palin has tangled with several major oil companies over a construction strategy for a Trans-Alaska natural gas pipeline. Palin wants to construct a natural gas line big enough to be used not only by the handful of major companies that now dominate oil and gas extraction on Alaska's North Slope, but also by other smaller companies that might be interested in new exploration.
Earlier this year, Palin signed an agreement with a Canadian company, TransCanada, allowing it to start permitting and other work for construction of a pipeline despite opposition from some of the major oil companies - Exxon Mobil, Conoco Philips and BP -- working on Alaska's North Slope. Those companies have argued that the pipeline, which would cost an estimated $30 billion, was not economically feasible. Palin got the state of Alaska to give $500 million to start the process if TransCanada would put up the same amount to get started. The project will take more than a decade to complete.
That would come none too soon for Alaska. Oil production from the state's reservoirs has begun to decline.
As Palin said in May:
"Getting this huge supply flowing is key for our national security and energy independence. The key to that is the expandability of this pipeline. There are other companies besides our oil producers who want the opportunity and vehicle to get gas to market. We're going to open up the North Slope basin to these explorers and not just have the same few companies. We're going to allow more exploration and development this way which is what this country needs to survive."
Palin was initially unhappy with oil companies' proposed financial terms for building a gas pipeline. "Another condition that was unacceptable to me, unacceptable to Alaskans, that these companies were negotiating with the prior administration [was] to lock up [pipeline transit] rates for decades," said Palin. "There may need to be adjustments down the road. We can't bind or tie the hands of future legislators."
Palin insisted that she stood a safe distance from BP and other major integrated firms. "I'm not anti-industry, I'm not anti-production. The oil company chief executives I respect are doing what the shareholders have mandated that CEO to do: look out for their bottom line. My bottom line for the state is to do the same for Alaska's shareholders. The people of Alaska own the resources. I have to look after their interests."
Though her husband Todd works for BP, Palin said that, "BP is not my biggest fan." She said that the three big operators on the North Slope -- BP, Conoco Philips and Exxon Mobil - "had a sweet deal" with the prior Alaska state government when negotiating terms for the proposed natural gas line. She said she has changed those terms. "I want America's conditions to be met," she said.
Palin acknowledged that a lot is at stake for Alaska when it comes to oil and gas. "About 85 percent of our state budget hinges on that oil production," Palin said. But she said that "with oil at $130 a barrrel, it is a two-edged sword," one "resulting in the family pocketbooks evaporating while state coffers fill up."