Intimidating Exxon is famously hard to do

By TOM BRENNAN

Gov. Sarah Palin and her inner circle apparently learned their negotiating tactics from watching old "Godfather" movies.

Brennan

Last Thursday, the Palin team held a press and public briefing on the rationale for its decision to anoint TransCanada as the state's choice to receive $500 million in matching funds for research, design and engineering on a gas pipeline project.

In it, she said her people wanted the North Slope producing companies to join forces with TransCanada — which is now doing business here as TC Alaska — and was confident that when they heard the details the companies would find the offer so lucrative that they couldn't possibly refuse.

She said they would find the offer irresistible despite the fact that BP and ConocoPhillips are already moving forward on their own pipeline, which the companies have dubbed "the Denali Project." They are also committed to spending $600 million for early field studies, design and engineering — none of it government money.

At last week's briefing, Palin's statement that the state/TransCanada offer would be irresistible to the producers sounded just like . . .

(cont'd from front page) Mafia chief Don Corleone saying that he would make someone "an offer he can't refuse." Palin's main "capo," Commissioner of Natural Resources Tom Irwin, later made it perfectly clear what the governor meant.

On April 22, Irwin rejected the latest proposal from ExxonMobil to spend $1.3 billion developing the high pressure, problematic North Slope gas field at Point Thomson. He said the state would move forward on dissolving the unit formed by Exxon and 16 other companies, which would cause most of their leases to expire and revert to the state.

The plan was not rejected on its merits. Irwin said he didn't trust the company to move forward with drilling and development. That was based on what state officials felt was a string of broken promises by the company, though Exxon says it was meeting its obligations all along.

Irwin made the comment and rejected the Exxon plan at a time he knew the Palin administration would soon be pressuring the producers to commit their gas to the TransCanada line. And to do that, the companies would presumably have to give up their own plans for a line.

Sure enough, at Thursday's big show Irwin said he might be willing to reconsider his rejection of the Point Thomson development plan. Presumably that will happen if Exxon signs on to ship its gas through the TransCanada line.

Rejection of the plan threatened to tie up 9 trillion cubic feet of gas reserves that would be critical for financing and development of a gas pipeline. The gas would be unavailable because the state action would be tangled up in legal appeals for years to come.

That approach is the same one President Lyndon Johnson was fond of using when talking about convincing his opponents to do things his way. LBJ's line: "When you've got them by the (male body parts), their minds and hearts will follow."

Irwin's approach smacks of political extortion, presumably legal but stay tuned. If that doesn't work — and intimidating Exxon is famously hard to do — perhaps the Palinistas will try waterboarding. You never know.

Getting tough with large companies is a popular move these days, though not necessarily an intelligent one.

Tom Brennan is an editor of The Anchorage Times. His e-mail address is This e-mail address is being protected from spam bots, you need JavaScript enabled to view it