Unraveling the Gordians Knot of Gov. Palin’s Alaska Gas Pipeline Scam

McCamy Taylor

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Tue Sep-09-08 02:49 AM
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Unraveling the Gordians Knot of Gov. Palin’s Alaska Gas Pipeline Scam

Edited on Tue Sep-09-08 02:54 AM by McCamy Taylor

The reason Gov. Sarah Palin gave the Alaska state legislature for why they must not renegotiate the portion of the Alaska-TransCanada gas pipeline deal which called for giving TransCanada $500 million up front before any work was done, even though BP and Conoco had already started work on another pipeline at no cost to the state:

"A last-minute change sets a horrible precedent, if the result is that we have to begin the process all over again because legislators added new terms," the Republican Governor said in a statement. "It's not realistic to expect businesses to go through the process all over again and absorb the time and expense."

http://mostlywater.org/transcanada_closes_alaska_0

There you have it. Business interests first. The taxpayers' second. That is Gov. Palin's philosophy.

I. Why Did TransCanada and Conoco Pretend to Be Business Rivals When They are Partners?

Listen up folks. This is complicated, like one of these:

In a recent journal, I wrote about how Gov. Palin had managed to scam Alaskans out of half a billion dollars for TransCanada, a company that can really use the cash right now to help it fund another project in the lower 48, an oil pipeline between Alberta and Port Arthur, Texas that it shares 50/50 with ConocoPhillips of Houston.

http://journals.democraticunderground.com/McCamy%20Taylor/288

http://www.transcanada.com/news/2005_news/2005_11_03.html

CALGARY, Alberta – November 3, 2005 – (TSX: TRP) (NYSE: TRP) (NYSE: COP) TransCanada Corporation (TransCanada), ConocoPhillips Company, and ConocoPhillips Pipe Line Company (CPPL) (a wholly owned subsidiary of ConocoPhillips Company), today announced they have entered into a Memorandum of Understanding which commits ConocoPhillips Company to ship crude oil on the proposed Keystone oil pipeline (Keystone), and gives CPPL the right to acquire up to a fifty per cent ownership interest in the pipeline, subject to certain conditions being met. Finalization of this transaction and the terms of the business arrangement are expected to occur after completion of the binding Open Season process, which will begin November 4, 2005.

http://www.adn.com/money/industries/oil/pipeline/story/291167.html

Conoco, TransCanada agree on oil pipeline
JOINT OWNERSHIP: Crude from Canada will flow to 2 US refineries in the deal.
By DIRK LAMMERS
The Associated Press
Published: January 23rd, 2008 01:05 AM
Last Modified: January 23rd, 2008 01:17 AM
SIOUX FALLS, S.D. -- Oil company Conoco Phillips has taken a 50 percent ownership stake in a proposed oil pipeline that would deliver Canadian crude to U.S. refineries.
Houston-based Conoco and TransCanada Corp. of Alberta made the announcement Tuesday.
In 2005, the companies signed an agreement to use the Keystone pipeline to deliver crude to Conoco's Wood River, Ill., and Borger, Texas, refineries, which are being expanded. The deal also gave Conoco the right to up to a 50 percent ownership of the pipeline.
"The Keystone pipeline will play a significant role in integrating Conoco Phillips' upstream and downstream assets and ensure market access for growing Canadian production," Jim Mulva, Conoco chairman and chief executive, said in a release.

In order to understand what follows, I strongly advise you to read the journal above, so that you will have an idea about what Keystone is and why it is so important to TransCanada, Alberta, and ConocoPhilips. It is also important to Dick Cheney, who has been rooting for Canada's dirty oil, even though it uses large amounts of natural gas to process it and therefore it produces more greenhouse emissions than other forms of crude--a fact that has prompted the U.S. mayors and Obama to call for a boycott of it this summer. In my last journal, I showed that TransCanada was the only Canadian oil firm with which Cheney help a private, secret energy meeting.

Foolishly giving a company $500 million in tax payer money as an incentive to build a pipeline that other companies (in this case gas drillers BP and Conoco) are currently building for free is hardly a reason to reward some governor with a VP position. I decided there must be something more to this deal---something that had warmed the ice cube that is Dick Cheney’s heart. There were two details of the story that caught my eye. One, lately Cheney has been fixated on natural gas. As in send in Israeli troops to train governments in how to attack their own citizens so that he can precipitate wars for the sake of the control of natural gas pipelines. Two, Conoco and TransCanada are business partners. (Conoco and Halliburton might as well be joined at the hip, too) And yet, throughout the negotiations for the Alaskan gas pipeline deal, they presented themselves as rivals and the Alaska press let them get away with it. Here was the closest I could come to responsible journalism on the question, a blogger who announced what all should have been able to see. The emperor had no clothes and TransCanada and Conoco were the same in this bidding process, even if they presented themselves as rivals.

http://mostlywater.org/transcanada_closes_alaska_0

TransCanada-- otherwise known as TCPL-- is a major sponsor of the 2010 Olympics destroying Vancouver and the lands of "BC". TransCanada is also a massive construction conduit for the expansion of the tar sands/tar pits up to 5 MILLION barrels a day (more than any other single country in the world minus Saudi Arabia for daily delivery). These plans are enunciated and spelled out in the SPP's round of talks from Houston, 2006.

TCPL is promoting the expansion of *both* northern pipelines for gas, and finally gave up the competition charade:

"Despite what media pundits or columnists may wish to imply, the Mackenzie project and the Alaska gas pipeline are not competing projects. They are two phases of a comprehensive objective that will ensure a secure and stable energy supply for the future."

This alone makes clear the nature of this corporation. They should be earmarked for corporate campaigners against the SPP, 2010 Games and the tar sands themselves.

What was with the act? Was it a scam to garner TransCanada the extra cash? Was TransCanada brought in, because its buddy Conoco had a bad reputation in Alaska and could not get the contract without a middle man with a clean reputation? And what was up with canceling Exxon’s leases? And why the VP payoff for Palin?

These were some of the questions I sat out to answer in this next journal.

II. Oily Bedfellows: Dick and John and Dick and Sarah

The GOP energy bed is really big and really crowded. Halliburton and ConocoPhillips, both located in Houston, do a lot of business together---and they share a lot of nasty business practices. These include setting up bogus offshore companies in the Cayman Island’s (phony addresses where no one works) that sell things to countries like Iran and Syria that the U.S. government forbids U.S. firms to trade with.

http://www.cbsnews.com/stories/2004/01/22/60minutes/main595214.shtml

I do not need to tell you how dirty Halliburton is. However, Richard Armitage is on the board of directors of ConocoPhilips. Ex-Iran Contra, former member of the board of directors of Choice Point DBT, which drew up the bogus felon’s list in Florida 2000 that stole the election for W., and dirty tricks master for the Bush-Cheney administration, he is now an oil man (isn’t that what all the Neo-Cons are?). Of the money Conoco donates to politicians, 90% of it goes to Republicans. And look at this Bush administration scandal.

"A senior Justice Department official who recently resigned her post bought a nearly $1 million vacation home with a lobbyist for ConocoPhillips months before approving consent decrees that would give the oil company more time to pay millions of dollars in fines and meet pollution-cleanup rules at some of its refineries," reported the Washington Post in February 2007. The official, former assistant attorney general on environment and natural resources issues Sue Ellen Wooldridge, "bought a $980,000 home on Kiawah Island, S.C., last March with ConocoPhillips lobbyist Don R. Duncan. A third owner of the house is J. Steven Griles, a former deputy interior secretary, who has been informed he is a target in the federal investigation of Jack Abramoff's lobbying activities.

The company spent $1,918,291 for lobbying in 2006. $140,000 of this total went to an outside lobbying firm Hunton & Williams"

http://www.sourcewatch.org/index.php?title=ConocoPhillips

Hunton & Williams has ties to the John McCain campaign. Close ties. From Firedoglake:

2005 was also when Mr. Swindle left the FTC and joined Hunton and Williams, a big DC shop which ... shockingly ... also does quite a bit of lobbying work. In fact, their lobbying money went UP starting in 2005 when McCain pal Swindle began working for them ... and McCain was a senior member of the Senate Commerce Committee, having just finished his second stint as its chairman.

Coincidence that Hunton & Williams would hire McCain's good ole buddy Orson -- who is now serving as an adviser to the McCain campaign, according to his own Hunton & Williams bio, while also providing McCain with convenient alibi material on demand? And that their lobbying revenue would also, coincidentally I'm sure, increase at around the time that Swindle joined the firm?

I have speculated in the past that John McCain’s vice president was selected for him by one of the many lobbyists who surround him, because he allows lobbyists to make all his decisions. Only someone more concerned with their bottom line than with national security would pick a candidate so obviously unfit to lead---and so easy to manipulate by Fortune 500 Companies. Spineless and ignorant are good qualities in a commander in chief if you represent Big Business. Could it have been Orson Swindle or someone working for Hunton & Williams who hand picked Gov. Palin? Conoco might as well be a U.S. subsidiary of TransCanada or vice versa.

III. Was there Collusion Involved in the Alaska’s Gas Pipeline Contract Deal?

Here is a document I found online from the state of Wisconsin about fraud and collusion in the awarding of highway contracts. Note that it is easier to commit this type of fraud when there are fewer companies bidding and when one of the companies has someone involved in writing the specifications for the job. Note also that Alaska has used the system described to catch people engaged in this activity in highway construction .

http://wisconsindot.gov/library/research/docs/tsrs/tsrfraud.pdf

The Alaska gas pipeline deal had all the necessary ingredients. It has a lobbyist making the specifications:

One of (TransCanada’s) lobbyists, lawyer Tom Roberts of Washington, D.C., was chief counsel and legislative director for Murkowski from 1985 to 1990 when Murkowski was a senator.
For the 2005 deal, TransCanada negotiated with Marty Rutherford, a deputy natural resources commissioner under Murkowski. Two years earlier, Rutherford had worked as a Juneau lobbyist for TransCanada's pipeline subsidiary, Foothills, and made $40,200.
Today Rutherford heads Palin's gas pipeline team.
Palin said this week she knows about Rutherford's work for Foothills and doesn't believe it is a conflict of interest.
"Going on five years later, no," Palin said.

http://www.adn.com/money/industries/oil/pipeline/story/217978.html

It has the same interests pretending to compete against each other (i.e. Conoco and TransCanada). From the article above, Conoco’s bid was rejected as too costly.

An earlier proposal by Conoco, BP and Exxon made to Alaska’s former governor, Murkowski apparently fell through because Alaskans were unsatisfied with demands made by the trio of gas drillers. I can see how the residents of the state might have been worried when the big three natural gas guys got together and said “We’re gonna build a gas pipeline, and we are gonna do it our way, whether you like it or not.” The citizens of Alaska might have wanted someone to at least let them pretend that they had a choice. And maybe they were worried about bribes and corruption.

So, they traded one Republican Business friendly governor for another one, and she participated in a scheme to make it look like they had a choice—when all along they were going to end up with a natural gas pipeline being built by the big three natural gas drillers---and one of the big three’s partners from an oil deal between Alberta and Texas. Neat public relations trick that. And all the citizens had to do for all that satisfaction was pay half a billion bucks.

Here is an Alaska size tall tale---the story of how Conoco’s gas pipeline would be different from TransCanada’s gas pipeline, because Conoco needed the gas for its Keystone project in the lower 48, which required lot of natural gas to refine that dirty oilsands crude from Alberta.

http://alaska-gas-pipeline.blogspot.com/2008_03_01_archive.html

But, you say, TransCanada is Conoco’s 50% partner in that same deal and needs the natural gas exactly as much as Conoco needs it for the exact same reason ? Shhh. Don’t tell anyone in Alaska. TransCanada’s qualifications are totally different---and I am sure that its motivations are different, too, and it would never dream of competing with Alaska’s oil industry.

http://www.adn.com/money/industries/oil/pipeline/story/217978.html

See, TransCanada’s qualifications are “impressive”. And competition made Alaskans feel like they were in charge, rather than the oil and gas companies, even as the real competitors, new players from places like China were quickly shut out of the process, leaving only the usual big Alaska energy companies to reap the rewards. For example, when, in the middle of the campaign to sell the TransCanada deal, BP and Conoco announced that they were going to start drilling their own gas pipeline, Alaska Daily News had this to say:

Wasilla Republican Sen. Charlie Huggins, an ex-Army colonel and chairman of the Senate Resources Committee, sounded excited about BP and Conoco competing with TransCanada for a pipeline.
"In the military vernacular, this puts Alaska on the high ground," he said.

http://www.adn.com/money/industries/oil/pipeline/story/370058.html

No, this puts Alaska square in the middle of You can save money from being wasted on a bridge to nowhere, but you can not save the people who were willing to waste it on a bridge to nowhere from their own gullibility.

Pardon me while I pull my hair out.

I can see where this is heading. You can see where this is heading. I wonder if the residents of Alaska could see where this was heading back when they were considering whether to fork over all that money to a company that did not even drill for natural gas in their state (but was business partners with one that refined a lot of oil).

IV. TransCanada/Conoco/Rutheford/Palin Shake Down Exxon

In one of her first acts as gas pipeline czar, Rutherford strong armed Exxon, which held big natural gas leases on the North Shore but had not started drilling yet. Someone wanted a gas pipeline full of gas, which meant that Exxon needed to get off its butt and start drilling. Rutherford's solution? She revoked Exxon's leases.

http://news.palangkarayapost.com/2007/12/28/exxon-mobil-bp-may-lose-leases-to-alaska-oil-field/

Exxon Mobil Corp., BP Plc and other oil companies may have their leases for an Alaska oil and gas field revoked by the state because they took too long to develop it, a judge said.
Alaska Superior Court Judge Sharon Gleason ruled yesterday that the state was allowed in 2006 to revoke its agreement with the companies, which have held the leases for Point Thomson since the 1970s, because they failed to bring the field into production.
“This ruling represents another significant step forward in the state’s efforts to develop the valuable oil and gas resources in the Point Thomson reservoir and to hold the lessees to the commitments they made in the unit agreement,'’ Alaska Governor Sarah Palin said today in a statement.

Gleason ordered the Alaska Department of Natural Resources to hold a hearing on the lease terminations. She said the agency didn’t give the companies enough notice to respond when it decided to revoke the agreement.
Snip
Exxon Mobil has been the field’s unit operator, holding 52 percent of the leases. Other leaseholders include BP with a 29 percent stake, Chevron Corp. with 14 percent, and ConocoPhillips with less than 3 percent.
Snip
Exxon Mobil and BP didn’t submit gas line applications. Company officials said the application terms set by Palin and the Alaska Legislature were too restrictive.
Palin has said a plan by ConocoPhillips won’t be considered because it doesn’t follow the state’s rules for permitting, financing and construction. ConocoPhillips, the biggest oil producer in Alaska, could still participate in a project, she said.

Note that Conoco, a big player in oil in Alaska, had miniscule gas holdings, so it would be in the same situation as TransCanada if it were to build the pipeline. I.e. it would have to beg Exxon to start drilling---or it would have to get the state to threaten to yank Exxon’s leases unless it started drilling to supply Conoco/TransCanada’s pipeline with the natural gas which it would soon begin to need (and which their refinery in Port Arthur would soon require).

I wonder how Exxon feels about all of this? They are the ones being forced to hire lawyers and haul in drilling equipment at a time when they may not have planned to start a big natural gas exploration project on Alaska’s North Slope. Maybe the market did not look right for expensive to access natural gas that did not have a pipeline (yet). Maybe Exxon planned to invest in other renewable energy sources. Or maybe they have been itching to get at the gas under the North Slope, they just wanted it to look as if someone was holding a gun to their head, so that no one would blame them for the environmental impact.

http://www.cnbc.com/id/26455908/for/cnbc

V. What Has the “Reform” Governor Bought Alaska With Its Half Billion Dollars? The Same Exxon, BP, Conoco (TransCanada) Gas Pipeline that It Rejected Under Murkowski.

No, I am not kidding. I thought that Texas was insane, and that people here tolerated any kind of corruption as long as it lined the pockets of oil and energy companies. But I guess if you live in a state that pays out $1000/month bribes to keep the governor’s approval rating high and which manages to scam the feds out of more money in federal handouts per person than it pays in taxes, you get pretty careless with your wealth, too.

After agreeing to pay TransCanada $500 million in start up fees, so that Alaskans could have a pipeline independent of the gas drillers and so that TransCanada (which does not actually extract gas) would have time to find drillers who would commit to use its pipes, who do you think has already expressed interest in working together?

If you said Exxon, which has most of the leases, and which wants to keep them., and which will only be allowed to keep them if it kisses Marty Rutherford (i.e. TransCanada and ConocoPhillips’ ass) you get a star.

http://alaska-gas-pipeline.blogspot.com/2008/08/conoco-and-transcanada-want-exxon-to.html

Saturday, August 9, 2008
Conoco and TransCanada Want Exxon To Join Gas Pipeline Effort
From CNN Money:

Conoco favors "taking ExxonMobil into the Denali project," said Brian Wenzel, Conoco's vice president of Alaska Gas Development. He added that the company would consider partnering with any other company that "provides value" to the project.

TransCanada has said Exxon's participation could be vital to its project.

ExxonMobil hasn't committed to either pipeline, although it has said it wants to participate in a project that would ship gas from the Point Thomson natural gas field on Alaska's North Slope, to the lower 48 states. The company said Thursday it wants to work with BP, Conoco, TransCanada and the Alaskan government to build a natural gas pipeline.

Exxon says they are ready "(Dow Jones)- Exxon Mobil Corp. (XOM) said Thursday it's ready to work with the Alaskan government and three companies competing to build a natural gas pipeline in the state, even as a dispute over leases revoked in 2006 looms in the background.

Who else is ready to pitch in a build the pipeline? Well, recall from the article in April that natural gas drillers Conoco and BP started working on their own project. Why build two gas pipelines when the state only needs one? Especially when TransCanada and Conoco might as well be the same company?

Savvy readers will have noticed that in the article above, Exxon wants to join with both Conoco/BP and TransCanada. That's right. The Alaska-TransCanada pipeline is now the BP-Conoco Denali-TransCanada-Alaska-according to Conoco spokesman Brian Denzel-gas pipeline. And the builders got paid $ 500 Million dollars as seed money even though the consortium includes two companies which together have 75% of Alaska’s natural gas fields meaning that it will not be hurting for gas to pipe and it has as a partner Alaska’s number one oil driller so it will not be hurting for political clout and it already has a buyer---itself, TransCanada-ConocoPhilips which needs that gas to process the dirty oil which it will transport to Port Arthur, Texas via another pipeline from Alberta.

So someone please tell me again what the half billion dollars is for?