The Alaska State Senate voted to adjourn from Special Session yesterday, one day after Governor Parnell pulled his Oil and Gas Tax Act from the short list of items to be acted on by the Legislature.

There were three items on the agenda for the expected 30 day session, a Sex Trafficking bill, Oil and Gas Tax and an In-state Gas pipeline. The Sex Trafficking bill was acted on quickly, passed and sent to the Governor’s deck within two days of convening. Governor Parnell pulled the Oil and Tax bill from consideration on Wednesday, leaving only the Gasline to be considered.

After Governor Parnell quit his efforts to push what could have been a $2 billion giveaway to the oil and gas industry every year, the Senate Bipartisan Working Group met to decide how to best move forward. During that meeting, Senators agreed that the only remaining issue, House Bill 9, was extremely problematic in several ways, and therefore, could not be fixed in a manner that would actually pass out of the Senate.

Instead, members of the Senate Bipartisan Working Group say the State needs to focus on more cost effective ways of getting Alaskans the cheapest gas possible such as a large diameter line from the North Slope or a gasline from Cook Inlet to Fairbanks.

“The governor’s initiative on the big line helped us reach this decision,” said Senator Bert Stedman, R-Sitka. “The new conversation that he has sparked between the three major North Slope leaseholders and their potential alignment around an all-Alaska big diameter line undercuts the economic rationale for the HB 9 approach. We feel the fiscally prudent approach dictates our action today.”

“We believe that a big-diameter gas line will deliver the cheapest gas that Alaskans will ever see,” said Senator Gary Stevens, R-Kodiak.

“Fairbanks would have the brightest future with a large diameter line,” said Senator Paskvan. “If that cannot be accomplished, only then does a small diameter line make sense.”

“Cook Inlet’s future is bright. The USGS estimates there are 19 trillion cubic feet of gas in Cook Inlet,” said Senator Bill Wielechowski, D-Anchorage. “In light of this, we need to proceed very cautiously before spending billions to subsidize a gasline from the North Slope that could double the cost of gas for SouthCentral consumers.”

Senator Hollis French, a former Cook Inlet oil rig worker said, “Let’s let these new drillers go to work. There’s no better and cheaper place to find gas than in your back yard.”

Following the Senate’s abrupt adjournment from the special session, House Speaker Mike Chenault said last night that he has called a House Majority caucus for Friday morning to consider members’ positions on the next move for the House. In the event that the House continues to work, by The Alaska Constitution – Article II, Section 10 – the Senate would be required to reconvene in three days. Senate President Gary Stevens, R-Kodiak, said they would handle that with a “technical session” that could include just himself and Sen. Dennis Egan, a Democrat whose hometown is Juneau.

“The House has been working diligently, and I’ll look to our caucus on how the House should continue in light of actions taken by the Senate,” Chenault, R-Nikiski, said. “There is work unresolved.”

“When we passed House Bill 369 two years ago, I believe that was our commitment to Alaskans to keep advancing an in-state gas pipeline,” Chenault said. “The House came through on that commitment, and the Senate has let Alaskans down. How long do we wait for gas? Alaskans have been waiting for gas for 30 years. It’s time to take our future into our own hands, and that’s just what House Bill 9 would have allowed Alaskans to do.”

HB 369, which was the genesis of AGDC and HB 9, passed the House unanimously and by an overwhelming majority in the Senate in 2010.

The sponsors estimated that failure to approve House Bill 9 will delay in-state gas by at least one, and likely several, years. In addition, the Senate has effectively denied Alaskans a direct role in a larger export project contemplated by the producers and TransCanada – perhaps even an ownership stake.

“If we keep saying no, we will never know what could be,” Hawker, R-Anchorage, said. “I’d like to turn on the flow of any gas pipeline, and watch how far the vision of Alaskans takes our communities, our businesses and our future.”

Chenault and Hawker challenged the Senate’s post-adjournment assertions justifying their refusal to fully consider House Bill 9.

While commending the producers’ and TransCanada’s agreement to talk about redirecting work on an aligned project, Hawker said for now, it’s just that – talk.

“The producers and TransCanada have been quite clear that they want to shift discussions to an aligned project, and I support that,” Hawker said. “However, Alaskans have been here before. My constituents and many other Alaskans have expressed their desire to have state leaders take Alaska’s energy future into Alaskans’ hands. House Bill 9 would have empowered AGDC to continue working on an instate line while participating in discussions on a larger project.”

Chenault and Hawker further took the Senate to task for misleading Alaskans that there is an adequate supply of gas in Cook Inlet to provide energy security to Southcentral, where the major utilities are facing supply shortages now on peak winter days, and for base needs beginning in 2015.

“The USGS thinks there may be 19 trillion cubic feet of undiscovered gas in Cook Inlet, but our Southcentral utilities don’t have the supply contracts they need to get much past 2015,” Chenault said. “I wish those explorers the very best but I can’t stake my communities’ energy supply on uncertain outcomes.”

The two have been leading supporters of Cook Inlet oil and gas development.

The sponsors have consulted with most of the Cook Inlet gas companies, and have letters supporting House Bill 9. A steady stream of North Slope gas would help secure the export market needed to support additional Cook Inlet production.

Chenault and Hawker also pointed to significant support for House Bill 9 from key Fairbanks gas consumers, including the Flint Hills refinery and Golden Valley Electric Association. The Fairbanks Chamber of Commerce has voiced strong support for House Bill 9.

“House Bill 9 told AGDC to work on an instate line, with modifications as necessary,” Hawker pointed out. “If there is adequate supply in Cook Inlet such that shippers are willing to sign the long-term contracts required to support a line from Cook Inlet north without a state subsidy, House Bill 9 would have fully equipped AGDC to shift its work to that line.”

According to the legislature’s attorneys, which they stated in a legal opinion, the abrupt removal of the tax bill that was to be considered in this special session essentially cancelled the special session proclamation. Doug Gardner, the director of the legal services for the legislature, said the removal of the bill for consideration amounted to giving the governor “the power to say, in effect, ‘I don’t like the bill you are considering so I’ll prevent you from passing it.’ “

Governor Parnell said that the legal advice he received said otherwise. His advice came from Chris Poag, an assistant Attorney General. He told the governor that he was in his legal rights to pull the legislation from the table.