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Stedman: Southeast must stick together


Daily News Staff Writer

Southeast Alaska needs to stick together if it’s going to keep the legislative momentum the region gathered in the last 10 years.

Such was the message from Sen. Bert Stedman, R-Sitka, when he spoke to Ketchikan’s two Rotary clubs and the Greater Ketchikan Chamber of Commerce on Wednesday.

The senator’s speech touched on the legislative priorities of Southeast as well as the natural gas debate he said he believes lawmakers are headed for in the next few years.

Stedman was speaking about the stagnant population in Southeast that the 2010 census turned into political power for the Rail Belt — power that Stedman suggested is leaving Southeast on the tail end of state politics.

"We see it in our population numbers ... in our school numbers, and you see it in the attitude of community members who travel and walk around and talk to people about the condition of their town, the condition of their school, just the attitude of the community in general," Stedman said.

The communities in Southeast, including Juneau — "though they’re a bit of an anomaly" — need to stick together and not be distracted "amongst the inner-family squabbles in Southeast" to move forward on energy expansion, the Alaska Marine Highway and schools, he said.

Southeast needs to cooperate, Stedman said, because it can’t count on the cooperation of other regions.

"Some of my colleagues wouldn’t even recognize us as part of the state," he said. "That’s how far removed some of them are from Southeast. They tease us about it, but I know within that teasing there’s some semblance of truth."

A determined Southeast should work to expand its hydroelectric capacity, the senator said, because the Rail Belt has shown it’s not interested in advancing energy legislation that benefits the whole state.

Rural Alaska suffered as well from the "grand execution of the Rail Belt energy solution" that Stedman said is going to cost the state treasury approximately $500 million.

The bill moved forward because rural and coastal regions of Alaska weren’t "in a place to participate and basically block the movement" of Rail Belt-focused bills, Stedman said.

"At the end of the day, we’re going to move forward with some energy solutions for the Rail Belt, which will continue to hold their energy costs down and that’s why Anchorage is the size Anchorage is today," he said. "That’s why the oil industry is based in Anchorage. It’s the cost of energy."

Energy prices are rising for Southeast as existing hydroelectric infrastructure is strained by increasing demand, he said. Sitka, which Stedman said is experiencing particularly high energy prices, is about to get into a $150-million project to raise the Blue Lake dam 83 feet.

But not all is dour for Southeast despite a disadvantage in the Legislature.

Stedman referenced the Bokan and Niblack mine projects on Prince of Wales Island as reasons for optimism, but talked at length about the new ferries for the Alaska Marine Highway System that are set to be constructed in the Ketchikan Shipyard.

The execution orders for the two ferries are "probably" and "hopefully" going to be released in the spring, Stedman said. He added that a third ferry might be on the table for next year and has $40 million already dedicated. Gov. Sean Parnell announced in Ketchikan that the two ferries would replace the single, large Alaska Class ferry project

"I don’t know the capacity of the shipyard, but I know if they can build two fast — well, not fast ferries. God forbid we have that again — build two Alaska Class they can definitely tackle a third one,"  he said. "I’m confident in that and I’ve had conversations with DOT about that."

There’s no reason why the Alaska Department of Transportation can’t move on a third ferry project for the shipyard, he said.

"I’ve asked the shipyard to give me a list of the finished concept in dollars that we need to put in place," Stedman said. "If we need to — in my opinion, the state — step up and get it built out, the sooner the better."

Stedman talked at length about Alaska’s opportunities in natural gas, which he said would see considerable interest in the near future. While it’s, for the most part, a gain for mainland Alaska — not including profits reaped by the state — there are opportunities for energy generation beyond the region’s current diesel generators.

Alaska owns "one of the richest hydrocarbon bases on the planet," between its natural gas and oil wells that will continue to be pumped "for well over 100 years," Stedman said. The world is "in the beginning of the hydrocarbon era, not approaching the end."

Natural gas is a new proposition for the state, one that’s calling Exxon Mobil Corp. back after the disasterous Exxon Valdez spill.

"Now it’s time to go after our gas," Stedman said. "Point Thompson is a gas field. Exxon is interested in our gas; not so much our oil. They’re spending hundreds of millions opening up Point Thompson, and they want that gas to market."

Exxon is as "serious as a heart attack" about Alaska’s natural gas, he said.

Alaska is positioned to take partial ownership — through substantial investment — of a processing facility, liquefaction plant and a natural gas pipeline to Nikiski, Cook Inlet or Prudhoe Bay. Stedman said the big three — Exxon, BP and ConocoPhillips — are targeting Nikiski and Cook Inlet, and the state should consider investing $10 billion into natural gas.

"They don’t have a lot of options," he said. "So I think we’re in good shape to have a gas line."

Someone years ago predicted the state would be in this situation, Stedman said — Gov. Frank Murkowski.

Murkowski was "a lot more correct than he was incorrect in his concept of putting forward a gas line," Stedman said, adding that "when we go forward with a gas project" it will look a lot like the Stranded Gas Development Act, Murkowski’s failed legislation.

Stedman’s recommended $10 billion investment, which he said he would prefer to be made in cash from the state’s savings and the Permanent Fund, would earn the state a 12 to 14 percent return on natural gas profits.

The key difference between natural gas and oil, Stedman said, that the public should be aware of when debate begins is the value of natural gas out of the ground "is substantially less than oil" because of high transportation costs.

"Don’t mix up the oil debate with the gas debate," he said. "They’re two different income streams, two different hydrocarbon streams."

He said people shouldn’t "bring in the oil baggage into the gas" debate.

As Alaska moves forward with a natural gas plan — and Stedman was confident the state eventually will — Murkowski will be vindicated.

"Just remember that Frank is going to have the last laugh on this one," Stedman said.