February 25, 2008 / 7:08 PM / 11 years ago

REFILE-NEWSMAKER-Alaska governor defies oil giants and own party

(Refiles to make name Exxon Mobil two words in second paragraph)

By Robert Campbell

ANCHORAGE, Feb 23 (Reuters) - Alaska’s Sarah Palin has made a habit of taking on big opponents and winning, but the Republican governor is facing her toughest fight yet after locking horns with the state’s powerful oil industry.

Palin, 44 has taken direct aim at the traditional comfortable partnership between the the big three oil companies in the state - BP (BP.L), ConocoPhillips (COP.N) and Exxon Mobil (XOM.N) — and the state Republican party.

"The oil companies have been hugely influential in Alaska, certainly over the last decade and a half with the prior two administrations," Palin told Reuters in a recent interview.

"(For) Alaskans, as owners of the resource ... it is time to embrace our sovereignty."

Palin’s clashes with the three giants that control the state’s vital oil industry have endeared her to some Alaskans wary of the companies’ power.

But they have made her few friends in the oil industry, which accuses her of hurting investment in Alaska’s shrinking oil sector and delaying the construction of a long-sought natural gas pipeline.

REPUBLICAN REBEL

A former small town mayor and mother of four, Palin was appointed chairwoman of the Alaska Oil and Gas Conservation Commission (AOGCC), the board that sets technical standards for oil and gas produced on state lands, by Republican governor Frank Murkowski in 2003.

Palin’s stint with the normally staid AOGCC was tumultuous. Soon after joining she began complaining about the conduct of Randy Ruedrich, the chairman of the Alaska Republican Party, who Murkowski appointed as the AOGCC’s top petroleum engineer.

Palin accused Ruedrich of ethical violations and resigned in disgust after less than a year in office. Before stepping down, she turned over incriminating evidence against Ruedrich to investigators.

Faced with this evidence, Ruedrich pleaded guilty to violating the state ethics act and was fined $12,000. But he remains chairman of the Alaska Republican Party.

A social conservative, Palin found herself a rising political star ahead of the 2006 elections as Alaskans grew disenchanted with Murkowski’s scandal-plagued administration.

Palin’s squeaky-clean image and outrage over Murkowski’s attempt to negotiate a natural gas pipeline contract behind closed doors propelled her to the top of the polls.

She humiliated Murkowski in the Republican primary and cruised to victory in the general election just as news of another scandal, this one implicating Republican members of the legislature, began to break.

A federal investigation had turned up evidence that executives at VECO Corp, Alaska’s biggest oil services company, had been bribing some Republican lawmakers to ensure support for legislation favorable to the oil companies.

Although no evidence has been brought to light linking the oil companies with VECO’s activities, recordings of senior oil company executives discussing political lobbying efforts with VECO officials led many Alaskans to conclude the majors were behind the bribery.

Palin used the uproar over the VECO scandal to partner with Democrats in the legislature to push through an increase in taxes on oil production and to set up a new state-backed effort to design a natural gas pipeline project free of the influence of the majors.

The companies are not backing down without a fight. They have already announced investment cuts due to the tax hike and have warned the Palin’s gas pipeline plan is doomed to failure without their support. (Additional reporting by Yereth Rosen, editing by Alan Elsner)




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