August 29, 2008 / 8:13 PM / 11 years ago

Palin, drilling advocate, spars with oil companies

NEW YORK (Reuters) - Alaska Gov. Sarah Palin is seen as a strong advocate for opening new areas to oil drilling, including the Arctic National Wildlife Refuge, but has taken a hard line in negotiations with oil companies and raised taxes on the state’s energy producers.

US Republican presidential candidate Senator John McCain (R-AZ) (R), running mate Alaska Governor Sarah Palin (L) and her daughter Piper head in for a shopping trip at The Buckeye Corner in Columbus, Ohio August 29, 2008. REUTERS/John Gress

Palin, who on Friday became the presumptive vice presidential candidate on the Republican ticket for the White House with Sen. John McCain, has sparred with oil giants Exxon Mobil Corp, ConocoPhillips and BP Plc since her election in 2006, but industry experts say she is strongly in favor of reaching into untapped deposits.

Much of that tension has come as Palin, whose husband works for oil major BP, has pushed for companies to more quickly develop reserves in the state that is home to Prudhoe Bay, the nation’s largest oil field.

“She’s a fairly articulate spokesperson for the pro- drilling view that will provide an interesting contrast to the opposition,” Craig Pirrong, director of the Global Energy Management Institute at the University of Houston.

Sen. Barack Obama, the Democratic nominee, has pushed development of renewable sources of energy as a means of reducing oil consumption, but has said he could be open to tapping some areas that are currently off-limits.

Obama, like McCain, opposes drilling in ANWR, an area that environmentalists say would be damaged by the oil industry.

But Palin also pushed through a tax increase on oil and gas producers last year that doubled the state’s energy revenues to more than $10 billion.

That increase was blasted by BP and ConocoPhillips, who cited it a reason they postponed new projects in the state.

Palin has sought to carve out an image as a reformer, especially after her predecessor’s administration was stung by a corruption scandal with one of the state’s energy companies.

The chief of staff for former Gov. Frank Murkowski pleaded guilty earlier this year to a felony conspiracy charge linked to illegal payments by now-defunct energy company VECO Corp to Murkowski’s failed campaign in 2006.

The VECO scandal also ensnared Republican Sen. Ted Stevens, who has been indicted on seven counts of filing false disclosure forms by omitting $250,000 he received from the oil services company. Stevens has pleaded not guilty to the charges and is standing for reelection


“She’s taken the ethical high ground and distanced herself from VECO,” said Jerry McBeath, professor of political science at the University of Alaska Fairbanks and co-author of the book “The Political Economy of Oil in Alaska.”

“She also has attempted to reverse the course established by the Murkowski administration, which was one where the administration directly negotiated with the oil industry in secret.”

On Wednesday, Palin signed a bill that would give the state the authority to award TransCanada Corp a license to build a long-stalled gas pipeline from the state’s North Slope.

That pipeline has been on the drawing board for three decades, but stalled because of its price tag — now expected to be $26 billion — and regulatory hurdles.

Its development is key to bringing new gas fields on line in Alaska, since energy companies currently have no way of shipping that fuel to the high-demand markets in the lower 48 states and Canada.

“Gov. Palin certainly showed leadership on the gas line. If Sen. McCain happens to be elected as president, that would put a strong representative in the administration in Washington that’s in favor of an Alaska gas line,” Tony Palmer, the TransCanada executive in charge of the pipeline said.

Palin has also moved to revoke Exxon Mobil’s license to develop oil and natural gas at Point Thomson, arguing the company has sat for too long on the North Slope site without developing the reserves. The company is challenging that move in court and is now seeking to start drilling there.

Exxon, Conoco and BP declined to comment on Palin.

Additional reporting by Anna Driver in Houston and Jeffrey Jones in Calgary; Editing by Andre Grenon

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