Off the record - a VIP policy letter from Senator Kim Elton

     Spencer Hosie is to oil and gas litigation as actor Johnny Depp is to Pirates of the Caribbean: Dead Man's Chest--charismatic and very, very, very successful. So it's not surprising Hosie's 90-minute 'Pirates of Deadhorse' gasline gig was strong on both substance and style.
     Expectations ran high leading up to Hosie's solo improv performance because his reputation is impressive. The National Law Journal calls the litigator one of the 10 most successful lawyers in the country and over his career he's won or settled cases worth nearly $2 billion. He's done oil and gas work for the State of Alaska dating back to the mid-1980s, so his mastery of the Last Frontier genre is not surprising.
     The theme of Hosie's solo star turn at the Alaska Gasline Inducement Act (AGIA) venue was: "oil companies have obligations and the state has rights." In the compelling voice of a top courtroom actor, he noted that in return for state oil and gas leases that gave the multi-nationals 87.5 percent of any hydrocarbons they find, big oil promised to use their expertise to develop and market profitable oil and gas fields, the compelling voice of a top courtroom player noted. His premise was logical and held together by a strong story line artfully delivered.
spotlight      Voice dropping to a low-pitched vibrato, the performer noted this 'develop and market' obligation does not have an asterisk that allows big oil to stiff Alaska while they pursue other global natural gas options. In return for their 87.5 percent share, Hosie dramatically opined in a voice as resonant as Gregory Peck's, big oil gave up any ability to unilaterally warehouse Alaska's profitable gas until our reserves match their business plan. (To drive home this point, Hosie tossed in one of his best ad lib observations, noting that Alaska seems a safe place for big oil to warehouse natural gas because we're slower than governments in other parts of the world to take back leases for non-performance.)
     In the course of developing his story line, Hosie delivered an unexpected thematic twist. In a dramatically out-of-character moment for a litigator who makes a spectacular living out of going to court, he surprised his audience in one memorable scene (using an especially erudite line that possibly misread his audience's knowledge of the literary arts) by referencing Dickens' classic Bleak House to make the point that taking big oil to court to compel the marketing of Alaska gas simply is a desperate ploy to be avoided at almost all costs. AGIA, he added in an aside, trumps the need for courtroom theatrics because TransCanada's application moots arguments from North Slope producers that delivering Alaska gas to North American markets is uneconomic.
     By this point in his performance, Hosie was completely settled into his role. He artfully brought to a staged crescendo his conclusion that TransCanada is right--market conditions for North Slope gas are extremely favorable. In other words, the desperate Bleak House scenario, he said, is unlikely.
     That's because TransCanada's willingness to produce a gasline without big oil means any court battle over the marketability of that gas likely is a fool's errand by North Slope producers. In an especially pregnant improv theater moment, Hosie noted to a questioner that the ConocoPhillips/BP gasline concept further demonstrates big oil companies already believe North Slope gas is marketable. Any glitzy, big budget courtroom production by big oil alleging non-marketability and aimed at project delay, Hosie said in summation, will be short term flops.
     All-in-all, Hosie's strong two-act (June 8th and 9th) performance was compelling to a critical audience of legislators and gas market experts. It should help bring down the curtain on big oil's stalling act.

Keeping score--The House and Senate are holding joint hearings on the TransCanada AGIA license question in the Terry Miller Legislative Office Building gymnasium (the gym is an artifact of the building's former life as a grade school). I'm sure it really meant nothing that all the experts and advocates presented their conclusions from a raised platform set smack dab beneath the basketball scoreboard. But I do wonder what would happen if there was a scorekeeper for the presentations who: kept track of fouls (illegal use of the mouth?); noted whether the home team (Alaska?) was ahead of the visitors (ANS producers?); and kept track of time (60 days before a vote?).

Speaking of 60--Rep. Mike Doogan was lauded during last Saturday's hearings for turning 60. He noted in remarks from the floor of the gym he'd now become what he used to mock when he was a younger newspaper columnist. One of his frequent observations during Gov. Wally Hickel's last term was that the governor's administration was staffed by old white guys. Now, he admits, he is one.

That's somewhat bizarre--The head of the Russian oil and gas consortium Gazprom noted last week in an address in St. Petersburg that his group has notified BP and ConocoPhillips it would be interested in working with them on their Alaska gasline concept. The Gazprom offer may come with fangs--Gazprom has instigated Russian tax and police raids targeted against BP's Russian subsidiary to pressure the oil giant into divesting some of its in-country business interests. Most recently, police interrogated the head of BP's Russian operations.

Hair on it--In response to a question, one of the state's expert AGIA witnesses noted a concern advanced by a questioner comes "with some hair on it." In the context this FERC expert meant, having hair on it was mildly pejorative. Music to my ears since the head I use comes with little hair on it.

Commissioner Shakespeare--Revenue Commissioner Pat Galvin capitalized on some shorthand used in the AGIA hearings. Experts, and then legislators, abbreviated 'billion cubic feet' to simply 'b' as in: that LNG proposal was analyzed at three and a half 'b' throughput. At one point in the hearing discussions Tuesday, the commissioner noted with a grin one scenario could lead to a two 'b' or not two 'b' decision.