Pipeline, Not Pipe Dream: Credit Palin

By INVESTOR'S BUSINESS DAILY | Posted Friday, June 12, 2009 4:20 PM PT

Energy: Exxon Mobil's surprise decision to join Trans-Canada on a vast Alaska gas pipeline project is a big step toward making the U.S. self-sufficient in domestic energy. By defying naysayers, Sarah Palin is now vindicated.

It must be sweet vindication for Alaska's governor. Against critics who said her 1,712-mile natural gas pipeline project would never get off the ground, who should the project bag but the "big gorilla" of American energy — Exxon Mobil.

In a major surprise, Exxon announced Thursday that it had forged a partnership with TransCanada, the Canadian pipeline company that holds the state license for Palin's $126 billion Alaska Gasoline Inducement Act project.

It's a big vote of confidence in Palin's top project from a by-the-books company known for its rigid investment standards.

"We evaluated all the options and it came down to our belief that this approach with TransCanada and Exxon Mobil was going to be the most successful project," said Marty Massey, U.S. joint interest manager of Exxon Mobil Production Co. He said Exxon might look at expanding its participation.

Rival oil firms had whispered to IBD that it would never happen. "It's gonna happen and we're very excited about this development," Palin told "Good Morning America" on Friday.

Doubters of Palin's pipeline plan were numerous.

Some said the pipeline would be too big to work, and that a rival BP/ConocoPhillips project, called Denali, would doom Palin's plan because Alaska didn't have enough natural gas for both.

Exxon's tilt toward TransCanada suggests the oil giant believes that's not true. Exxon is America's largest company, with extraction rights to a third of all Alaska's gas reserves. It can use them to fill either pipeline. "We will make a decision based on commercial reality," Massey said. "But . . . why would we put our money and not our gas in the pipeline?"

Obama administration officials who had nothing to do with this, like Energy Secretary Ken Salazar, rushed to claim credit too.What better vote of confidence could there be?

Other doubters had suggested the pipeline could never happen because of a global gas glut, making the pipeline uneconomical. But with the project slated for completion in 2018, and the need for natural gas expected to rise between 20% and 40% by 2030, it's precisely now that such a project should be built.

"I think it's very shortsighted" to assume that "market conditions are going to stay as they are today," Palin told CNN. In an interview with IBD last July when gasoline hit $4 at the pump, she noted that if drilling had started in the Arctic National Wildlife Refuge just five years ago, when policymakers were dismissing the idea of $100-a-barrel oil, "we wouldn't be in our predicament today."

This is another in a series of successful steps to build the world's largest commercial construction project. For this, credit Palin. Despite the too-hip ridicule of comedians like David Letterman, she was the one who got the pipeline past Alaska's legislature, something governors had tried — and failed — to do for 30 years.

Other partners are sure to join, and the near-impossible task of bringing Alaskan energy to the continental U.S. is that much closer.

If there are any doubts left, note that it's Alaska's officials giving Palin the most credit. As Deputy Natural Resources Commissioner Marty Rutherford told IBD, Palin relentlessly drove this project, walking the process through the bureaucracy, asking questions, even going to Texas on Thursday to hear from Exxon itself.

"We're sitting here and in a short two-and-a-half years we have two premier companies in the world moving this process forward," said Alaska Natural Resources Commissioner Tom Irwin. "Thank you Gov. Palin, thank you participants and thank you Alaskans."

With praise like this, maybe it's time Palin started getting some attention for helping to secure America's energy future — and less for having to defend herself from the dirty jibes of over-the-hill comics.

For Americans tired of high energy prices and dependence on foreign energy, Palin's hitting some very big home runs indeed.