The Tom Irwin memo.

• Author: Liles, Patricia

The memo written by Tom Irwin, then the commissioner of the Department of Natural Resources, provides some insight and limited information about negotiated terms proposed in the governor's contract.

In fact, Gov. Murkowski was questioned during the Oct. 28 press conference whether his release of Irwin's memo violated the confidentiality clause required in the gas pipeline negotiations.

Murkowski brushed aside the question, saying that it is "... not considered a breach of contract because there were not any details of any significance."

Yet the memo outlines areas of negotiation, which conflict with existing state law, as Irwin pointed out in his memo.

The first of the eight areas of concern Irwin outlined addresses the increases in market prices for natural gas, which have changed the status of Prudhoe Bay and Point Thomson gas from "stranded" to "unstranded," a conclusion supported by various staff and consultants and noted in a mid-October public speech given by the governor.

If negotiations continue under the Stranded Gas Development Act, Irwin questioned in the memo "...what liability might I or my staff personally face and what damage could be done to the state should I sign a preliminary fiscal interest findings and determination under the Act that concludes Prudhoe Bay and Point Thomson gas is "stranded gas" when the available data indicates that it is not.

Irwin also raised questions about proposed terms that "materially conflict" with obligations the three oil producers are currently bound by under existing North Slope, Prudhoe Bay and Point Thomson agreements.

"Furthermore, substantial and continuing pressure is being exerted on the DNR to endorse terms governing Point Thomson development that are inconsistent with and materially weaker than the producers' current obligations ...," Irwin wrote in his memo.

He also questioned the state making a "multi-decade" commitment to take all of its royalty gas in-kind rather than reserving the right to take some or all royalty in value, a move that will cause the state to "assume significant risk without substantially improving the producer's incentive to develop the pipeline."

The proposed contract terms that provide the producers' with guaranteed fiscal certainty for 30 years from the pipeline's in-service date also have raised concerns with Irwin and his staff, which he said current data shows are not necessary.

He also questioned contradictions in the proposed contract terms with...