SARAH PALIN, Alaska's first female governor, is the freshest new face on the nation's political circuit. She is young and energetic and since taking office in early December has been working her charm on hard-boiled pols in the state Legislature.

But Palin also sent sparks flying when, in one of her first acts as governor, she insisted on renegotiating an agreement reached in early 2006 between then-governor Frank Murkowski and a consortium of major oil companies (both Palin and Murkowski are Republicans). The agreement was for a project to build a $30 billion-plus pipeline to take gas from fields in far northern Alaska through Canada to the continental United States. The pipeline would deliver 4 billion cubic feet of gas per day, enough to cover about 6 percent of U.S. gas production. The project was expected to re-energize Alaska's energy business and create thousands of jobs.

Palin's decision set up a possible confrontation between state government and the oil industry andmay delay implementation of the project. Alaskans believe the project is critical to supporting the state's budget in the coming years, as revenue from oil production, which now accounts for 85 percent of the state budget, starts to decline. Without the gas pipeline, experts predict that Alaska would face huge budget deficits that could drag down the economy.

Slow progress on the gas pipeline could also set up a confrontation with Washington, D.C. The Federal Energy Regulatory Commission issued a report in January citing slow progress by Alaska in reaching an agreement on a pipeline that would deliver sorely needed energy to a country heavily dependent on unstable sources overseas.

The pipeline project would be a bonanza for Alaska and the Pacific Northwest. Its construction and logistics requirements would create huge demands for steel and machinery. "What this amounts to is a year's worth of production by the world's steel industry," says Alaska State Sen. Charlie Huggins, who, as chairman of the Senate Resources Committee, is closely watching the pipeline's progress.

All that material and heavy equipment would be mostly transported by freight companies based in the Northwest and through Northwestern ports, creating thousands of jobs in Alaska and Washington.

The fate of this massive project comes down to Palin, a 43-year-old, Alaskan-born mother of four, whose family is about as Alaskan as they come (Palin could not be reached for this story). She loves riding snowmobiles and then coming home to her favorite meal of homemade moose burger chili. Her husband, Todd, whom Alaskans now affectionately call "the First Dude," has spent much of his career working in the North Slope oil fields. He is a champion many times over of the grueling 2,000-mile cross-country Iron Dog snow machine race, which runs from Anchorage to Nome and then loops back to Fairbanks, in the state's frigid interior. Palin and her family have fished salmon commercially in southwest Alaska's Bristol Bay. Her youngest daughter, Piper, is 5.

Not surprisingly for a born-and-bred Alaskan, Palin has been fiercely independent since becoming governor. Indeed, she swept into office vowing to clean out ethics abuses in state government after a series of scandals prompted the FBI to raid the offices of several legislators. One lawmaker was arrested on corruption charges. Palin makes no secret of her dislike for lobbyists. She isn't a big fan of Big Oil, either.

But she knows Alaska is dependent on the oil industry. Her husband, after all, brought home the family's main paycheck from his work in the fields. She also knows that a natural gas pipeline is critical to Alaska's future. Oil production from the big fields is declining at a rate exceeding 7 percent a year, according to Angus Walker, a senior manager for BP, one of the North Slope producing companies. The gas pipeline is needed not only to deliver huge reserves of gas to big markets in the lower 48, but also because it will generate more oil production.