Budget challenges and crucial decisions on a gas pipeline await Sean Parnell as he succeeds Sarah Palin as governor of Alaska, sources said.

Parnell Sunday was to become Alaska's 10th governor since statehood. Palin announced her resignation earlier this month, saying Parnell would continue her agenda.

Parnell, who was Palin's lieutenant governor and a close ally, faces a primary election for a full gubernatorial term a year from now, with at least two state legislators already saying they want his job, The Anchorage Daily News reported Sunday.

Parnell inherits a Legislature that fought constantly with Palin and faces a state budget that is barely in the black and heavily dependent on revenues from state's oil and gas reserves

Voters also will be watching how Parnell handles negotiations for a multibillion-dollar gas pipeline to the lower 48 states, which includes a $500 million state subsidy and a license granted to TransCanada Corp.

"I believe he is completely up to the challenge," Rep. Mike Hawker, R-Anchorage, said. "He has such a wealth of experience that he hits the ground running."