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Senate Energy Gears Up for Alaska Drilling Fight

Republicans aim to attach ANWR proposal to tax overhaul effort

Sens. Lisa Murkowski of Alaska, right, and Maria Cantwell of Washington, leaders on the Senate Energy and Natural Resources Committee, are on opposite sides of the ANWR drilling issue. (Tom Williams/CQ Roll Call file photo)
Sens. Lisa Murkowski of Alaska, right, and Maria Cantwell of Washington, leaders on the Senate Energy and Natural Resources Committee, are on opposite sides of the ANWR drilling issue. (Tom Williams/CQ Roll Call file photo)

As the Senate Energy and Natural Resources Committee prepares for a high-profile hearing Thursday on opening the Arctic National Wildlife Refuge to oil and gas exploration, Republicans are preparing to argue that improvements in drilling technology over the past decade will minimize potential damage to the environment.

That assertion will rile committee Democrats, who plan to raise the specter of oil spills as well as an invasion of drilling infrastructure and manpower in an area described by environmentalists as one of the most pristine habitats on the planet.

It will also trigger, at the very least, a pause in the committee’s bipartisanship, forged by the panel’s chairwoman, Lisa Murkowski of Alaska, and top Democrat, Maria Cantwell of Washington.

Republicans aim to attach the drilling proposal to the tax overhaul effort using reconciliation procedures, which enable legislation affecting the federal budget to pass with a simple majority vote in the Senate.

Due to the reconciliation language, which directs the Energy and Natural Resource panel to find $1 billion in deficit reduction over 10 years, the Senate will initially consider and mark up the legislation, largely leaving the messaging and legislative legwork to Murkowski, a longtime champion of drilling in her state.

“When I say I want to focus on ANWR, one of the reasons I think the hearing is important is to show people how far we have come with the technologies we are utilizing up north,” the Alaska Republican said last week. “The last time we really had an opportunity for a discussion like this was over 10 years ago, so when you think about what has happened in a dozen years, with the technology, the ability to access the resource with a limited footprint, we have a lot to show off.”

When ANWR was designated as a wildlife reserve in 1980, Congress allowed for a future congressional vote to permit energy exploration in a 1.5-million-acre section, known as the “1002 area,” of the 19-million-acre refuge near the Arctic coast.

Since then, GOP lawmakers have looked to authorize those activities, but have come up empty.

Central to the technology improvements in the last decade has been innovation in horizontal drilling, which enables oil rigs to access more underground deposits in sites that are not directly below the drilling rig, allowing oil and gas to be extracted from multiple deposits from a single site.

ConocoPhillips Alaska’s Colville River Unit, for example, has received regulatory approval to further develop its extended reach drilling technology. Those improvements, scheduled to become operational by 2020, would enable the facility to reach deposits up to 12 miles from its drilling point.

A cluster of 17 such pads, each on about about 12 acres and spread 24 miles apart, could access the entirety of the 1002 area. That calculation does not factor in that the easiest accessible deposits are in the northwest portion of the area, likely the only portion companies would look to develop.

And based on previous legislative efforts and industry estimates, Republicans could place a limit of somewhere around 2,000 acres for total development, based on that technology.

“The natural gas and oil industry’s long record of production on the Alaska North Slope demonstrates that resources at ANWR could be developed in an environmentally responsible way,” said Erik Milito, a director with the American Petroleum Institute. “Opening it would be an important step toward increasing American competitiveness and securing our nation’s energy future.”

Environmental risk

Democratic committee staff took issue with the assertion that techniques have improved enough in the last decade to significantly reduce environmental risk.

Due to the remoteness and size of the oil wells in the ground, aides said, the resulting drilling would result in multiple smaller drilling efforts that in a vacuum do not cause as much damage as larger wells, but which in aggregate would equal the same amount of environmental and wildlife disturbance.

Democratic aides said the damage would stem from the “spider web of infrastructure” of primary, secondary and tertiary structures that would go with the drilling pads — roads, phone lines, housing, etc. — to overcome the remoteness of the refuge.

At the same time, Democratic staffers said, laws like the National Environmental Policy Act and Endangered Species Act would need to be waived for infrastructure projects that support the drilling — an issue especially worrisome as polar bears and other species, some endangered, are forced into the refuge as climate change destroys their habitats in the Arctic Circle.

“It would basically make the Arctic wildlife refuge one of the least protected wildlife refuges in the nation,” one Democratic aide said.

Many environmentalists and climate scientists also argue that to avert the worst impacts of global warming, the best thing to do with oil and gas is to leave it in the ground rather than burn it and release its carbon into the atmosphere.

The Democrats’ more convincing argument for winning over Republicans, however, may be the economic one.

Due to a glut of oil on the world market, Brent crude oil prices — the global benchmark — have hovered around $50 a barrel for most of the last two years. And with increased U.S. production as a result of the past decade’s fracking boom, prices are unlikely to rise substantially in the immediate future, according to the Energy Information Administration.

“Drilling the refuge should forever be off the table, but it’s particularly nonsense to propose doing it when the nation has an oil surplus and oil prices are near record lows,” said Lydia Weiss, a government relations director with The Wilderness Society.

That may make Congressional Budget Office projections a little tight in calculating the federal budgetary effects of drilling in ANWR — a needed step for the measure to move via reconciliation. The CBO’s last estimate of the budgetary impact of opening up ANWR exploration in 2012 projected that drilling would generate $5 billion for the U.S. Treasury through the lease bidding process in the first 10 years, although those funds would be shared with state of Alaska. That estimate was made during a different time for oil markets.

Drilling backers acknowledge that — not even accounting for the likely lawsuits — it will take at least 10 years after congressional approval before drilling could commence. That timeline would align with an increase in oil prices, according to projections by the Energy Information Administration.

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