WASHINGTON,
D.C. – U.S. Sen. Lisa Murkowski, R-Alaska, yesterday made the following
statement on the U.S. Senate Floor:
“Mr.
President, I would like to take a few minutes this afternoon to perhaps switch
the discussion from what my colleagues were referring to earlier in terms of
the budget and speak a little bit about the issue of energy–obviously, a topic
of great concern.
“The
President has addressed it as recently as last week in a major address at
Georgetown. There have been a lot of discussions about what it is we need to do
to respond to the higher prices families are paying at the pump and just how we
deal with the issue of energy in general. There has been much discussion about
this concept of ‘use it or lose it.’ I want to speak to that proposal a little
bit this afternoon.
“It
is a rather strange proposal that claims to address the rising cost of oil and
gas for America’s working families. The premise of this is, even with oil at
more than $100 a barrel, and even though lease terms are already limited by law
to 5 to 10 years, energy companies somehow are hording Federal lands and
refusing to produce the resources that are beneath them.
“’Use
it or lose it’ has been presented by this administration and others as a way to
increase our Nation’s energy production. But even a cursory review will show
this is fundamentally flawed in its premise. This proposal will not increase
American production. It will not increase jobs or create jobs. It will not
raise government revenues or bolster our security. Instead, I believe it is a
diversion from our more critical need to produce more of our own resources and
to streamline our burdensome regulatory processes.
“ Now,
the idea behind ‘use it or lose it’ is to simply punish companies for not
drilling on lands they have leased, so they either drill or they give back the
acreage to the government which can then resell it to someone else. But,
interestingly, this proposal has drawn some support from a number of Senators
and from the President himself who, until recently, have claimed: Well, we
can’t drill our way out of this. We can’t drill our way to lower gas prices.
America’s oil–and we have been repeatedly told this–has minimal impact on
global prices and takes too long to bring online.
“So
I do not know, maybe this is a change of heart. If that is so, I am glad to see
it. I do hope–I do hope–their proposal is a signal that, indeed, they would
like to see drilling on every leased Federal acre onshore, offshore. That is
certainly the premise of the proposal, even though it is perhaps a pretty major
departure from the previous positions.
“Now,
the advocates of ‘use it or lose it’ have pointed out correctly that there are
millions of acres leased in this country that are not currently producing oil
and gas, but they have misidentified the reason why. Chances are maybe there is
just no oil present on that land. Perhaps exploration is ongoing or, in many
cases, the Federal Government has simply blocked the drilling. To add a new
penalty to this process and to add a new layer to existing bureaucracy will
only backfire.
“From
the outset, I think it is important to understand what is involved in oil and
gas production. This is an incredibly capital-intensive, labor-intensive
business, and from a technological perspective, the process is extraordinarily
complex. I think we saw, after the Deepwater Horizon, cameras trained a mile
below the surface of the ocean, and it was described by many as, this is akin
to how we deal with putting a man on the Moon. This is complicated stuff, and
there is no ‘X marks the spot’ as to where that oil is actually going to be
found.
“It
can take years, not to mention tremendous amounts of money, to finally locate
these commercial deposits. When there is resource present, it takes some teams
of some pretty highly skilled and trained engineers to figure out how we are
going to bring it to market. There are the entire legal departments that have
to wade through the multitude of permits, the analysis, the plans that are
required by our Federal Government.
“This
process takes a considerable amount of patience and for lots of good reasons,
but the government is certainly not in a hurry to provide leaseholders the
approval they need to move forward.
“Last
week, the Interior Department had an opportunity to explain what goes on within
the exploration process and show why not all Federal leases immediately produce
oil and gas. Instead, the Interior Department issued a report that attempts to
portray many Federal leases as idle or unused. What could have been a very
helpful and instructive process was instead hopelessly politicized, and that is
unfortunate.
“The
findings of the Interior Department’s report I believe defy common sense,
general business principles, and what we know to be true about the Federal
regulatory process. The definition of ‘inactive’ purposely excludes many
important development activities, and there is no acknowledgment that
oftentimes it is the government itself that is causing the delays in drilling.
“I
guess one of the more telling examples of what is wrong with the Interior
Department’s new report is its depiction of what is happening in Alaska right
now. Companies have been trying for years–trying for years–to bring their
Federal leases in this State of Alaska into production.
“These
efforts have been blocked. They have been delayed by the Federal Government,
especially this administration, and they have been blocked at every turn.
Despite this, the Interior Department’s report claims that just 1 percent–1
percent–of Alaska’s leases are producing and puts the blame on industry. But
when I talk to folks back home, when I talk to those who are trying every
single day, getting up and trying their hardest to advance so we can get to
levels of production, they only find that there is yet one more hurdle, one
more roadblock that is thrown up and thrown up by the government. It causes
incredible frustration.
“It
is hard to pick what would be described as the best example of companies trying
to produce from their leases–which, I might add, they purchased at the
invitation of the Federal Government–yet they are being forbidden by the
administration from pursuing their exploratory operations. It is happening in
the National Petroleum Reserve Alaska. Think about the name. This is the
National Petroleum Reserve Alaska. That is pretty ironic. We can’t get started
there, and one of the biggest reasons we can’t is we are being blocked–the
producers are being blocked–from getting a permit to build a bridge over a
river to get started.
“As
regrettable and as ironic as that example is, there is an even higher profile
example that we see up North, and that is what Shell is attempting to do. They
have set a record–and a record that is certainly not enviable but a record
nonetheless–for both dollars invested and frustration experienced in return.
This is a situation where a company has spent a little over $4 billion–this is
billion with a B–they spent $4 billion to buy Federal acreage in Alaska’s
Outer Continental Shelf nearly 7 years ago. Since that time, Shell has done
nothing but slog through an incredibly long and incredibly arduous permitting
process. Air permits that take 6 weeks to acquire in the Gulf of Mexico have
now been delayed for over 5 years.
“I
ask my colleagues to put that in context. A company, at the invitation of the
Federal Government, purchased leases over 7 years ago, has put more than $4
billion into trying to get to exploration, has spent 5 years waiting on
permits, where in other parts of the country permits can be turned around in 6
weeks, and they have yet the opportunity to even start. So can anyone honestly
suggest we ought to punish Shell or any company that is going through this for
the Federal Government’s failure to allow even exploratory drilling to proceed?
Is it fair that we demand Shell pay the price because the government has failed
to issue a permit that even the EPA and even the Administrator of the EPA has
acknowledged poses no human health risk? This is where we are sitting right
now.
“I
was incredulous. I had an opportunity to ask the Secretary of the Interior, who
is a friend of mine–most certainly a friend who I acknowledge has a very
difficult job, a very challenging job–but he could not assure me that the so-called
‘use it or lose it’ fee would not apply to the millions of acres of leased land
in Alaska, both onshore and offshore, where the Federal Government has sold the
leases but is not allowing drilling activity. It is similar to a commercial
real estate company offering to rent some office space to you. We go ahead. You
pay the rent. I never give you the key, so you can’t access your commercial
office space. Then I am going to go ahead and assess a fine. We are going to
penalize you when you failed to open your doors for business. That is kind of
what is happening up North. It is not a “use it or lose it” policy, it is
‘heads we win, tails you lose.’ My colleagues have to imagine: What would such
a policy say about the way our government conducts its businesses and manages
its resources?
“’Use
it or lose it’ is drawn from a desire to do the right thing, which is to
increase our domestic production, but I also believe it reveals a fundamental
lack of understanding about how energy resources are developed and how they are
brought to market. It risks very real consequences for our energy production
here in America. Because instead of encouraging producers to find energy
faster, it would actually discourage them from discovering it in the first
place. Instead of creating jobs, it would likely end jobs. Instead of raising
new revenues for the Federal Government, it would likely diminish taxpayers’
returns from leasing and production.
“It
seems as though every time oil prices are on the rise, we come together and we
debate how we are going to respond to them and every time someone points out we
should be producing far more of our own–frankly, very tremendous resource
base–someone steps forward with the potential scapegoat, perhaps to distract
attention from our need to be leasing more new lands. It is like clockwork
around here. Instead of making the hard choices about what we can do to better
insulate ourselves from higher crude prices and geopolitical instability, we
see proposals to impose windfall profit taxes, to pour unprecedented sums of
money in unproven alternative technologies, to rein in speculators, to sue
OPEC, to raise taxes and fees on production, and now to force companies to act
faster or to face greater penalties.
“Until
we see some evidence that companies are refusing to develop their leases, I
have to call it like I see it. ‘Use it or lose it’ is a ploy to claim that we
support increased domestic production, without doing anything to ensure that
domestic production is the actual result of our Federal energy policies.
“There
has been a lot of discussion, when we are talking about energy, about Brazil
and their potential–how that nation is set to significantly ramp up its oil
production, and we commend the Brazilians. They have been able to make a number
of very important discoveries, estimated at about 50 billion barrels of oil
equivalent.
“According
to the Wall Street Journal, Brazil’s oil production rose by 876 percent over
the past 20 years–876 percent over the past 20 years. They are now planning to
double their current production in less than 10 years. So there are pretty
remarkable things going on there. Even while Brazil is developing their current
resource base, they are actively looking for more. They are working
aggressively. They are pursuing that objective while expanding their production
and their use of alternative energy sources. They are kind of pursuing the ‘all
of the above’ we talk about so often.
“In
the United States, we have technically recoverable oil resources estimated at
157 billion barrels, more than three times–more than three times–what Brazil
has recently found. I don’t understand. I don’t understand why we refuse to set
the same ambitious goals for increasing our production that Brazil has, even as
we continue to pursue alternative energies that will diversify our supplies
equally. When it comes to energy, we should strive to be our own best customer,
not Brazil’s.
“As
Federal policymakers, we need to think carefully about what we demand of any
industry, including oil and gas. When we tax something, the fact is, we get
less of it. I don’t think we want to make ourselves even more dependent on
foreign oil right now. We don’t want to discourage domestic production,
especially under the guise of promoting it, and we have no reason to add yet
another layer to an already daunting regulatory system.
“I
strongly urge us in the Senate, in the Congress, to recognize ‘use it or lose
it’ for what it is. It is an attempt to extract more money from the companies,
not to extract more energy from the ground. It is not the right approach for
America, and it will not move our energy policy in the right direction.
“I
do take comfort in one fact, and that is this: At least the debate is now about
how to produce more oil and not whether to produce more oil. My work on the
Energy Committee and certainly what goes on in the State of Alaska has taught
me much about how and how not to achieve greater oil production if we want more
domestic production–and I think we all recognize the President’s verbal
commitment to this and the change of heart amongst some of my colleagues–it is
time to eliminate the needless redtape and allow access to America’s huge resources
that are still off-limits.
“I
thank the Presiding Officer for the time and the opportunity to speak this
afternoon on yet another aspect of our country’s much needed energy policy and
how we can continue to find ways that will move us toward a future where we do
engage in energy sources that are clean and renewable while also harvesting our
bountiful supply in this country as we find ways to produce more domestically.”
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