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Sen. Murkowski: Five Ways to Boost America’s Oil Production

WASHINGTON, DC - U.S. Sen. Lisa Murkowski, R-Alaska, delivered a speech on the floor of the Senate today focusing on ways to improve America's energy policy, particularly the need for greater domestic oil production. The prepared remarks are attached and the speech can be viewed here

The combination of international events and domestic policy restrictions threaten both America's economic recovery and national security.  Unrest and instability abroad have pushed oil prices to their highest levels in two years, and today's already-painful gasoline prices are projected to reach $4 a gallon in the months ahead. 

Even when civil unrest is not spiking the cost of oil, our nation's foreign dependence still comes at a staggering cost. America spent $333 billion on oil imports last year. For the month of December, the U.S. trade deficit was $40.6 billion, with petroleum-related imports accounting for 62 percent of that total. Over the course of decades, trillions of American dollars have been sent out of our economy to pay for oil from abroad - including many countries that are led by non-democratic or anti-American regimes.

It doesn't have to be this way. America has ample resources to reduce its foreign oil dependence, create well-paying jobs, raise revenue to pay down the $14 trillion national debt, and develop advanced energy technologies. Increased domestic production will result in a stronger economy, greater security, and, because our safeguards are among the most stringent in the world, a cleaner environment as well.

Five Ways to Increase American Production
  1. Look North - to Alaska: Alaska has huge reserves of oil just waiting to be tapped for the good of the nation. The National Petroleum Reserve-Alaska, just 2,000 acres of the non-wilderness portion of the Arctic National Wildlife Refuge, and the Chukchi and Beaufort seas hold at least 40 billion barrels of recoverable oil. That's enough to replace crude imports from the Persian Gulf for nearly 65 years. All three areas are effectively off-limits to new development, however, due to decisions made or continued by this administration.

  1. End Gulf "Permitorium:" It's time to restore production in the Gulf of Mexico. This administration has slowed permits for new deepwater development to a crawl. This could cost the United States some 200,000 barrels of new supply if left in place for a year, far more if left in place longer, and tens of thousands of jobs in the meantime. Courts have also ruled - repeatedly - that this "permitorium" is unlawful.  Most recently, the Interior Department was held in contempt for its "dismissive conduct" and "determined disregard" of previous orders to end its de-facto moratorium.

  1. Cut Red Tape: In January, President Obama ordered his executive agencies to review their regulations to ensure they are cost-effective and not unduly damaging economic growth and job creation. The Interior Department clearly has its work cut out. In late 2008, Interior stated that the "number of required plan and permit approvals is on the order of 25 to 30" for a typical offshore lease. Over the past two years, this administration has sought to add more layers to - rather than streamline - these already significant requirements, which are a major reason why the leaseholders need years to begin production.

  1. "All of the Above:" The alternatives to conventional oil, natural gas, and coal are not limited to wind, solar and geothermal. Far from it. America will utilize fossil fuels for decades to come, and our energy policy needs to account for that fact. The good news is that according to the Congressional Research Service, the United States has a larger fossil fuel endowment than any other nation, and that doesn't even include our tremendous potential in oil shale and methane hydrates.

  1. Shelve Bad Ideas: With oil prices on the rise, the administration and many in Congress seem to have forgotten that the oil industry provides Americans with energy and jobs, and instead have begun to treat its companies as an untapped source of government revenue. Proposals to take more from oil companies have included a range of tax increases, "use it or lose it" and similar fees, and substantially shorter lease terms. All of these anti-production efforts deprive companies of a stable operating environment, which in turn reduces their willingness to invest in America. It's time to set these bad ideas aside and adopt a more constructive approach. Instead of seeking to punish the industry, a better way forward would be to let it tap into more of America's vast resources, and then make good use of the resulting revenues.
America has options. Responsible development would reduce energy prices, create jobs, improve our security, raise revenue to pay down the debt, and allow America to invest in new technologies for the future. We can't afford to ignore any one of those benefits - let alone all of them - any longer.

Top Five Things to Increase American Energy Production

1.      Develop Alaska's onshore resources, including the oil reserves in 1 percent of the 19 million acres of the Arctic National Wildlife Refuge:

·        National Petroleum Reserve-Alaska: 9.7 billion barrels of oil equivalent;
·        Arctic National Wildlife Refuge: 10.6 billion barrels of oil (USGS) enough to produce 30 million barrels a month for 30 years; Worth $1 trillion in royalties and taxes to the federal treasury at $100 a barrel prices; (ICF study).

2.      Restart exploration and production in the Gulf of Mexico and open new areas of the Outer Continental Shelf (OCS):

·        Only 2 percent of the nation's 1.8 billion acres of OCS is leased, but it provides about 27 percent of America's domestic oil production;
·        The eastern Gulf of Mexico: 4 billion barrels of oil;
·        Atlantic Ocean: 4 billion barrels of oil;
·        Pacific Ocean: 11 billion barrels of oil;
·        Alaska OCS: expected to exceed $15 billion in revenue, plus an additional $10 billion for TAPS, create 39,000 jobs (University of Alaska Anchorage's Institute of Social and Economic Research and Northern Economics)
·        76,000 direct jobs by 2030 of currently off-limits OCS areas. Total estimated federal revenue from currently inaccessible areas: $361 billion - $1.34 trillion. (API)
·        1 year and 2 year delay in permitting could cause $13.7 billion and 17.1 billion in government revenue respectively. (Wood Mackenzie Study 2010). Based on this study, API believes that 125,000 jobs could be lost.

3.      Stop blocking exploration in Alaska's Beaufort and Chukchi seas:

·        Alaska's OCS: 26.7 billion barrels of oil, based on the Institute for Social and Economic Research at the University of Alaska Anchorage (ISER) recent numbers. Generate an annual average of 54,700 jobs nationwide with an estimated cumulative payroll of about $145 billion over the next 50 years. $193 billion in federal, state, and local revenue over 50 years. (Northern Economics, Inc. and Institute of Social and Economic Research at U of AK, Anchorage).

4.      Approve the Keystone XL Pipeline project to bring more than 1 million barrels a day of Canadian oil to American consumers:

·        Would create 15,000 direct and 250,000 indirect jobs (Perry Group Study);
·        $5.2 billion in property taxes for transit states (Perry Group Study);
·        Increased Canadian oil production, estimated to create 340,000 new U.S. jobs by 2015 (Canadian Energy Research Institute).

5.      Open federal lands in the Mountain West to production of oil in shale formations:

·        Only 4 percent of federal lands are available for oil exploration;
·        1.5 trillion barrels of oil in western Colorado alone (USGS);
·        $22 billion in federal government revenues, create 12,000 jobs (ICF study).
·        Wood Mackenzie Study (Jan 2011): Increased oil and natural gas development to currently closed areas of eastern Gulf of Mexico, Rocky Mountains, ANWR, and Atlantic and Pacific OCS would create 150,000 direct jobs and 380,000 indirect jobs by 2025. Government revenue would increase by $150 billion a year by 2025.


Floor Statement: Rising World Oil Prices
March 3, 2011
Senator Lisa Murkowski
Mr. President, it's become hard to turn on the news, or pick up a newspaper, without seeing a story about rising oil prices.  The combination of international events and our domestic policies have now pushed oil prices above $101 per barrel.  Many members of Congress, myself included, are deeply concerned about what those higher prices will mean for our nation.  We are absolutely committed to protecting the American people and our businesses, and I've come to the floor today to outline several steps that we can - and should - take to dramatically improve our nation's energy policy.     

First, however, I want to touch on why we again find ourselves in this regrettable situation.  Civil unrest and political instability are not new, but actually facts of life in many of the nations that provide our imports.  Iran now holds OPEC's presidency, and is perfectly comfortable with hundred dollar oil.  And it is far from guaranteed that OPEC is even capable of moderating the price of oil in the way it claims with spare capacity.  With Libya's supply either offline or unreliable, another further disruption of any kind, anywhere in the world, would likely spike global prices to levels that will swamp our economic recovery and result in genuine hardship for American working families. 

Worst of all, the costs and consequences associated with our dependence on foreign oil are largely our own fault.  Over the years our lands have been locked up, and many of our most promising opportunities have been put out of reach.  The U.S. sits on tremendous oil reserves in the offshore, in Alaska, and in the Rocky Mountain West.  We have massive shale formations that aren't even accessible for research and development.  As the columnist Charles Krauthammer wrote last year, "We haven't run out of safer and more easily accessible sources of oil. We've been run off them..."

Today our energy policy has gone beyond frustrating and become simply irresponsible.  The American people expect their government to help keep energy affordable and to see to it that we can benefit from natural resource development in a responsible way.  They expect us to take an honest look at where increased domestic production is possible; how it can protect against higher prices and supply disruptions; and what it will do to increase our security, restore our trade balance, generate government revenues, and create jobs.  Right now, when we import oil, we export those benefits.  It's our loss, and others' gain.

We ignore the positive benefits of domestic production at our own peril.  The Bipartisan Policy Center issued a statement about four weeks ago and it's a sobering reminder.  It stated:  "A one-dollar, one-day increase in a barrel of oil takes $12 million out of the U.S. economy.  If tensions in the Mideast cause oil prices to rise by $5 for even just three months, over $5 billion dollars will leave the U.S. economy.  Obviously, this is not a strategy for creating new jobs."  America spent an estimated $333 billion on oil imports last year.  That's a tremendous amount of money, especially as we fight our current budget battles and decide which programs and services will continue and which will be terminated.

So today I am renewing my call for a realistic and truly aggressive approach to our energy challenges.  For the sake of our national security, for the sake of our economy, and for the sake of our world's environment, America should produce as much of the oil that it uses as possible.  It is this balance, in concert with the resulting revenues and benefits to our manufacturing and transportation industries, that will allow us to truly take control of our energy future.

I have five concepts that will support greater domestic oil production and I will submit them for my colleagues to consider here:

First, look north to Alaska.  My home state has an unfathomably large supply of oil just waiting to be tapped for the good of the nation. The National Petroleum Reserve-Alaska, just 2,000 acres of the non-wilderness portion of the Arctic National Wildlife Refuge, and the Chukchi and Beaufort seas hold at least 40 billion barrels of recoverable oil.  That's enough to replace crude imports from the Persian Gulf for nearly 65 years.  All three areas are effectively off-limits to new development, however, due to decisions made or continued by this administration.

Second, end the "permitorium" and bring back production in the Gulf of Mexico.  This administration has slowed permits for new deepwater development to a crawl.  This could cost the United States an estimated 200,000 barrels of new supply if left in place for a year, far more if left in place longer, and tens of thousands of jobs in the meantime. Courts have also ruled - repeatedly - that the administration's "permitorium" is unlawful.  A District Court judge ruled last year that it was "arbitrary and capricious."  More recently, the Interior Department was held in contempt for its "dismissive conduct" and "determined disregard" of previous orders to end its de-facto moratorium.

Third, we must cut the red tape.  In January, President Obama ordered his executive agencies to review their regulations to ensure they are cost-effective and not unduly damaging economic growth and job creation.  The Interior Department, which oversees a lengthy and burdensome regulatory process, clearly has its work cut out.  In late 2008, Interior stated that the "number of required plan and permit approvals is on the order of 25 to 30" for a typical oil lease.  Over the past two years, this administration has sought to add more layers to - rather than streamline - these already significant requirements, which are a major reason why leaseholders need years to begin production. 

Fourth, our nation must focus on a true "all of the above" energy policy.  The alternatives to conventional oil, natural gas, and coal are not limited to wind, solar and geothermal.  Far from it. America will utilize fossil fuels for decades to come, and our energy policy needs to account for that fact.  The good news is that according to the Congressional Research Service, the United States has a larger fossil fuel endowment than any other nation, and that doesn't even include our tremendous potential in oil shale and methane hydrates.

Finally, we need to shelve the bad ideas.  This is the "stop the bleeding" element of my proposal.  With oil prices on the rise, the administration and many in Congress seem to have forgotten that the oil industry provides Americans with energy and with jobs.  Instead, they are often viewed as this untapped source of government revenues.  Proposals to take more from oil companies have included a range of tax increases, "use it or lose it" and similar fees, and substantially shorter lease terms.  All of these anti-production efforts deprive companies of a stable operating environment, which in turn reduces their willingness to invest in America.  It's time to set these bad ideas aside and adopt a more constructive approach. Instead of seeking to punish the industry, a better way forward would be to let it tap into more of America's vast resources, and then make good use of the resulting revenues.  

America has options.  Next week I will return to the floor to talk more about those, and about what our goals should be for a national energy policy.  For today, I'll simply conclude by emphasizing that responsible domestic production would reduce energy prices, create jobs, improve our security, raise revenue to pay down the debt, and allow America to invest in new technologies for the future.  We can't afford to ignore any one of those benefits - let alone all of them - any longer.

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