Senate Energy Bill to Greatly Help Alaska Develop Its Natural Resources, Say Sens. Murkowski & Stevens
SENATE ENERGY BILL TO GREATLY HELP ALASKA DEVELOP ITS NATURAL RESOURCES, SAY SENS. MURKOWSKI & STEVENS
As markup concluded on the Senate's version of comprehensive energy legislation, Alaska Sens. Lisa Murkowski and Ted Stevens said the measure contains provisions that offer historic opportunities for Alaska and its Native residents to both develop their energy sources for the benefit of its economy and to generate low-cost power for residents statewide.
"This bill contains provisions to help unlock Alaska's potential as the nation's true energy storehouse," Murkowski said. "It offers provisions to help develop our oil, natural gas, huge coal resources and the future gold mine of our vast gas hydrate reserves. It also provides the means to help Alaskans build a modern electrical system involving a range of both renewable and non-renewable sources.
"There is no bigger step we can take to further natural resource development and the expansion of our economy than to reduce the cost of electric power in both rural and urban Alaska. This bill provides the resources to move Alaska's economy into the 21st century."
"Alaska has oil, natural gas, coal and immense gas hydrate reserves," said Stevens. "Our nation needs a comprehensive energy policy that utilizes Alaska's terrific potential. Developing our natural resources is critical to providing our nation with a dependable, secure source of energy and with providing Alaska with jobs and economic development well into the future."
Murkowski said that she will continue to work to improve the bill, both on the Senate floor and in a later conference with House members, and that the committee proposal and adopted amendments contain the following provisions of importance to Alaska:
Rural Energy Assistance: The bill authorizes $550 million over the next decade for improvements to the state's energy infrastructure. Under the bill some $55 million yearly is authorized to the Denali Commission to be used to fund a host of projects including energy generation and development, (through fuel cells, hydroelectric, solar, wind, wave, tidal and other alternative energy sources) transmission networks, interties, fuel tank replacement and cleanup, fuel transportation networks and related facilities and coal energy generation and alternative coal fuel projects.
Power Cost Equalization: The funding to the Denali Commission is also intended to provide up to $5 million a year for a decade to endow the Alaska Power Cost Equalization program. Currently the fund contains $185 million, whose interest is used to subsidize the first 500 kilowatts of electric usage by rural residents. The funding is intended to increase the size of the endowment so the fund can spin off more earnings to fully fund the program that this year is cutting the cost of power by between 20 and 30 cents per kilowatt hour in 175 rural communities.
National Petroleum Reserve Oil-Gas Leasing Changes: This provision allows oil leases to be extended for 10 years to give lease holders more time to develop oil inside the 23.3-million acre petroleum reserve, which is forecast to hold up to 10.6 billion barrels of oil and 73 trillion cubic feet of natural gas. It also allows for more expeditious lease sales, gives authority for reduced lease royalties where needed to stimulate production, allows for unit agreements to speed oil or gas field development and allows the Secretary to waive administration of oil and gas leases when the subsurface estate is held by Arctic Slope Regional Corp. It also creates the North Slope Science Initiative to fund better scientific research into the effects of oil and gas leasing in northern Alaska authorizing future funding for the effort.
Alaska Offshore Royalty Suspension: This provision allows the Secretary of the Interior to suspend federal royalty requirements in Outer Continental Shelf lease planning areas in Alaska where the aid is needed to encourage oil and gas production. The authority is the same that the Secretary enjoys in other areas nationwide and is intended to help increase Alaska OCS production - a significant potential benefit to the state since the bill provides $500 million in OCS revenues to producing states based on production. Alaska would be guaranteed a minimum of $5 million from the funding.
Gas Hydrate Research and Development Assistance: The measure, authored by Murkowski, Stevens and Sen. Daniel Akaka of Hawaii, is designed to continue research and expand efforts to develop a commercial process for producing natural gas from methane hydrates - gas locked in ice and permafrost. The nation is estimated to contain a fourth of the world's total reserves of methane hydrates - about 200,000 trillion cubic feet - with Alaska holding about 15 percent of the nation's resource - 600 trillion cubic feet on shore and 32,000 trillion cubic feet offshore.
Cook Inlet Carbon Dioxide Oil Enhancement Program: Murkowski won an amendment that will permit the Department of Energy to determine the feasibility of using carbon dioxide to increase oil return from the maturing Cook Inlet oil field. The U.S. Department of Energy last month issued a report that indicated the nation could recover up to 43 billion additional barrels of oil from aging oil fields, if carbon dioxide was pumped into the fields to force more oil to the surface. The report indicated that up to 12 billion of the barrels could come from Alaska, about 670 million, potentially being available from the aging Cook Inlet reservoirs near Kenai.
Indian Energy Assistance: The bill provides grant assistance and up to $2 billion of loan guarantees to help Natives nationally and tribes and Alaska Native corporations develop energy resources on their lands. The bill gives priority for federal funding to projects that will utilize new technology, such as coal gasification, carbon capture and sequestration and renewable energy-based electricity generation.
Healy Clean Coal Loan: The bill provides the Secretary of Energy the authority to make a market-rate loan of up to $80 million to fund improvements to get the Healy clean coal power plant up and running. The nearly $300 million clean-coal technology power plant has not operated since its testing period because of concern over the reliability of the plant. The loan has dropped to $80 million from the previous $125 million proposal because of new engineering reviews that has reduced the estimates for the extent of work needed to get the plant operating. The loan would allow the plant's eventual owner to make whatever equipment upgrades are necessary to get the plant operating. It is currently owned by the Alaska Industrial Development and Energy Authority.
Renewable Energy Provisions: The bill provides assistance to renewable energy projects, anticipating a continuation of a production tax credit for wind, solar, biomass and geothermal energy among other forms of renewable energy. The bill also includes assistance to development of ocean energy including tidal, current and thermal ocean energy electricity projects. The measure fences off 40 percent of potential assistance for ocean energy and other new forms of renewable energy. The biomass provision also gives a preference for grants to development of power from biomass obtained from disease-infested timber, which could be of particular importance to the Kenai Peninsula where roughly 5 million acres of spruce have been killed by the spruce bark beetle in the past decade.
Coal Production Assistance: The bill includes $200 million per year in aid for projects to utilize the nation's coal resources, with the aid especially intended (80 percent) to help construction of clean coal gasification combined cycle plants. Alaska, with an estimated 160 billion short tons, leads the nation in known reserves of low-rank, low-sulfur coal.
Alaska Natural Gas Pipeline Provision: Building on last year's success in winning loan guarantees and two tax deductions for pipeline segments and a North Slope gas conditioning plant, the bill includes a provision requiring the Department of Energy to write a progress report every six months on how work is proceeding on an Alaska gas line - a provision designed to help maintain momentum for the project.
Israeli-U.S. Energy Cooperation: The measure also includes a provision that extends an agreement between Israel and the United States to cooperate on energy research and development activities.
Alaska hydropower bill: The measure, sought by the State of Alaska, includes a clarification to 2000 legislation that allowed the State's Regulatory Commission of Alaska (RCA) to take over the licensing of small hydroelectric projects in Alaska that produce less than 5 megawatts of power from the Federal Energy Regulatory Commission. The new clarification makes it clear that the state has the same authority as FERC in reviewing agency recommendations concerning the impacts of hydro projects.
Small hydro debt forgiveness: The measure also includes an amendment that allows the Rural Utility Service to make grants for project debt reduction in high-cost service areas. The language is potentially important for three Alaska projects: the Power Creek hydro project in Cordova, the Chilkat Valley project outside of Haines and the Tazimina hydro project near Iliamna all of which are causing extraordinarily high electrical costs in their communities due to economic downturns in their service areas. The language simply permits the Rural Utility Service to make grants to aid these projects in the future.
Alaska Science Provisions: While the Senate bill does not contain earmarked appropriations, projects that were included in the House energy Bill and will be considered during conference include funding for an Arctic Engineering Research Center at the University of Alaska Fairbanks and a $61 million authorization for a Barrow Geophysical Research Facility to provide a home for climate research in the Far North.
Murkowski said she also will be working with the Senate Finance Committee to include provisions in the tax title of the bill to further a host of energy developments in the state and across the nation. The tax title is likely to be developed by the Finance panel in mid June.
http://murkowski.senate.gov/pressapp/record.cfm?id=238326