Energy Prices

Floor Speech

ENERGY PRICES -- (Senate - May 12, 2008)

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Ms. MURKOWSKI. Mr. President, it is so important that we as Members of the Senate, Members of the Congress, are on the floor discussing the No. 1 issue--the No. 1 domestic issue certainly in the minds of Americans--and that is the price of energy. The folks back home want to know: What are you going to do to fix it? What is the Congress going to do?

Tomorrow we are going to have an opportunity to vote on a couple of different proposals. I rise this afternoon in support of the passage of the American Energy Production Act. This is a comprehensive energy bill that was introduced last week by the ranking member of the Energy Committee, Senator Domenici.

Americans are at a point where I think their patience is wearing thin, their frustration is showing, but it goes beyond just frustration. I think it is fair to say that many across the country are in true economic distress over the prices they are paying now for gasoline, for their home heating oil, many for their natural gas that they are seeing coming into their home and, unfortunately, the prognosis for the future doesn't look much more consoling to the consumer. All estimates indicate these prices will continue to rise in the future.

Look at some of the events of last week in terms of what was happening around the world. The rebel disturbances in Nigeria, concerns about the relations with Iran and production disruptions over there, production disruptions in Iraq--all of this plus many other factors, including the price of the dollar, and what is happening with the Chinese and Indian economies in terms of additional consumers coming on. So many of these factors keep driving the price of oil to the point where last week's closing crude oil price topped out at $126, down to $125 per barrel over the weekend. That hike in price is going to continue to drive the retail prices for refined product even higher, above the $3.62 national average for unleaded regular we reached last week; 52 cents higher than last year.

Talking to the folks back home, it is literally one horror story after another in terms of what people are paying. I know there are many places in the country today where fuel is hovering right at $4 a gallon, but in Alaska we are looking at prices that are much higher than that. In Athaca, fuel was costing $8.65 a gallon last week. This is about a dollar higher than the folks there were paying last year. They are used to paying high prices, but I am here to tell you 8 bucks and 65 cents a gallon is really high. In the community of Kiana, it is $6.25 a gallon. It is exactly $1 higher than they paid last year. At these prices, Alaskans and all Americans are having great difficulty making ends meet. Americans need relief from high fuel prices and they are asking for it now.

I have so many opportunities, coming from a State such as Alaska that is a producing State, a lot of opportunities to talk about how we can produce more as a nation. But I also am very insistent when we talk about an energy policy for this country that we also focus on promoting energy conservation, we also focus on greater energy efficiency and developing the alternative energy so critical for this Nation.

But we also have to make sure when we talk about an energy policy, we recognize there are different components. I liken it to a three-legged stool. You have the conservation and efficiency, you have the renewables and alternatives, but you also have increased production and increased production in traditional energy sources that are done in an environmentally sensitive manner.

The amendment Senator Domenici has introduced, the American Energy Production Act, does that in many ways. It proposes to open a couple thousand acres, 2,000 acres--I don't come from a farming State necessarily, but my colleagues from South Dakota and some of the big farm States tell me that 2,000 acres is pretty much the size of a small farm there--of the Arctic Coastal Plain to oil and gas development. We believe this area, the 1002 area of ANWR, is the site with likely the largest onshore oil and gas deposits left in North America. We know if we were to act today to open ANWR tomorrow, it is not going to bring new North Slope oil to the markets tomorrow, but it will affect the psychology of the oil markets. It will show that America is getting serious--finally getting serious--about producing the 40 billion barrels of oil and the hundreds of trillions of cubic feet of natural gas we believe exist in the current moratoria areas.

I think we need to recognize--and so many of my colleagues have stated this already on the floor--ANWR is about the long term. I can't tell my colleagues how many times I have heard on this floor: If we had only opened ANWR 10 years ago when President Clinton vetoed it, we would have that pipeline today. That pipeline would now be full instead of half full as we currently see it. But ANWR is about the bridge, if you will. It is a bridge to an energy future that can get us to the alternatives and to the renewables we keep talking about, and those who are so focused on making sure we have a solid environment and a solid environmental base. This is what so many of my Democratic colleagues are talking about. We need to get to the future of energy, which I agree is absolutely the alternatives and the renewables. But you can't flip a switch and have this Nation powered 100 percent by wind or solar or geothermal or ocean energy. We have to allow for that transition, and ANWR, the oil from ANWR, can help us to do that.

We have had many hearings in the Energy Committee on the issue of production. But earlier this year we heard from witnesses who said the current runup in world oil prices is due to so many of the factors I mentioned a few minutes ago; clearly, the hike in world demand for oil is led by China and by India; what is happening with the weakening of the U.S. dollar, which is used to pay for all of the oil sales; and oil becoming the new gold--a commodity of interest to investors because of the tightness of the world supplies.

Essentially, what it comes down to--so much of the discussion we are talking about--is supply and demand. I suggest that as we look to all these factors that are influencing price right now, one of the ways we can deal with that, one of the ways we can tell the American consumer we are working on this is to produce more energy from non-OPEC nations, to help increase our global supplies, and to help drive down world prices.

Robert Samuelson, a columnist, said in a column, which I will submit for the Record, that we need to exert long-term influence on the global balance of supply and demand for energy.

I ask unanimous consent that the column be printed in the Record.

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Ms. MURKOWSKI. That means we have to actually produce more energy in this country. How do you get from here to there in increased energy production?

I wish to take a few minutes this afternoon and talk about ANWR. ANWR has 10 billion to 16 billion barrels of economically recoverable oil, according to the USGS estimates, and 10 trillion cubic feet of natural gas. We recognize that, by itself, that infusion into the energy market is not going to change the world's energy equation. But pair it with the other things we are talking about in this energy legislation Senator Domenici introduced and pair it with the additional barrels that could come from OCS development in current moratoria areas, and the 80 to 100 trillion cubic of natural gas there, and pair it with the fuel from coal-to-liquids development and the oil from U.S. oil shale deposits. Together, all these can start to break the stranglehold OPEC has on us and help to lower the prices.

Now, back to ANWR. I had said that--and I have said this throughout my public life--if opening ANWR was going to come at the expense of our environment and our wildlife, I would have to oppose it. But we have technology we have utilized up north in the past 30 years, since we have been in active production pulling oil from the North Slope, that has truly revolutionized what happens in the Arctic when it comes to development of our resources.

This chart is a New York Times science chart. It is essentially outlining some of the latest drilling technology in an effort to reduce environmental damage from the oil drilling. Directional drilling. It used to be that you would sink your drilling rig and drill straight down. Under the new directional drilling, what you are literally able to do is you sink it but you ``spider'' out, or ``spaghetti'' out underneath the surface. And you can take this in a direction of up to almost 8 miles in every direction around you, with no disturbance to the surface. So you don't see what is going on down below the caribou that are wandering around and are oblivious to the activity up top. But it is a technique that is in place in the Arctic that helps to literally provide about 100 square miles of habitat for the caribou and musk oxen that are between the well pads.

This technology has made the difference for us not only in Alaska in Arctic conditions but truly as we develop our technology for oil exploration around the country. It is difficult to see a lot of the descriptions on this chart, so I will use other maps to show you the ice roads, the pads on the ground, how you utilize a crossing over a river, the 3D seismic technology, how we have been able to reduce the well pads paths.

Initially, when drilling in the 1970s, the well pads were about 13 acres in size. Through the use of this technology, you can limit that footprint to about 5 acres. I wish to show you a picture of how we travel across the tundra so we don't disturb it, you don't see man's footprint or the trucks that are going over it. This is a composite mat that is literally laid on top of the tundra in the summer months, so you don't damage the fragile tundra below. Look at a picture of the ice roads. We do not explore in the summer months. Exploring is in the wintertime. This is a picture of exploratory drilling in Alpine in the winter. You will see around the exploration site--you cannot see the ice road from here, but there are no roads around this. There are no roads that will take you to this site. The way you get there is you build out roads on the ice. It is like a big Zamboni machine making an ice road that will take you across the tundra in the wintertime only--you cannot go out there during the summer--and lay down the ice road, so when summertime comes, you have this.

This is Alpine during the summer months. The photo is grainy, and I apologize for the quality of it. You can see you don't have any roads that lead to the exploration site in the tundra there. This is a picture that was taken in the fall. This white box is the well site that is awaiting actual development.

We have a picture of rendezvous well No. 2. This is located in the National Petroleum Reserve Alaska. This is done in the winter. You can see this is the ice road I am talking about, which literally goes 4 miles, connecting this site to a road system miles away. We have a picture of the same site. This is in the summer, the same site. We have capped off and removed the rig. So the first one was the exploration, and then once the exploration is complete, they cap it off. There is no sign of impact to the area except for this ``Christmas tree'' valve stem that can be removed if, in fact, there is no production that is ever likely in that area.

Again, you may look at this and say: How do you get there? We get there because we are utilizing techniques that allow us and require us to protect the environment, so the impact is as minimal as absolutely possible.

The last picture I wish to put up in this series is this one. Everyone talks about the caribou. I think no picture of ANWR is complete unless we have a picture of the caribou wandering around at Point McIntyre Field while drilling is underway. The caribou--the wildlife--have learned to coexist with the level of development that goes on in the area there.

Again, I think it is important to point out we have gotten smart over the past 30 years. We figured out how to utilize technology so we can gain access to a resource, while at the same time preserving and protecting an area, a part of the country that we know is fragile. That tundra is fragile territory, and we have to treat it right, with respect, and be able to allow a level of subsistence harvest for the Natives who live up there and live off the land. We have to figure out how we balance it. We have worked very hard to do that.

The chairman of the Energy Committee, a colleague for whom I have a great deal of respect and who has worked very hard on so many energy issues spoke a little while ago, and he made the point that to the west of the Prudoe fields, and to the south, we have an area that is known as the National Petroleum Reserve-Alaska. His point was, why do we need to open ANWR if we have all this area that is potentially available for oil exploration and development? There are a couple things going on with NPRA. It is a huge area. It is larger than the ANWR area itself. As a consequence, the pockets of oil--the areas that would be conducive for exploration and drilling--are further from the infrastructure, the existing pipelines. So that adds enormous costs to already very expensive operations up north.

You also have some very environmentally sensitive areas in the NPRA, around the Shirukak Lake, where you have a great deal of waterfowl that come through. So we are sensitive to making sure we are not disrupting, to the furthest extent possible, the wildlife, the waterfowl. That, too, is a point of concern. We also recognize the potential in ANWR for greater intensity, in terms of the oil finds, is that much more real. It is estimated that in ANWR we could get approximately 6,860 barrels per acre as opposed to only 480 barrels per acre in the NPRA. Those are factors to consider when we are talking about NPRA and ANWR.

I think it is helpful to put up a map of ANWR, so people can put it into context. The ANWR portion of this bill limits exploration to 2,000 acres of the 19.6 million acres of wildlife refuge. This is just one 10,000th of 1 percent of the refuge. It allows the establishment of critical habitat zones. It requires the use of the best commercially available technology to produce the oil, no matter what the cost is to the company. We believe, truly, this new technology can limit the environmental impact in the north.

Look at what we are talking about, the refuge itself. When people talk about ANWR, some might get the impression we are talking about developing in all of the wildlife refuge, all the 19.6 million acres. That is incorrect. The area we are talking about developing is within the ANWR Coastal Plain. That acreage is 1.5 million acres. Still, look at what you have within the refuge. You have a wilderness area, which has absolutely no development of anything at all, 8.5 million acres that is fully established in the wilderness area. In the balance is about 10 million acres and it is the refuge area. So this is the area--the 1002 we are talking about opening for potential exploration and development. Of that, this tiny little red dot on this map represents 2,000 acres out of the 1.5 million acres. So it is important to put that into context.

We have not had the ANWR debate in some months, so I think it is always nice to refresh people's memories of what ANWR is. You will notice ANWR itself is about the size of the State of South Carolina. We are talking big territory here.

The amendment that was offered by Senator Domenici and members of the Energy Committee does more than just open ANWR. ANWR is not the sole answer to the high price of oil. ANWR is not the sole answer to a balanced energy policy. ANWR is just one piece of that puzzle.

The amendment also permits revenue sharing with States that decide to allow OCS development off their coastlines. For the States that do not want it, this also provides new moratoria powers to prevent drilling, powers that could be gone in just 4 years. This is actually a plus for those who are somewhat concerned about OCS development off their coast.

With the new technology we have, the old fears of well blowouts from offshore development should be satisfied. The fear of subsea pipeline leaks should be alleviated by the performances we saw in the Gulf of Mexico during Hurricanes Katrina, Rita, and Wilma in 2005, category 5 hurricanes, which resulted in no major spills. The fear of water contamination by drilling rigs should be resolved since nontoxic chemicals can now be used.

The amendment also removes the moratorium that is imposed on oil shale production in the West. There is great new technology that permits production from in situ piping, not requiring open-pit mining of the oil shale. We recognize we have so much oil shale in this country. They say America is the Saudi Arabia of oil shale, holding 2 trillion barrels of potential oil production.

Also, the provision in the legislation regarding coal-to-liquids sets a goal of America producing 6 billion gallons of such fuels by 2022, one-sixth of what we theoretically will produce from biofuel by then. But it requires that the fuel not produce more life-cycle carbon emissions than gasoline and allows for waivers to protect the environment. Given that Alaska alone holds the world's largest potential coal deposit and that America contains about 60 percent of the world's total reserves of coal, it is vital that we find some way to utilize the fuel. Coal is the only fossil fuel we can develop where we know we have the technology currently to capture and store any carbon produced and to keep it out of the atmosphere.

We believe that bill could produce another 24 billion barrels of oil--enough to meet our Nation's total needs for 5 years. That will dampen world prices. But if we don't take these steps, we will continue to be in this exact same position of being held hostage by the world's oil cartel for decades until we have new alternative technologies. We have to stop letting ourselves be held over the proverbial barrel by the world's nationally owned oil companies.

We understand in this country that there is no good reason, with our technology, our environmental advancements, not to be producing more of the energy that it needs.

I do want to add a caveat because I have been talking about ANWR, offshore, and coal-to-liquids, that by passing this amendment, it does not mean we shouldn't move full speed ahead to promote noncarbon-emitting nuclear power, that we shouldn't do everything possible to produce more power from wind, biomass, hydropower, solar, geothermal, ocean energy, and all the other technologies. We need them all. What it does mean is America will finally show the world that we are willing to do our part in meeting our energy needs.

There used to be a mantra, if you will, that nations should think globally but act locally. In this country, we should produce more of the energy we consume rather than expect other nations to supply it to us. We have the ability to reduce our dependency on imported energy sources. We just need to get on doing it. I think this amendment will help us cut our prices now, but especially looking out for the long term, help us to avoid higher prices for the years to come.

Over the weekend, I was reading through the local columnists in the Anchorage paper. One guy had it right. He said: I think the Republicans need to be more supportive of alternatives and renewables, the Democrats need to be more supportive of increased domestic production, and the American consumer needs to just conserve more. Sounds like pretty sage and wise advice to me.

With all of those components--increased domestic production, focus on the future of energy, which is renewables and alternatives, and focus on conservation and efficiency--we have ourselves the start of a pretty good energy policy for this country.

I appreciate the time of my colleagues. I yield the floor.

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