Murkowski, Norton Say Oil Companies Will Bid for ANWR Leases Once Political Issues Settled; Defend Revenue Estimates

MURKOWSKI, NORTON SAY OIL COMPANIES WILL BID FOR ANWR LEASES ONCE POLITICAL ISSUES SETTLED; DEFEND REVENUE ESTIMATES

Alaska Sen. Lisa Murkowski and Secretary of the Interior Gale Norton today said they are confident oil companies will be active in bidding for oil leases, once Congress opens the Arctic coastal plain to oil development. The two also defended estimates of the amount of money ANWR leasing will bring to the federal treasury, once opened.

During a Senate Energy and Natural Resources Committee hearing into the Department of the Interior's proposed FY '06 budget, Murkowski said she was amused by a newspaper story in the New York Times last week that questioned the interest of some larger oil companies in bidding on ANWR leases.

"I found the article interesting or bemusing because I thought we were proposing to open ANWR to promote America's energy independence and not necessarily to enhance the operations of the oil companies, and I would ask your opinion or your feelings about whether you feel the industry will show up to bid on the leases when we are successful in opening up ANWR to oil exploration and development," asked Murkowski.

"First of all Senator, I agree with you that it is the American public and the American government that needs to be concerned about America's domestic production and our reliance on foreign oil. The multi-national oil companies can look wherever they want to around the world for their sources, so having our own domestic supply is a uniquely American concern," said Secretary Norton.

"At the time we actually do the leasing - first of all, this area would be open and the legal situation would be clear - and secondly, we would have additional seismic information on which the bidding will take place. … I certainly anticipate the companies will have interest," said Norton.

Murkowski noted that according to the U.S. Geological Survey, the coastal plain offers the best opportunity for the largest oil find in America. The estimates are that the plain has an even chance of producing 10.4 billion barrels - twice the oil contained in the East Texas oil field over the past 75 years - with a chance for the field containing 16 billion barrels, most of which will be economic to produce at current prices.

Murkowski and Norton also responded to Democratic complaints earlier this week that official estimates are too high for the amount of revenues that initial oil leasing will bring to the federal treasury. The Office of Management and Budget has estimated that companies will bid $2.4 billion for the first leases in the coastal plain and bid at least another $200 million for follow up leases - bringing total revenues within five years of leasing to $2.6 billion. Those revenues are anticipated to be split evenly with the State of Alaska. The Congressional Budget Office recently repeated its estimate that ANWR should generate just over $5 billion in lease revenues within the first five years -- $2.501 billion going to the federal government.

Norton said in her prepared testimony that she is confident in the revenue forecasts and Murkowski added during the hearing that she is also convinced that the estimates are conservative, given that ANWR has huge oil potential and is located near the trans-Alaska oil pipeline that greatly improves the economic feasibility of oil development.

Murkowski noted that the oil industry paid more than $2 billion for slightly less desirable oil leases in the Beaufort Sea (federal Lease Sale 77) two decades ago, at a time when oil prices were less than half of current forecasts.

"Given that experience and the experience the federal government had in leasing tracts in 1988 in the highly speculative Chukchi Sea frontier area, where bids reached nearly a half billion dollars for leases a thousand miles from the nearest means to get the oil to market, I have no concerns about the government realizing its current estimates for leases on shore, where all the technology is already perfected and where a transportation system is literally a few miles away," said Murkowski in her opening statement.

Murkowski also questioned the Secretary about proposals in the President's budget that would cut funding for land conveyance efforts in Alaska, the Land and Water Conservation Fund and the payment in lieu of taxes (PILT) programs - all of which affect Alaska. The Senator said she will be working to attempt to find money to restore funding to these and other programs during the budget process.

http://murkowski.senate.gov/pressapp/record.cfm?id=232719