By Jenny Neyman
Even when coming from other energy-producing states, it’s good for lawmakers to get a firsthand look at Alaska and the unique challenges and opportunities it has for energy production, said Sen. Lisa Murowski, R-Alaska, while playing host and tour guide to senators from North Dakota, Louisiana and Oregon in recent weeks.
“Particularly for people that are in policy-making positions, they need to understand that their knowledge base might not necessarily translate to what actually happens here,” Murkowski said, referencing visits from Sen. John Hoeven, R-N.D., and Sen. Mary Landrieu, D-Louisiana. “Both of them, I think, would tell you, ‘I am an energy senator. I know and I understand it.’ But when they come up here and see what it is that we deal with, how we operate here, what some of the confines and challenges are, they’re like, ‘Wow. I didn’t understand it,’ because they have made certain assumptions that they know what it’s like because they have oil and gas exploration and production. And I think it’s important to recognize that it is different here and to figure out how you ensure that a state like ours can have the same advantages and the same benefits that a state like North Dakota or Louisiana can.”
Murkowski has been making a tour of the state since Aug. 10, including stops on the North Slope to check in on Shell Oil’s proposed offshore development, and a visit with Sen. Hoeven to ConocoPhillips’ Alpine Oil Field.
“We’re always looking over our shoulder at North Dakota now because they’ve taken over in terms of their production. It was really interesting having him there because I somehow or another assumed, because he came from an energy-producing state that he would understand Alaska’s situation,” Murkowski said.
However, North Dakota has less than 3 percent of its land owned by the federal government.
“He’s looking at this very small pad — one of the concerns that they have is there’s no place for storage of any kind,” Murkowski said. “And he says, ‘Well, why don’t you just expand your pad?’ And you say, ‘Well, that’s a little bit difficult.’ And he says, ‘Well, how come you don’t build some roads around here?’ And we kind of chuckle, but in North Dakota, that’s just not an issue. You want to access your resources, you build a road. You want to get from here to there, you build a bridge. You want a bigger storage pad, you build a bigger storage pad because you’re negotiating with either private individuals or the state. In Alaska we’re negotiating with the federal government, and we are not in a good, strong negotiating position.”
Next was a stop in Kodiak with Sen. Landrieu for a field hearing on the Coast Guard’s readiness to handle the increasing activity in Alaska’s Arctic waters.
“We’re not just talking oil and gas, we’re seeing a volume of shipping traffic coming through the Bering Straits that is unprecedented,” Murkowski said, in making a push for the Coast Guard to home port a national security cutter in Kodiak.
Following was a stop in Katmai National Park, then a swing through Fairbanks and down to Ketchikan and Metlakatla to talk about hydropower intertie capacity. Aug. 14 brought Murkowski to the Kenai Peninsula, followed by a stop in Anchorage to hold a conference on the health care reform. Then stops in Fairbanks, the Matanuska-Susitna area and the Interior, before meeting with Sen. Ron Wyden, D-Ore., and taking him to the Renewable Energy Fair at Chena Hot Springs Resort on Sunday, and to tour Cook Inlet oil and gas facilities on Monday.
“I want him to see our potential with what we’ve got in the inlet here, what we’ve been producing for 40 years and doing a mighty fine job of it,” Murkowski said.
The pair flew out to Hilcorp’s Steelhead oil platform, acquired from Chevron Corp., and got a tour highlighting how the company is putting old wells and infrastructure to new use.
“Essentially, they’re going into the same wells that have been out there for years, for decades, and reconstituting those. They’re more efficient, they’re more productive so it’s less risk, not only from an environmental perspective, but from a financial perspective. It’s reasonable yield. And, again, what we’re seeing in terms of input to the local economy, there’s over $100 million plus that is being injected into the operation and maintenance of these platforms out there by one company. That translates into jobs, that translates into a stronger economy here, but they’re doing it not by expanding their footprint. You’re not seeing new platforms, necessarily, out there. They’re being smart with what they have, the assets that they have bought into,” she said.
Particularly, Murkowski wanted Wyden to see ConocoPhillips’ liquefied natural gas facility in Nikiski, in hope of swaying his previously reluctant position to endorse LNG export with the argument that natural gas export in Alaska is an entirely different animal than what is being debated in the Lower 48.
“He has been very, very cautious and has made some statements that he’s not so keen on export of our natural gas. What I have been trying to do is position it so Alaska’s LNG is viewed differently than the shale gas in the Lower 48. I want us to be able to get a gas line. We can’t do that unless we have a market. The Lower 48 market is flooded. Our market — natural market, historical market — is Asia. So I have been courting the Japanese, South Koreans, basically anybody who will listen. But it’s important that we have support from the Alaska side to work towards export,” she said.
Following the tour, Wyden was complimentary of his Alaska visit and spoke of an openness to at least consider the message he had been hearing in Alaska.
“Sen. Murkowski and folks up here are making some arguments that certainly need to be followed up on, that, from the seat of my pants, make some sense. The argument, to me, when you really strip it down, is that this (Alaska LNG export) isn’t going to affect the prices in the United States. This is gas for which there possibly might not be a market in the Lower 48, depending on what happens with transportation, so I want to have a chance to do my due diligence and really do my homework before I lock into a position, but I think Sen. Murkowski and folks here in the inlet are making some good arguments,” he said.
Wyden and Murkowski have been trading tours — with Murkowski previously visiting Oregon to see offshore energy projects and a solar manufacturing plant. The two are in line to be the chair and ranking minority member of the Senate Energy and Natural Resources Committee, depending on whether the Republicans or Democrats control the Senate following the November election.
“We’re a team working on a lot of different projects, and having better understanding as to the interests of our respective states or our shared interest makes it easier to work together,” Murkowski said.
In Wyden’s home state of Oregon, he said that debate over natural gas, to the point of pitched battles, has focused on issues of importing until quite recently.
“Literally in my home state up until it feels like 15 minutes ago we were fighting about imports. We were all talking about natural gas — import, import, import — and I kept trying to find a way to work out agreements with people. Now we’re talking all about exports,” he said. “… I can tell you, just this last week with gasoline hovering around $4 a gallon in my home state, folks were coming up to me and saying, ‘Well, we’re hearing all this talk about exporting, maybe we should keep some of this here to lower the price.’ So we need to think through what an energy export policy ought to constitute.”
The scope of the issues goes far beyond just Oregon or Alaska. It’s a national topic both senators expect to tackle in the next Congress.
“This is the first time in years we, the country, have been faced with the prospect of exporting energy in a serious way,” Wyden said.
It’s a topic he intends to do his homework on before deciding his stance, regarding exports from the Lower 48 or Alaska.
“In the Lower 48 we’re having the discussion with respect to natural gas and some are arguing that there is so much natural gas that we’re going to have a solid year for our consumers and our businesses and prices are going to stay reasonable and, shoot, we can just export it like crazy. That may well be. I just want to make sure that we have really thought it through,” he said.
Murkowski also anticipates Congress will discuss tax structures, as it relates to oil and gas. With Alaska debating that same issue in terms of state taxes, it’s a particularly relevant issue to her home state.
“We all know we’ve got some issues going on at the state level, but you also need to understand how that integrates with the federal taxing structure,” she said. “… There’s a lot of discussion right now in the Congress about taxes and tax reform. I happen to believe that as we deal with our debt issues and as we deal with the fiscal cliff that is looming, that as part of a positive path forward we’re not only going to have to figure out how to rein in spending but we’re going to have to look at our tax structure very critically. And I think we need to do significant tax reform.”
Financial reasons, in fact, are part of her argument to Wyden for supporting natural gas exports from Alaska.
“I also need him to understand the value of Alaska’s natural gas to our nation, because when we can be exporting this to Japan or South Korea, it’s going to help with our balance of trade. It’s going to help with our deficit issues. It’s going to help our country,” she said. “I need him to know and understand how we are a leader for the country and view it in that perspective, rather than just Alaska’s little domain up here. Educating colleagues is hugely important.”
Educating herself is just as important, she said. In that regard, her tour through the state has been as energizing as it has been informative, from knocking 25,000-year-old dust off her Dansko shoes after a visit with Wyden to the permafrost tunnel outside Fairbanks, to a trip out to the Aleutian Islands of Shemya, Attu and Adak, to Interior communities of Tanana, Ruby, Rampart and Emmonak to talk about needs of rural villages, to the fishing time she was able to squeeze into her trip home.
“It’s also equally important that I remember that I don’t know it all, either,” she said. “As a senator who represents an incredibly diverse state, I need to make that sure I’m not making assumptions about what I think we need out there, that I can actually see it for myself. I’ve had the opportunity to live in so many different regions, and that helps me, but you should never ever assume it’s the way it was when you were a kid, or that because you’ve landed in the airport there in Kotzebue, you know what going on in Kotzebue. You need to be able to spend time with people.”