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Providing coverage of Alaska and northern Canada's oil and gas industry
July 2006

Vol. 11, No. 31 Week of July 30, 2006

Hope for ANWR: Congressman offers bill with win-win provisions for both sides

It could take the homespun practicality of a California farmer to dig up enough support in Congress to pass a bill this year that would open the 1002 area of the Arctic National Wildlife Refuge to oil drilling.

At least ANWR supporters hope that will result from legislation crafted in the U.S. House of Representatives just before Congress was scheduled to adjourn for the annual summer recess July 28.

The bill, introduced July 26 by Rep. Devin Nunes, R-Calif., would allow oil exploration in the 1002 area of ANWR (coastal plain), provided the resulting $40 billion in federal lease and royalty revenues would fund research and development of domestic alternative energy supplies.

A second-term congressman from the agriculturally rich San Joaquin Valley of California, Nunes credits a trip to ANWR four years ago with opening his eyes to the realities of the arctic drilling debate.

“I expected to see running water in streams through trees and animals running around,” Nunes said in a speech on the House floor in May. “Instead, it was a barren slope with nothing there.

“With gas prices at $3 a gallon and nearing $4 a gallon in some places in California, it’s time the Congress passed this legislation and made this into law,” he added.

ANWR to fund alternative energy R&D

Known as the American-Made Energy Freedom Act, Nunes’ bill calls for the creation of a trust fund into which the estimated $40 billion in lease and royalty revenues from ANWR over 10 years would be deposited.

Nunes said the bill represents a comprehensive national energy policy that addresses America’s growing energy needs and the nation’s current dependence on foreign sources of energy.

“Congress has a responsibility to deal with our nation’s energy demands in a bipartisan manner that benefits all Americans,” he said in a statement July 26. “As such, we have proposed the largest investment in alternative energies in the history of the United States, and most importantly, it can all be done at no expense to the taxpayer.”

All monies in the trust fund would only be used for development of new home-grown technologies that will fuel America in the future, Nunes said.

ANWR supporters say the trust fund would, in fact, fund many of the alternative energy provisions of the Energy Policy Act passed by Congress in 2005.

Specifically, the fund would support the following provisions:

• Cellulosic Ethanol Tax Credit. Cellulosic ethanol, the next generation ethanol, is a renewable fuel produced from plants and agriculture waste which can be found in all 50 states. This can be developed as a primary fuel for cars and trucks to potentially displace our dependence on foreign oil.

• Coal-to-Liquid Tax Credit. Coal liquefaction can produce a virtually sulfur-free diesel fuel which is cleaner than conventional diesel and can also produce jet fuel. At the very least, this technology could produce about 2.6 million barrels of fuel (109 million gallons) per day by 2025 and meet 10 percent of projected U.S. oil demand.

• Solar and Fuel Cell Investment Tax Credits. Extends the residential and business tax credit through 2012. In California, residential solar installations rose 53 percent in 2004, thanks to a generous state rebate program. This could be magnified with expanded federal incentives.

• Fund Emerging Renewable Fuels Development. Allocates funds to the Advanced Biofuel Technologies Program, the Integrated Biorefinery Demonstration and University Biodiesel Programs, the Improved Biomass Use Grant Program. All of these programs foster the production technology, facility construction, and capacity improvements for renewable fuels.

• Fund Clean and Advanced Energy Loan Guarantee Program. Provides financial commitment by investing in projects that avoid, reduce, or sequester air pollutants and greenhouse gases.

Bill could attract more ANWR votes

“With rising turmoil in the Middle East and other oil-producing nations, we can no longer outsource our energy stability to countries that put our national security at risk. Funding future home-grown energy innovations is what has to be done to produce lower prices at the pump and increase security in America,” Nunes added.

Observers said GOP strategists believe that funding alternative energy with ANWR revenues will gain additional votes for the legislation in both the House and U.S. Senate, especially in the Midwest.

No further action is expected on the measure before the House adjourns July 28.

Action on offshore drilling measure

The U.S. Senate, meanwhile, voted 86-12 July 26 to begin work on an election-year bill that would open Lease Area 181, a large area of the central Gulf of Mexico, to oil and gas drilling.

It directs the U.S. Department of the Interior to begin offering oil and gas leases for waters that lie 125 miles to 230 miles off Florida’s coast. The bill would guarantee that much of Florida’s Gulf coast would be protected from drilling until 2022.

But it would fall far short of a broader offshore energy development measure already approved by the House.

And opponents fear the legislation could open the way to lifting a federal drilling moratorium that has protected 85 percent of the country’s Outer Continental Shelf from New England to Alaska for a quarter century.

Lease Area 181 and an adjacent area cover 8.3 million acres and are believed to contain 1.3 billion barrels of oil and 5.8 trillion cubic feet of natural gas, enough to heat 6 million homes for 15 years. The area has been off limits to development largely because of concerns from Florida that drilling could jeopardize its beaches and lucrative tourist sector.

Congress may consider ANWR after recess

Senate Resources Chairman Sen. Pete Domenici, R-N.M., reiterated his support for ANWR drilling legislation July 19. “Opening ANWR is the most meaningful thing Congress can do for domestic oil production,” Domenici said, vowing to take up ANWR legislation as soon as possible.

With gasoline prices soaring at record levels, ANWR drilling supporters are hoping that voters exert considerable pressure on their representatives to take action on energy legislation when Congress reconvenes Sept. 5 after the August break.

The pending energy legislation likely will be used by members of both parties to show constituents concerned with high gasoline and heating fuel prices that they are tackling the energy issue, observers say.

However, none of the three ANWR bills now before Congress are expected to pass before mid-term election in November.

—Rose Ragsdale






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