Murkowski presses multiple oil issues

Alaska’s senior senator urges lifting oil ban, says federal officials send positive signals on legacy wells, Arctic exploration

Wesley Loy

For Petroleum News

U.S. Sen. Lisa Murkowski, R-Alaska, is continuing to hammer away at a trio of issues of interest to the oil and gas industry.

First, she repeated her call for the federal government to lift its virtual ban on exports of domestically produced crude oil.

Second, she said the Alaska chief of the Bureau of Land Management recently gave her a favorable report on prospects for cleanup of so-called legacy wells in the National Petroleum Reserve-Alaska.

Lastly, the senator said an Obama nominee for a high-ranking post in the Interior Department pledged to improve the department’s permitting process and “provide greater regulatory certainty for oil and natural gas exploration in the Arctic.”

Export oil?

She has been outspoken lately in urging the federal government to lift the prohibition on crude oil exports.

The ban does have some exceptions. Exports into Canada are allowed, and so is export of Alaska crude. But most if not all Alaska oil is sent to West Coast refineries, or is used within the state.

Murkowski argues removing the export ban is necessary to provide a release valve for surging U.S. crude production. Lower 48 plays such as the Bakken and Eagle Ford are driving the surge.

“The prohibition on crude oil and condensate exports threatens record-breaking U.S. oil production and American jobs by creating inefficiencies, gluts and other dislocations,” Murkowski said.

The Senate Energy Committee on Jan. 30 held the first hearing in 25 years on the export ban, which was put in place after the Arab oil embargo of the 1970s.

Murkowski believes the Obama administration has the authority to lift the export ban without congressional action. And administration officials have themselves suggested it might be time for the ban to go.

“The International Energy Agency has warned that maintaining the ban may actually result in shut-in production,” Murkowski said. “Lifting the ban is about increasing domestic production and creating jobs.”

Some in Congress, as well as some U.S. refiners, oppose lifting the export ban. Others, however, believe relaxing the ban would be for the best.

“I am not saying that President Obama should open the spigot willy-nilly,” Amy Myers Jaffe, of the UC Davis Graduate School of Management, said in written testimony provided to the committee. “But clearly ... our energy situation is changing and we should not cling to historical policies because they are familiar and thereby politically comfortable.”

Legacy wells

These legacy wells don’t produce and are now abandoned. State elected officials and regulators say the federal government has neglected the sites, failing to properly plug many wells and clean up surface junk.

The BLM, which manages the petroleum reserve, has put together a multiyear plan to remediate the worst of the well sites.

The agency also has said that half of the legacy wells require no action because they already have been remediated or pose no threat to people or the environment.

Murkowski has been pushing for faster cleanup, and has worked to line up funding.

The senator said she met Jan. 30 with the BLM’s Alaska director, Bud Cribley, and the agency now says it’s “able to accelerate cleanup work.”

Murkowski in 2013 helped secure $50 million that can be used to remediate and close old federal wells. She said another $1 million was included in the recent consolidated appropriations bill.

“Director Cribley indicated that having this sizable amount of funding upfront should allow BLM to more efficiently make headway in cleaning up the legacy wells,” Murkowski said. “I’m confident that over the next few years the bureau will be able to resolve many of the most pressing environmental issues stemming from the abandoned legacy wells.”

Murkowski said she “secured a commitment” during a Feb. 4 confirmation hearing for Janice M. Schneider, the president’s nominee as assistant interior secretary for land and minerals management.

The commitment, Murkowski said, was to improve the Interior Department’s permitting process, and to provide greater regulatory certainty for offshore oil and gas exploration in the Beaufort and Chukchi seas.

Schneider currently is a partner in the Latham & Watkins law firm in Washington, D.C.

Part of the assistant secretary’s job is overseeing two agencies that regulate offshore oil and gas activity, the Bureau of Ocean Energy Management and the Bureau of Safety and Environmental Enforcement.