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Vol. 10, No. 31 Week of July 31, 2005
Providing coverage of Alaska and northern Canada's oil and gas industry

National energy policy clears Congress

Alaska senator played key role in crafting bipartisan legislation; sweeping measure offers something to everybody

Rose Ragsdale

Petroleum News Contributing Writer

As a new energy bill emerged from conference July 26, Congressional leaders predicted Congress would send a sweeping national energy policy to President Bush for his signature by Aug. 1, meeting a self-imposed deadline.

H.R. 6, the first such energy legislation in 13 years, literally covers the waterfront, offering something for everyone from climate change to oil and gas leasing.

Hailed by proponents as legislation filled with conservation and efficiency measures that reflect the will of the bipartisan, bicameral majority of Congress, the energy bill was expected to win the approval of the House on July 28 and head to the Senate for a final vote July 29.

In praising H.R. 6, Sen. Pete Domenici, R-N.M., who chairs the Senate Energy and Natural Resources Committee, said provisions of the energy bill would shave 10-40 percent off the anticipated growth of energy demand by 2015, according to the Alliance to Save Energy. He also cited the American Council for an Energy Efficient Economy’s estimate that conservation measures that survived the conference committee debate will save 50,000 megawatts of peak electricity demand by 2020. That’s the equivalent of 170 300-megawatt power plants, Domenici said in a statement July 26.

Sen. Lisa Murkowski, R-Alaska, also a member of the conference committee, called the legislation “balanced.”

Murkowski said the bill’s climate change title is the first ever crafted by Congress. She was an original co-sponsor, with Sen. Chuck Hagel, R-Neb., of several bills that were included in the final energy bill to address climate change.

The bill creates an Interagency Coordinating Committee on Climate Change Technology to create technology to help capture greenhouse gases and keep them out of the atmosphere. It also works to prevent developing nations from adding to greenhouse gas emissions by reducing trade barriers for the U.S. to export new technology to reduce gas emissions, and by authorizing overseas technology demonstration projects.

But critics say the bill does little to corral high oil prices and stops short of ensuring real and immediate reductions in the production of ozone-eating greenhouse gases.

At one point during the Senate debate, Sen. Joseph Lieberman, D-Conn., described the Hagel amendment as “fiddling while the earth warms.”

ANWR not in energy bill

Most of the provisions introduced by the Alaska delegation made the final cut and remained in the energy bill. However, a much-criticized provision to open the coastal plain of the Arctic National Wildlife Refuge to oil and gas exploration in the House bill was dropped in conference after failing to make it into the Senate version. Republican leaders wanted to avoid a threatened filibuster by Senate Democrats if ANWR drilling was included. The ANWR provision, meanwhile, is included in a budget reconciliation package that Congress expected to consider in September after its August recess.

“It would appear that Alaska is getting what we wanted and expected out of the energy bill,” said Mike Chambers, a spokesman for Gov. Frank Murkowski. “When it finally goes through, (the bill) is going to get a warm reception in Alaska,” he said July 27.

In addition to previously reported provisions (See July 17 and July 24 stories in Petroleum News), the bill should provide a major boost to construction of a modern, less expensive power system in Alaska and further a variety of energy projects that could greatly aid the state’s economy and employment in the future, Murkowski said.

U.S. Rep. Don Young, R-Alaska, who also served on the conference committee, joined Murkowski in protecting most all of the Alaska provisions placed in the bill by the House and Senate earlier in the year — provisions highlighted by authorization of a $550 million rural energy development program.

During the final day of the conference, they also succeeded in reauthorizing the Oil Spill Recovery Institute, which conducts research on ways to combat and prevent oil spills in northern climates. The OSRI was made permanent to conduct long-term research on spill impacts as long as oil development occurs in the state.

Murkowski also sponsored a measure that extends an agreement between Israel and the United States to cooperate on energy research and development activities.

Alternate energy funded

The conference bill’s roughly $11.5 billion tax title includes a tax production credit for wind turbines, geothermal energy and biomass that may make such projects more viable in Alaska. The bill also includes a $400 million tax credit to help refineries afford the cost of producing ultra-clean diesel fuels in the future.

Other tax breaks will encourage ethanol production, renewable energy sources, and capture of carbon dioxide, hydrogen-fueled vehicles, and new energy efficiency standards for appliances, buildings, buses and trains. They also will help to reduce fuel consumption by planes; set up a national bicycle program; improve insulation in homes and double funding to $5.1 billion for the Low-Income Home Weatherization Program.

Other previously reported Alaska specifics of the bill include: Indian energy assistance; rural energy assistance; and coal production assistance. The bill includes $200 million per year in aid for projects to utilize the nation’s coal resources, with the aid especially intended (70 percent) to help construction of clean coal gasification combined cycle plants. The State of Alaska has two such projects under potential development, one intending to use Beluga coal — the Silverado Green Fuels — project to make boiler fuel for export to the Pacific Rim, and a second project that intends to use Healy coal to make aviation and diesel fuels for use in the Alaska market.

The bill also includes the Power Cost Equalization program, National Petroleum Reserve Alaska oil and gas leasing changes, Alaska offshore royalty suspension, gas hydrate research and development assistance, Cook Inlet carbon dioxide oil enhancement program, Healy Clean Coal loan, renewable energy provisions, Alaska Natural Gas Pipeline provision, Alaska Hydropower bill, Arctic Engineering Research Center and the Barrow Geophysical Research Facility.

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