Murkowski continues to push for Alaska

State’s senior US senator wants to see easier NPR-A development access, ANWR opened to exploration, approval for crude oil export

Steve Quinn

For Petroleum News

The election results are in, for the most part, and U.S. Sen. Lisa Murkowski returned to Washington poised to run the Senate’s Energy and Resources Committee and the Appropriations Committee’s Interior-Environment Subcommittee, which covers ANWR. Should this play out when a new Congress convenes in January, Alaska’s first state-born senator will follow the footsteps of her father Frank Murkowski 20 years later as Energy and Resources chair.

Serving as ranking member, Murkowski has long addressed the country’s needs to develop federal lands and waters, approve the Keystone XL pipeline and open up the Arctic National Wildlife Refuge for exploration.

She has also been a proponent for the U.S. exporting its resources as it continually becomes self-sufficient and able to meet domestic demand.

The following is an edited transcript of an interview between Petroleum News and Murkowski, and questions presented and answer by email.

Petroleum News: From a resource development standpoint, what do you see as this country’s priorities? Is it developing federal lands and/or waters? What about transportation? The Keystone line remains as divisive as ever. Why is that?

Murkowski: My priorities will be the same as they have been for some time. And we should be focusing on new production, infrastructure, permitting reform, exports, and a lot of other policy areas to make sure that our energy renaissance keeps going.

Rising North American production is offsetting production outages around the world. As a result, we’ve seen both crude and gasoline prices fall dramatically - Brent is down in the $80s from the $100s mid-year, and gasoline is down from the $3.70s to below $2 in many places.

It is a mistake to respond to this increased production by keeping federal areas closed off to development. Exploration and development takes years, even decades - and now is precisely the time we should be thinking about the future. For this reason, I remain committed to supporting expanded offshore development, including in the Arctic Coastal Plain and the NPR-A.

I think the administration probably wishes it had never let the Keystone decision go this long. But the longer it’s waited, the harder it has become for them to make what should have been an easy decision. I don’t think the line is that divisive; I think it’s supported by a strong majority of the American people, but opposed by a highly vocal minority.

Petroleum News: Speaking of NPR-A. There is a state and federal lease sale coming up Nov. 19. You’ve weighed in with some criticism. What’s missing?

Murkowski: The frustration you saw expressed a few weeks ago was you’ve got an administration asking for congratulations because they will be making available another round of leases in the NPR-A. The problem that we are facing is that it’s very difficult to get anyone to bid on these leases when they know getting access to them is practically impossible. When I say that all you have to do is look at the history. It took almost five years to get the permit for a bridge at CD-5. Right now there is a big back and forth over whether or not a road will be allowed to provide a connection to that bridge and to the pad. If you can’t have access to these places, it begs the question why anyone is going to spend good money to even lease in these areas.

Petroleum News: A while back news of North Slope oil being shipped to Asia made big news. Why is that important and can this mean for the rest of the country?

Murkowski: I think it gives us a reminder of Alaska’s potential when it comes to exports. It’s been since 2004 when we saw exports coming out of Alaska. There was a time when we engaged in a fair amount of oil export trade to Asia, to South Korea where this shipment went, but also to Japan, to China and to Taiwan. What we are seeing is a positive sign. I’m hoping the rest of the country looks at this and recognizes that the United States, not just Alaska but the United States, can do more when it comes to participating for global exports for our crude oil, so I think it’s good to see and hopefully we are going to be seeing more of it.

Petroleum News: Trade routes change all of the time, including parts of the country where our oil typically goes - California. They are now getting it from North Dakota. Do you think this can help Alaska?

Murkowski: I do. I think what we are seeing in the Lower 48 is I’ve been calling it a misalignment of what is happening to production coming out of places like North Dakota and the Bakken, and the Eagle Ford (Texas). We are seeing a large quantity of the sweet crude coming out of the north, but it’s going down to the refineries in the south, where they are simply not set up to accommodate this type of crude. We are in a mismatch. What Alaska is able to offer allows us a chance to deal with the downward pressure that we see on Alaska North Slope crude by providing for more outlets for Bakken and other Lower 48 crudes. So I think this is good not only for Alaska by allowing and encouraging greater Alaska exports, but it also helps with the price issues that we see and the price spreads between what we have with the premium ANS as the Lower 48 crude, so there are lots of different reasons to encourage this. But as you point out, the markets change, and as they change, the adaptability that we have in Alaska to be able move, whether it’s moving the product to the West Coast or moving the product to the Asian market.

Petroleum News: Speaking of Asian markets, the state and producers have their eye on the Asian markets as potential customers for North Slope gas. Do see that as a viable path for natural gas as well? As you know we’ve had a lot of plans on the table and even supporters remain cautious.

Murkowski: You’re right, we’ve have had a lot of plans on the table, and we’ve had a lot of plans on the table for many, many years. I certainly count myself among those Alaskans who were anxious about getting the timing on this, anxious about getting Alaska’s gas to market. We don’t want to be squeezed out of the worldwide market out there. But we do want to recognize the progress.

The fact that we do have the administration, the producers - Exxon, BP and Conoco - as well as TransCanada who have agreed on a proposal and they are working with that. That is encouraging. We know that we have an opportunity for our gas, in terms of the market, outside of our country. Because of the shale gas, the Lower 48 is not necessarily our market. It is clear the Asian market is a positive one for us. If you think about where we are right now in this process with the producers, TransCanada and the state, the proposal that is moving forward is progressing, and that’s critical

We are coming up to a pre-FEED stage right now. That’s a year to 18 months or so. We’ve got some important milestones coming up with regards to license to export - the pre-file application with FERC that was accepted this past month. Things are moving. They are progressing. While there is still a long way to go, there is reason for optimism on this and I certainly stand ready to do what I can at the federal level on this. The Legislature is going to have to be ready to deal with the fiscal terms on this still next year. That’s going to be important.

When people get perhaps frustrated with the pace, I do think that they need to stop and appreciate is what we are talking about with this gas line project, this is unprecedented in the size and scope. Right now we are talking about a project that is in the ballpark of $65 billion. It is world class. We say it’s big for Alaska and it’s big for the country. It is big for the world. I think we need to keep that in mind that this is no ordinary project. It is quite an undertaking to advance it. We are making progress.

Petroleum News: Are you seeing more willingness with the administration for export in general?

Murkowski: First on the natural gas side. What we have seen is the administration has a process they are moving forward. Within the queue, they have done a little bit of realignment to help expedite the process, though not nearly fast enough from my perspective. I believe the export of LNG out of this country is good for this country and it’s good for our friends and allies. I can’t tell you the number of Japanese people, for instance, who have come to visit me who have urged the administration to expedite the process for lots of good reasons. I have had many different conversations with the secretary of energy about this.

I think he clearly gets it. I think you do have a reluctance among some of the administration and some members of Congress who seem to be concerned that if we export, it’s going to result in less gas available here in this country, and our prices are going to go up. I think it’s an issue, quite honestly, that’s a matter of economics. If there is a higher demand for the natural gas because you have greater markets outside of this country, I think that will help increase production, which will, in turn decrease the cost.

I think on natural gas, we will continue to have the debate in the Senate about whether or not we need to do more to move forward more quickly on the applications that are still pending

I think the debate is internal within the Democratic Party because every Republican, at least in the Senate, has made it very, very clear they are most favorable of export of our LNG out of this country.

That’s the natural gas side. One the oil side, it is very interesting. I took point on this issue in March when I spoke down in Houston to a gathering of international energy leaders. I was the first member of Congress to outline the reasons why lifting the ban on oil exports was sound and good for the country. At that time, I made very clear that I wasn’t proposing to introduce legislation. What I wanted to do was advance the conversation, get people talking about it. We haven’t had a conversation about exporting our oil in this country for decades. We just didn’t think we had the resource for export. What’s happened is with all that’s coming out of the Bakken and out of the Eagle Ford, it’s really been a revolution, an energy revolution, for the country, so let’s figure out a way not only for Americans to gain but our allies and friends around the world.

So what has happened is my purpose, which was to kick start the conversation, we really have done just that. Larry Summers, who was one of President Obama’s policy advisors in his first term, came out with a speech a couple of weeks ago that laid down as well as anything I have read, the reason for exporting our oil. When you have somebody as high profile as Summers and somebody who was very prominent with this administration coming out in support, you know you’ve made some headway. I think next session you will not only further discussion and debate on it, but I think you will see some proposals for legislation to help lift that ban.

Petroleum News: OK, on to ANWR. Is this still worth pursuing after all these failed attempts? With Lower 48 boosting production does it make it more difficult to press this argument? Do you feel as though you’re in a race to at the very least keep these and other lands from being permanently locked from development? Is the state on the right track to shift 20,000 acres? Also does it help that Exxon and its partners are strategically poised with bringing Point Thomson on line?

Murkowski: There’s no question that ANWR is still worth pursuing. We’re still very dependent on foreign oil, for starters, and even as we fully end that dependence, we can also sell Alaska’s oil around the world. Remember, this is our most promising onshore conventional field. It’s very close to existing infrastructure and a very long oil pipeline. And it’s our best option for refilling a national security asset - the trans-Alaska pipeline - with American oil.

We’re talking about fields that could produce for decades - all the while creating thousands of new jobs, generating billions of dollars in revenue for every level of government, and helping to stabilize if not outright reduce oil prices. There is zero downside to opening the coastal plain.

With Republicans in control of the Senate, the odds of a wilderness bill going anywhere are dramatically lower. But even in a Democratic Senate with 60 members, not too long ago, we didn’t see that move. Permanently abandoning close to $1 trillion worth of resources is not something that is high on very many priority lists around here.

I do think the state is on the right track in seeking to regain those 20,000 acres, and I’ve supported their efforts. As I recently wrote to Interior: you could take a major step toward solving this by producing the official refuge map, so go ahead and do that for us. And, yes, I do think Point Thomson helps us make the case for opening this tiny fraction of the coastal plain. The 10-02 Area that we’re talking about is in the non-wilderness part of the refuge. If we can produce energy on one side of an artificial boundary, why not the other?

Petroleum News: On to the Arctic: you recently visited Iceland for the Arctic Circle. With all the focus on the races, this seemed to be off the radar, but in six months the U.S. takes over as Arctic Council chair. What did you learn about what other countries are doing and what can the U.S. accomplish with its two years as chair. Can Alaska be a hub of sorts for advancing this nation’s Arctic policy?

Murkowski: While the U.S. is just starting to realize the reality that it’s an Arctic nation, the other members of the Council are well aware that they are. The interest in the Arctic goes well beyond the eight Arctic nations, too, as evidenced by the 1,400 participants from 40 countries at the Arctic Circle Assembly.

The rest of the world is recognizing the growing importance of the Arctic, and it’s time the U.S. does the same.

We are an Arctic nation because of Alaska, but the Arctic needs to be a national priority - not just a regional or state issue. Alaska and Alaskans can help lead the effort, but in order for the U.S. to achieve the full benefit of being an Arctic nation, it needs to be a national priority.

My hope is that the U.S. term as chair will follow the same direction Canada did as far as focusing on development for the benefit of those who live there.

Petroleum News: As a follow-up, I hear how the administration is viewing this as a chance to advance a climate change agenda ahead of an economic development purpose? Does this concern you? Would this be an opportunity missed if the agenda remains too narrow?

Murkowski: We cannot forget that there are people who live in the Arctic. Climate change is an important topic to be part of the conversation, but the people who live there are affected in very real ways if we insist on only talking about climate change and ignoring everything else.

It’s important to remember that the U.S. chairmanship on the Arctic Council will span through the next presidential election. The U.S. agenda needs to be one that will survive that election if it is to be successful.

An agenda focused entirely on climate change will not have the broad support of Alaska stakeholders, and it will not survive to the end of the U.S. chairmanship.

Petroleum News: You’ve used the words all of the above when it comes to energy and resources. Do you believe Alaska can serve as a blueprint for that with the state’s portfolio of oil, hydro, wind, etc?

Murkowski: Absolutely. Our state has great opportunity for all types of energy development, including geothermal, hydropower, wind, biomass, tidal energy, marine hydrokinetic, coal, methane hydrates, unconventional fuels, and more. You name it, we have it. I’m not really aware of anything that we lack, actually. Our energy sources are already being used successfully and there is a lot of opportunity for growth and expansion.

The biggest problem that we’ve seen is that this administration is happy to borrow the phrase ‘all of the above’ - but in this administration’s application, we see that it doesn’t include all 50 states, and certainly not Alaska. We have repeatedly seen very one-sided policy decisions that have harmed, and not helped, my home state.

Petroleum News: Your office recently released a report on an unstable region, in this case Iraq. There are other regions in question. What could this mean for our country in taking the lead as a producer and supplier?

Murkowski: I released those reports on Iraq because no other situation so clearly illustrates the importance of energy in the 21st century. We must do a better job of integrating energy policy with national security policy because the two are inextricably linked.

I understand that some markets are global. But whether it’s oil, rare earths, or some other commodity that we import in great volume and at great cost, there is no substitute for doing it ourselves. If we have the resources, and we need to use the resources, we should find ways to produce them.