Young works to educate federal lawmakers

Alaska’s congressman brings colleagues to Alaska, stressing importance of state’s resources; continues to press for ANWR drilling

Steve Quinn

For Petroleum News

Any federal lawmaker who isn’t convinced about the prospects of Alaska’s role toward increased domestic oil and gas production and in boosting the economy, check in with Alaska’s lone Congressman Don Young.

He’ll be happy to show you around the state as long as you’re willing to make the seven-hour flight to the state and spend several more hours on a plane surveying the vast fields and Arctic waters that contain billions of barrels of reserves.

Young recently played host to House Resources Committee Chairman Doc Hastings of Washington.

In July the committee passed the NPR-A Access Act designed to expedite permitting.

Young recently discussed Alaska’ resource development prospects with Petroleum News, highlighting his intentions to bring more lawmakers to Alaska next year.

Petroleum News: Talk about this technique of bringing people like Doc Hastings to the state.

Young: Next year I’m going to bring a group to Alaska. We’ll show them Southeast; we’ll show them the Railbelt; we’ll show them the Interior. So they can visualize the challenges we have, the people who are there and the resources we have. When I see 15,000 high paying jobs leaving Southeast, Alaska — that’s wrong. It goes to development of resources. You won’t get that employment back until we start manufacturing in the United States. A lot of people say it’s the cheap labor overseas. To some degree it is. The reality, labor is relatively high. It’s high in Europe. It’s relatively high in Japan. In China, they are going huckly buck. It’s really not labor. It’s the delay and return on investment when we have to go through a process of getting a permit not only from the federal government, but from the state, and from the borough and from the city to put a manufacturing plant in. If it takes 10 years to get your money back why would you invest in the United States? You wouldn’t. You’d go where you can get a return in five years. We have become over governed. We are over regulated. It’s not just federal. The state is equally as bad.

Petroleum News: Who do you think should come to Alaska to see what it can contribute to the nation?

Young: I want to get key players I’m going to try to get six Republicans and six Democrats that are interested in resource development and investment and see if they can make sure they understand it. They won’t always agree because their constituents don’t understand it. I remember Sen. Barbara Mikulski of Maryland landed in Prudhoe Bay, went to Kaktovik and said is this it? She went back and voted against it because her people don’t know the difference. That’s the real challenge. We are a service-oriented state. We have a good fishing industry; we have the mining industry getting better; but the oil is declining, we have no timber industry, so we are living primarily with tourists. So, I’m going to bring people up there to show them and warn them as we fly over so they can visualize it as we land and visit these communities.

Petroleum News: You said six Democrats and Republicans. Does it help to reach across the aisle like that?

Young: I’ve always done it that way. When I was chairman of transportation, (former Minnesota Congressman) Jimmy Oberstar, he and I worked real close together and we never had an adversarial vote during the six years I was there. We had united 75 members who were very loyal to the committee. That’s how we got a lot of things done.

Petroleum News: Why is it taking D.C. so long to view Alaska as a resource state?

Young: A lot of it is our fault. I say that with no doubt in our mind. It’s when this whole land battle started. I tried talking Gov. (Jay) Hammond into shutting down the pipeline. It was our oil and draw attention to that. You shut down 2 million barrels of oil and you get their attention about how important this state is. It’s a big state. Down here they just don’t quite understand that.

Petroleum News: Do you believe people still are taking the oil production for granted with the consistently high price this year?

Young: That’s exactly right. We still have people in Anchorage that frankly who don’t know their broadside from their backside when it comes to economics. Unfortunately, too many Alaskans, as long as they get their permanent fund dividend checks and they have a job, they are happy. They don’t realize that’s coming from one source of income, a diminishing source: oil.

That’s from Prudhoe Bay, which has been in place for about 35 years. People think well it won’t stop. The truth of the matter is that it can stop. That’s sad because we have tremendous oil and gas capability in Alaska and the rest of the United States by the way. We have tremendous gas. The (Obama) administration is coming down with new frack regulations to keep them from getting the gas.

That’s one reason the economy won’t grow back. If we drop gasoline prices to $2.50, every family would have an increased income probably from around $1,500 to $2,000 a year. That would be a great boom for money to buy other things from money which right now they are pouring money down the tank. We sit here on our backside while China is buying everything they can as far as natural resources They have to have 25 million new jobs a year to keep their economy going. They are manufacturing from our natural resources and sending it back to us.

Petroleum News: One of the key battles is ANWR. Why do you keep pushing for it? Some call it a wheel spinning exercise.

Young: I don’t believe that. I will pass it out of the House. It will be the 12th time I get it out of the House. The Senate probably won’t pass it because of Harry Reid of all people. If Obama were smart, he’d come out in favor of it. We could put 2 million barrels in that pipeline, and it would drop the price of gasoline dramatically because the other countries would see we are serious about this, and we can get this economy back on a road to recovery. I’ll pass it out of the House, then it will get over to the Senate. If we control the Senate next session, we’ll probably get it passed and hopefully we’ll have a new president and someone will see the logic of opening ANWR. It is not the pristine area they are talking about. Never has been; never will be. We have an infrastructure in place that needs more oil. It isn’t (Alaska’s) oil. It will be federal oil, so we won’t get much money out of it. It’s important to create the jobs to keep the pipeline going. I do think we will eventually get it done. I said I want to live long enough to get it done. In fact I told (U.S. Rep. Ed) Markey, if we get ANWR opened up, I might quit. He damn near took me up on it, but I’m going to get ANWR done before I get out of here.

Petroleum News: Moving offshore, what are your thoughts on Shell’s efforts to get permits to begin drilling and some of the hurdles they’ve encountered?

Young: My biggest concern is they might drop out. They’ve got $5 billion out there invested, starting with $2.5 billion on the lease bid. This is all gobbledygook. One thing that’s bad about the president. He says I’m all for leases on the Beaufort; I’m all for leases on the Chukchi Sea. The reality is that doesn’t solve the problem. If the agency doesn’t provide the permits, we aren’t going anywhere. I’d be dog gone reluctant to bid on a lease if I didn’t have some assurance that I could actually drill the area. I’ve said all along in the new ANWR bill, we are going to put a provision, if we open it up, it will be drilled — like we did the pipeline. That’s the reason we got the pipeline built. It was my provision that said there will be no lawsuits.

Petroleum News: Speaking of pipeline, what are your concerns about throughput in the pipeline?

Young: I have big concerns. Everybody knows it’s declining. It’s heavier oil. It’s more waxy in content as everybody knows and that makes it more difficult to keep the line moving smoothly. If it weren’t for the refinery in North Pole, the oil might not be warm enough to go all the way to Valdez. We have to increase that. I think we have to look at new ways to do it or get the Chukchi open. The goal of the environmental community is to make sure the pipeline finally gets to 300,000 barrels and they have to shut down and can’t run it, and it has to be pulled up. This is the Pelosi, Waxman, Schumer, no fossil fuels philosophy. I’m a big believer we will get that pipeline moving. If we don’t it will be a bigger problem, not only financially to the state, but the bigger problem is to the rest of the nation, which is really scary. We still import 72 percent of our oil, yet we have a tremendous amount of oil in the north, and we have a tremendous amount of oil in other areas such as off the coasts of California, Virginia and Florida. We just have lacked the will to do it because it wasn’t popular. Look at the battle of the (Alberta to Texas) Keystone pipeline, which is still not over. It’s well and good and I would support it. It’s a still a foreign oil source. Now they are better neighbors but we should be using our own oil; instead, we are still going to pay $100 a barrel.

Young: Oh, yeah I’m fine with it. We get more oil from Canada than we do from Venezuela. People don’t quite know that but we do. At least they are friendly neighbors, but still, why are we buying from a friendly neighbor when we can be producing our own? That’s the thing I don’t understand. To me that’s not being very smart. It’s better buying from them than having it shipped in from Kuwait and Iran and Libya.

Petroleum News: There have been issues with pipelines the last five years. There were leaks on the North Slope; Enbridge had a leak in Michigan; Exxon had one in a Montana river. Are you concerned about pipeline integrity?

Young: I have concerns about transportation of any form. None of it is failsafe. There is no other way to move oil. The biggest way is to make sure it’s kept up. Remember this pipeline is 35 years old. The one in Montana, who in the world would have thought that would have flooded? The one in Michigan, that’s another old system. Anybody who can show me another way to bring oil and gas in years old, I’m listening.

Petroleum News: If pipelines aren’t maintained, does it make it more difficult for you in D.C?

Young: The money being spent is in maintenance; it’s not being spent in development. It’s like trying to get rich by using funny money. You have to dig and be developing new wells.

They said they saw two rigs leaving the Port of Seattle and going to Alaska. In the first place they didn’t check it out. Second place, they were probably going up as those rigs they were replacing have been worn out.

So the money being spent is on maintenance. That’s great for work now, but it doesn’t increases the flow of oil. Then it decreases over time and that’s a big problem.

Petroleum News: Do you still believe there can be a market for a large-diameter gas line?

Young: No. No one is going to invest what I expect to be a $40 billion project and bring gas down to a market that is already saturated. There won’t be a return on the money. I always said that would be a challenge. Frank Murkowski missed that open window and he told us that. If we had that agreement then (2005), we would have had a pipeline started. We lost that. I still insist we’ve got to look at the possibility of export because there will be a use for it in China and Japan. The state itself has got some real challenges. Whether we find some more gas in Cook Inlet or not, I don’t know. We’ve got the rig up there, but it will relieve the pressure on the Railbelt. But Fairbanks is dying because of the high cost of energy. No one can expand stores. Those are the questions we are going to be faced with. Either we build a bullet line and bring it into Fairbanks, then Anchorage and down, or we build a larger line at least as far as Delta, maybe to Fairbanks, so later on if there is a market in the Lower 48, then we can take into the Midwest. But that’s not going to happen for another 40 or 50 years. You know I’m paying $7.50 for heating oil in Fort Yukon right now. It’s something you have to have. There’s no doubt about that. We’ve got a lot of opportunities right now, if we would just do it. The other solution would be if you don’t build a gas line, is Susitna Dam, which I have seen the Legislature and governor attempt to do. That might be cheaper than building a pipeline. The gas is there. We know it’s there. We’ve got the energy; we just don’t have the will or the desire to replace it. I think that’s what we have to do.

Petroleum News: Is it up to the state Legislature to make it work, the industry or a combination?

Young: I don’t know whether anybody is going to the industry to say would you be interested in a tidewater pipeline. If they said yes, then, that’s not a bad idea. I think it would be a good idea. The state can be partners, but I don’t particularly think the state should own it or manage it. Old man (Roy) Huffington at Huffington Oil he told me once ‘don’t ever let the government ever get involved in the industry because eventually it will corrupt the government.’ I think we’ve seen that in places like Venezuela. The government doesn’t police itself. The private industry can be policed by the people.

Eighty-five percent of Alaska would benefit. That’s very crucial. Southeast would not, so we would build up those hydro sites. Then you would have export to finance the line and make sure it’s not so expensive. That’s one reason you can’t build a big line for the state of Alaska. We don’t have the market. So I think if somebody would go and ask them to see if they are interested in building a gas line, you might be surprised.