Energy bill delayed; committee vote could come in November

Larry Persily

Petroleum News Juneau correspondent

It now appears it could be early November before congressional conferees will have an energy bill ready for a vote, with Alaska’s oil and gas proposals still among the unresolved issues.

Congress was expected to break Oct. 3 for a weeklong recess and is scheduled to return to work Oct. 14, after the Columbus Day holiday. Despite its intentions to have an energy bill ready for review, the House-Senate conference committee was unable to finish its work before the recess.

Of the four or five major issues facing the committee, two involve Alaska: The state’s push for congressional approval to open the Arctic National Wildlife Refuge to oil exploration, and efforts to win federal tax incentives to build a $20 billion pipeline to move North Slope natural gas to market.

“Perhaps that’s the way it should be, since Alaska is America’s energy storehouse,” said John Katz, director of the state’s Washington, D.C., office.

It wasn’t just private debate among members on the merits of the legislation that prevented energy bill conferees from reaching their goal of a finished bill by the holiday.

“A variety of other things going on in Washington slowed down the process,” said Chuck Kleeschulte, a spokesman for Sen. Lisa Murkowski, R-Alaska. The other issues taking up congressional time have included confirmation hearings on the president’s appointment to lead the Environmental Protection Agency, work on possible prescription drug health care benefits and funding for rebuilding efforts in Iraq.

And there is always politics to delay the process.

“We’re down to political infighting, which never has to do with the issues,” said Roger Herrera of Arctic Power, the state-backed lobbying group in Washington. In addition to ANWR and the gas line, fixes to the nation’s electrical system problems and provisions to boost production of corn-based ethanol are among committee members’ remaining debate points, he said.

And then there still is the federal budget, health care costs and other issues on members’ work lists. “The likelihood of it dragging on … is quite high,” Herrera said.

All of the unsettled issues are politically controversial subjects. “Everyone is viewing the bill in terms of presidential politics,” said Katz. And the presidential politics don’t involve only next year’s election; there is President Bush to deal with on some of them. Bush wants to hold down the cost of the tax credits in the bill to $8-9 billion, but the price tag for the credits now stands at about $18 billion. “They’re trying to pare it down,” Katz said.

Not all of the disputes are purely partisan, he said, adding there are genuine differences of opinion among Republicans on opening ANWR and support for ethanol production.

“The key dynamics are really among the conferees themselves,” Katz said.

All of which means more waiting for Alaska. “You go through all the ups and downs so many times, said Herrera, who has been working on ANWR for a decade. “You go from euphoria to the depths of despair in 24 hours.”

The conference committee would like to move the bill out of its committee by the first week of November, Kleeschulte said.

Meanwhile, congressional Democrats held a press conference in Washington on Oct. 1 to complain they have been shut out of the most important of Republicans’ closed-door negotiations over the energy bill. The GOP leadership denies the charge.

In addition to its own battles over ANWR and other issues, the conference committee also is waiting for work by the Senate Finance and House Ways and Means committees, which are struggling with the tax issues in the energy bill. Conference Committee Chairman Sen. Pete Domenici, R-N.M., said tax negotiators are still working on ethanol, electricity and the Alaska gas line tax credits.

The credits would kick in whenever the wellhead value of North Slope gas dropped below $1.35 per thousand cubic feet. The credits, which would be applied to companies’ corporate income tax bills, would be limited to 52 cents per mcf. The credits could cost the treasury about $14 million for every month the wellhead value of the gas is a dime below the price floor of $1.35.

The state says the project is dead without the commodity price support provision.

The latest version of the committee’s draft bill includes provisions to open ANWR to oil and gas exploration but does not yet include the gas line tax credits sought by the state and North Slope producers ConocoPhillips and BP.

Filibuster still a threat

“It is still a struggle to get 60 votes in the U.S. Senate,” Kleeschulte said.