<DOC>
[107th Congress House Hearings]
[From the U.S. Government Printing Office via GPO Access]
[DOCID: f:73674.wais]
H.R. 2436
THE ENERGY SECURITY ACT
=======================================================================
LEGISLATIVE HEARING
before the
COMMITTEE ON RESOURCES
U.S. HOUSE OF REPRESENTATIVES
ONE HUNDRED SEVENTH CONGRESS
FIRST SESSION
__________
July 11, 2001
__________
Serial No. 107-48
__________
Printed for the use of the Committee on Resources
Available via the World Wide Web: http://www.access.gpo.gov/congress/
house
or
Committee address: http://resourcescommittee.house.gov
U.S. GOVERNMENT PRINTING OFFICE
73-674 WASHINGTON : 2002
____________________________________________________________________________
For Sale by the Superintendent of Documents, U.S. Government Printing Office
Internet: bookstore.gpr.gov Phone: toll free (866) 512-1800; (202) 512ÿ091800
Fax: (202) 512ÿ092250 Mail: Stop SSOP, Washington, DC 20402ÿ090001
COMMITTEE ON RESOURCES
JAMES V. HANSEN, Utah, Chairman
NICK J. RAHALL II, West Virginia, Ranking Democrat Member
Don Young, Alaska, George Miller, California
Vice Chairman Edward J. Markey, Massachusetts
W.J. ``Billy'' Tauzin, Louisiana Dale E. Kildee, Michigan
Jim Saxton, New Jersey Peter A. DeFazio, Oregon
Elton Gallegly, California Eni F.H. Faleomavaega, American
John J. Duncan, Jr., Tennessee Samoa
Joel Hefley, Colorado Neil Abercrombie, Hawaii
Wayne T. Gilchrest, Maryland Solomon P. Ortiz, Texas
Ken Calvert, California Frank Pallone, Jr., New Jersey
Scott McInnis, Colorado Calvin M. Dooley, California
Richard W. Pombo, California Robert A. Underwood, Guam
Barbara Cubin, Wyoming Adam Smith, Washington
George Radanovich, California Donna M. Christensen, Virgin
Walter B. Jones, Jr., North Islands
Carolina Ron Kind, Wisconsin
Mac Thornberry, Texas Jay Inslee, Washington
Chris Cannon, Utah Grace F. Napolitano, California
John E. Peterson, Pennsylvania Tom Udall, New Mexico
Bob Schaffer, Colorado Mark Udall, Colorado
Jim Gibbons, Nevada Rush D. Holt, New Jersey
Mark E. Souder, Indiana James P. McGovern, Massachusetts
Greg Walden, Oregon Anibal Acevedo-Vila, Puerto Rico
Michael K. Simpson, Idaho Hilda L. Solis, California
Thomas G. Tancredo, Colorado Brad Carson, Oklahoma
J.D. Hayworth, Arizona Betty McCollum, Minnesota
C.L. ``Butch'' Otter, Idaho
Tom Osborne, Nebraska
Jeff Flake, Arizona
Dennis R. Rehberg, Montana
Allen D. Freemyer, Chief of Staff
Lisa Pittman, Chief Counsel
Michael S. Twinchek, Chief Clerk
James H. Zoia, Democrat Staff Director
Jeff Petrich, Democrat Chief Counsel
------
C O N T E N T S
----------
Page
Hearing held on July 11, 2001.................................... 1
Statement of Members:
Hansen, Hon. James V., a Representative in Congress from the
State of Utah.............................................. 1
Prepared statement of.................................... 3
Kind, Hon. Ron, a Representative in Congress from the State
of Wisconsin, Prepared statement of........................ 110
Pallone, Hon. Frank, Jr., a Representative in Congress from
the State of New Jersey, Prepared statement of............. 109
Rahall, Hon. Nick J., II, a Representative in Congress from
the State of West Virginia................................. 5
Prepared statement of.................................... 7
Udall, Hon. Tom, a Representative in Congress from the State
of New Mexico, Prepared statement of....................... 111
Statement of Witnesses:
Glenn, Richard, Arctic Slope Regional Corporation, Barrow,
Alaska..................................................... 68
Prepared statement of.................................... 70
Herrera, Roger C., Arctic Power, Washington, DC.............. 63
Prepared statement of.................................... 65
Hood, Jerry, International Brotherhood of Teamsters,
Washington, DC............................................. 76
Prepared statement of.................................... 78
Johnston, The Honorable J. Bennett, Former Senator from the
State of Louisiana, Johnston & Associates, Washington, DC.. 56
Kolton, Adam Michael, Alaska Wilderness League, Washington,
DC......................................................... 80
Prepared statement of.................................... 82
Lance, Linda, The Wilderness Society, Washington, DC......... 90
Prepared statement of.................................... 92
Norton, The Honorable Gale A., Secretary, U.S. Department of
the Interior............................................... 8
Prepared statement of.................................... 10
Additional materials supplied:
Ahmaogak, Hon. George, Mayor, North Slope Borough, Statement
submitted for the record................................... 73
Regelin, Wayne, Director, State of Alaska Department of Fish
and Game, Letter submitted for the record.................. 43
Slutz, James A., Director, Division of Oil and Gas, Indians
Department of Natural Resources, Letter submitted for the
record..................................................... 32
H.R. 2436, ENERGY SECURITY ACT
----------
Wednesday, July 11, 2001
U.S. House of Representatives
Committee on Resources
Washington, DC
----------
The Committee met, pursuant to call, at 10 a.m., in Room
1324, Rayburn House Office Building, Hon. James V. Hansen
(Chairman of the Committee) presiding.
STATEMENT OF THE HONORABLE JAMES V. HANSEN, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF UTAH
The Chairman. The Committee will come to order.
Good morning. Today the Committee will hear testimony on
H.R. 2436, the Energy Security Act. We welcome the witnesses to
the hearing today, and we look forward to your remarks. I am
sure this could be an interesting and lively discussion.
The Energy Security Act was introduced in response to
President Bush's call for a long-term energy policy for our
nation.
Several months ago, our nation was sent a wakeup call by
California and put on notice that we have failed to develop an
energy infrastructure that is capable of supporting a 21st
century economy.
We were expecting major power outages throughout the West
and Northeast, and long gas lines and outrageous energy bills.
While the situation has been rectified somewhat, there is still
an urgent need to implement a comprehensive, long-term policy
for the 21st century.
I am afraid that the impacts of the current crisis are now
beginning to be felt in places all across the country. While
short-term fluctuations in energy supplies are inconvenient, if
we fail to act in a responsible or a timely manner, our economy
will be brought to a grinding halt.
Our role in Congress should be to clear any unrealistic and
overburdensome regulatory obstacles, then get out of the way
and allow the markets to work.
This is not a debate between Big Oil and the working man,
nor is it between the big utilities and the suburban
homeowners. This is a debate about how we as a nation can reach
a balance between responsible development of our known, proven
resources and the environment.
We must take action and do so in an environmentally
responsible way.
Unfortunately, there are some who will crowd before the
cameras, claiming that any legislation will open up all the
public lands for development and that our national conservation
areas, our wilderness areas and national forests and wild and
scenic rivers, will be at risk.
This is false. And I hope that we will have a spirited and
honest discussion today and avoid demagoging the energy issue
simply to score political points in the short term.
During the course of this debate, we must not forget where
our responsibilities lie. We have a responsibility to the
small-business owners, the farmers and ranchers, to those who
ship our goods, teach our kids, and protect our streets, and
make sure that their hard-earned dollars are not eaten up by
skyrocketing fuel costs.
We have a responsibility to them to develop a reasonable
and realistic energy policy to protect their long-term
security. Energy security is as vital as national security to
our nation. These two are inseparable.
American farmers across the country have suffered because
of the lack of an energy policy.
Dairy farmers in the San Joaquin Valley have been forced to
dump hundreds of thousands of pounds of milk because processing
plants did not have power to take delivery of their milk. Dairy
cows don't seem to want to cooperate when rolling blackouts and
power contracts conflict with milking time.
Poultry farmers are extremely nervous as summer rolls on.
They don't know if the next rolling blackout will last so long
that their birds die of heat exhaustion because the circulation
fans are shut off in the barns.
Higher natural gas prices have driven up the cost of
fertilizers and diesel. It has become cost prohibitive to
irrigate in many areas of the West. While we can live without
radios, TVs and air-conditioning, we can't live without food.
We should remember this as we discuss the energy policy of this
nation.
Small businesses have been hit particularly hard. Utility
bills and transportation costs have soared. Eighty thousand
independent truckers have turned in their trucks because profit
margins are too narrow to make a go of it. Pay raises are being
scrapped and benefits reduced as energy prices rise. Many small
businesses have put a freeze on hiring altogether.
Small business is the backbone of this country. By failing
to act, we are telling the small-business owners on Main Street
to fend for themselves. It is that simple.
If we want our economy to keep growing and maintain our
standard of living, we have to have an adequate supply of
energy.
There is a lot of work to do. However, the jurisdiction of
the Committee on Resources is fairly limited to the energy
resources and activities related to public lands.
Unfortunately, these issues are also oftentimes the most
contentious and emotional. Technology tax credits for hybrid
engines do not seem to invoke the spiritual and philosophical
fervor among the different viewpoints that drilling in ANWR
does.
While our colleagues on other Committees debate the fun
stuff, we on the Resources Committee have to roll up our
sleeves, get down in the trenches, and figure out a way to
ensure a stable supply of fossil fuels until other technologies
come on-line, which could be decades away.
Finally, we must recognize that energy policy is also an
issue of jobs and what type of jobs we want in the future. It
is unrealistic to assume that we can rely solely on a high-tech
or service-based economy without also paying attention to the
engine that drives these sectors.
As in all things, there must be a balance and a little dose
of reality. This means that we must admit to ourselves that
until the promise of clean, cheap, abundant energy materializes
from whatever source--that may be solar, wind or hydrogen--the
engine that drives the world's economy will continue to be
almost entirely fossil fuels.
Like it or not, this legislation is a first step in the
right direction toward developing a long-term energy policy
that will ensure a stable and abundant energy supply for future
generations as well as a tool for creating good, high-paying
jobs in the energy sector at a time when recession in other
sectors such as technology has wiped out trillions of dollars
in wealth.
I hope that my colleagues will remember that as we discuss
the bill today.
The energy challenges we face are complex. They can't be
met by a single action plan or legislation that comes under a
single Committee's jurisdiction. But I am confident that
through conservation, increased research, and increased
production, as well as efficiencies in delivery of our energy
resources from whatever source that may be, including our
public lands, we will meet these challenges.
I want to welcome our witnesses again. I look forward to an
interesting and informative debate.
Finally, I request opening statements be restricted to Mr.
Rahall and myself. I would encourage members of the Committee
to use their allotted 5 minutes for statements and questions.
If time allows, we will try to have a second round on most of
the questions.
[The prepared statement of Mr. Hansen follows:]
Statement of The Honorable James V. Hansen, Chairman, Committee on
Resources
Good morning. Today the Committee will hear testimony on H.R. 2436
the Energy Security Act. We welcome the witnesses to the hearing today
and we look forward to your remarks. I am sure that it will be an
interesting and lively discussion.
The Energy Security Act was introduced in response the President
Bush's call for a long-term energy policy for our nation. Several
months ago, our nation was sent a wake-up call by California that we
had failed to prepare an energy infrastructure capable of supporting a
21st century economy. We were expecting major power outages throughout
the west and northeast, and long gas lines and outrageous energy bills.
While the situation has been somewhat mitigated, there is still a
desperate need to implement a comprehensive, long term policy for the
21st Century.
I am afraid that the impacts of the current crisis are just now
beginning to be felt in places all across the country. While short-term
fluctuations in energy supplies are inconvenient, if we fail to act in
a responsible timely manner, our economy will be brought to a grinding
halt. Our role should be to clear any unrealistic over-burdensome
regulatory obstacles, then get out of the way and allow the markets to
work.
This is not a debate between big oil and the working man, nor is it
between the big utilities and the suburban homeowners. This is a debate
about how we as a nation can reach a balance between responsible
development of our known, proven resources and the environment. We will
do so in an environmentally responsible way even if those opposed to
this legislation will crowd before the cameras claiming that H.R. 2436
opens up all the public lands for development and that our national
conservation areas, our wilderness areas and national forests and wild
and scenic rivers are at risk. This is absolutely false. Instead, I
hope that we will have a spirited and honest discussion today and avoid
demagoging the energy issue simply to score political points in the
short-term.
During the course of this debate we must not forget where our
responsibilities lay in the first place. We have a responsibility to
the small business owners, the farmers and ranchers, to those that ship
our goods, teach our kids and protect our streets to make sure that
their hard-earned dollars are not eaten up by skyrocketing fuel costs.
We have a responsibility to them to develop a reasonable and realistic
energy policy to protect their long-term security. Energy security for
our nation is as vital as our national security.
American farmers across the country have suffered because of our
lack of an energy policy. Dairy farmers in the San Joaquin Valley have
been forced to dump hundreds of thousands of pounds of milk because no
cheese plants had the power to take delivery of their milk. Dairy cows
don't seem to want to cooperate with rolling blackouts and power
contracts at milking time.
Poultry farmers are extremely nervous as summer rolls on. They
don't know if the next rolling blackout will last so long that their
birds die of heat exhaustion because the circulation fans are shut off.
Higher natural gas prices have driven up the cost of fertilizers
and diesel. It has become cost prohibitive to irrigate in many areas of
the west. While we can live without radios, tv's and air conditioning,
we can't live without food. We should remember this as we discuss the
energy policy of this nation.
Small businesses have been hit particularly hard as utility bills
and transportation costs have soared. 80,000 independent truckers have
turned in their trucks because profit margins are too narrow to make a
go of it. Pay raises are being scrapped and benefits reduced as prices
rise. Many small businesses have put a freeze on hiring all together.
Small business is the backbone of this country. By failing to act,
we are telling the small business owners on Main Street to fend for
themselves. It is that simple. If we want our economy to keep growing
and maintain our standard of living, we have to have an adequate supply
of energy. We should remember this as we discuss energy policy today.
There is a lot of work to do. However, I must note that the
jurisdiction of the Committee on Resources is fairly limited to the
energy resources and activities related to public lands. However, these
issues are also oftentimes the most contentious and emotional.
Technology tax credits for hybrid engines do not seem to invoke the
spiritual and philosophical fervor among the different viewpoints that
drilling in ANWR does. While our colleagues on other Committees debate
the fun stuff, we on the Resources Committee have to roll up our
sleeves, get down in the trenches and figure out a way to ensure a
stable supply of fossil fuels until other technologies come on line,
which could be decades away.
Finally, we must recognize that energy policy is also an issue of
jobs and what type of jobs. It is unrealistic to assume that we can
rely solely on a high-tech or service-based economy without also paying
attention to the engine that drives those sectors. As in all things,
there must be balance and a dose of reality and that includes admitting
to ourselves that until the promises of clean, cheap abundant energy
materializes from whatever source that may be, solar, wind or hydrogen,
the engine that drives the world's economies will continue to rely
almost entirely on fossil fuels.
Like it or not, this legislation is a first step in the right
direction toward developing a long-term energy policy which will ensure
a stable and abundant energy supply for future generations. Again, we
are now witnessing the direct results of relying solely on a high-
technology and service-based economy while ignoring other sectors such
as the agricultural and extractive industries which are the true
creators of wealth in our society.
Therefore, H.R. 2436 will be a tool for creating good, high paying
jobs in the energy sector at a time when recession in other sectors
such as technology has wiped out trillions in wealth. I hope that my
colleagues will remember that as we discuss the bill today.
The energy challenges we face are complex. They can't be met by a
single action plan or legislation that comes under a single Committee's
jurisdiction. But I am confident that through conservation, increased
research and increased production and efficiencies in delivery of our
energy resources from whatever source that may be, including our public
lands, we will meet these challenges.
I want to welcome the witnesses again. I look forward to an
interesting and informative hearing today.
______
Mr. Chairman. Mr. Rahall?
STATEMENT OF THE HONORABLE NICK J. RAHALL II, A REPRESENTATIVE
IN CONGRESS FROM THE STATE OF WEST VIRGINIA
Mr. Rahall. Thank you, Mr. Chairman.
Mr. Chairman, I want to first express my appreciation to
you for calling this hearing, because we on the Democratic side
also recognize the pressing need to fashion a better national
energy policy.
We also welcome the debate on what the President has
proposed and what we view as needed in this vital area.
With that noted, I must point out that if we were following
the President's legislative proposals on energy, the ones that
he submitted to this body on June 28th, the only item this
Committee would be considering would be opening the Arctic
National Wildlife Refuge to oil and gas leasing. That is the
only area within this Committee's jurisdiction included in the
President's legislative initiatives on energy.
But judging by the legislation that has been introduced by
the majority just yesterday, which is the subject of this
hearing, that's not going to be the case. We are not going to
be considering just the President's proposals.
So this begs the question: Why is the majority so intent on
pursuing a broad array of what, with all due respect to the
majority, could be viewed as unnecessary, uncalled for, and
unjust giveaways that are part and parcel of this legislation?
The effort here, I believe, is to engage in what I call the
lightening rod school of legislating. You plop a controversial
item like ANWR on the table, you introduce it in a long bill,
and then you hope everyone focuses on just that item.
Meanwhile, lying below the surface is a whole bevy of
equally contentious items that consequently may escape the same
level of scrutiny.
Others today can butt their heads over whether or not the
bit of tundra in northeastern Alaska should be leased to energy
development. My role will be to expose what is in the rest of
the package.
And a central feature is this business of providing relief
from the payment of oil and gas royalties to the American
people, what I call a royalty holiday--it's July; I know
there's a store in Old Town Alexandria that sells Christmas
items in July, and we've heard of Christmas in July before. But
this is what's happening in this bill under the guise of
needing to give companies an incentive to drill.
I must say, at a time when Americans are reading in the
newspaper that profits for oil companies are soaring--124
percent increase for Exxon and Mobil, for instance--when there
is widespread public criticism that collusion and price-fixing
has taken place, and when people still get acid indigestion
when they go to pump their gasoline at the gas pump, providing
a royalty holiday is simply the wrong message that we need to
be sending.
It is just plain wrong. The oil companies do not need a
royalty holiday.
And as far as I can tell, the rig count is very robust and
the oil and gas drillers are going full tilt and do not need
any type of royalty relief, thank you very much.
This is something the market determines in a free-market
economy. When demand is there, folks drill. When it is not,
they park their rigs.
You know it, we know it, many on the majority side know it
as well, the American people know it.
We do not need to rob the Federal Treasury, and the states
would share in on-shore royalties, to provide false incentives
to drill, especially when royalty underpayments are already
commonplace.
The same goes with the royalty in-kind proposal, which is
nothing more than a thinly disguised ruse to reduce royalty
payments. This proposal would have the Federal Government
receiving its royalty in the form of actual crude oil and
natural gas.
Federal bureaucrats would then be in the business of
marketing oil and gas, joining the ranks of Exxon, Shell,
Mobil, and the rest of them. I have never heard of such
nonsense.
And this surprises me, coming from the majority at a time
when Russia and China are shedding themselves of state-run
industries, why, in effect, is an effort being made here to
toss the Communist Manifesto into our national energy policy?
But I don't think that is quite the extent of it, if we
examine the rest of the package. It is unfortunate but true
that this legislation strips the ability of the Forest Service
to consent over issuing leases on its lands. It reduces
restrictions on drilling in areas protected for critical
wildlife habitat, environmental and historical purposes. And it
has the American taxpayer subsidize the costs the industry
incurs in preparing leasing documents.
Mr. Chairman, at some point in the debate, we as Democrats
on this Committee will have an alternative to offer. We do have
an alternative energy proposal that we will submit at the
proper time. In my view, our alternative will represent a more
balanced contribution on matters within this Committee's
jurisdiction to overall energy legislation being developed by
the House.
We Democrats do not believe we have to short change the
American taxpayer and short thrift the environment by doling
out royalty holidays to Big Oil and by providing unfettered
access to drilling rigs and to environmentally sensitive
Federal lands.
Our alternative will recognize the contribution that
certain Federal lands can make to our nation's energy mix--
already one-quarter of America's oil consumption and over one-
third of our natural gas and coal use, while at the same time
we recognize that there are environmental and social costs to
energy development, which also need to be addressed in any
national energy policy.
As I said, and as I conclude, Mr. Chairman, we thank you
for this hearing. We welcome the debate energy policy
legislation.
And hopefully as a result of this hearing, and perhaps from
additional reflection and additional debate on this issue, many
of the provisions in the bill that I have highlighted today
will have been dropped by the final markup next week.
Thank you, Mr. Chairman.
[The prepared statement of Mr. Rahall follows:]
Statement of The Honorable Nick J. Rahall, Ranking Democrat, Committee
on Resources
Mr. Chairman, I want to express my appreciation to you for calling
this hearing because House Democrats also recognize the pressing need
to fashion a better national energy policy. We also welcome the debate
on what the President has proposed and what we view as needed in this
area.
With that noted, I must point out that if we were following the
President's legislative proposals on energy, the ones he submitted to
Congress on June 28th, the only item this committee would be
considering would be opening the Arctic National Wildlife Refuge to oil
and gas leasing. That is the only area within this committee's
jurisdiction included in the President's legislative initiatives on
energy.
But judging by the legislation introduced by the Majority
yesterday--which is the subject of this hearing--that is not going to
be the case. This begs the question. Why is the Majority so intent on
pursuing a broad array of what, with all due respect, could be viewed
as unnecessary, uncalled for and unjust giveaways that are part and
parcel of this legislation. The effort here, I believe, is to engage in
what I call the lightning rod school of legislating. You plop a
controversial item like ANWR in a long bill and hope everyone focuses
on that. Meanwhile, lying below the surface is a whole bevy of equally
contentious items that consequently may escape the same level of
scrutiny.
Others today can butt heads over whether or not that bit of tundra
in northeastern Alaska should be leased to energy development. My role
will be to expose what is in the rest of the package. And a central
feature is this business of providing relief from the payment of oil
and gas royalties to the American people--a royalty holiday--under the
guise of needing to give companies an incentive to drill.
I must say that at a time when Americans are reading in the
newspaper that profits for oil companies are soaring--an 124% increase
for Exxon-Mobil, for instance--when there is widespread public concern
that collusion and price fixing has taken place, and when people still
get acid indigestion every time they fill their vehicles up at the
pump, providing a royalty holiday is simply the wrong message we need
to be sending. It is just plain wrong.
As far as I can tell, the rig count is very robust and the oil and
gas drillers are going full tilt and do not need any type of royalty
relief thank you very much. This is something the market determines in
a free market economy. When demand is there, folks drill. When it is
not, they park their rigs. You know it. I know it. The American people
know it. We do not need to rob the federal treasury, and the States
which share in onshore royalties, to provide false incentives to drill
especially when royalty under payments are already commonplace.
The same goes with the royalty-in-kind proposal, which is nothing
more than a thinly disguised ruse to reduce royalty payments. This
proposal would have the federal government receiving its royalty in the
form of actual crude oil and natural gas. Federal bureaucrats would
then be in the business of marketing oil and gas, joining the ranks of
Exxon, Shell and the rest of them. I never heard of such nonsense. And
this surprises me coming from the Majority. At a time when Russia and
China are shedding themselves of State run industries, why is an effort
being made to toss the Communist Manifesto into our national energy
policy.
But that is not the extent of it. It is unfortunate, but true, that
this legislation strips the ability of the Forest Service to consent
over leasing on its lands. it reduces restrictions on drilling in areas
protected for critical wildlife habitat, environmental and historic
purposes; and it has the American taxpayer subsidize the cost industry
incurs in preparing leasing documents.
Mr. Chairman, at some point in this debate Committee Democrats hope
to offer an alternative to this legislation. In my view, our
alternative will represent a more balanced contribution of matters
within this committee's jurisdiction to the overall energy legislation
being developed in the House.
We Democrats do not believe we have to short change the American
taxpayer and short shrift the environment by doling out royalty
holidays to Big Oil and by providing unfettered access to drilling rigs
into environmentally sensitive federal lands. Our alternative will
recognize the contribution certain federal lands can make to our
Nation's energy mix--already one-quarter of America's oil consumption
and over one-third of our natural gas and coal use--while at the same
time recognize that there are environmental and social costs to energy
development which also need to be addressed in any national energy
policy.
As I said, Mr. Chairman, we welcome the debate on energy policy
legislation. Hopefully, as a result of this hearing and perhaps with
some additional reflection, many of the provisions I have highlighted
in the bill as being troublesome can be dropped by the time we meet to
consider the legislation next week.
______
The Chairman. I thank the gentleman from West Virginia, the
new Paul Harvey.
[Laughter.]
We are grateful to have as our first witness the Honorable
Gale Norton, the Secretary of Interior.
Madam Secretary, we will turn the time to you.
STATEMENT OF THE HONORABLE GALE A. NORTON, SECRETARY, U.S.
DEPARTMENT OF THE INTERIOR
Secretary Norton. Good morning, Mr. Chairman, members of
the Committee.
I spoke to you recently about the President's overall
energy plan, and today I am happy to return and comment on
specific legislation addressing portions of the plan that
require legislative changes.
The President's national energy proposal dedicates more
than half of its recommendations to increasing energy
efficiency and conservation, encouraging the development of
fuel-efficient vehicles, and encouraging renewable energy with
tax incentives.
The plan provides stability to what might otherwise be an
uncertain energy future. It diversifies our energy supplies in
the long run. In the nearer term, it provides assurances that
traditional domestic energy sources will be available.
Stabilizing our current energy situation by utilizing
American ingenuity and emerging technology, is just one part of
our effort to address energy needs.
There are some aspects of the President's energy plan that
can be addressed and implemented without legislative changes.
And we are going forward with a number of those.
For example, today the Department of Interior is announcing
that it will bring state and local officials together with
industry leaders and other citizens for a renewable energy
summit this fall. The summit will focus on ways to maximize
wind, solar and geothermal energy production on public lands to
help stabilize our nation's energy needs.
Already, Federal lands provide geothermal energy sufficient
to serve 570,000 homes, and wind energy enough for 87,000
homes. This, we believe, will be a head start on H.R. 2436's
provisions to improve geothermal leasing. And we look forward
to moving forward with the information that we have learned to
implement the provisions of H.R. 2436.
Americans have a core belief in American ingenuity.
American ingenuity is a major factor in everything from our
military victories and status as the only remaining Superpower
to our development of cures for once-deadly diseases and our
ability to vastly improve our air and water quality.
American ingenuity is directly tied to our technological
advancements. Nothing puts our nation's skills to test like a
challenge, a challenge like the one we face today to ensure a
comprehensive energy future. This ingenuity is already hard at
work.
For example, since 1985, energy producers in the Gulf of
Mexico's Outer Continental Shelf produced more than 5 billion
barrels of oil. Thanks to American ingenuity and high-tech
advances, of that amount, only .001 percent, just one-one-
thousandth of a percent, was released into the ocean. By
comparison, naturally occurring oil seeps in the shelf release
150 times more oil than OCS production.
President Bush addresses the need to keep our economy
moving forward with good jobs and our determination to protect
our environment. The underlying basis of this report is that
our energy problem is inextricably tied to each of our lives.
For example, we are concerned that household budgets can be
stretched to the limits by high winter heating and summer air-
conditioning bills and increasingly expensive trips to the gas
station. What difficult choices are families forced to make?
Whether or not to maintain the family car? Buy new back-to-
school clothes?
Rising energy costs also affect the budgets of our schools
and hospitals. They affect our national prosperity and the
availability of jobs.
Planning for long-term availability from traditional and
nontraditional sources can shield America's families from these
impacts.
The administration supports H.R. 2436 and urges the
Committee and Congress to act expeditiously on this bill.
We want to address short-term concerns about high energy
costs through the LIHEAP program. The President has directed
Interior to seek authority to redirect oil and natural gas
royalties to the Low-Income Home Energy Assistance Program.
This program helps low-income families heat their homes in the
winter. The President strengthens the LIHEAP program by
investing $300 million more than the fiscal year 2001
appropriation.
H.R. 2436 would allow the use of oil and gas royalty
payments to bolster LIHEAP funding. We appreciate your support
of this very important program.
The President has also directed Interior to work with
Congress to develop legislation that authorizes environmentally
safe leasing of oil and gas in the Arctic National Wildlife
Refuge.
The President's plan emphasizes that Congress should
require the use of the best-available technology and ensure
that energy production activities protect the ANWR environment.
This bill accomplishes those goals.
I have visited ANWR again, since my last testimony here. I
have now seen ANWR in both the summer and the winter. There are
high-tech approaches that are being used on the North Slope.
For example, ice roads used in the winter do indeed melt
away in the summer with minimal impact. I was surprised to find
out that one road I had seen in the winter turned out to be on
the surface of the Arctic Ocean. So clearly, when that melts
way, there is no impact.
I saw the caribou from the central Arctic herd, which is
the one that is in the Prudhoe Bay area. The Porcupine caribou
herds' caribou were not in ANWR at all. They had calved in
Canada.
This is a unique area, and it is appropriate that we use
the standards that are the most stringent in any energy
regulatory statute. And that is exactly what is found in H.R.
2436.
The administration supports tough regulation like that
found in this legislation.
The President's budget calls for a 50-50 split of lease
revenues from ANWR. The President's plan provides that the
Federal share of the ANWR receipts would go toward two funds,
one for renewable energy research and development, and another
dedicated to the maintenance and improvements of public lands.
Our country faces a national energy problem, but I believe
it can and will be managed. Working with Congress, the Bush
administration is committed to finding workable solutions that
improve our national energy problem.
American ingenuity has never let us down in the past. And
by acting wisely today, it will help us provide for future
generations.
Thank you.
[The prepared statement of Secretary Norton follows:]
Statement of The Honorable Gale Norton, Secretary, U.S. Department of
the Interior
Mr. Chairman, members of the Committee, it is a pleasure to be here
again to discuss the President's ``National Energy Policy'' report, and
to present the Administration's position on H.R. 2436, the proposed
Energy Security Act. The Administration supports H.R. 2436, and would
like to work with the Congress as it moves through the legislative
process to address a few concerns we have with the bill as currently
drafted. The legislation before the Committee today, while not
identical to the Administration's's National Energy Policy, advances
these goals, and we would like to work with the Congress to bring this
bill more closely into conformance with the Administration's Policy.
The need for a national energy policy becomes clear when you look
at the numbers. Take clean-burning natural gas, for example. Over the
next 20 years, U.S. natural gas consumption has been projected to grow
by more than 50 percent while production will grow by only 14 percent
if it grows at the rate of the last 10 years. U.S. energy production is
not keeping up with our growing consumption, creating a rapidly
increasing gap between domestic supply and demand.
Energy reserves contained in the lands and offshore areas managed
by the Department of the Interior are an important source of potential
energy production. The Department of the Interior manages energy
production on all Federal lands, both onshore and the Outer Continental
Shelf (OCS). These Federal lands provide nearly 30 percent of annual
national energy production. In the year 2000, 32 percent of oil and 35
percent of natural gas were produced from Federal lands. In addition,
Federal lands produced 37 percent of domestic coal production and 48
percent of geothermal energy production in 2000. Federal lands are also
estimated to contain significant undiscovered domestic energy
resources. Estimates suggest that these lands contain approximately 68
percent of all undiscovered U.S. oil resources and 74 percent of
undiscovered natural gas resources.
The Department also owns and operates hydro power facilities in the
17 western states. These facilities produce about 16 percent of all the
hydro power in the United States.
President Bush has developed a balanced plan to produce more
reliable, affordable and environmentally clean energy that is built on
three principles:
* It is comprehensive and forward-looking.
* It utilizes 21st Century technology to promote conservation and
diversify supply.
* And the plan will increase the quality of life for Americans by
providing reliable energy and protecting our environment.
The President's plan calls for increasing domestic energy
production, seeks to improve the aging energy infrastructure network by
creating a new high tech energy delivery network and promotes energy
conservation. It is important to point out that more than 50 percent of
the President's plan focuses on energy efficiency, encouraging the
development of fuel efficient vehicles and encouraging consumer
conservation. The President's plan proposes new tax incentives to help
increase the contribution that alternative and renewable energy can
make to our nation's energy supply.
President Bush has directed his Administration to work with the
Congress to develop comprehensive legislation that would help those
with low-incomes pay higher energy bills, stabilize our current
situation, while seeking those new resources and technologies to
support our energy needs for the future.
The President directed The Department of Interior to seek authority
to redirect a portion of oil and gas royalties to the Low Income Home
Energy Assistance Program whenever oil and natural gas prices exceed
pre-set trigger prices.
The President also directed us to work with Congress on
legislation. authorizing the leasing of oil and gas in that portion of
the Arctic National Wildlife Refuge (ANWR) defined as the Coastal Plain
in section 1002 of the Alaska National Interests Lands Conservation
Act. The President's plan emphasizes that Congress should require the
use of the best available technology and require that energy production
activities have no significant adverse impact to the environment in the
ANWR 1002 area.
The President has also proposed incentives to increase geothermal,
coal and hydro power development that will enhance expeditious
production of those resources, and royalty in kind provisions that will
help us with the administration of our royalty in kind program.
All of these steps are needed to solve the energy problems facing
our country, and to secure our energy supply while protecting the
environment.
Please allow me to briefly address several aspects of the
President's Energy Plan.
The Low Income Home Energy Assistance Program
The Low Income Home Energy Assistance Program (LIHEAP) is a federal
block grant program that helps low-income consumers pay their energy
bills. It is the nation's core program for targeting home energy
subsidies to low income households with vulnerable members (the
elderly, disabled, or young child) and households with the lowest
incomes and highest energy costs. Last winter, 1.2 million more
American families applied for LIHEAP assistance to pay their heating
bills, bringing the total to more than 5 million American families--up
by 30 percent over last years's 3.9 million applicants. As many as 3.6
million families in eighteen states and the District of Columbia risk
being unable to pay their bills and having their energy cut off because
of the effects of rapidly increasing energy costs. The low-income
elderly are particularly vulnerable to disruptions in energy supply.
The President's National Energy Policy includes strengthening
LIHEAP by making $1.7 billion available annually, and the
Administration has recently proposed a supplemental request that would
increase fiscal year 2001 funding by $150 million. H.R. 2436 would
authorize the Secretary of the Interior to use royalty in kind oil or
gas for providing additional resources to LIHEAP.
As part of its support for LIHEAP, the National Energy Policy
recommends that Congress enact legislation that would allow the use of
oil and gas royalty payments to bolster LIHEAP funding whenever oil and
natural gas prices exceed certain prices. Specifically, a limited
portion of royalties should be provided by the Department of the
Interior to the Department of HHS's LIHEAP program as a cash payment,
when oil and natural gas prices both exceed a certain trigger price.
The Administration wants to work with the Congress to determine the
appropriate trigger prices or the formula for determining them.
The Arctic National Wildlife Refuge
As you know, The President is proposing to open the 1002 area, a
small fraction of the 19 million acres in Arctic National Wildlife
Refuge (ANWR) for oil exploration using the most high-tech,
environmentally responsible methods. The President and I both believe
that oil and gas development can successfully coexist with wildlife in
Alaska's arctic region.
Our support for enactment of authority to lease oil and gas
resources in ANWR is a prime example of the Department's dual
commitment to energy development and environmental conservation. We
recognize that the ecological resources of the Refuge are unique and
precious. We must respect and conserve this wealth for future
generations of Americans. However, because of advances in technology
and in our enhanced understanding of the ecology, we are now able to
proceed with exploratory work with very little long-term effect.
Further, the President's proposes that the Federal share of ANWR
revenues should be earmarked for two new permanent funds to promote
renewable energy technology and improve our national parks and public
lands. Specifically, the National Energy Policy calls for 50% of the
bonus revenues to be dedicated to renewable energy technology research
and development, and that the Federal share of the royalties be
dedicated to conservation and elimination of the maintenance and
improvements backlog on federal lands. Use of the revenues from ANWR
leasing for these purposes would pay permanent dividends to the
American public by lowering the costs of developing renewable energy
resources and identifying new resources, and by restoring and
protecting wildlife habitat on public lands and addressing facility and
site maintenance and improvement needs at National Parks, Refuges and
Forests and on other recreation lands managed by the Federal
government.
I do want to emphasize that the Administration supports the strong
environmental protections provisions that are included in the pending
legislation. Section 707 of H.R. 2436, entitled Coastal Plain
Environmental Protection, establishes an environmental standard of no
significant adverse effect on fish and wildlife, their habitat, and the
environment. Section 707 also requires the application of the best
commercially available technology for oil and gas exploration,
development, and production. These would be the most stringent
environmental protection requirements ever applied to Federal energy
production.
Section 707(d) of H.R. 2436 requires the leasing program, among
other things,----
<bullet> Lto set seasonal limitations on exploration, development
and related activities, where necessary, to avoid significant adverse
effects during periods of concentrated fish and wildlife breeding,
denning, nesting, spawning, and migration,
<bullet> Lto limit exploration activities, except for surface
geological studies, to the period during which ice roads, winter trails
with adequate snow cover, ice pads, and ice airstrips could be used,
<bullet> Lto design standards for all pipelines and roads that
minimize adverse effects on passage of migratory species, such as
caribou, and on the flow of surface water,
<bullet> Lto require consolidation of facility sitings, and
<bullet> Lto require stringent reclamation and rehabilitation
standards.
While this title provides a good, safe and environmentally sound
arrangement for leasing in the 1002 Area of ANWR, it attempts to
accomplish this under the structure of the Mineral Leasing Act. Under
that Act, 90% of the bonus, rent and royalty revenues are distributed
to the State of Alaska and 10% to the U.S. Treasury. We recognize the
historical antecedents of the 90%-10% distribution. However, the
legislation of two decades ago authorizing the oil and gas leasing
program in the National Petroleum Reserve-Alaska provides for a 50%-50%
split of lease revenues between the State and the Federal government.
We believe that the 50%-50%division of revenues should also apply to
leasing in ANWR.
OCS Lease Sale 181
I'd like to take a minute to bring you up to date on the actions we
have taken with respect to Lease Sale 181 in the Eastern Gulf of
Mexico. I recognize that this sale, and the OCS program in general, is
of great interest to members of this Committee. The OCS provides more
than 26 percent of the natural gas and 25 percent of the oil produced
in the United States. The Minerals Management Service (MMS) administers
about 7,500 active leases on 40 million acres of the OCS. In addition,
the OCS contains about 19 percent of the Nation's proven natural gas
reserves, 18 percent of its proven oil reserves, and is estimated to
contain more than 50 percent of the Nation's remaining undiscovered oil
and natural gas resources.
On July 2, 2001, we proposed a Notice of Sale for oil and natural
gas production in a portion of the Outer Continental Shelf in the
Eastern Gulf of Mexico, also known as Sale 181. This area was first
proposed for possible lease sale by Interior Secretary Babbitt and
President Clinton after negotiations with Florida Governor Lawton
Chiles and other coastal governors in 1997.
As part of determining the area to be offered, we listened and
worked carefully with officials and affected citizens around the Sale
181 area. I believe the outcome is a balanced and common sense proposal
consistent with the President's National Energy Policy. Our modified
181 area has been adjusted from 5.9 million acres to 1.5 million. The
adjusted area is at least 100 miles from any portion of the Florida
coast. For example, it's northern border is more than 100 miles from
Pensacola, Florida and the eastern edge is 285 miles from the shores of
Tampa Bay.
The proposed 181 Area will help expand our domestic sources of oil,
and reduce our dependence on foreign oil. The proposal also works to
meet the President's commitment to develop our nation's energy needs in
an environmentally safe way. The Department projects the adjusted area
contains 1.25 trillion cubic feet of natural gas--enough to serve one
million U.S. families for 15 years. The area also contains 185 million
barrels of oil--enough to fuel the automobiles of a million families
for nearly six years.
Other Recommendations
While we believe the Committee has done an excellent job in putting
together a bill that will ensure increased environmentally sound
production of energy from our public lands, we have a few more concerns
with the bill as introduced, and want to work with the Congress to
address them as the legislation moves forward.
We have concerns about the potential cost of extending the
Deepwater Royalty Relief Act provisions for two years. I understand
that the Minerals Management Service has stated that there is no longer
any need to provide incentives for production of oil and gas in water
depths of less than 800 meters. I have also heard from industry that
those incentives are in fact needed to sustain and increase the
production levels of oil and gas that we have seen since enactment of
the Deep Water Royalty Relief Act in 1995. Whatever is done in the
short run, it does appear appropriate to ask the National Academy of
Science to look into this issue, so that we can do what is best for the
nation's long-term energy security.
We have a technical issue to point out as well. Currently, under
section 27 of the OCS Lands Act, the Secretary of the Interior has the
authority to transfer royalty in kind oil without compensation to the
Department of Energy for the filling of the Strategic Petroleum
Reserve. In both 1999 and 2000, the Secretary of the Interior exercised
this authority. The exercise of this authority should obviously be
limited to times of extreme national need, recognizing that the cost to
the Treasury is usually significant. We recommend that H.R. 2436 be
amended to retain our current section 27 authority.
The bill authorizes the United States Geological Survey to
establish and operate regional technology transfer centers that would
conduct oil and natural gas exploration and production research and
archive and provide public access to data regarding oil and natural gas
reserves and production. I understand that the Department of Energy
currently has similar authority, and I ask that this provision make
clear that these centers are not intended to duplicate efforts already
underway by DOE.
We look forward to working with you on these and any other concerns
that arise as the bill moves through the legislative process.
Conclusion
Mr. Chairman, while the challenge facing us is significant, it is
not insurmountable. By building on new 21st century technologies, this
country can produce ample domestic resources while enhancing and
protecting the environment. I look forward to working with this
Committee and others in Congress to implement Interior's pieces of the
President's National Energy Policy.
Mr. Chairman, this concludes my statement. I would be pleased to
answer any questions that you or members of your Committee might have.
______
The Chairman. Thank you, Madam Secretary. We appreciate
your comments.
We will now go for questions.
Mr. Rahall?
Mr. Rahall. Thank you.
The Chairman. I have to limit everyone to 5 minutes,
strictly to 5 minutes. We are going to be here all day unless
we do that.
Mr. Rahall. Thank you, Mr. Chairman.
Madam Secretary, the bill that is the subject of today's
hearing contains a provision requiring that the development of
leases issued within the Coastal Plain be subject to what is
known as project labor agreements.
What is the administration's position on this requirement?
Secretary Norton. This provision was negotiated between
Congress and the unions, and so we have not been directly in
those discussions. We do not object to those provisions.
Mr. Rahall. The administration supports the project labor
agreements in this legislation?
Secretary Norton. We do not object to those. And we believe
that the legislation should be adopted.
Mr. Rahall. Okay.
The bill contains two royalty relief provisions, one
allegedly for OCS deep water leases and a general provision,
which our analysis shows is not limited to marginal wells, as
is being advertised. Your testimony noted some concern over
extending the deep water royalty holiday, and I am looking for
something more definitive.
In that regard, on June 28, 2000, then-candidate George
Bush attacked Al Gore for his support for extending the deep
water providing royalty relief program. And I have that full
press release here in front of me.
At the time, candidate Bush stated, and I quote, ``I look
forward to hearing his explanation as to why big gas producers
ought to be given a royalty tax break.''
So my question to you, Madam Secretary, does the
administration still hold that view? Is the administration
outright opposed to the inclusion of deep water royalty relief
in this legislation?
Secretary Norton. Our administration has had the experience
of going forward with leasing in the Gulf of Mexico with
reduced royalty provisions that provided royalty relief only in
the 800 meter and deeper water. And we found that we had a
higher response to that lease sale than what we expected and
what we had to lease sales in the past.
And so while we think that this issue in the long run is
best resolved by the suggestion to have a study so that we
really have a solid basis for making those decisions, we
believe that at the current time our existing authority to
allow some royalty relief is sufficient. And so we would like
to see changes in the provisions that are in this legislation
that would mandate royalty relief in shallower water.
Mr. Rahall. Is it accurate then to say that earlier this
year you rejected--rejected--the need for continuing royalty
relief under the 1995 Deep Water Royalty Relief Act?
Secretary Norton. That is correct. While we do provide some
royalty relief for deeper water, it does not appear to be
necessary for the areas where production is already taking
place, where we understand the technology, and where we are
utilizing essentially routine approaches in going forward with
production.
Mr. Rahall. So today you are saying you do support some
royalty relief?
Secretary Norton. In more than 800 meters' depth.
Mr. Rahall. Okay. Thank you.
Mr. Chairman, I have no more questions right now.
The Chairman. I thank the gentleman.
We are not just going to take everybody for 5 minutes. It
is going to take us all day.
On the Republican side, raise your hand if you have
questions for the Secretary.
Mr. Tancredo is recognized.
Mr. Tancredo. Thank you, Mr. Chairman.
Thank you, Madam Secretary, for coming today. And I want to
really commend you for your outstanding work on this
legislation.
I remind my colleagues that some of these proposals we see
today were on the table during the previous administration. And
rather than taking leadership, we saw only procrastination.
The proposal is about all the issues that our former
Secretary of Interior did not want to approach, even though it
is painfully clear that energy issues needed attention in that
administration, the Clinton administration, which they never
received. Just because something is controversial does not mean
it can be ignored.
And now, with new and strong local leadership by the
President and my friend from Colorado, Secretary Norton, these
issues have been brought before the Congress again.
Secretary Norton, I think often taxpayers forget that in
addition to their income tax are gas taxes, estate taxes, et
cetera; the Federal Government draws a significant amount of
revenue from oil and gas royalties and lease payments.
But in addition to the important revenue, this legislation
is full of what appears to me to be some important
administrative cost savings, both on the side of the private
companies and within the Department of Interior. I am thinking
specifically of Title II, Subtitle C, which contains the
royalty in-kind provisions and the cost-sharing programs with
the state geologic surveys.
Would you expand upon some of the potential cost savings?
And also, do you think this legislation is a net gain for the
country fiscally? And if so, at what magnitude?
Secretary Norton. I do believe that this approach will
allow us to be more efficient in our regulation. It basically
will require us to look at the ways in which we can make our
process operate in a way that is going to make more sense, to
look across the board at what our leasing processes are, at
what standards are applied, and make sure that those really fit
the situation that we face.
The royalty in-kind provision is one where I think we can
see some efficiencies. And I think as we learn through time, we
can go to a much more efficient kind of process.
The approach that we use right now is trying to estimate
and to appraise and to hypothesize what the price is on the oil
and gas that is produced from our Federal lands. The royalty
in-kind approach basically says, put it on the market, sell it;
that's the way to find out how much it is worth.
And so we have gone through tremendous efforts trying to
decide what the valuation is of our oil and gas. And I think it
would more efficient and recognizes that we have a much more
competitive marketplace for natural gas marketing especially.
And this allows us to take advantage of the pricing
efficiencies that come from having the marketplace set those
prices.
Mr. Tancredo. Thank you, Madam Secretary. I have no other
questions.
The Chairman. The gentleman from California, Mr. Miller.
Mr. Miller. Thank you, Mr. Chairman.
And, Madam Secretary, welcome to the Committee.
Madam Secretary, really since the Exxon Valdez oil spill, I
have been involved in really active oversight on the operations
of this system.
As we tragically learned in the Valdez oil spill, this
system isn't just at Prudhoe Bay. This is a system that really
runs from the Arctic Circle all the way down to southern
California or further, wherever the tankers and the pipelines
and others take us.
And I have been involved with Alyeska and the corporations
and others in constant meetings about upgrading and improving
this system. And I don't want to pretend for a moment that
those companies do not take this in a very serious light,
because they have dedicated hundreds of millions of dollars to
doing this and have responded to inquiries from myself and
Chairman Dingell and others in an ongoing basis.
But again yesterday, we read in the paper again about a
series of concerns raised by employees on the Arctic Slope,
questions of malfunctions and the readiness of very important
valves with respect to blowouts and spill containments.
And I just wonder what we can expect from your office in
the way of increased oversight. I don't think, if we are going
to expand this system--I don't happen to agree with that--but
if you are going to expand this system for another 20 or 30
years, if there isn't something done to increase public
confidence in the operations of this system--because obviously
we know when things go bad in this industry, they can go bad
quickly and in a very big way.
And I wondered, can you enlighten us as to what we might
expect in terms of oversight from your office under the joint
authority?
Secretary Norton. The approach that we would use would be
having Federal regulators who would oversee any of the
production activities on Federal lands. The discussion in the
newspaper was about the production that is taking place on
state lands.
Mr. Miller. Right.
Secretary Norton. And we would certainly expect that we
would have stringent standards in place and that those
stringent standards--
Mr. Miller. With respect to the offshore and national
petroleum reserve and pipeline, I assume you are talking about?
Secretary Norton. On all of those things, and wherever we
have--the things that we are talking about--
Mr. Miller. Would you put--
Secretary Norton. --in terms of the expansion--
Mr. Miller. Would you put that in the category of increased
oversight by your office or the status quo?
Secretary Norton. My understanding was you were talking
about--
Mr. Miller. The report also raised the questions about the
right to do surprise visits, whether or not rigs were doctored
and dealt with before the inspectors came along. We know, you
know, that is not exactly the best way to do oversight.
Secretary Norton. On the Federal side, on the Federal lands
that are on the North Slope, we would expect to have a high
level of scrutiny, including surprise visits. We have two
inspectors that are already operating in the NPRA area that has
only exploratory wells at this point in time.
So we are already at a high level of scrutiny and expect to
increase that level of scrutiny.
Mr. Miller. If I might, Madam Secretary, I would like to
follow up in correspondence with you for some questions as a
result of this hearing.
Mr. Chairman, if that is all right, if I could forward
those on that topic?
The Chairman. Without objection.
Mr. Miller. Thank you.
On another matter, the legislation before us designates the
1987 study, the 1002 report, as being adequate for discussions
of environmental impacts. And I just wondered whether or not
you concur with that or the administration concurs with that.
Most members of this Committee weren't in Congress when
this report was done. We have obviously had 10 years of
additional experience, and clearly this report was done before
the Exxon Valdez, which brought into focus the nature of this
system, the length of the system, and the consequences of it.
And I just wondered whether you support the notion that we
are going to designate this as adequate or whether you think
there should be an update of this report, with respect to
cumulative impacts; with respect to some of the issues of water
usage that have been raised; and obviously, the off-site
impacts from additional drilling with respect to the age of the
pipeline, those issues that are raised; and the shipments?
Secretary Norton. I think it is important to note the very
limited way in which that report would be utilized, and only at
the very beginning stages. As we move forward toward actual
impacts taking place, there would be additional studies that
would be--
Mr. Miller. But that report, we understand why this is
being done. That report is key to going forward in a rapid
fashion. I am asking whether or not that key, which is the
linchpin in terms of moving forward with rapid--and that is
clearly what the sponsors want to do--whether or not you
believe that is adequate or whether or not you believe there
ought to be an attempt to make some update based upon what we
have learned over the last 15 years?
Secretary Norton. Under the existing H.R. 2436, there would
be additional studies before there are actual impacts on the
ground. And I think that through those studies, we would see
the advances in technology that have taken place in the 15
years since that original study was done, and to see that the
environmental impacts can be further minimized as a result of
the newer technology.
The Chairman. The time of the--
Mr. Miller. Mr. Chairman, I would make same request with
respect to this topic, if I might--
The Chairman. Without objection.
Mr. Miller. --as a result of this hearing, forward
questions to the Secretary.
Thank you, Madam Secretary.
The Chairman. The gentleman from Maryland, Mr. Gilchrest.
Mr. Gilchrest. Thank you, Chairman.
Good morning, Madam Secretary. Welcome.
Three quick questions that you may be able to answer now or
maybe we can correspond on these later.
One is, I am Chairman of the Subcommittee that has
jurisdiction over wildlife refuges, and what we will be doing
over the course of the next few months is to hold hearings on
existing oil and gas leases on some of those refuges to see the
type of oversight that has been used and to ensure that those
existing oil and gas leases are living up to Americans'
expectations of environmentally sensitive and so on and so
forth. And we would just like to see what oversight existing
authority and the previous administration has in those areas.
So sort of a heads up on that.
Number two, could you tell us where geothermal, hydropower,
and maybe even wind and solar, are promising on our Federal
lands?
And the third is, you mentioned technological advances and
American ingenuity, which are, I think, two characteristics
that have made this country great. But in that process,
technological advances and American ingenuity, when you go
through this seminar this fall dealing with alternative energy
sources, will it go beyond geothermal, hydropower and so on to
possibly a rapidly promising technology known as a fuel cell,
of which, I understand, in the next couple of years it is
possible to run all of your electrical needs in your house with
one of these devices, and within 10 or so years, the kinks will
be out of the technology so that it will become mobile. In
other words, in less than 20 years, we could be operating
vehicles with long lives with fuel cells.
Secretary Norton. The fuel cell technology is indeed
exciting. That is something that primarily the Department of
Energy is pursuing. And while we would look forward to working
with Energy on the conference that we are proposing, this
conference would be based primarily on the public lands
opportunity to contribute to--
Mr. Gilchrest. I understand that. And your jurisdiction is
the public lands and hydropower and geothermal and wind and
solar and things like that.
But with American ingenuity, the crossover of technologies
from one department to another--I think it is sort of an
American characteristic to look at other sources other just
your area of jurisdiction.
You may not have the authority to do that, and I don't know
how the Secretary of Energy feels about that, but it just seems
that some of these aquaculture fish farms out west could depend
a little bit on geothermal and wind and solar and things like
that.
But the promising technology other than those would be
interesting to build into the mix.
Secretary Norton. We are working with the Department of
Energy on using advanced technologies within our parks and
within other activities that we undertake. We have alternative
fuel vehicles in a number of our parks.
So we are really trying to work with them to use ourselves
as an experimental population to help in the advancement and
development of some of these things.
Mr. Gilchrest. Thank you very much.
Thank you, Mr. Chairman.
The Chairman. Thank you.
The past Chairman of the Committee, Mr. Young, has now
joined us.
And, Mr. Young, we would like to present to you a present,
whether you want it or not.
[Laughter.]
Would you hand Mr. Young his present, please?
I am going to tell you what it is; it is a pair of custom-
made boots and it took forever to have those made for you
because of the odd shape of your foot.
[Laughter.]
But anyway--
Mr. Young. Well, thank you, Mr. Chairman. This is indeed a
surprise. I am a little reluctant to open them.
I hope they are hip high--
[Laughter.]
--because a lot of times in these hearings, we hear a lot
of stuff that gets over the low-cut loafers, I can tell you
that right now.
[Laughter.]
The Chairman. You are in for a disappointment.
[Laughter.]
Mr. Young. I do appreciate this. And I will cherish them,
wear them, and use them when they're appropriately needed, with
the sharp-pointed toe where it really belongs.
[Laughter.]
Thank you, Mr. Chairman. I do appreciate it.
The Chairman. They were made that way with that in mind.
[Laughter.]
And members of this Committee have chipped in to buy those
for you.
Mr. Young. And I hope they understand that I do deeply
appreciate it.
The Chairman. Okay, we thank you.
With that in mind, Mr. Kildee?
Mr. Kildee. Thank you, Mr. Chairman.
And I thank you, Mr. Young, for what you do.
Mr. Young. I deeply appreciate your contribution.
[Laughter.]
Mr. Kildee. In conjunction, Madam Secretary--thank you for
being here again--with Mr. Gilchrest's question, I think it is
very important that the departments of the executive branch do
not operate in isolation. I am sure that you concur in that
yourself.
But it seems that the Department of Energy, the Department
of Interior, and the Department of Treasury all play a vital
role in the future energy needs of this country. And I
certainly hope that is formalized in some way because you
should be talking one to another because you have interrelated
solutions, I think, to the energy needs of the country.
As co-Chairman of the congressional automotive caucus, I am
disappointed that the administration has been so timid on the
question of fuel efficiency, not just CAFE standards but such
things as tax credits for both R&D in the automotive industry,
for alternative energy sources, tax credits for the customer
who would purchase such vehicles, such as a vehicle with fuel
cells.
And I agree with Mr. Gilchrest that the future of fuel
cells, both for mobile and stationary sources, is very, very
promising. I have talked to some of the power companies in the
country who indicate that some of them could have something the
size of a refrigerator in one's backyard that, with the fuel
cells, could produce the energy for that home.
So I think that the fuel cells, both the for the automotive
industry and for other sources of energy, is very, very
important.
But I think that we should emphasize some incentives for
that, and tax credits are a great way to deal with incentives,
both for the customer who purchases that vehicle and for the
automotive industry that has to spend a great deal of money on
research.
We do allow some write-offs for R&D. Certain research and
development has a great societal purpose. And I think right now
the societal purpose of fuel efficiency is very high.
So I would hope that you would talk with people in the
administration and the Treasury on increasing tax credits, both
for R&D and for the purchasers of some of the hybrid vehicles.
I have driven hybrid vehicles, both at the Ford Company and
General Motors and at Chrysler, which is located in my
district. And I think the future is here, right now, with some
of those vehicles.
So I was disappointed that the tax bill that went through
the House rather rapidly did not address that. But I would just
commend you, as Secretary of Interior, to counsel with others
in the administration, particularly the Treasury and the
Department of Energy, to put together an energy package that
includes with less timidity fuel efficiency and encouraging
alternative sources.
Secretary Norton. The President's plan does include a tax
credit for consumers who purchase automobiles that are fuel
efficient alternative energy types of automobiles. And so that
portion of your suggestion is a part of the President's plan.
There are also additional Department of Energy efforts in
working with companies on development of new technologies. I am
not as familiar with that portion of the plan as I am with the
ones that deal directly with Interior. But the spirit of your
remarks is reflected in the President's plan.
Mr. Kildee. I appreciate that, and I hope the President
will push that and pursue that. I wish he included that on the
tax bill, because that was really greased up to pass, if I may
use that term.
But thank you very much, Madam Secretary.
The Chairman. The gentleman from Nevada, Mr. Gibbons.
Mr. Gibbons. Thank you very much, Mr. Chairman.
And, Secretary Norton, welcome. Pleased to have you here
before us today.
And I know there are many on this Committee and throughout
Congress who are going to criticize your organization for
slowness in getting things done, but we understand, and I hope
they will understand, the critics especially, that staffing
levels have been held up by the leadership in the Senate. And
so it is difficult to have an agency running at full speed
without everybody on board.
I have just two questions that I want to enter into the
record, if I may, Madam Secretary.
Your statement didn't mention a provision within the bill
which is an outgrowth of a recommendation from a group
established by your predecessor, Secretary Babbitt. It is
called the Green River Basin Advisory Council. It consisted of
state and local officials, environmentalists, and industry
people.
And one of the ideas that they came forward with was to
allow lessees to pay for cumulative impact studies when the BLM
lacked sufficient appropriated funds to get the job done in an
early and timely fashion, to help remove some of the delays.
In return, the lessees would then receive a credit against
future royalty obligations for money they put up for third-
party prepared studies done to BLM specifications, for the BLM,
of course.
But the solicitor at the time, and that would be Mr. John
Leshy, said that the Secretary lacked authority under the
Mineral Leasing Act to grant an eco-credit. Of course, when we
offered him the authority in legislation, Secretary Babbitt
then declined that authority.
Do you have any thoughts about this concept?
Secretary Norton. The need for environmental planning and
environmental analysis is obviously critically important to
ensuring that we go forward with any development activities in
an appropriate way. And it does make sense to ask that we do
allow that money, instead of coming directly from the taxpayers
to pay for that, to essentially be put forward by the
applicants.
Mr. Gibbons. One final question, if I may, we have advanced
the idea of MMS collecting royalty in-kind natural gas volumes
from the Gulf of Mexico leases, and perhaps some onshore
fields, like the Powder River basin coal bed methane or the San
Juan basin, and designing a pilot program with the HHS folks to
actually send that product or those molecules to the LIHEAP-
approved utilities which serve low-income qualified households.
Does the language in this bill provide you the flexibility
necessary to do such a demonstration program?
Secretary Norton. We have been doing some pilot testing of
royalty in-kind already, on a more limited basis, in Wyoming,
Texas, and the Gulf of Mexico. And we are now building on that.
I think this bill does allow us the flexibility to do the
type of LIHEAP program that you are talking about. And we will
certainly work with you to make sure that it does allow that
type of flexibility.
Mr. Gibbons. Great. Thank you, Madam Secretary.
Thank you, Mr. Chairman.
The Chairman. On the Democratic side?
Mr. DeFazio. Here, Mr. Chairman.
The Chairman. The gentleman from Oregon.
Mr. DeFazio. Madam Secretary, on page 2 of your testimony
you point out that ``more than 50 percent of the President's
plan focuses on energy efficiency, encouraging the development
of fuel-efficient vehicles.''
Could you please tell me, what is the measure? Is it 50
percent of pages, 50 percent of the tax credits, 50 percent of
the energy that we are going to capture through this plan? What
is the measure? What is 50 percent?
Secretary Norton. We counted the recommendations and half
of them dealt with that.
Mr. DeFazio. Okay, so half of them dealt with it. What
percentage of the energy gained is going to come from those 50
percentage of the recommendations rhetorically?
Secretary Norton. I have not quantified that.
Mr. DeFazio. Okay. So wouldn't that be a more important
measure since over the last 20 years we have captured four
times more energy through efficiency measures than increased
production measures?
Secretary Norton. Well, I apologize. It is a little simpler
for us to count the number of recommendations.
Mr. DeFazio. Right. Okay, well, at least we know what we
are measuring here.
I am a bit puzzled by one of the earlier questions of Mr.
Rahall, in particular, about project labor agreements, and I
happen to be a big supporter of them. I think they are a very
efficient, effective way to administer projects.
However, you said the administration has no objection to
the Republican bill which would require only in Alaska project
labor agreements.
Now, I kind of wonder how that jibes with the February 17,
2001, executive order by the President of the United States
where he says: ``shall ensure that neither the awarding
government authority nor any construction manager acting on
behalf of the government shall in its bid specifications reject
agreements, project agreements or other controlling
documents.'' That is a special executive order rescinding the
Clinton administration order mandating project labor
agreements, that were ballyhooed by the President.
I guess I have a two-part question.
One is, you said you have no objection. Do you support
project labor agreements in this or does the President,
notwithstanding his earlier executive order prohibiting them?
And secondly, if it is good for Alaska, why isn't it good
everywhere else?
Secretary Norton. As I said previously, this was not a
portion of the President's plan. It was something that was
negotiated by Congress, and we do not object to it.
Mr. Young. Will the gentleman yield?
Mr. DeFazio. Well, I don't have a lot of time, Don. You
have lots of time.
Well, I will yield to you.
Mr. Young. I would just like to suggest to you that you
know why it is in the bill.
Mr. DeFazio. Yeah, because you wanted it in there.
[Laughter.]
Mr. Young. That is exactly right.
[Laughter.]
Mr. DeFazio. Okay.
Mr. Young. I admit it, I accept it, and thank you a lot.
Mr. DeFazio. Couldn't you want it somewhere else?
[Laughter.]
Mr. Young. Remember, my job is to take care of my people,
and I am doing it.
[Laughter.]
Mr. DeFazio. But we would like to take care of working
people everywhere. So if the gentleman would like to extend it
to the lower 48, I would be thrilled to support that effort. So
we will talk about that later.
Further, on the issue of the Arctic National Wildlife
Refuge exploration and drilling, I wonder if the administration
would support restoration of the prohibition on the export of
oil from Alaska, in supporting the Arctic National Wildlife
Refuge exploration and drilling.
That is, assure the people of the United States that if
there such a crisis in the United States of America that we
have to go into this previously wild and pristine area to
drill, that that oil is not going to China or Japan or
somewhere else, that that oil would remain in the United
States, which was the law until 1996, which unfortunately was
passed by a Republican Congress and signed by President Bill
Clinton to allow the export of that oil.
Would you seek or support a reimposition of the ban?
Secretary Norton. Our primary concern is trying to provide
energy for America's future, and our focus is trying to make
sure that that is the audience that we are addressing, that is
the market that we are addressing. I will be happy to get back
to you with a further statement as to--
Mr. DeFazio. Okay. Well, that is an encouraging first step.
And I have legislation to reimpose the ban or the President
could do it by executive order. So if you could take a step
unilaterally or support legislation; that would be great.
I was reading an interview with you and it said that ``Star
Trek Voyager'' is your favorite television show. Is that true?
[Laughter.]
Secretary Norton. Yes, and unfortunately it is now off the
air.
[Laughter.]
Mr. DeFazio. Well, I would just observe, Madam Secretary,
if that is your favorite show--
The Chairman. The time--
Mr. DeFazio. Just very briefly, because I did yield
generously to him. Thirty seconds? Then we should have perhaps
a more forward-thinking energy policy. You know, the Stone Age
didn't end because they ran out of rocks.
[Laughter.]
They evolved. They went on. We went to new technologies.
And I would observe that this is mostly a petro-based
energy policy. And really, I would like to see the 50 percent
in efficiency and alternatives expressed in more than words.
Thank you, Madam Secretary.
The Chairman. The time of the gentleman has passed.
We have two votes coming up, and the Secretary is going to
leave. We are going to try to finish with her before we go
vote.
Let's do this: one question each in a hurry. Okay?
On the majority side, you are next. Do you have a question
for the Secretary over here?
On the minority side?
Mr. Faleomavaega, one question.
Mr. Faleomavaega. One question.
Madam Secretary, thank you for coming this morning.
Madam Secretary, there are some 5.4 million Americans who
depend entirely on imported fuel for their resources. And I am
speaking mainly, as you know, of the State of Hawaii, Puerto
Rico, the insular areas. And I don't see anywhere in the
proposed legislation anything dealing with the energy needs of
these areas in our country, and I would really appreciate if
you can pursue this.
On the question of ANWR, I would like to know what the
position of the Native Alaskan tribes are in the State of
Alaska concerning ANWR.
And secondly, I would like to note also that there is a
question about alternative sources of energy, and I don't see
anywhere in this legislation about doing comprehensive research
and study, especially on areas like deep ocean water energy
resources, and I would really appreciate if you could address
that issue.
Secretary Norton. As to the issue of your area and Hawaii
and the source of oil and gas, we would be happy to work with
you further on that.
As to ANWR, the Alaska Federation of Natives, which is a
statewide organization, voted to support opening ANWR. There
are native lands that cannot be used by the natives for oil and
gas as they would like to do because of the restrictions, and
they cannot act until Congress allows them to utilize their own
lands.
The Chairman. The gentleman from California, Mr. Calvert.
Mr. Calvert. Just real quick, Mr. Chairman, I appreciate
the time. I would encourage the members to--I will do a little
advertising--to get on my hydrogen act bill, which is named
after Bob Walker and George Brown, because that is the next
energy source.
But I just wanted to point out to the Secretary that
California does a great job with wind, solar, geothermal; we
probably use more of those types of energy sources than any
other state in the union, but we still have a little problem
that has been well-publicized.
And we certainly appreciate your efforts to attempt to find
fuel to get us through this next number of years until we can
move to a hydrogen-based economy, which at some point I think
we will get into.
So I know many of the members here are already on that
bill, Mr. Chairman, and I appreciate their support. But in the
meantime, we are going to need to find additional hydrocarbon
resources throughout the country and Alaska to get us through
this period.
I appreciate the time.
The Chairman. Madam Secretary, we have a little problem
here. We are going to have to go.
Maybe I understand it wrong, but I don't think you can
spend the day with us, and we have a whole bunch of other
witnesses sitting there, who have been very patient.
What are your druthers?
Secretary Norton. I would be happy to accept any questions
in writing, to reply, and to talk with members with specific
questions, if that helps.
Mr. Pallone. Mr. Chairman?
The Chairman. Well, let's try--Mr. Pallone?
The gentleman from West Virginia.
Mr. Rahall. Obviously, we had a larger turnout on our side
of the aisle today, and there are members, and I think they are
entitled to their 5 minutes. Obviously, they can't do it today.
I would ask the Chairman and Madam Secretary if she would
be so kind as to consider a reappearance before our Committee--
I recognize schedules are tight today--at another time, so that
our members and additional majority members will have time for
their 5 minutes.
Mr. Kind. Mr. Chairman, I have a housekeeping question as
well for Madam Secretary.
In her last appearance on June 6 before the Committee,
testifying about the national energy policy, a lot of members
submitted written questions.
We were wondering if you will have an opportunity to
respond to those important questions prior to the markup of
this legislation, which I believe is going to take place next
week.
The Chairman. The gentleman is correct. We are intending to
mark this up next week.
Secretary Norton. Those are on their way. They were,
unfortunately, in the OMB process. We could not deliver them to
you in advance of this hearing. But those will be to you very
quickly.
The Chairman. I would suggest that the members write
questions to the Secretary.
Mr. Pallone?
Mr. Rahall. Can they be answered before the markup, Mr.
Chairman?
Mr. Pallone. I just wanted to--
The Chairman. It is up to the Secretary.
Mr. Pallone?
Mr. Pallone. I just want to ask you very quickly, at the
New Jersey shore, which I represent, and other members, on a
bipartisan basis, they are in an uproar over the possibility of
offshore drilling off the coast of New Jersey and the Mid-
Atlantic.
There have been two proposals, one from the outer
continental shelf policy Committee and another from MMS itself
to try to study and look into exploration off the coast of New
Jersey.
We now have a moratorium in place in our Interior
appropriations bill on an annual basis. There is an executive
order of the President, President Clinton, for a 12-year
moratorium for the Mid-Atlantic.
Does the administration support continuing those moratoria
or is the administration--
Secretary Norton. Yes.
Mr. Pallone. You do. In both cases, both the 1-year annual
appropriation plus the executive order?
Secretary Norton. We don't have any proposals to take the
moratoria off the table.
Mr. Pallone. Okay.
Secretary Norton. Those are currently in place, and we have
not proposed making changes to those.
Mr. Pallone. All right, I appreciate that.
The Chairman. We probably have time for one quick question.
Mr. Inslee?
Mr. Inslee. Well, Mr. Chair, I spent 4 days in the Arctic
refuge last week, and we have before us an issue that will
substantially damage that, and I believe that we ought to have
5 minutes to get our questions answered before we destroy our
precious national resource.
We have questions outstanding for weeks we haven't received
back from the Secretary. I understand she has a busy schedule.
We ought to have 5 minutes to get our questions answered
before we take a vote to destroy the Arctic wildlife refuge.
The Chairman. Mr. Underwood?
Mr. Underwood. Basically, I just wanted to reiterate the
point about the insular areas and the lack of an energy policy
on this, and also the fact that ocean thermal energy is not
part of your discussion or apparently not part of anything that
you have submitted either for the record or in your
conversation this morning.
Secretary Norton. Thank you.
The Chairman. We are going to miss a vote unless we recess
right now.
[Recess.]
The Chairman. The Committee will come to order.
The Secretary has agreed to take these questions, if
members want to take their 5 minutes. That is very gracious of
her. I think of all of the times that people have had to run
and many of us did not get our time in.
Madam Secretary, we appreciate you graciously staying with
us. We know you have other things to do, but we truly
appreciate that.
The gentleman from Wisconsin, do you want to get your 5
minutes now?
Mr. Kind. Thank you, Mr. Chairman.
And I want to thank Madam Secretary for your graciousness
with your time and agreeing to stay and answer a few more
questions.
As you are aware, we are in all likelihood going to be
going to markup on this legislation that the Chairman and
others have introduced in this Committee. It is a very
important piece of legislation, and I am happy to hear that you
are going to try to expedite the response time in regard to the
written questions we had submitted after the June 6 hearing as
well.
The first question I have for you, Madam Secretary, I had
an opportunity to review your written statement that you
submitted to the Committee for today's testimony. You had
stated in your written statement, and I quote, ``The President
has also proposed royalty in-kind provisions that will help us
with the administration of your royalty in-kind program.''
But I have had a chance to review the administration's
report of the national energy policy development group that was
released in May, as well as the President's legislative
initiatives that were recently released just a couple of weeks
ago in June, and I can't find any reference at all to royalty
in-kind in those two major documents.
Has the President in fact proposed that? If so, where is
it? And can we obtain a copy of the proposal?
Secretary Norton. I apologize. You are correct in your
reading of that. And we did make a mistake in the written
testimony.
The President did include provisions for trigger prices to
trigger that royalties would go into the LIHEAP program, but it
did not address the royalty in-kind aspect of that.
Mr. Kind. Just so I am clear on the administration's
current position, are you now here endorsing the legislation
that has been submitted, 2436, in regard to the royalty in-kind
provisions contained in the legislation? Or hasn't the
administration taken a position on that?
Secretary Norton. We believe that the provisions that are
in 2436 are consistent with the energy plan, so we are
endorsing generally those aspects of 2436.
Mr. Kind. I am a little confused because I was part of the
bipartisan group that went down to the White House just a
couple of weeks ago to have a conversation with the President
and Vice President in regard to the energy policy.
During that meeting, Representative Rahall directly posed
that question with the President, and he at the time indicated
that they weren't moving forward on any proposal regarding
royalty in-kind. He gave that assurance to Representative
Rahall.
Now, is this a reversal in that policy position in
endorsing the legislation that has been submitted and we will
be marking up next week?
Secretary Norton. I am not aware of what the statement was
that was interpreted in that way.
Mr. Kind. Well, perhaps we can follow up and just get some
clarification from the administration on that provision in
particular.
I don't know, Madam Secretary, if you had an opportunity to
review the article that appeared in the Wall Street Journal
yesterday titled ``How Many Inspectors Make Safety Checks in
Alaska's Oil Fields? Answer: Only 5 and That Worries Some
People as Bush Backs Drilling.''
I think it an very important article in the fact that it
raises so many substantive issues in regard to our ability to
go into Alaska generally and the Arctic National Wildlife
Refuge specifically and be able to extract these resources in a
environmentally friendly way, in a clean fashion, which the
administration touts as feasible and possible.
Yet this article, which I would ask unanimous consent to
submit for the record at this time, Mr. Chairman, without
objection, raises some very important questions.
[The article follows:]
THE WALL STREET JOURNAL.
july 11,2001
fueling controversy: how many inspectors make safety checks in alaska's
oil fields?
answer: only five, and that worries some people, as bush backs
drilling; legislature trusts industry
By Jim Canton
DEADHORSE, Alaska--As Congress begins debate this week on President
Bush's proposal for expanded oil drilling here on Alaska's North Slope,
concerns about safety are intensifying.
On April 15, a corroded pipeline spilled roughly 100,000 gallons of
crude oil and saltwater onto the delicate tundra. Crews working in
below-zero conditions plugged the leak in 12 minutes--but that was long
enough to poison vegetation across an area the size of two football
fields.
Alaska's 25-year-old oil infrastructure is showing its age, just as
a new energy boom is poised to hit the state. The problem stems from a
combination of industry and government behavior: As North Slope wells
have been steadily depleted in recent years, oil production has
declined, and energy companies eager to cut costs have held back on
much-needed investments in replacement parts and equipment. Alaska's
legislature, meanwhile, eager to please the industry, has gutted the
state agencies responsible for regulating oil-field safety. Indiana,
which takes a full year to produce the amount of crude oil that Alaska
pumps in three days, employs nine oil-field safety inspectors. Alaska
has five.
``By and large, we are distrustful of big government up here,''
explains State Rep. Eldon Mulder, the Republican co-chairman of
Alaska's House Finance Committee and a key hand in the killing of
proposals for more-stringent regulation. Slumping production has hurt
the state economy and should be cured by more drilling, he says. And,
he adds, ``the industry has done a good job regulating itself.''
Others are more skeptical. Although the state hasn't had a
catastrophic oil spill since the Exxon Valdez incident in 1989, critics
of the industry, including some who work in it, say danger signs
abound. The 100,000-gallon spill in April, at a Phillips Petroleum Co.
field called Kuparuk, was just one of 50 modest-size and small spills
attributed to pipeline corrosion and other wear and tear in the past
five years, Alaska regulators say. Yet the industry consortium that
runs the vast oil field beneath the North Slope and Prudhoe Bay--North
America's largest--says it has slashed maintenance spending by 10% this
year, to about $100 million, after years of holding the level roughly
even.
A page one Wall Street Journal article in April reported that oil-
rig technology touted by President Bush as environmentally friendly and
central to his expanded drilling plans has malfunctioned at rising
rates in the past five years on rigs in western Prudhoe Bay. These
technological problems, such as failures in spot checks of emergency
shut-off valves, are all the more worrisome because of the state's
relatively light regulation and reduced maintenance by the industry.
Federal authorities in Alaska delegate most responsibility for the oil
industry to the state.
If the safety valves on some rigs fail in a real emergency, as much
as 3.5 gallons per second of crude oil could gush into the ecosystem.
``These valves are meant to protect against catastrophic failure,''
says Lou Grimaldi, one of the five state oil-safety inspectors.
``They're absolutely crucial.''
Industry officials acknowledge they have had maintenance problems
in recent years but say the troubles are being addressed and pose no
safety risk. ``This place is safe and getting safer,'' says George
Blankenship, Prudhoe Bay manager for London-based BP Amoco PLC, which
operates the field for the consortium. Other BP officials add that this
year's maintenance-spending cut reflects expected consolidation after
BP's 1998 acquisition of Amoco Corp., which had operated part of the
Prudhoe Bay field.
The Bush administration's call for more drilling responds to a
projected shortfall of 7.5 million barrels of oil per day in the U.S.
over the next 20 years. Environmentalists counter that stepped-up
conservation could cover any shortfall. But the White House maintains
that more fuel is needed and singles out Alaska as a particularly rich
source of reserves.
The administration's most controversial proposal--to allow drilling
in the North Slope's pristine Arctic National Wildlife Refuge--was
probably doomed by the Democrats' recent takeover of the Senate. But
with White House encouragement, industry is gearing up for expanded
exploration and production in other parts of Alaska where congressional
permission isn't required.
A unit of Phillips Petroleum, for example, recently struck oil in
three large fields in the National Petroleum Reserve, a 23-million-acre
area west of Prudhoe Bay in which the White House directly controls
drilling. Wells are being drilled in the Beaufort Sea, as well as Cook
Inlet near Anchorage. State officials also want to build an 1,800-mile
pipeline to transport natural gas from the Arctic, through Canada, to
the lower 48 states--a plan that would raise concerns about potential
pipeline explosions and fires.
Some Alaskans wonder whether the state's creaking pumps and
pipelines, and the skeletal staff of regulators who oversee them, can
handle a fresh oil boom. ``The people doing the job now are stretched
far too thin,'' says Democratic State Rep. Ethan Berkowitz, minority
leader of the Alaska House.
The state legislature's parsimony during the past decade has left
Alaska's oil industry with less safety oversight than many states that
produce a fraction of Alaska's output. Indiana, for one, pumps 2.5
million barrels of oil a year, compared with Alaska's current level of
400 million annual barrels, which amounts to 20% of the nation's
domestic oil supply. Alaska spends about $3 million a year to monitor
oil-field safety. Indiana spends $1.4 million, deploying its nine
inspectors mostly across a 480-square-mile oil patch. The five
inspectors employed by Alaska's Oil and Gas Conservation Commission, by
contrast, oversee wells spread across 1,000 square miles of icy
emptiness.
California, which produces about 300 million barrels of oil a year,
has 40 oil-field safety inspectors. Canada's Alberta province, which
produces 700 million barrels a year, has 110. But the stakes are much
higher on Alaska's North Slope, where the typical well gushes 750
barrels a day, far more than wells in these other places.
Overwhelmed by its task, Alaska's tiny inspection cadre has
abandoned the technique, used by its counterparts in some other states,
of making surprise visits. The Alaskan inspectors schedule their
arrival at drill sites ahead of tine.
``There is no question that the legislature has done a very myopic
job in terms of environmental responsibility,'' says Alaska Gov. Tony
Knowles, who is a Democrat but generally a strong industry backer.
Alaska's Republican-controlled legislature, the governor says, has
mounted a dangerous budgetary ``attack'' on the state's safety
agencies.
Take the Alaska Department of Environmental Conservation, the
state's pollution watchdog. Its budget has been reduced by 55% since
1991--more than triple the 15% decline in Alaska's overall state
spending during that period due to lower oil revenues. In December, the
department's staff, worried that aging gear on the North Slope and
elsewhere could cause a major spill, petitioned lawmakers for a
$500,000 grant to monitor pipeline corrosion and study spill-prevention
techniques.
As it happened, the legislature was considering the request in
April when the Phillips Petroleum pipeline burst at the Kuparuk field.
Although the level of damage is still being studied, scientists with
environmental groups say that sludge and seawater killed surface plants
and thawed underlying permafrost, making it unlikely the vegetation
will ever fully recover. ``Migratory birds also suffer, because even a
drop of crude on their eggs can cause them not to hatch,'' says Pamela
Miller, an environmental consultant in Anchorage.
Still, the legislature rejected the department's request, siding
with industry lobbyists who argued that oil companies were capable of
monitoring pipeline corrosion themselves. ``There appeared to be a
certain amount of duplication'' between the industry's efforts and the
department's request, Republican State Rep. Loren Leman, majority
leader of the Alaska Senate, says in an interview.
Lawmakers did appropriate $3.6 million to help fund an industry
lobbying campaign on behalf of Mr. Bush's proposal to drill in the
Arctic wildlife refuge. ``There's nothing to oversee if there's nothing
coming out of the ground,'' says State Rep. Mulder, explaining
lawmakers' preference for lobbying over safety spending.
The oil industry generates two-thirds of Alaska's revenue and
provides annual royalty payments of thousands of dollars for each of
the state's roughly 500,000 citizens. The drop in oil revenues in the
early I 990s hit Alaska hard, forging strong political will to boost
production. Michele Brown, commissioner of the state's Department of
Environmental Conservation, says, ``The legislature doesn't care for
our mission.
The paucity of resources makes it hard for Alaska's oil-safety
inspectors to do their job. Stretched by the state's vast terrain and
its 3,500 wells, the five inspectors say they schedule their field
tests with the oil companies to ensure that inspectors don't travel
hundreds of miles only to discover that necessary personnel or
equipment aren't around.
Lost is the element of surprise that regulators in some other major
oil-producing states swear by as the crucial component in keeping oil
companies honest. ``You want to make sure that what's going on in the
field is what you-think it is,'' says Philip Asprodites, Louisiana's
commissioner of conservation. His staff of 35 inspectors runs surprise
safety checks on oil rigs in the Gulf of Mexico.
Instead, Alaska's safety regulators operate on trust, often
established between inspectors and industry employees over years of
working side by side in the state's desolate reaches.
On a snowy day on Prudhoe Bay, Mr. Grimaldi, one of the five
inspectors, watches a BP Amoco roustabout adjust pressure gauges inside
an instrument shed, simulating a leak that instantly shuts down the oil
well beneath them. The valves work flawlessly, as well they should: The
valves just underwent their regular tests by the company, which also
knows the inspector has a journalist in tow.
Despite the close coordination with the company, Mr. Grimaldi says
BP wouldn't rig a test by fiddling with equipment before he arrives.
``The No. I thing these guys have going for them is we can trust
them,'' he says. BP's supervisor on hand for this day's test is Merv
Liddelow, whom he has known for many years and with whom he once worked
at another company.
At the reporter's request, Mr. Grimaldi makes an unscheduled check
of a BP rig with a troubled history, known as G pad. Nearly a third of
this platform's safety-valve components flunked a state test in March.
It passed a scheduled retest in April, and this time, without prior
warning to the company, it passes again.
Out of the inspector's earshot, however, a BP Amoco worker, who
declines to be named for fear of retaliation, says maintenance crews
were dispatched to G pad the night before the scheduled April retest to
assure everything was working well. When valves on one well continued
to fail, that well was shut down--and was therefore bypassed by the
state inspector the next day, the worker says.
A BP spokesman confirms the company performed its own preparatory
maintenance on the eve of the inspector's visit in April. But the
spokesman adds that the company was merely taking steps to head off any
more safety-valve problems. He says the bypassed well, were it
operating, would not have significantly affected G pad's overall
success rate.
______
Mr. Kind. And they highlight in the article that there are
only five oil safety inspectors currently working in Alaska,
whereas the State of Indiana, which produces oil over a year
equivalent to the amount of oil produced in just 3 days in
Alaska, has nine inspectors.
And obviously, the question arises, is there sufficient
safety programs or safety inspectors in place right now in the
State of Alaska in order to address some of these safety
concerns? What is your opinion?
Secretary Norton. First of all, we would intend to have
however many inspectors it takes to ensure that we have not
just appropriate standards in place, but also compliance with
those standards.
Second, I think it is important to recognize that the North
Slope is a little different than other areas, and some of the
comparisons in that article are not quite correct. I would be
happy to provide you with the specific information.
But having visited there, I think there are 20 or 25 sites
where production takes place on the North Slope compared to
probably thousands of sites in a state in the lower 48 that is
in production. And so, in terms of being able to inspect on
site-by-site basis, per amount of oil produced, that is not an
appropriate measure. It really is the facility itself that
needs to be--
Mr. Kind. And I am not sure about the accuracy of the
report in the Wall Street Journal yesterday, but one of the
troubling features of it, it indicated that State Legislature
in Alaska has actually appropriated more money for lobbying
purposes here in Washington to drill in the Arctic National
Wildlife Refuge than they are appropriating for safety
inspection programs in the State of Alaska.
If that in fact is true, then I think there is more work
that we should be doing together in order to beef up the safety
inspection teams in Alaska, given the amount of production that
is currently taking place in some very valuable lands.
The Chairman. The time of the gentleman has expired.
Mr. Kind. Thank you, Mr. Chairman.
The Chairman. Mr. Pallone and Mr. Faleomavaega each have--
Mr. Faleomavaega. Four more minutes.
The Chairman. You get 4 more minutes and then Mr. Pallone
and then we will--
Mr. Faleomavaega. I didn't use more than a minute.
The Chairman. Mr. Pallone?
Mr. Pallone. Well, I am not going to use all 5. But I just
wanted to ask a question about two American Indian issues that
have come up in the context of energy.
You are probably familiar with Weatherman's Draw in
Montana. This is also known as the Valley of the Chiefs. It is
a sacred site to Native Americans.
And I know that the Sierra Club and about 10 different
tribes have basically appealed to you, to the Secretary's
office, because of the fact that drilling has been allowed
there. Exploratory wells are being drilled, and they are very
much opposed to this.
And they also feel very strongly that not only shouldn't it
happen because it is such a sacred site, but also that there
was no consultation with the American Indians, with the tribes
that consider this a sacred site.
And I just wondered if had reviewed this, if we could you
to be supportive of not allowing drilling there, or at least
have some consultation with the tribes.
I know that the Blackfeet Tribe were here a couple weeks
ago with our Ranking Member Rahall and had actually proposed
that they could lease part of their reservation instead of the
sacred site.
And I just wondered if you could comment on any of that,
Madam Secretary.
Secretary Norton. It is my understanding that there have
been discussions about an exchange like that, that would avoid
the Weatherman's Draw site and that would take place on a
private basis. That is an issue that we are continuing to
monitor. It is on our radar screen at this point.
Mr. Pallone. Would you be willing to play a role, though,
in trying to work that out?
Secretary Norton. To the extent that it is appropriate, my
department at least certainly would be playing a role. We need
to look at what we can do while it is in an appeal process.
Mr. Pallone. Okay.
Secretary Norton. It was my understanding that there was at
least a statement made that the company was not planning on
going forward with any activity in that area--
Mr. Pallone. Well, they are doing--
Secretary Norton. --in a significant--
Mr. Pallone. They are doing exploration.
But if you are willing to have the department work
something out, I would appreciate that. I think that is what
you are saying, that you are willing to have the department try
to work it out if possible.
Secretary Norton. We are certainly willing to try to work
something out.
Mr. Pallone. Okay.
Let me ask another thing. Under the 1992 Energy Policy Act,
you were authorized as Secretary to request funding for
American Indian renewable energy projects. And given that there
is such a potential for renewable clean energy products by
tribes, are you going to have any funding or be seeking any
funding for the American Indian renewable energy project? And
what is the department's plan to help tribe develop their
renewable resources?
Secretary Norton. My new Assistant Secretary for Indian
Affairs was just confirmed a week before last. And in my first
meeting with him, I asked him to look at working with tribes on
energy issues, and that is part of what we would like to
consult with the tribes about.
Mr. Pallone. Could we, as members of the Committee, myself
or others, follow up with that a request a meeting with him to
talk about what is going on in those areas?
Secretary Norton. Certainly.
Mr. Pallone. Okay. I appreciate it.
Thank you, Mr. Chairman.
The Chairman. I thank the gentleman.
Apparently, the word in Wall Street Journal upset the folks
in Indiana, and they have written me a letter refuting most of
that, signed by Mr. Slutz, James A. Slutz, Director of the
Division of Oil and Gas. I will submit that for the record for
your perusal.
[The Letter from Mr. James A. Slutz, Director, Division of
Oil and Gas, Indians Department of Natural Resources, follows:]
[GRAPHIC] [TIFF OMITTED] T3674.003
The Chairman. The gentleman from American Samoa, you have 4
minutes left.
Mr. Faleomavaega. Thank you, Mr. Chairman.
Madam Secretary, I can fully appreciate the complexity of
so many of the areas in your responsibility and the issues that
you take within the Department of Interior.
It has come to my attention that at a recent hearing held
at the other body, my good friend, the good Senator from
Hawaii, Senator Akaka, raised some questions with a couple of
your subordinates concerning insular areas, and they knew
absolutely nothing about territories, which is part of your
jurisdictional authority.
I am a little concerned. And maybe perhaps at some time
later your subordinates who do have direct administrative
authority over these areas as assistant secretaries will meet
with those of us who do represent the insular areas. And that
would really be helpful to us so that we will know exactly who
to talk to when we need to get some results or things on the
issues that we are concerned about within the department, if
that is all right with you.
Secretary Norton. I would be happy to do that. We have our
incoming Assistant Secretary for Policy Management and Budget
that is pending confirmation, and she would be the appropriate
person for you to speak with.
I did work on those issues myself when I was at Interior
previously and have met with a number of people from the
territories, and look forward to working with you and others in
the future.
Mr. Faleomavaega. As a followup of the question that I had
raised earlier--it was so quick that I didn't even have a
chance to elaborate on this--as Mr. Underwood had indicated
earlier also, but the question of deep ocean water as an
alternative source as energy technology.
This technology was developed with one of our most noted
nuclear scientists, Dr. John Craven, out in the State of
Hawaii. And I wanted to know if the administration if willing
to commit resources to do this study, even in a more
comprehensive fashion so that perhaps this is another area that
our nation can look into, not just for the insular areas where
we have the Pacific Ocean, but certainly coastal states where
there is deep ocean water in which this kind of technology can
also be utilized.
Will the administration be willing to entertain possible
amendments to look into this area?
Secretary Norton. I would be happy to talk with the
Secretary of Energy. That may well fit under some of the
existing research type of programs that are already part of our
package.
Mr. Faleomavaega. As another followup on the question,
Madam Secretary, of ANWR, there was a recent lead article out
of the L.A. Times questioning some of the real concerns of the
native Alaska tribes on the development of ANWR, and I
understand also that the Gwich'in tribe is probably the most
directly impacted because of their tribal dependence so much on
the caribou and the life structure and how this tribe also
meets their basic needs. It is my understanding this tribe has
never asked for any royalties on anything dealing with oil, as
opposed to other tribes.
Have you had an opportunity to talk to the leaders of the
Gwich'in tribe, Madam Secretary, on this issue?
Secretary Norton. In my most recent visit to Alaska, I
spent several hours--I visited one of their villages, Arctic
Village, and spoke with the leaders of the Gwich'in tribe. They
do not have royalties from their lands. They have leased
apparently in the past, but there was no finds of petroleum on
their lands.
The tribe that is in the Coastal Plain, I have also met
with them, with the residents of Kaktovik, and they do desire
to have development.
I would like to continue working with both groups of
natives to try to address the concerns of both groups.
Mr. Faleomavaega. Do you honestly believe that this
proposal does address seriously not only the environmental
concerns but that the development of ANWR can be done in a safe
way in a similar fashion when we developed the Alaska pipeline
system? Is this your basic position?
Secretary Norton. I believe it is. We see 25-year-old
technology in parts of Prudhoe Bay and yet the caribou herds
have increased. And we can go forward with environmentally
responsible technologies.
Mr. Faleomavaega. Thank you, Mr. Chairman.
Thank you, Madam Secretary.
The Chairman. On the majority side? Questions for the
Secretary?
Mr. Peterson?
Mr. Peterson. Welcome. I look forward to working with you.
I was reviewing your statement. I just got here, so I
missed most of the discussion.
But I agree with you that there is no silver bullet to this
issue, that we really have to do a lot of things if we make
energy abundant, because we will solve the energy problem when
people have choices of energy and they can use the most cost-
effective one, in my view.
And that is not really out there today. We have a lot of
people locked on one or two kinds of energy, and they rise or
fall or their business flourishes or dies because of the cost
energy.
I just quickly made a list here of what I think needs to be
a part of it. Of course, conservation first, and then hydro,
geothermal, fuel cells, wind, solar, gas, improved access to
gas, oil, coal, and nuclear.
I mean, I think if we leave any of those out, in my view,
we are short-changing Americans for a strong energy future
because the future of energy will depend on the success of this
county. Do you agree with that overall philosophy?
Secretary Norton. Very definitely. And I think that is
consistent with our plan.
Mr. Peterson. The one that concerns me, I guess, is that we
find Congress is willing to lock up one land after another. I
guess I am not sure there is a place we should drill or explore
that will be agreed to by everybody, but it appears to me that
we have a lot of naysayers in Congress who are seemingly
willing to lock up every piece of property they can to future
energy availability.
But the one that bothers me is the--for the short term;
this is not a long-term problem, but for the short term, the
dependence on natural gas for power generation I think has some
huge negative problems, can bring on some huge negative
problems, if we cannot get enough gas into the pipeline to keep
costs from exploding even further.
In my district, home heating last year increased from 100
to 135 percent. And it looks like it might even be more
difficult next year.
That had a huge impact on this country's economy because
that money immediately came out of the holiday Christmas
spending. When you have costs driving up, when you have home
heating costs up, you have business operational costs up that
dramatically, you have a huge impact on businesses, you have a
huge impact on our seniors who are trying to stay in their
homes in the north; I come from the Northeast.
So I am concerned the overdependence on gas with the
inability to transport gas because of pipelines and the
inability to drill for enough new gas quick enough--because
every power plant we hook up, 95 percent of them, I am told,
are gas, and everyone of them, it takes a lot of gas wells to
fill that high-pressure line that is going to supply that power
generation.
And if we want to negatively impact America's economy, you
raise home heating costs and business costs drastically again
next year, and you are going to have a potential of a very
negative impact on our economy.
Secretary Norton. We chose as a nation to approach natural
gas as one of our main sources because of the air quality
benefits. And we continue to recognize those air quality
benefits.
One of the reasons for having a comprehensive approach is
to look at both supply of natural gas and whether there are
alternatives that can, with some adjustments, provide the same
kinds of air quality benefits as well.
So we want to look at both of those kinds of approaches, so
that we have both the supply to meet our needs as well as a
diverse range of sources.
Mr. Peterson. Well, the charts I guess that have scared me
are the charts showing natural gas entering the system in the
next year is a shorter curve than gas being consumed for power
generation, which is something we normally didn't do in this
country. We sort of saved gas as that clean home heating fuel.
You know, I just lost a major business. Their energy costs
last year, they did not lock in gas prices, and their prices
went from $3 a thousand to $10 and $12 a thousand last winter.
I am losing that business. It cost them $2 million in energy
costs unanticipated, a $2 million increase.
So I am losing it. And I know a lot of other businesses
that had to shut down temporarily during the winter.
You talk about fertilizer factories, sold their gas because
they made more money than making fertilizer.
I don't think people realize how dependent--something that
happened a few years ago--the tank bill, the underground tank
bill, where we removed all the underground tanks. A lot of my
businesses had the ability to use fuel oil or gas. And when
they removed their underground tank, gas was all-time world
cheap, so they didn't put in tanks.
They no longer have that dual capacity. And so they were
stuck.
Companies that had dual capacity last year immediately
kicked into fuel oil, because it was cheaper. But those who did
not have that chance to alter were stuck on gas.
My concern in the short term is that it can impact our
economy with huge spikes. If we have huge spikes again next
winter, we are really going to put the hurt on seniors and on
businesses who depend on high usage of gas.
And I guess that is one of the concerns. If anybody has
added up how much we are adding to the system and how much new
gas we are putting into the system, and do those numbers meet.
I am afraid they don't.
Secretary Norton. We share those concerns.
Mr. Peterson. Okay.
The Chairman. The time of the gentleman has expired.
Mr. Smith or Mr. Inslee, which one of you?
Mr. Smith is recognized for 5 minutes.
Mr. Smith. I just wanted of follow up a little bit on Mr.
Peterson's questions, also Mr. DeFazio's questions, because I
do have some sympathy for the administration's position in
terms of drilling for natural gas or oil, in the sense that we
can't just close off the entire country. I think we need to
have a more serious examination of weighing the options, what
makes on spot better than another.
I think right now one side is saying drill everywhere, the
other side is saying drill nowhere, and I wish we could come to
sort of a list of principles, ``Here are the goals that we want
to achieve.''
The thing that I find most disturbing about the
administration's position now sort of follows up on what Mr.
DeFazio was asking about earlier, about how it is being
portrayed that half of the energy plan focuses on energy
efficiency and renewable sources. But it really, at this point,
is just half of the rhetoric, maybe even two-thirds of the
rhetoric.
But that doesn't really do much for us, because if you are
going to seriously improve options like wind or fuel cells or
energy efficiency, there are really three ways to do it: one,
invest heavily in R&D in any one of those areas; two, give big
tax credits to people to use those technologies; or, three,
fairly aggressively set standards on the things that use the
energy--for instance, electric motors, set a standard to have
the highest energy efficiency required on selling of electric
motors.
And when I look at the budget, at what has been proposed--
well, first of all, given the fact that we just passed the tax
cut that has grown a little bit even since we past it, and
there was nothing in there, tax credits for energy, I wonder
where we are going to find the money, even if all of a sudden
there is a new found commitment to do anyone of those things.
But in looking at it, other than rhetorically, where is the
support for these programs. Because if we don't make the
investment or push it, it is not going to happen.
So I guess, how are we planning actually implementing the
rhetoric on alternative sources of fuel and increased energy
efficiency without that significant investment? And where are
we going find the money?
Secretary Norton. We are looking at a number of different
kinds of things, both within my Department and across the
Administration. I think if you will look at the recommendations
that we have made, you will see that there are many of those
that do deal with conservation.
In my Department, we are going ahead with steps to look at
geothermal leasing, at solar areas that might be leased, at
wind energy areas so that we can move forward with those kinds
of things--
Mr. Smith. Specifically.
Secretary Norton. --through our planning process.
Mr. Smith. I mean, it is awful easy to make a
recommendation that, ``We should use more wind. We hope we
do.'' But, okay, how? What is the recommendation? And if it
costs a significant amount of money, how are we planning on
funding it, since it is certainly isn't in the President's
budget that he submitted?
Now, he is talking about it a lot, but in the budget that
we are working our way through, it is not there. So I guess,
what are the specific recommendations and what is the specific
plan for implementing it?
Secretary Norton. There are a number of Department of
Energy programs dealing with alternative energy research and
development.
From my Department's perspective, what we need to look at
is whether we have obstacles in the way to geothermal and to
solar and wind development. That is why we are bringing
together those people who are actually involved in that
industry to work with us and help us discover if there are some
of those obstacles that we can work on.
The inventory that is suggested in H.R. 2436 is something
that would allow us to move forward with that, and to see what
we can do to make that a realistic contributor to our energy
needs.
Mr. Smith. That really doesn't help me at all. It is okay;
I appreciate the answer to the question. But basically, in sum,
it is: We are going to take a look at it, and we hope to figure
it out.
And it just doesn't seem good enough. I mean, there are--
you are right--very specific programs that have been around for
years, for that matter. Many of them very helpful.
And I suppose part of it has to be a winnowing process of
which ones are working, which ones aren't. But another part of
it has to be saying, ``Here's the money. Here's what we are
going to do.'' And that is what I find noticeably absent from
the administration's plan at this point, other than cranked up
rhetoric about how much we like energy efficiency and renewable
sources.
It takes more than rhetoric to make this happen. And I hope
we can take those steps forward.
Thank you, Mr. Chairman.
The Chairman. The gentleman from Nebraska, Mr. Osborne.
Mr. Osborne. Thank you, Mr. Chairman.
Thank you, Madam Secretary, for your testimony today.
It has already been touched on briefly in the discussion of
natural gas, but one of our major concerns in farm country has
been fertilizer and natural gas supply. And I noted in your
testimony that you mentioned that roughly 74 percent of the
untapped or unrealized reserves are on Federal properties.
Could you be a little bit more specific, flesh that out a
little bit? Because as far as the farm economy is concerned,
people kind of ignore it, they forget about it, but this has
been a huge impact. The fertilizer costs have doubled and
tripled. And with farmers, it has just been almost impossible
to make any kind of profit.
So this is a critical issue. And as was mentioned earlier,
it doesn't look like it is going to get any better very soon.
So we appreciate all you can do. But if you could flesh
that out a little bit, I would appreciate it, as to where those
resources are and what are the probabilities that we can have
fairly quick access to them.
Secretary Norton. I would be happy to provide you with some
of the specifics about where those resources are located. One
of the areas that we may be looking toward is having a gas
pipeline bring North Slope gas production to the lower 48. And
that is a large resource that would soon be available to us
even from the existing Prudhoe Bay areas.
Mr. Osborne. Mr. Chairman, I yield back my time.
The Chairman. The gentleman from Washington, Mr. Inslee?
Mr. Inslee. Thank you, Mr. Chair.
Madam Secretary, thank you for coming back. We appreciate
it.
I just spend 4 days last week with the caribou and the
plovers and the mosquitoes, and I learned some things.
And one of the things I learned about is a fellow named
Clarence Rhode, who used to work for the Department of Interior
in the 1950's. Mr. Rhode was one of the people who had the
vision for the Arctic National Wildlife Refuge way back in the
1950's, and he saw that some day there would be an attempt to
encroach in this area, which was pretty perspective of him.
He died on August 21, 1958, when he was ferrying people
around, doing scientific research about the caribou herd and
the like in the Wind River drainage, and he crashed into a
mountain.
And I am here to say that we are going to speak for his
vision, to not allow that vision to be shattered now, 43 years
later, for several reasons.
One: I have seen that country and there is one thing I can
tell you for sure. After I went to Prudhoe Bay and the Aichilik
River on the refuge, I know Prudhoe Bay and Prudhoe Bay is not
a wildlife refuge. It is a wonderful production facility, but
it would be shattering the vision of many people in the
Eisenhower administration who had the foresight to recognize
how unique this entire ecosystem is--entire ecosystem, meaning
it is not just the caribou, it is the entire ecosystem.
This is the largest intact ecosystem in America, and that
is the site that the administration wants to drill on.
What I saw on Prudhoe Bay was a honeycombed area over a 100
miles, honeycombed with oil production facilities, pipelines,
gravel roads, and ice roads that do leave a track on the
tundra, because I saw them with my own eyes. They are still
there.
And it is disturbing to me that the administration ignores
its own science, of the U.S. Government.
In 1995, the Fish and Wildlife Service did a study on this,
and they concluded, quote, ``Full development of the Coastal
Plain would result in the irretrievable loss of the wilderness
character of the area. The refuge, including the Coastal Plain,
is a world-class natural area.''
Continuing, ``Full leasing and development of the refuge
Coastal Plain would have a major impact on the Porcupine
caribou herd. Research indicates that displacement of the herd
to the foothills south and east of the 1002 area would subject
the herd to the area of highest predator density, reduce the
amount and quality of preferred forage species available during
calving--this is the maternity ward for the largest caribou in
North America; that is my language--``and restrict access to
important coastal insect relief habitat.''
To me, it is stunning when the science recognizes--and I
keep hearing about the central herd increasing. The central
herd has 100 miles of Coastal Plain to deal with. You can
displace the coastal central herd with a couple of buildings;
it doesn't hurt it. The Porcupine herd--and you know this,
because you have been there--has only 25 miles of coastal
plain, has one-fourth area involved in the calving area.
And that is why this research has been stunningly, I think,
dramatic, in saying that we run a risk of damaging this intact
ecosystem.
I am also disturbed that the vision of the Gwich'in people,
who live with the caribou, who have put solar panels up in the
Arctic Village to run their washroom, isn't a vision shared by
this administration, because a fair statement is, for every
drop of conservation, for every drop of research in new energy,
there are 55 gallons of money for the oil industry.
And as I understand your proposal, and I need you to
correct me if I am wrong, and the legislation that is proposed
here, the only money you get for research of these new
technologies that the Gwich'in people themselves are using in
the Arctic Village is if we agree to this blackmail of agreeing
to drill in the Arctic refuge.
That doesn't sit well with us, to say you don't do research
unless you agree to destroy the largest, most intact ecosystem
in North America. That doesn't sit well.
Finally, I am very disturbed that 2 years after the
pipeline explosion in Bellingham, Washington, that killed 3
children, a year-and-a-half after a New Mexico explosion
killing several people in New Mexico, at the same time that the
administration wants to open up hundreds of miles of new
pipelines in the Arctic refuge, we haven't seen the
administration push one inch for improving pipeline safety in
this country.
And let me tell you why that is necessary. I was in the
control room of the Endicott drilling facility up on the North
Slope on Prudhoe Bay. And I was talking to a really nice fellow
who operates the entire production facility at Endicott.
He sits there with these computer banks. He turns the well
on and he turns the well off. And if there is a leak, he is
supposed to know what to do.
I asked him about the Office of Pipeline Safety and the
instruction he had from the Office of Pipeline and Safety and
the certification and the testing and the information. He had
never heard of the Office of Pipeline Safety.
The Chairman. The time of the gentleman--
Mr. Inslee. We need this administration--and I would just
like to give you, if want to comment on any of the things I
have said, I would appreciate your perspective. If I am
inaccurate in any of my assumptions, I would like to know.
The Chairman. Would the Secretary like to respond?
Secretary Norton. The approach that you have described is
not the kind of approach we want to utilize. We have involved
the scientists of the Fish and Wildlife Service in our
proposals, in going forward with exploration in the ANWR area.
The Coastal Plain is not even where the calving occurred
this year, as I am sure you know from having visited Alaska
this year. The herd calved in Canada and did not rely on the
Coastal Plain at all, and that has been the case in the past.
We believe that we can go forward and still allow that
caribou herd to flourish, as well as to protect the rest of the
wildlife and other resources in that area. We will maintain
high standards to do that.
Mr. Inslee. If I can just make one comment, Mr. Chairman,
in response to something the Secretary said?
The Chairman. Briefly.
Mr. Inslee. You are correct that the calving that occurred
in the migration route this year is an aberration which occurs
about every 15 to 20 years. And they had twice the calving
mortality as a result of that, because these calves take place
right here in the 1002 area.
The traditional and typical calving area, where the calves
spend their very first days of life, is right here in the 1002
area where you want to put a major oil production area. We
think that is wrong.
And thank you for staying to take our questions. I
appreciate it.
The Chairman. The gentleman's time has expired.
The gentleman from Montana.
Mr. Rehberg. Thank you, Mr. Chairman.
And welcome, Secretary Norton. Thank you for being here.
And I want to congratulate you and applaud you for your
resolve in trying establish a meaningful energy policy in spite
of the opposition that seems to be occurring in the United
States Congress.
My question is specific to the Missouri Breaks.
And I defy anybody on this Committee to fly over the
Missouri River and locate the natural gas pipeline that goes up
to the shores and under the river and continues on south
providing a much needed natural gas supply.
Does anything in the existing statutes, now that the area
has been put into a monument, in the House, whether it stands
or not--2 weeks ago I made an amendment on the Interior
approps, limiting oil and gas exploration or consideration
within that Missouri Breaks. Is there anything within existing
law that is going to preclude our opportunity to expand the
size of that natural gas pipeline if necessary to bring
additional product to the lower 48 from Canada?
Secretary Norton. I am not aware of the situation as to the
pipeline. I do believe that President Clinton preserved
existing oil and gas rights within that area as a part of the
declaration of the monument itself. So I don't know what
provisions would have applied as to the pipeline.
Mr. Rehberg. I would hope that the administration will look
into the opportunities. The infrastructure is already in place.
I am not sure of the congressmen, when they made the vote on
the floor, truly understood that the infrastructure is already
in place. Those pipelines are already buried, and there is de
facto creating a wilderness around private property within the
Missouri Breaks.
But there is an opportunity--if pipeline supply is truly
one of the problems that exists in our ability to develop full
energy policy. The pipeline already exists, the easement
already exists, and I hope the administration would take the
time to establish whether they can in fact expand the size of
that pipeline.
I don't know. I have been asking that question. Nobody
seems to be able to answer the question for me, as to whether
you would be limited under that designation of monument status.
But the pipeline is already in place, and I think it would
play an important role. And if it isn't covered, I would like
to have an amendment in this bill and hope that I would get the
administration's support to give us that opportunity to expand
the size of the pipeline.
Secretary Norton. As you are aware, we have just started a
process of consulting with the governors and with state elected
officials on the future of the monuments, as well as with
Members of Congress, and so we will be happy to obtain
additional information about that as part of our planning
process.
Mr. Rehberg. That brings up another point. Your letter to
our governor actually has slowed down the process that I had
hoped to be able to bring to this Committee a reasonable
discussion on the private property that is included within that
monument. Your opening up the opportunity for their input has
actually slowed that process down.
So I hope that you will work expeditiously, because it will
affect our energy policy as we develop that through Congress.
Secretary Norton. We felt it was important to get local
input, and we look forward to working with you to make sure we
are doing things in the right way.
Mr. Rehberg. Thank you, Mr. Chairman.
The Chairman. The gentleman from New Jersey, Mr. Holt.
Mr. Holt. Thank you, Mr. Chairman.
And thank you, Madam Secretary, for taking some more time
for our questions.
There are lots of things I would like to talk with you
about with regard to mix of energy resources and conservation
and a number of other things, and Porcupine caribou and so
forth.
But one thing I would like to focus on with regard to
possible drilling in area 1002 is the environmental mediation
or the steps that might be taken to mitigate environmental
damage, and to really get answer to the question: Is it
possible--is it even possible--to drill up there without
unacceptable environmental damage?
And, you know, ice roads sound attractive. Now, I notice in
your testimony that you say that the bill would limit
exploration activities to a period of the year when ice roads
could be used. Now, are you saying ice roads would be used?
Secretary Norton. Oh, absolutely.
Mr. Holt. Almost exclusively, exclusively? That would be
the norm?
Secretary Norton. That would certainly be the norm. And
that is already what is taking place.
One facility I visited, the Alpine facility, is a large
producing facility, and it has absolutely no permanent roads to
it. And I think that is exactly the model that we would see
utilizing, ore without permanent roads.
Mr. Holt. Madam Secretary, where would the water for these
ice roads come from?
Secretary Norton. It has come from nearby water sources.
That is one of the things that in the Coastal Plain area we
would need to study, and that would have to be a part of the
environmental planning process, is making sure that the water
would be available in a way that is environmentally
responsible.
I know that in the Coastal Plain, the 1002 area, that is
one of the concerns. And that is certainly something we would
have to deal with, the availability of that water.
Mr. Holt. Well, we scientists are often doodling, doing
back-of-the-envelop calculations. And I just did a calculation
of how much water it would take to make a rather thin ice road,
and it is on the order of a million gallons per mile.
Now, as I understand it, we are talking about 60, maybe 100
miles of roads. As I looked up some figures here, it appears
that in all of the 200-and-some-odd miles of river in that
area, there might be 9 million gallons available.
Well, we are off by a factor of 10 at least in the water
that is even available to build ice roads, assuming that ice
roads would be environmentally attractive, that they would
leave no permanent scar on the land. And yet I hear from my
colleagues who have just flown over this area that the ice
roads melted some time ago but leave a very visible trace long
after they are melted.
So just in this one area, just on this one point, it raises
very real questions about whether it is even possible to go in
there without unacceptable environmental damage.
I certainly would like to see from you facts and figures
about even the possibility of building ice roads of appropriate
thickness, of appropriate length, with the water that is
available.
Secretary Norton. We would be happy to look at that and
provide you with information.
Mr. Holt. Thank you, Madam Secretary.
The Chairman. The gentleman from Alaska, Mr. Young.
Mr. Young. I thank the gentleman.
First I ask to submit for the record a letter from our Fish
and Game in the state. It quotes, ``There is no evidence of
negative effects on waterfowl population from oil development
on the Coastal Plain on Alaska. Development of the 1002 area of
the Arctic coast would have no measurable effect on waterfowl
production for the nation because relatively few birds nest in
this area.''
The Chairman. Without objection.
]The letter from Mr. Wayne Regelin, Director, State of
Alaska Department of Fish and Game, follows:]
[GRAPHIC] [TIFF OMITTED] T3674.001
[GRAPHIC] [TIFF OMITTED] T3674.002
Mr. Young. And, Mr. Chairman, and, Madam Secretary, I do
thank you for being here.
I wished I was wearing my new boots, from what I have heard
recently.
Number one, these pictures that Mr. Inslee showed, I wished
he had identified really the Coastal Plain. If you will take
the time to look at the back page of the 1002 area, that was
not an ice road made by recent oil activity.
This is not a virgin area. This is an area that has people
living in it. It has people living in it. It has warning sites.
It has military activity, did have military warning sites, has
a large native village living there. And that they can cast
this area as a pristine last Serengeti is nonsense.
I wish you would take the time to go up there and see it,
by the way.
It is nonsense.
Secondly, may I suggest respectfully that the caribou
argument is full of holes. The so-called calving area, as has
been said before, is not an aberration. Three years in a row
they calved in a migratory route, not in this so-called
hospital room. This is something that has been brought up by
certain environmental groups.
And thirdly, the people that live in that area, that live
on those caribou say this can do no harm to the caribou, the
Alaska native. And that is something I think you ought to
listen to, instead of the environmental community that knows
diddly-squat about this issue period.
And thirdly, may I suggest that Rhode's idea of the
refuge--when this area was considered and was established as a
refuge, it was said to be open for oil drilling. That was
specifically in the legislation by this Congress.
And then fifth, may I suggest is when we pass the Alaska
National Lands Act, Senator Tongass and Senator Jackson and
Senator Stevens and, yes, Congressman Udall, agreed to let the
1002 area open for oil development, if it was decided it was
important to this nation.
This was never a wilderness area. It was a refuge to be
open for drilling, and we set aside approximately 17 million
acres as wilderness area, but left the 1002 area open, the
barren, flat area of the whole refuge area that I have been on
many times.
So this area is and has one of the largest, I believe,
deposits of oil. To say we can't drill there, and it will do
irreparable harm, is really a factitious argument because we
can. We have proven it in the Alpine field; we have proven the
new technologies from the time we first opened Prudhoe Bay.
Before everybody jumps off this cliff because you are
responding to the environmental community, not scientifically,
I would suggest respectively you go up there.
Mr. Inslee went up and took a lot of pictures that have
nothing to do with the 1002 area. It is what you see in the
postcards. It is what you see in the propaganda on the
television by the environmental community.
It is a dishonest presentation of so-called facts.
The facts are, this is 74 miles away from the existing
pipeline, the largest single deposit of oil left in United
States that should be developed for this country.
It is not my oil; it is your oil. But it should be
developed for this country.
No one has said during this hearing anything about the
moneys we are spending overseas to the OPEC countries, the
billions of dollars you send over out of your taxpayers'
pocket. Why don't you talk about that for awhile?
The money they take that bleeds this economy; the money
that goes into those countries would take and be an enemy of
this country.
No one says anything about that. You are worried about
something that does not exist, an area that should be drilled
for this nation, if you believe in this nation.
Now, if you believe in the foreign countries, then you will
keep supporting the system that is in place now, the
importation of foreign oil, and be dependent upon. That is what
we have been.
Billions of dollars. The trade deficit we have today is not
because of manufactured TVs and such. It is because of the
importation of oil--refined oil and crude oil and gas.
And yet we try to develop something.
And this President, Madam Secretary, may I suggest, this
President is tying to lead this country out of a terrible,
terrible problem that this Congress and previous
administrations have allowed to happen. And I commend him for
that. I commend you for it.
Mr. Kind. Will the gentleman yield for a question?
Mr. Young. Not until I am finished. I am on my soapbox
right now.
[Laughter.]
Mr. Kind. I know you are.
[Laughter.]
I hate to interrupt.
Mr. Young. We sit here in Congress and grouse and complain
and talk about conservation and talk about all of the good
things. Where were you the last 20 years?
I have been trying to open this thing and did it in 1995,
trying to get production online and refineries built in place,
and nobody says, ``Not in my backyard. We will buy it from
overseas.'' Bleeding your taxpayers.
I think you ought to be ashamed of yourselves. I think you
ought to think about this country for a change. It is not about
your election. Think about what is right for this country. It
is not about those interest groups that say, ``Oh, we can't do
it.''
Let's think about America for a change.
Mr. Kind. Will the gentleman yield for question?
Mr. Young. I will yield for a question.
The Chairman. Hang on a minute.
Does the gentleman ask for an additional minute for the
gentleman from Alaska to respond for a question?
Mr. Kind. Without objection.
The Chairman. The gentleman asks without objection one
additional minute.
Mr. Kind. We certainly appreciate the knowledge and
experience that the gentleman from Alaska brings to this
debate, and it is a very important debate.
But I wondering if the gentleman from Alaska had an
opportunity to review the Wall Street Journal article that
appeared just yesterday. And I know when I raised this issue
during the June 6 hearing, citing the Anchorage Daily News, you
called that paper I think it was ``piece of rag.''
But I am wondering if you have had a chance to review the
Wall Street Journal article in regard to the oil safety
concerns that were raised in it, the safety inspection teams
that are currently in place with current drilling operations in
Alaska, and if you may be able to provide the rest of the
members on the Committee with your refutation of the facts
contained in the Wall Street Journal article.
I think that would be--
Mr. Young. Well, in the first place, I don't usually read
that rag, by the way. That is number one.
Secondly, they say Alaska is assigned more inspectors per
well than either Indiana or Louisiana. This is the most heavily
inspected oil field in the world. That is what people don't
understand.
We have done the job right. We have had problems, yes,
because it was a project built too soon because this Congress
in fact said had to be done. And I don't want to go through
that again.
Right now we have the time to do what is correct. And this
Secretary says she will do it correctly. We can assure it in
the legislation.
Remember, we have more inspectors in Alaska than Indiana
and Louisiana all put together, the most inspected oil field in
the world--in the world.
And so I am suggesting it can be done. But you would say it
can't be done because you are worried about someone's
presentation about the environment. It has nothing to do with
environment. It has nothing to do with the environment.
If I didn't think we couldn't do this correctly, I wouldn't
be supporting it. I have always said; I always will. If I
thought it hurt the caribou, I wouldn't be supporting it.
Mr. Kind. Well, I guess that is completely contrary to what
the article reads in yesterday's Wall Street Journal, so if you
have different facts, I think it would be helpful.
Mr. Young. Well, I would gladly give you different facts.
By the way, if you believe everything--
Mrs. Cubin. Regular order.
Mr. Chairman, regular order.
Mr. Young. Are you regulating me?
[Laughter.]
The Chairman. The time of both gentlemen has expired.
The gentlelady from Minnesota. The gentlelady from
Minnesota is recognized.
Ms. McCollum. Thank you, Mr. Chair.
And, Secretary Norton, I do have some questions, although
tempting it would be to get in the middle of the rhetoric on
both sides here.
Could you tell me what, from reading your letter, what the
goals are going to be for the regulations, state regulations,
Federal regulations? Are you going to look at perhaps some
different regulations, more stringent because being in the
Arctic National Wildlife Refuge?
Secretary Norton. The regulations that we would like to see
are very stringent regulations, and the ones that are outlined
in H.R. 2436 meet that standard. They are the most stringent
regulations that are in any statute, as far as oil and gas
operations are concerned.
Ms. McCollum. So, Madam Secretary, it is your opinion that
we don't need to look at doing anything different in this area,
with all the controversy going on between the two groups, to do
anything more?
Secretary Norton. I am saying we are doing something that
is quite different. We are doing something that is quite
stringent.
Ms. McCollum. Well, Madam Secretary, you said you were
using regulations that are already in place.
Secretary Norton. No, no, that are in the proposed
legislation.
Ms. McCollum. Yes. I mean, they are there. You have already
decided what they are going to be. We have the right to amend,
add to them, but you have laid them out.
Could you please tell me, or get back to me--and I still am
waiting to hear back from the letter I sent you on the Great
Lakes drilling; I realize that you have been really busy, but I
am assuming you got it, although I didn't get an
acknowledgement.
Could you please get back to me with what your definition
of reclamation is, because that can be very wide open? I don't
know if you mean removing any gravel if gravel roads are there,
making sure that water is restored if water is pumped out.
Because when I visited some of the oil sites, they were
working very, very hard on coming up with scientific ways of
doing reclamation in the sites that are in the Prudhoe Bay
area. And I commend the oil companies for working on it.
But they had different types of reclamation going on,
trying to figure out which would work best and which would be
least disruptive.
And then, could you tell me, is it the Department of
Interior's intention to treat both the elected leaders, the
tribal leaders, at the same scale as those who are serving on
the tribal corporation? Does elected leadership have any more
value, any more input to you, when you are discussing with
individuals versus the tribal corporations? Because I noticed
in the bill that they appear to be given equal weight.
So my basic questions are, the standards that you have come
up with, how do they compare with what is going on with the
scientific studies that are going up there, with the Arctic
council, with how that is going to interplay with what is going
on with the global warming, with what is going on with what is
happening with the permafrost in the area, with what is going
on with the ozone in the area.
Because I agree with some of the comments the gentleman
from Alaska made. You know, this isn't just about the caribou.
This is about the air, this about the water quality and
everything else.
And from what I witnessed up there, British Petroleum wants
to do a good job. I think that they are capable of doing a good
job much later on, in the future, than they are now, without
leaving an industrial footprint that is there.
But I want some followup on the questions. And I will
submit those again to you in writing.
Thank you very much, Mr. Chairman, for the time.
And thank you for staying.
Secretary Norton. Thank you.
The Chairman. The gentleman from Utah, Mr. Cannon.
Mr. Cannon. Thank you, Mr. Chairman.
And, Madam Secretary, thank you for being here. I
appreciate that.
And I also appreciate your contributions over a very long
period of time to the careful development and balance with
which we use our natural resources.
Let me just ask you, actually, a couple of questions that
you can respond to, I hope.
This legislation places great emphasis on conducting a
comprehensive inventory of the energy resources on our Federal
lands. Do you think this is necessary? And if so, what
information do you think we could learn from this activity?
Secretary Norton. I think it is important for us to examine
what are the areas that have the highest potential for energy
sources, whether that is wind or geothermal or the more
traditional sources. That helps us in our planning process to
identify those areas where we can have that type of energy with
the least environmental impact.
And so I think this gives us the opportunity to look across
the board and to make intelligent decisions about how to
balance environmental protection and energy needs.
Mr. Cannon. We have done these kinds of inventories many
times in our history. In fact, I ran into a book recently that
was published in the century before the last century about
mineral resources in Utah, for instance. A great little
interesting piece based on very old technology.
We have done a lot of things. We have a lot of technology
that helps us assess what our energy resources are.
And secondly, we have some new things that we are looking
at for energy. As you mentioned, wind and thermal and other
kinds of things.
Do you expect that if we do an inventory like this we will
come up with some new insights and new possibilities for
development in an environmentally friendly fashion?
Secretary Norton. I certainly hope that that is what we
find from those kinds of inventories.
Mr. Cannon. By doing this inventory, do we do anything that
would put Federal lands at risk? In the process of conducting
an inventory, is there anything that would be damaging or a
matter of concern to the lands?
Secretary Norton. Not that I am envisioning at this point.
Mr. Cannon. I mean, it seems to me these are noninvasive
kinds of things, generally speaking.
Secretary Norton. Right.
Mr. Cannon. It is a matter of coordinating data. It is a
matter of finding what is there, looking with new technology.
But you are not anticipating in this inventory that we
would do anything destructive? We are not going to cut any
roads or do crazy new things, are we?
Secretary Norton. What I am anticipating is largely looking
at the information that we already have and looking at the
kinds of information that we would get through our ongoing
planning processes, just to make sure that we have really
consolidated the information and thoroughly understand the big
picture.
Mr. Cannon. Let me just point out that understanding the
big picture I think is going to be very, very important, partly
because we are using an enormous amount of energy that comes
from other countries and looking to exploit areas around the
world that are not going to have the environmental care taken
with them that we would take in America.
So if we care about the Earth as a whole, we ought to be in
America not just shunting off the responsibility to other
countries but taking an affirmative, aggressive role in
deciding what the resources are, what the costs of developing
them are, and how we can protect and guard our stewardship in
the process.
Enough of my homilies, by the way. Let me ask another
question.
The national energy policy in its first recommendation
suggested any regulatory activity that affects energy should
include a detailed statement regarding the impacts of that
action.
Do you believe that this would apply to negotiations that
could affect power production from Federal hydropower
facilities?
Secretary Norton. Yes.
Mr. Cannon. Could you elaborate?
[Laughter.]
Secretary Norton. Okay.
I think that we need to consider hydropower as one of our
resources, looking at how we can enhance hydropower production
from existing facilities.
We have a lot of balancing that needs to take place,
especially in years like this year where we have a lack of
water through much of our territory that has Bureau of
Reclamation projects. And so we need to factor in energy as one
of the considerations that we have in trying to manage those
projects.
Mr. Cannon. With that in--
Secretary Norton. This is really an analysis kind of thing
that we would go through.
Mr. Cannon. As part of that analysis, are you looking at
the Colorado River and the Glen Canyon Dam and other dams
there, and their peaking capacity and how we can make
adjustments to help meet the peak power demands in the
Southwest?
Secretary Norton. That is an ongoing issue that we fairly
continually look at as part of our management.
Mr. Cannon. I notice my time has expired, so whatever is
left, I yield back, Mr. Chairman.
The Chairman. Thank you.
The gentleman from Massachusetts, Mr. Markey.
And happy birthday on your 29th birthday.
Mr. Markey. Thank you, Mr. Chairman, very much. I
appreciate it.
Mr. Young. His hair used to be black.
[Laughter.]
Mr. Markey. That is the cruelest cut of all. You know that.
[Laughter.]
Thank you, Mr. Chairman.
Let me turn, Madam Secretary, to the issue of the red dot.
[Laughter.]
Now, everyone in the room is familiar with the red dot. The
red dot has been circulated in many forms, Madam Secretary,
most recently in the form of a mousepad that got sent to each
of our districts. But it is on every single document that is
sent out by Arctic Power or any of the advocates.
And it asserts that the footprint in the refuge from the
drilling would only represent 2,000 acres, just a little,
teeny, tiny red dot.
[Laughter.]
Now, who could object to that little red dot?
[Laughter.]
So the first poster here shows you the little red dot in
larger scale placed randomly on the 1002 area of the refuge,
the area where some of the Committee would start drilling.
As you know, this red dot is intended to mislead us into
believing that the impact of the refuge would be very, very
small. Who could object to that?
And I would like to just correct that misinformation today,
Madam Secretary, with your assistance, if I could.
Now, none of us of course know exactly what the industry
will do if we let them loose in the refuge--
[Laughter.]
--because drilling and producing oil is a messy, inexact,
unpredictable business.
But one thing we know for certain: It won't look anything
like this little, teeny, tiny red dot on a white background.
For one thing, we are talking about a delicate and pristine
ecosystem that has escaped the interference of human
development for eons.
Now, this first transparency begins to give you a visual
feel for some of the wildlife values that are at stake. This
data is all based on official reports of the U.S. Fish and
Wildlife Service.
The yellow area is the area typically used by the Porcupine
River caribou herd for giving birth and regaining energy for
the migration that has occurred every year for eternity, but
always brings the herd back to the 1002 area. Always. For eons.
The blue triangles and the pink squares show the spawning
and migration routes of fish. The black crosses represent the
denning locations of radio-collared female polar bears. The
light green represents the common use areas of the tundra
swans. The maroon dot shows the distribution of radio-collared
musk oxen.
My point is that this is a very special refuge area, set
aside to protect a one-of-a-kind ecosystem. This is the reason
this are is called the biological heart of the Arctic refuge.
And I guess you could argue that our heart is just a very
small part of our body. Why would anyone mind if they went into
your heart--
[Laughter.]
--as opposed to, you know, your fingers? It's all the same,
huh? The heart is the same as any other part.
So this is just a little dot, say the drillers.
But the question is, how do you produce and deliver oil
from the dot? Is the oil going to come out by helicopter? Is it
going to come out by balloon? Maybe we could you use the
Russian transport that brought back our reconnaissance plane in
pieces from China.
How are we going to get the oil out from the heart?
Maybe we will do it with a nice big pipeline. Ah, a
pipeline to bring out oil. Let's see what that might look like,
if we actually had to build a pipeline. Oh, a little bit
different.
[Laughter.]
Now, this is taken from the 1987 environmental impact
statement of the Department of Interior. As you can see, it is
not a red dot. It represents impacts estimated by the
Department of Interior spreading over 130,000 acres to 303,000
acres, one-fifth of the entire 1002 area--not a 2,000-acre dot.
Now, this shows the pipeline needed to get the oil out of
the refuge, the feeder lines to the well heads and the impact
area around the facilities.
The surface area is extensive and stretches across the
entire refuge. It shows oil development less as a cartoon and
more as a serious--may I have one additional minute, Mr.
Chairman?
The Chairman. The gentleman has one additional minute.
Mr. Markey. I can't help but notice that it looks a huge,
pink snake--
[Laughter.]
--that sprawls over the entire area.
So my question to you, Madam Secretary, is this: Do you
expect the ultimate result of drilling in the refuge to look
like the red dot sent around as propaganda to every Member of
Congress by the drillers? Or do you expect it to look more like
the pink snake that Department of Interior describes in its own
research?
Secretary Norton. Mr. Chairman, if I may reply to that?
I anticipate and I double-checked just yesterday with the
technical people on my staff, that 2,000 acres is the
anticipated footprint of the drilling activities, and that is
at full production.
Mr. Markey. How about the pipelines? What about the
pipelines?
Secretary Norton. The pipelines, I have seen pipelines that
were put in just a few years ago. They have no roadways next to
them. It is simply the pipe itself.
And that is something that will be a part of the
transportation facilities. But it is not the kind of huge, wide
highway or even larger that you depict on that.
The technology has moved forward so that the impacts that
would have been predicted 15 years ago are dramatically less
than the impact that we would anticipate today.
Mr. Markey. This is based on Department of Interior
information.
Secretary Norton. It is based on 15-year-old information.
Mr. Markey. You can't get the oil out without constructing
a pipeline.
The Chairman. The time of the gentleman has expired.
Madam Secretary, you are the most popular witness we have
had this year.
[Laughter.]
And we have some very patient people waiting here, but I
have to ask the gentleman from Alaska, whose district this is,
is that dot in the right spot?
Mr. Young. That is a cumulative acreage disturbed by the
drilling. That is all it is, trying to bring the size to the
1002 area.
And it is not misleading at all. And, staff, it is not
misleading at all.
Mr. Markey. So the lobbyists are wrong, then.
Mr. Young. No, the dot is exactly the amount of acreage
that will be disturbed by the drilling in 1002. You keep
forgetting this is a small area set aside by this Congress to
drill in.
Mr. Markey. So we should stop having lobbyists send us this
erroneous--
Mr. Young. Who said it was wrong?
Mr. Markey. Oh, okay.
Mr. Young. I mean, if you can't understand a dot, you ought
to start eating M&Ms.
[Laughter.]
Mr. Markey. This dot is inaccurate.
The Chairman. The time of the gentleman has expired.
The gentleman from Tennessee, Mr. Duncan.
Thank you, Mr. Markey.
Mr. Duncan. Thank you, Mr. Chairman.
I had to Chair a Subcommittee hearing at the Water
Resources and Environment Subcommittee, so I won't try to
repeat any questions that the Secretary has already been asked.
I will simply say that Mr. Cannon said the key word awhile
ago, I think, when he said the word balance. And I think that
is what we need to try to get back to, some balance and
moderation in our environmental policies.
We have these groups all over the country that protest any
time that anybody tries to dig for any coal or drill for any
oil or cut any trees or produce any natural gas. And what they
are doing now is really hurting the poor and the low-income and
the working people of this country because they keep destroying
jobs, they keep driving up the cost of energy.
And it may not be hurting some of these environmental
elitists, but it is starting to hurt a lot of middle-income and
lower-income people. And so I applaud the President for this
energy plan that he has come forward with.
In fact, I think just a few years ago, it probably would
have been considered a very liberal plan because it does have a
great deal in there about conservation and development of
alternative resources and things of that type.
But some of these groups have to keep raising the bar and
have to keep telling people how bad things are, and have to
keep denying that there has been improvements over the last 25
or 30 years so that they can keep getting in their big
contributions. And I think that is what a lot of this is about.
But I will repeat that we are letting the energy debate be
controlled by extremists. And what we need to do is get some
balance and moderation. And I think that is what the
President's plan does.
I would imagine, and probably Chairman Young can tell us
more about this, but I can imagine that many of these same
arguments were used many years ago to stop the development in
Prudhoe Bay and the pipeline that we have. And I hate to think
where we would be in this country today if we hadn't had all
those billions of barrels of oil.
As he pointed out a few minutes ago, it is certainly a
matter of national security. I am sure of these contributions
to these groups come from the OPEC countries, and foreign
companies, and so forth, that stand to gain huge profits if we
don't develop any of our own natural resources.
But I mentioned in here one time, when the Secretary was
here before, that I had the mayor of a small town in my
district, Englewood, Tennessee, who came to me a few months ago
and said that he had senior citizens in his district who were
having to choose between eating or paying their utility bills,
because we are letting these extremists drive up the price of
energy.
And I have mentioned in here before that I represent about
half of the Great Smokey Mountains National Park. We have
between 9 and 10 million visitors a year to that park. I read
in Time magazine about 3 months ago that the entire Arctic
National Wildlife Refuge had 1,000 visitors last year to 19.8
million acres.
That is 35 times the size of the Great Smokies. Yet all of
these 9 or 10 million visitors we get to the Great Smokies
think it is huge.
And most people look at a map of the entire United States
on one little page in a book, and they don't realize how
unbelievably huge this country is. And we just can't fathom how
huge this Arctic wildlife refuge is.
And as Chairman Young said, almost all of the people that I
have talked to who are opposing this drilling have never been
there before. I have been up there twice.
And I can tell you that when these groups show these
pictures of the mountains and the trees in opposing this, none
of this drilling is going where the mountains and the trees and
the Brooks Range are.
It is amazing how they have distorted this issue almost
worse than Nazi propaganda.
And I repeat that who they are hurting are the poor and the
lower income and the working people of this country.
So I applaud you, Madam Secretary, for trying to bring some
balance and moderation into our environmental policies. And I
know it is going to be difficult, but I hope you are
successful. And I thank you for being here today.
The Chairman. I thank the gentleman.
The gentleman from Oklahoma, Mr. Carson.
Mr. Carson. Thank you, Mr. Chairman.
And thank you also, Madam Secretary, for staying around.
You recently visited my own congressional district, the
Tall Grass Prairie in Pawhuska, Oklahoma, to exemplify your
interest in development alongside ecological preservation as
well. So thank you for coming to northeast Oklahoma.
At the same time, I am sympathetic to opening up ANWR for
exploration and production. You know, the EIA at the Department
of Energy says that price of oil, in 10 years, per barrel is
going to be $17 to $18 in time.
Obviously, the amount of recoverable oil in ANWR is
extremely sensitive to what the price of world oil going to be.
Are there any estimates that you have, if the Department of
Energy's predictions are right, about how much recoverable oil
there is going to be in ANWR?
Secretary Norton. Our estimate that looks just at the
Federal areas within ANWR is 7.7 billion barrels of oil.
Mr. Carson. And that is based on what assumptions, though,
about price, percentage recoverability, and things like that?
Obviously, it is sensitive to a number of important
modeling assumptions here about the world oil market. I mean, I
guess there seems to be a strong sense, if what the Department
of Energy is true, that you are not going to have much
recoverable oil, even though I am sympathetic to the desire to
open it up. I guess it is an empirical question of how much is
actually there.
Secretary Norton. I would happy to provide you with all of
the details on that. I know it is a very complex type of
analysis.
Mr. Carson. Sure.
Secretary Norton. And I would be happy to provide you with
the basis for our determination.
Mr. Carson. One last question for you on a related subject
about hydropower. That section of the bill that deals with
hydropower, what changes does it make in the current regulatory
scheme that deals with hydropower and how does it address the
crisis in licensing of hydropower facilities that we are
having?
Secretary Norton. It is my understanding that that is
handled in separate legislation, that this is primarily
focusing on the aspects that look at enhancing what we have on
existing Federal Bureau of Reclamation type dams, for example,
so that we are making sure that the dams we are currently
operating are maximizing their hydropower capability.
Mr. Carson. Thank you for staying this afternoon as well.
And thank you, Mr. Chairman.
The Chairman. I thank the gentleman.
The gentlelady from Wyoming.
Mrs. Cubin. Thank you, Mr. Chairman.
And thank you, Madam Secretary, for being here. I too
apologize for not having been here earlier, so I won't ask
questions just to have you repeat answers. But if there is
something that we wanted to ask that isn't already covered,
then if you wouldn't mind, I will submit that in writing to
you.
Secretary Norton. Great.
Mrs. Cubin. One point that I want to make is that people
who don't live in a place like I live in where you have mining
and oil and gas exploration--excuse me, Mr. Young.
The Chairman. The gentlelady will--
Mrs. Cubin. Excuse me, this is really important. I am on
your side, too.
Can you imagine how he cowers in front of me?
The point that I want to make is people like Mr. Young and
Mr. Hansen and myself, who live in areas where minerals are
produced, where forests are harvested, we see every single day
how it is possible--not only possible, it is healthy for
wildlife to be able to live in amongst oil wells and mines.
And let me tell you about a thing. When I took some Members
of Congress back to my state because they were voting
differently on environmental issues every single time than I
thought they should, took them back to Wyoming. We went to the
largest open pit mine in the Western Hemisphere, the Black
Thunder Mine.
And as we were driving out of the big pit, up on the edge,
there was overburden in a pile like that, and up on the very
rim of the mine was the biggest buck deer you have ever seen.
And that buck deer followed us along, followed us along, as we
were driving out of the mine pit in the bus.
We then went to a gas field, and Newt Gingrich was along,
and he was just astounded because a rabbit ran across his foot.
There was a mother pronghorn antelope and her baby sitting
in the shadow of a compressor station.
As we went on, there were literally herds of antelope right
intermingled in between the pumpers on an oil field.
And so people who look at illustrations like this and say,
``Oh my gosh, those animals can't live there if minerals are
produced or if man steps foot on that,'' they are just dead
wrong.
And besides that, the pink snake looks like something way
worse than a pink snake to me.
[Laughter.]
And I just want to remind everybody that that is 15 years
old, that footprint of that pipeline. That is based on 15-year-
old information.
And it simply isn't fair. It shouldn't be on the record.
And last point is, wildlife can live quite nicely and
reproduce and have a good home, and allow for development of
minerals, too.
Thank you so much for being here.
The Chairman. Madam Secretary, you have the record. You
have worn them all out.
Secretary Norton. Thank you.
The Chairman. And we appreciate your excellent testimony
and your patience and your good answers.
And I also want to thank all the other witnesses who have
been here. We are going to go ahead with the hearing. These are
all important things that we want to hear.
And we will excuse you and ask our former colleague, the
Honorable J. Bennett Johnston, former Senator from the State of
Louisiana, to please come up.
Senator, we appreciate you being with us. Thank you so
much. We appreciate your patience. We will turn the time to
you, sir.
STATEMENT OF THE HONORABLE J. BENNETT JOHNSTON, FORMER SENATOR
FROM THE STATE OF LOUISIANA, JOHNSTON & ASSOCIATES, WASHINGTON,
D.C.
Mr. Johnston. Thank you very much, Mr. Chairman. I am
delighted to be here, back with the Committee again, in support
of your bill H.R. 2436.
I am testifying for myself and not for Chevron, on whose
board I serve, although I would assume--I have not discussed
the bill with them--I would assume they would support the bill
because I think is common sense, and I think it supports the
policy of this country to have a reasonable energy policy.
Mr. Chairman, I was asked to focus on royalty relief today.
I will be prepared on other parts of the bill, with which I am
quite familiar.
But let me say, with royalty relief, in 1995, when we
worked with Mr. Young and others on this Committee and you to
give royalty relief, the reason was that domestic resources
were depleting fast.
At that time, 50 percent of our oil was imported. Today it
is 57 percent. By 2020, it is supposed to be 70 percent.
And with that importation, we export our jobs, we export
our tax money, we export the economic impact which domestic
production will give us. And we were not getting the kind of
production in the Gulf of Mexico that we thought we should, so
we came up with a proposal to give incentives to develop and
drill in the Gulf of Mexico.
The theory was that in a competitive market, that the value
of that lease will be reflected. The higher the royalty, the
lower the bonus; the lower the royalty, the higher the bonus--
that the real value will be reflected.
We had economic models of that we projected to say that if
we gave royalty relief, that we would have higher bonuses, we
would have more activity, we would have more wells developed.
We were greatly challenged, Mr. Chairman, you will recall,
on the figures that we put out and that MMS put out reflecting
what we thought would be the success of this bill. In fact, Mr.
Chairman, the bill was much more successful than even what we
had projected.
The acting director MMS, Ms. Kelleher, said after the first
2 years that deep water royalty relief for new leases has
contributed to record-breaking lease sales in the central and
western gulf over the last 2 years. A January 2000 study of MMS
showed a large increase in bidding activity partly attributable
to royalty relief.
Bonuses have exceeded $5 billion in this period of time.
Investment in the period of 1998 to 2005 is estimated to be
$9.5 billion in drilling alone.
So, Mr. Chairman, I would say, to quote the old adage, ``If
it ain't broke, don't fix it.'' And if it is a huge success,
don't change it.
Now, Mr. Chairman, I can tell you that exploration and
production budgets of oil companies are done on a very rational
basis. What you do is you balance risk and reward. There are
huge risks in drilling for oil and gas.
In the central gulf, about between one in three and one in
four wells produce a geologic success; that is, you find oil in
producible quantities.
But more importantly, Mr. Chairman, of those where you find
oil, only one-third are an economic success.
So, in effect, about 10 percent of the wells drilled, of
the exploration programs in the Gulf of Mexico, lead to wells
that produce oil. That means that nine-tenths do not produce.
So, in effect, Mr. Chairman, what the royalty relief bill
has done is, first, give more bonuses, because when nine out of
10 wells are not going to produce, if you get the up-front
bonuses from that, get the use of that money in the meantime,
as we have done far exceeding what the estimates were, then you
get money which you would not get for nine out of 10 of those
wells.
Secondly, and this is very important, you reduce the
threshold of the reserve size necessary to support production.
The size of the field necessary to support production
statistically has been shown to be at about the median size of
discovered fields in the gulf. That median size is 143 million
barrels of oil or oil equivalent.
So that means that for a field that is 143 million barrels
of oil and found in the Gulf of Mexico, the chances are 50-50
that it won't be produced. Or in other words, you can have
fields of 100 million barrels that it is too expensive to
produce.
Now, when you have royalty relief, you reduce that size
because, first of all, you put your investment up front and
that which is already sunk is not taken into consideration by a
company as to its expense of developing that well. And to the
extent that they can forego payment of royalties, then it makes
it possible to develop a smaller field.
Mr. Chairman, that has been our experience. We have proven
that this is so. I mean, MMS says, you know, incredibly
successful program.
The third thing the royalty relief does, Mr. Chairman, is
it helps keeps the independents and the small majors in the
business.
In 1985, 45 percent of the 1.14 billion barrels of oil or
oil equivalent in the gulf were produced by independents. By
1998, this had increased from 45 percent to 55 percent.
Independents now account for 80 percent of the acreage under
lease, 90 percent of the dollars bid in the last two lease
sales.
Now, Mr. Chairman, it is much more difficult for
independents and the small majors to invest in these deep water
drilling programs. So this program of royalty relief is
particularly important for them.
In the very deep water, your bill provides, as the
administration does, over 800 feet, it is 9 million barrels of
relief. In 1,600 meters, it is 12 million. That is really not
enough in the very deep water to account for very much
incentive.
In the shallower depths, where the independents play,
between 200 and 400 meters where you provide 17.5 million
barrels, and between 400 and 800 meters where you provide 52.5
million barrels of relief, this is important.
Mr. Chairman, it is not a giveaway. Look, you get it on the
front end. I mean, to say that this is a giveaway is to suggest
that oil companies don't recognize the value of that which they
are bidding on. They are going to bid in a competitive market
what they think it is worth. And if there is royalty relief in
it, their bid is going to reflect that. That is what experience
has shown.
Mr. Chairman, your study I think is a good thing. I am not
sure that the National Academy of Sciences is the one to do it
because it is largely a question of statistics, to go analyze
what has happened. It is largely a question of economics, to
examine the prospect in the Gulf of Mexico as opposed to
Nigeria, Angola, Kazakhstan, other places around the world that
have different kinds of risks, political risks and others.
I might say that there political risk in the United States
in drilling as well.
But it is not a giveaway. To the contrary, what it will do
is spur drilling by the independents in those shallower, still
used to be very deep water, but shallower, up to 800-meter
proposals.
Mr. Chairman, I don't know what this Congress is going to
do on ANWR. I support it strongly. Always have, although I know
you have an uphill fight.
But if you look at what this Congress and other Congresses
have done, not very encouraging on ANWR or on the Destin Dome.
They want to take that out.
Lease Sale 181 worked out by Governor Lawton Chiles and
Governor Fob James with Bruce Babbitt, and that has been
declared off-limits.
One hundred percent of the East Coast is off-limits. One
hundred percent of the West Coast is off-limits. I think now
the Great Lakes is off-limits. Forty percent of the Rocky
Mountains is off-limits.
I mean, most of it is off-limits. Now, we have a program
that has succeeded, Mr. Chairman. We can prove it. We have
shown it.
And for goodness sake, Mr. Chairman, keep the faith on what
you are doing in your bill, because it has proved to be
successful. It will work, and it should be allowed to continue.
The Chairman. Thank you, Senator.
Questions for the Senator?
Mr. Young?
Mr. Young. No questions. Thank you, Senator. And we did
work on that bill.
And unfortunately, as you know, it has worked greatly, but
a lot of the people--not everybody--on that side of the aisle
still look upon it as a giveaway, it won't work, there is no
need for it.
But I saw what it did in the gulf. I will continue to
support that concept, but I wish they had been here to listen.
We have one Democrat and two Republicans left in this hearing,
and it is unfortunate that they are not here to listen to the
facts. But sometimes facts are not part of their ball game.
But you bring up a good point, and I think we ought to take
into consideration your recommendation about the study. Maybe
if you have a recommendation about who should do it, it would
be helpful.
And secondly, if you have any suggestions on how to use
this royalty incentive onshore as well offshore, I think that
should be encouraged, because my goal is try to get us back
down to maybe 50 percent. I don't think we will ever solely
self-sufficient, but we shouldn't be so dependent on foreign
countries.
And thank you for your testimony, Senator.
Mr. Johnston. Thank you, Chairman Young.
The Chairman. The gentleman from Oklahoma, Mr. Carson.
Mr. Carson. No questions.
The Chairman. The gentleman from Tennessee.
Mr. Duncan. Thank you, Mr. Chairman.
I won't ask any questions. I will just say, I was here when
Senator Johnston testified originally on this royalty relief
bill, and I am very pleased at the results you just mentioned,
especially about the independents. It seems that everything we
do up here runs out the small businesses first and then it
starts getting the medium-sized ones.
And just for example, I have been told we have 157 small
coal companies in east Tennessee in 1978; now we have none,
because we opened up a office of surface mining and the
environmental groups came in. And I am sure they think it is
good that there is no coal production in east Tennessee, but
that destroyed a lot of jobs.
And some of these young people wonder why they can't find
good jobs with just bachelor degrees now and why they are
forced to go to graduate school, but we send our best jobs to
other countries.
But I thank you for the good work that you did on that
legislation, and I am very pleased that you have come here
today to testify and tell us these good results.
Thank you.
Mr. Johnston. Thank you very much.
The Chairman. The gentlelady from Wyoming.
Mrs. Cubin. Thank you, Mr. Chairman.
And thank you for being here, too.
I just have a couple of brief questions.
The 1995 Deep Water Royalty Relief Act was clearly
successful because the lessees, as you pointed out, had a
better reason to pay more in bonuses to the government. And so,
whether or not the mineral was produced, the bonus was paid
anyway.
I have never personally seen a spreadsheet, if you will,
balancing out the effect of the royalty relief and bonus versus
what the royalty would have been. Do you have any information
like that, that we could, in a simplified way, present to our
colleagues to try to help sell this deal?
Mr. Johnston. Well, the information is available because we
know the precise number of barrels that have been foregone.
What you have is, the fields that have been discovered and
are producing, in those situations, it is a very good deal for
the company that is producing the field. But what you have to
do, is you have to balance that where they find the field and
they find enough oil to produce it and to put in--
Mrs. Cubin. So the intangibles also play into it? In other
words, there are discoveries that otherwise probably wouldn't
have been discovered. Is that what you are saying?
Mr. Johnston. Yes, that is right. I mean, nine out of 10 of
those wells out there are economic dry holes.
Mrs. Cubin. Right. Right.
Mr. Johnston. Two-thirds are really dry holes. And of those
that hit, two-thirds are economic dry holes because they are
too expensive to produce.
So if you have royalty relief, you can deduct that amount
out of what it would cost you to develop the field.
Mrs. Cubin. Right.
Another thing that is important to me and why I wanted to
have deep water royalty relief in the energy bill is that we
are, on our side of the aisle, constantly being criticized as,
you know, the water boys for Big Oil.
So would you explain--I know you covered it in your
testimony--but would you explain just very precisely how this
helps independents stay in the market and stay competitive
instead of, you know, just having to go up against the big
money of Big Oil.
I far and away represent more people making their living
because of independent operators than I do the majors. And so,
you know, you are criticized on the one hand because you do
what you can to support Big Oil. And then on the other hand,
you are criticized when you try to help independents and
smaller operators get involved in something like this.
Could you just spell that out?
Mr. Johnston. Yes, I would be glad to.
This really doesn't help the majors, the big majors, very
much, because over 8,000 meters, it is only 9 million barrels,
and 1,600 meters, it is only 12 million barrels. I mean, that
compares to 87.5 million barrels in the previous bill in excess
of 800 meters. So it is down to a tenth of what it was.
And this really doesn't help the majors very much.
It is a very important thing for the independents, who now
are drilling most of the wells. It is still a very high-risk
and still very expensive, in relative terms, in the shallower
water.
The Miocene trend, for example, out there is red hot for
independents but highly risky.
And, look, let me say this. You know, I understand the
politics, having been in the politics of energy and the
substance of energy now for 30 years. I understand Big Oil and
how unpopular we are.
But if you think that it is such a good deal, I would tell
these people who think they are making a killing to go invest
in the stock. It is available to be purchased.
But do you know that Chevron, for example, on whose board I
serve, has a price-earning ratio of about 10. In other words,
the market thinks that is what they are worth. The average
stock on the New York Stock Exchange has a price-earning ratio
in excess of 20. The dot-coms, who have been going broke
everywhere, a lot of those still have--I think Microsoft is
still in excess of 30.
So if it is such a good deal, then go buy the stock.
By the way, I think it is a good stock.
[Laughter.]
And we are making a lot of money right now.
Mrs. Cubin. Thank you very much, Mr. Johnston.
Mr. Young. [Presiding.] Thank you gentlelady. The time is
up.
And, Senator, I do appreciate your insight. You have been
around a long time. You know this business.
I would suggest that you go talk to some of your allies on
that side of the aisle and explain the facts of life to them,
because right now you are really talking to the choir.
And I do thank you for being here, though--
Mr. Johnston. Yes.
Mr. Young. --and explaining the bill. I do appreciate it.
Mr. Johnston. Let me just say one final comment for you,
Mr. Acting Chairman.
I took four trips up to ANWR with members of the Energy
Committee and I well recall one trip. I had one particular
Senator who looked around and said, ``This is all there is?''
He said, ``If I refuse to allow drilling here, and I went back
and tried to explain that to people in the bar rooms in my
state, why they would throw me out of the Senate.''
And guess what? A few weeks later that Senator voted no on
ANWR.
Mr. Young. I understand.
Mr. Johnston. So that is what you are facing. And that is
why I say it is an uphill fight.
Mr. Young. Well, I hope that we will win it this year. If
we don't, it will be because of those that don't have the
vision, as you had in that royalty provision. And secondly, if
they don't do it, I hope they all freeze in the dark big time.
And I said this all along, they continue to oppose this for
no scientific reasons, for no facts, and it deeply disturbs me.
But that is going to be their bed that they have to sleep in.
Thank you, Senator.
Mr. Faleomavaega. Will the Chairman yield? Will the
Chairman yield?
Mr. Young. Oh, yes, I am sorry. You just walked in. I am
sorry.
Mr. Faleomavaega. Yes, I did. And I wanted to express my
apologies. Something took me out, but I wanted to pay my
personal respects to the gentleman from Louisiana, who for
years had done the tremendous jobs who come from those small
insular areas. I just wanted to let Senator Johnston know how
much we appreciate the work he has done to help our people. And
I appreciate also his presence here.
Mr. Johnston. Well, thank you very much, Mr. Faleomavaega.
We have in fact worked for many years for the good of your
people. And you have done, if I may be permitted to say, an
excellent job for Samoa.
The Chairman. [Presiding.] Thank you, Senator. I appreciate
you being here.
Our last panel is Mr. Roger Herrera, of Arctic Power,
Washington, DC; Mr. Richard Glenn, Arctic Slope Regional
Corporation, of Barrow, Alaska; Mr. Jerry Hood, International
Brotherhood of Teamsters, from Washington, DC; Mr. Adam Michael
Kolton, Alaska Wilderness League, Washington, DC; and Ms. Linda
Lance, the Wilderness Society, Washington, DC.
Mr. Young. Mr. Chairman?
The Chairman. The gentleman from Alaska.
Mr. Young. Unfortunately, again, the other side of the
aisle, Mr. Inslee and the rest of them are not here.
Mr. Glenn is one of those people that lives in the area,
represents those people in the area, is an Alaska native. And
unfortunately, they are not being listened to. They are
listening to the Gwich'in, which is my group, which I belong
to, which is 450 miles away from where we are going to drill.
And by the way, Richard Glenn brought his wife. Arlene is
in the audience. Been sitting there very patiently, I
understand, and his daughter. And I thank both of them for
being patient.
This congressional duty we have is sometimes very tiring
and very slow. But it deeply pleases me to have also Mr. Hood,
and of course everyone knows Roger Herrera.
And Mr. Hood is with International Brotherhood of
Teamsters, who happen to support this. I hope those people on
that side of the aisle remember that.
But welcome, for the Committee.
The Chairman. We appreciate you being here. And above all,
we sure appreciate your patience.
But as you noticed, the Secretary brought a lot of
attention to this issue. And it is a very important issue, and
one we are very concerned about. So, therefore, we wanted to
take the time and let all the members have it.
But believe me, the testimony you are about to give, we
will pour over every inch of it. So we do appreciate you being
here.
I would like to take you in the order that I called you to
the panel: Mr. Herrera, Mr. Glenn, Mr. Hood, Mr. Kolton, and
Ms. Lance.
Mr. Herrera, I don't know what they have told you before,
but we try to keep it within 5 minutes. I am sure most of you
have worked your testimony out for about that time, so we
appreciate it.
Mr. Herrera, the time is yours, sir.
STATEMENT OF ROGER C. HERRERA, ARCTIC POWER, WASHINGTON, DC
Mr. Herrera. Thank you, Mr. Chairman.
My name is Roger Herrera. And today I am representing
Arctic Power, which is a citizens's grassroots organization
mainly composed of Alaskans that support careful development of
the Coastal Plain.
I personally have spent most of my career working in the
Arctic as a geologist. I have literally lived way over a year
in a tent on the North Slope of Alaska and spent two summers
and one cold winter in the Arctic islands of Canada, much
closer to the North Pole than Alaska is.
So I have seen the Arctic in its worst moments and its most
beautiful moments. And they have certainly indelibly changed my
whole attitude to the area.
With regard to your legislation, Mr. Chairman, because in
past times I have played a role looking for oil in the North
Slope for one of the big oil companies, and also being
responsible for environmental protection of the oil operations,
I looked at the bill in the light of that experience. And one
thing that is very important with regard to legislation
covering activities in the Arctic is that it mustn't be too
confining to prevent the ability for technology to expand
beyond the regulatory control.
What has happened in the last 25 years in the Arctic is
just that. Technology has transformed the whole way of
operating there for the better, to improve environmental
protection and improve the efficiency of the operations.
I think in this bill you have reached a nice balance in
that regard. You have used all the technological improvements
which have been generated over the last 25 years, you have used
all the environmental protection which state of the art and
experience has shown to be necessary.
But I think there is enough wiggle room for new technology
even better than the existing ones to evolve as time goes on.
And that is exactly what you should try to achieve when you are
controlling large oil operations on the Coastal Plain.
If I may, Mr. Chairman, I will just digress a little bit
from my written testimony to address the water problem which
Mr. Holt talked about earlier.
I spent a year of my life looking oil in the middle of the
Sahara Desert in southern Libya. And the Sahara Desert is a
desert, as we all know, just as the North Slope of Alaska is a
desert. It doesn't have much rainfall in either area.
It is quite easy and routine to drill wells in the middle
of the Sahara Desert where no fresh water exists. And in fact,
the same techniques that we use there will be used and have
been used on the North Slope of Alaska. One does not need to
tap running fresh water, especially in the wintertime, on the
North Slope of Alaska in order to drill oil wells.
First of all, one can use seawater and distill it quite
comfortably. In fact, most of the oil fields that are presently
producing oil on the North Slope of Alaska don't use any
freshwater at all. They all distill seawater.
If you are some distance away from the sea and it is to
difficult in the middle of winter to pipe the seawater to your
location, you simply drill a shallow hole beneath the
permafrost 2,000 deep and there in the geological formations is
more saltwater than you have ever seen in your life.
So once again, you use that water, distill it, and you have
all the freshwater you need.
With regard to making ice roads; first of all, you drive
preferentially across the sea ice until you get the area where
you want to operate inland, and then you make an ice road over
the tundra.
People seem to forget that in the wintertime, the North
Slope of Alaska is covered with snow. Snow is freshwater
waiting to be melted. And so all you do is put up a snow fence.
Within 24 hours, you have more snow than you have ever seen in
your life because of the winds that constantly blow there. You
melt that and you make your ice roads without disturbing the
rivers and the fish and all that sort of stuff. So it is not a
practical concern.
I would just like to make one point further beyond my
written testimony, and that is only once today have we heard
the term OPEC. Mr. Young mentioned OPEC.
OPEC is controlling the world price of oil. And we are
suffering because of that control. If we don't take advantage
of the oil resources which we believe underlies the Coastal
Plain to moderate that OPEC control, we deserve the
consequences of such control. OPEC is looking after its own
interests; it is not looking after the interests of North
America.
What Alaskans know and what Alaskans want you to know, Mr.
Chairman, is that the vast majority of us, 75 percent plus,
support careful development on the Coastal Plain. We have
recognized for the last 25 years that we have changed the
history of the United States of America because of the oil that
has come out of Prudhoe Bay and has benefited the whole nation.
If Prudhoe Bay had not been discovered or the pipeline had
not been built, our whole history would have changed for the
worse, no doubt.
We think we can prolong that history in the future by
careful development of the new oil beneath the Coastal Plain.
Thank you, Mr. Chairman.
[The prepared statement of Mr. Herrera follows:]
Statement of Roger C. Herrera, on behalf of Arctic Power
Mr. Chairman, My name is Roger Herrera. I am an Alaskan citizen and
I have been asked to represent Arctic Power today. Arctic Power is a
grassroots, citizen's organization whose sole objective is to persuade
Congress to open the Coastal Plain of the Arctic National Wildlife
Refuge (ANWR) to responsible oil and gas leasing. Arctic Power has
approximately 10,000 individual members, mostly Alaskans, and
represents all segments of Alaska people, of all political persuasions.
It is funded by individual contributions, plus generous grants from the
State of Alaska approved by the state legislature and governor. I,
personally have lived in Alaska for almost 30 years and have been
involved with its geology and the search for oil and gas since 1960. I
have spent many summers and several winters working on the North Slope
of Alaska and in the Canadian Arctic Islands with British Petroleum,
where, at different times, I was responsible for the exploration and
environmental programs of the company. Because of that experience, I
have accompanied scores of members of Congress on their visits to the
North Slope and the Coastal Plain, including members of your committee.
I retired from BP in 1993 and am now a consultant to Arctic Power.
My long association with oil and gas exploration in the Arctic and
my past responsibility for environmental protection in the region has
allowed me to review, with interest, the text of the Arctic Coastal
Plain Domestic Energy Security Act of 2001. It is a document which is a
result of an evolution over the past 14 years during which time many
similar documents have been prepared and debated in the House and
Senate. Interestingly, none of the previous bills has been found
wanting to the extent that not one has suffered defeat in the committee
or on the floor. However, the fact that the issue has not been resolved
indicates a certain resistance in the minds of some people, probably
based on their lack of intimate knowledge of the arctic.
My point is that the present bill is the product of many decades of
experience, not only of the preparation of legislative documents, but
also, knowledge and practical know how of arctic operations and ways of
protecting the arctic environment.
It is worth repeating that much of the technological change that
can be recognized in the oil industry's operations over the past 30
years has resulted from ideas initiated on the North Slope of Alaska.
These ideas, exemplified by treatment of waste materials, long step-out
horizontal wells, coiled tubing drilling, use of ice pads and ice
roads, new light-weight drilling rigs, etc., inevitably achieved the
multiple objectives of more efficient, safer operations and more
protection of the environment. They incorporate technological
improvements that make it easier to operate in the harsh, dangerous,
arctic winter and it has been the incentive supplied by the difficult
climate coupled with the environmental responsibility of all Alaskans--
especially the residents of the North Slope Borough--that has triggered
that remarkable evolutionary improvement. It has made the North Slope
oil operations the cleanest and most advanced in the world.
The language of H.R. -- does nothing to diminish those benefits. It
mandates that best technology should continue to be used, but it
resists the bureaucratic tendency to stifle innovation by excessive
rules. The bill gives great authority to the Secretary of Interior to
formulate appropriate regulations. One has to hope that that authority
will be used by staff with firsthand knowledge of the arctic that
liaise closely with the Eskimos and State of Alaska experts to achieve
a win-win balance.
Such a balance can readily be established as exemplified by the
Audubon Society in its Rainey Sanctuary in Louisiana and its Baker
Preserve in Michigan, where careful oil and gas production has been
quite compatible with nesting cranes and other wildlife for many
decades.
The arguments often voiced by more extreme environmental
organizations that the Coastal Plain cannot be developed in an
environmentally acceptable way is opposed 75% of Alaskans (Dittman,
2001), to say nothing of the villagers of Kaktovik (www.kaktovik.com)
who are the only inhabitants of the Coastal Plain. It is remarkable
that the Coastal Plain area, despite the rhetorical superlatives used
inaccurately to describe it, is one of the few federal land areas where
the NIMBY syndrome does not apply. If the local viewpoint is so
important in making decisions against drilling beneath the Great Lakes
or offshore Florida, surely it should be the dominant consideration in
opening the Coastal Plain!
Unfortunately the rules of engagement on this issue are more often
emotional rather than factual. Caribou are a case in point. One hears
concerns that Coastal Plain oil development might adversely affect the
caribou of the Porcupine Herd. It is worth recording that the herd has
declined in numbers for 189,000 in 1989 to 128,000 today. This decline
occurred in a period when the herd has been actively managed and
protected by a US/Canadian Caribou Commission and by the US Fish and
Wildlife Service. It has been subject to harvesting by the Gwich'in
Indians of Arctic Village and Canada, and some drilling has occurred
within its range on the Canadian side, but, by and large, the herd has
apparently declined due to natural causes.
The recent history of other Alaskan Caribou herds is a warning of
what might happen to the Porcupine herd in the future. The Forty-mile
Caribou herd in east central Alaska was once over 500,000 animals. By
the 1960's the herd had declined to 6,000 animals, but it slowly
recovered over the next 30 years to about 22,000 caribou--a shadow of
its historical size. Similar fluctuations have been recorded in the
Western Arctic Herd. In the 1970s, this herd crashed from 240,000
animals to only 75,000. The point about these huge statistical
variations in caribou numbers is that neither oil development nor
wildlife management has much influenced them. It is quite relevant,
therefore, to worry about the Porcupine Caribou Herd decline, but it is
probably quite irrelevant to suggest that a Coastal Plain oil field
will in any way affect the population trends. The trend is clearly down
for this herd, as it is clearly up for the adjacent Arctic Herds.
Bearing in mind that there are almost twice as many caribou in Alaska
as people, it is difficult to justify jeopardizing the nation's energy
balance by excessive worry about the Porcupine Herd.
A decision to open the Coastal Plain as contemplated in H.R. -- is
all about careful development of its oil and gas resources. Therefore a
brief discussion of how much oil might underlie the Coastal Plain is
appropriate, especially in the light of the distortions that have been
applied to the US Geological Service estimates by environmental
organizations. In its 1998 assessment the USGS concluded that, at $25/
barrel oil and with an oil recovery factor of 37-38%, there was a 95%
chance that the Coastal Plain could produce 5.7 billion barrels of oil
over a period of 25+ years, and a 5% chance that almost 16 billion
barrels could be produced. The relevance of these estimates is not in
the geological assessment of how much oil might be present, but rather
in the economic and technical parameters which impact the figures. I
believe that the price of oil demanded by the USGS for optimum
production is much too high. It does not take into account the huge
cost efficiencies of the new arctic drilling technology already
discussed. However, even more important, is the USGS estimate of how
much oil can be taken out of a given geological reservoir. The
expectation that only 37-38% of the oil present can be extracted is too
low. The Prudhoe Bay field is now calculated to have 60-65% of its oil
eventually produced. The Endicott field producing from a different,
more difficult, geological horizon, will give up more than 55% of is
oil, and the Alpine Field, which is the beneficiary of state of the
art, 2001 technology, and which taps a ``tight'' reservoir, will
produce over 50% of its oil. These examples justify the assertion that
37-38% recovery is much too low. Consequently the USGS resource figures
are extraordinarily conservative and can be considered minimal and
pessimistic.
I would prefer to await the results of exploratory drilling before
being dogmatic about the amount of oil present, but because we already
know that significant amounts of oil are present in the Soundough
Field, which partially underlies the western edge of the Coastal Plain,
and because of the conservative nature of the USGS figures, it is easy
to believe that 10 billion or more barrels might be producible from the
area. Such an amount would represent the largest new oil province found
in the world in the past 30 years. The Caspian Sea area might prove the
single exception to that, but it remains to be fully proven.
This testimony has argued that there is a lot of oil beneath the
Coastal Plain and that it can be produced, with the law established by
H.R. --, in a manner which will not sacrifice the environment and
wildlife. Despite those conclusions, it is necessary to establish why
we need the oil. The answer has a lot to do with peace of mind, a
viable economy and OPEC. It goes without saying that America should
continue to use innovation, energy efficiencies and other conservation
measures to reduce the level of concern we presently and realistically
have for our energy future. In particular, it is hard not to embrace
more efficient automobiles, just as we embrace more efficient jet
airplanes. Jets are safer, faster and cheaper to operate than they were
20 years ago, and other forms or transportation should strive to mirror
that improvement. Having wished that, it is nevertheless difficult to
forecast a significant reduction in our use of petroleum energy in the
next generation or two, if only because of population growth. If that
proves to be the case, America will inevitably become more and more
dependent on oil imports from OPEC countries, specifically Middle
Eastern producers.
This is a situation, which has faced advanced countries such as
France, Japan and Britain for many decades. Britain's reliance on
Middle Eastern oil was neutralized by its discoveries of the North Sea
Oil. France and Japan both coped by embracing nuclear energy and by
foreign policy decisions, with regard to Arab nations, quite different
than those of the U.S. Unfortunately, OPEC nations now have effective
control of the world price of oil. This is exemplified by the fact that
in 1999 when OPEC increased world oil production by 1.75 million
barrels of oil per day, the price of oil immediately slumped from
$25.00/barrel to $10.00/barrel. Conversely an OPEC tightening of supply
is solely responsible (coupled with world demand) for the present
levels of $25-30/barrel. OPEC nations have every reason not to get too
greedy in increasing the price of oil to levels where alternative or
unconventional oils become competitive, but likewise the United States
has every reason to reduce OPEC control by using ANWR oil to moderate
the world price (any new oil in the world market will moderate price),
and to reduce our reliance on OPEC production. The U.S. is the world's
largest energy market so a clear indication to OPEC that we are willing
to manage our energy use and production in a manner that lessens the
cartel's influence is a very strong message indeed.
The alternative to more domestic production of oil is inevitably
more U.S. troops in the Middle East to ``protect'' OPEC oil, and a
sustained higher price. The alternative would also demand a radical
change in our foreign policy in the region with the inevitable problems
associated with such changes.
These are heavy issues that the energy legislation tries to address
in a reasoned manner. Unfortunately, the opponents to ANWR oil and gas
production whose mantra is environmental protection, wish to disregard
the NIMBY syndrome by offering millions of acres of wind farms and tens
of millions of acres of solar panels across the nation--all in an
effort to prevent 2000 acres of ANWR Coastal Plain from being
developed. Perhaps we should embrace windmills, solar, hydro, and
nuclear, etc., but we still need oil and gas, and our own oil is better
than anyone else's.
Production of oil from the Coastal Plain has been bitterly
criticized on the basis that it only represents six months supply of
oil to the nation. To some extent I have already addressed this
misrepresentation in the above discussion on reserve estimates, but it
is worth amplifying the practical reality of ANWR production. The
Coastal Plain is different from many isolated oil and gas basins (such
as the Canadian Beaufort Sea) because it is already within 25 miles of
an existing pipeline and has the benefit of the Prudhoe Bay
infrastructure, 60 miles to the west. I mentioned that part of the
Sourdough Field underlies the western edge of the Coastal Plain. It is
possible that that known deposit would be developed very quickly after
the first lease sale. Consequently, because only a feeder pipeline 25
miles long would be necessary to link to the Trans Alaska Pipeline,
first production from the Coastal Plain could be expected as quickly as
2 or 3 years after leasing took place. Litigation used as a delaying
tactic could increase that time and unfortunately such legal strategy
has been used routinely in Alaska, nevertheless, all the physical plant
for production could be built very quickly. Moderate sized oil fields
in the arctic would have a 20-25 year lifespan. Giant fields (>1billion
barrels) will inevitably continue to produce for a much longer period
of time, so the coastal plain could easily be producing oil from 2005
for 50 years. The two certainties of such a long time frame is that
more oil will be produced than originally estimated, due to continuous
technological breakthroughs, and, second, that oil will still be a
valuable world commodity as a source of petrochemicals if not of
energy.
It is difficult to be sanguine about our energy situation in the
near term and while we in America have taken cheap, reliable energy for
granted all our lives, we have also exhibited a quick irritability when
it becomes too expensive or not available.
The tendency of opposition groups to impose nuisance delays on oil
development projects should be of concern in the future. The public
process must always be rigorously followed to ensure responsible
decisions on new developments, but deliberate litigious delay for the
sake of delay should be strongly discouraged. I am not sure that H.R.
-- achieves that necessary protection.
In conclusion Arctic Power--representing the vast majority of
Alaskans--is fully supportive of passage H.R. --. We are proud of
Alaska's contribution to America's energy portfolio over the last 45
years. We think we have long proven the compatibility of responsible
oil development and healthy wild life populations better than anyone
else. The Lower 49 states supply Alaska with all its goods and services
because we have no manufacturing base, so our oil development generates
hundreds of thousands of jobs for those states. The Coastal Plain
belongs to all of us, but first it belongs to the Inupiats of Kaktovik,
then it is Alaskans' responsibility and finally it belongs to any
American who cares to think about it or visit it. This bill will
realize its true riches and sacrifice nothing by so doing.
______
The Chairman. Thank you, sir.
Mr. Glenn?
STATEMENT OF RICHARD GLENN, ARCTIC SLOPE REGIONAL CORPORATION,
BARROW, ALASKA
Mr. Glenn. Thank you, Mr. Chairman. It is an honor for me
to come before the Committee this afternoon.
My name is Richard Glenn. I am the vice president of lands
for Arctic Slope Regional Corporation, which is the native-
owned regional corporation of Alaska North Slope comprised of a
membership of more than 8,000 Inupiat Eskimos.
And it is an honor again for me to represent them.
I would like to request that my written testimony be
adopted for the record, and I will not belabor the Committee
with going over the testimony verbatim.
The Chairman. Without objection, all of your testimony will
be put in the record.
Mr. Glenn. In addition, Mr. Chairman, I would to provide a
little digression. It is a double honor for me to speak here.
Chairman Young hails from my home state. My mother is
Inupiat Eskimo born and raised on Alaska's Arctic Coastal
Plain.
And in addition to that, it is a double honor because my
father is a son of the great State of Nebraska. And to be here
among the membership of this Committee with the great Tom
Osborne is just going to elevate my testimony to near heroic
status when I go home and tell my family about it.
[Laughter.]
But I have a job to do here, and that is to represent the
views of our Inupiat Eskimos, who join with the majority of
Alaskans in support of safe, responsible exploration of the
Coastal Plain.
We live in the Coastal Plain of the Arctic. We are the only
group of native Alaskans who live in the Arctic National
Wildlife Refuge.
Our communities are scattered across the Coastal Plain from
the Canadian border to the western North Slope. We are
subsistence-oriented people. We value the resources of the land
and the sea. We depend on them for food. And so it is in our
interest to see that these resources are protected. And it is
in the interests of all Alaskans and all Americans.
The priorities that bring me here are threefold.
First is the protection of our culture, the well-being of
our people, and the natural resources that we depend on.
Second is the economic self-determination and the
opportunity to develop our lands, some of which exist inside
the Coastal Plain of ANWR, for the betterment of our people. We
live there, and we view this as a very important issue.
Third, we believe in and support the responsible
exploration and development of the public lands of the Coastal
Plain. We know that it can be done. We have seen it over the
last 30 years of active exploration and development on the
North Slope.
So as a people, we support passage of Title V of the Energy
Security Act, and we want to make that message clear.
There has been, Mr. Chairman, almost a century of
exploration on the North Slope, and our people have borne
witness to that exploration for minerals, for coal. We have
assisted them, advised them.
Natural gas seeps located around the North Slope where
methane is percolating to the surface. Oil seeps located by our
people furnished to explorationists. Mineral exposures, coal,
all of these have been accessed by the outside world, with
access provided by our people.
In addition to that, we have viewed the history of
development, beginning with Prudhoe Bay and coming up to the
present, in several lights.
At first, we feared exploration and development. We fought
against it. But we learned, along with industry. We commented,
we harangued, we fought, but in the end, industry listened. And
they listened to our views.
And as a result, the oil industry of the past is a lot
different from the oil industry of the present. The oil fields
of Alaska's North Slope are among the cleanest oil fields
producing in the world.
And to those who want to compare an unspoiled wilderness
with an area of active exploration and development, I would
urge an additional comparison: that between the Alaska oil
fields on the North Slope and those areas around the world
where oil production is going on today. Look in places like the
Russian Far East or in Colombia or in parts of the Middle East,
where they don't have the environmental safeguards that we hold
dear. This is the kind of exploration and development that will
continue is we are prevented from this responsible development
of Alaska's North Slope.
Mr. Chairman, there are professional views that I also
hold, as a geologist, a professional geologist, that support
the development of the Coastal Plain of the refuge.
The 800-mile long pipeline that supplies our country with
oil needs to be running at capacity, or, according to the law,
when the pipeline is not flowing, it will be shut down.
It is not like areas of the Canadian foothills or in areas
of West Texas where there are many ways to move our oil to
market. While that pipeline is there, Mr. Chairman, it needs to
be efficiently producing oil.
Our people are a sharing people. We have shared among each
other. We share food. We share resources. We share our time and
our effort.
And it is this attitude of sharing, Mr. Chairman, that I
would like to bring to this Committee. In return, I would
expect and hope that this attitude of sharing can be foisted
back upon us by the United States Government.
We have shared our lands with the Federal Government. Huge
enclaves of our area have been given to the petroleum reserve,
the wildlife refuge and to the national park, areas that were
part of our aboriginal claim. It was later settled by the
Native Claims Settlement Act, but we received a much smaller
acreage.
In this attitude of sharing, Mr. Chairman, we ask that we
have access to our own lands, our traditional homeland within
the Coastal Plain of the wildlife refuge.
And, Mr. Chairman, that we have this avenue of economic
self-determination for the betterment of our people, jobs for
our people, jobs for native Alaskans, jobs for Alaskans in
general.
For these reasons, we urge passage of the energy act and
specific support for Title V of this act. Thank you.
[The prepared statement of Mr. Glenn follows:]
Statement of Richard Glenn, Vice President, Arctic Slope Regional
Corporation
My name is Richard Glenn. I am the Vice President of Lands for
Arctic Slope Regional Corporation (ASRC). I am here to offer testimony
in support of the passage of the Energy Security Act (or, the ``Act''),
and wish to give specific support to Title V of the Act, which is
titled, ``The Arctic Coastal Plain Energy Security Act of 2001''.
ASRC is the Alaska Native-owned regional corporation representing
the Inupiat Eskimos of Alaska's North Slope. ASRC owns surface and
subsurface title to certain Alaskan North Slope lands. This ownership
stems from an earlier claim of aboriginal title--covering the entire
Alaskan North Slope--that was eventually settled in part by the Alaska
Native Claims Settlement Act of 1971 (ANCSA). Under the terms of ANCSA,
ASRC's land selection rights, which amounted to a small fraction of
what was originally claimed as aboriginal title, were further limited
by what at that time were pre-existing state and federal withdrawals.
ASRC's corporate mission is to enhance the cultural and economic
freedoms of it shareholders.
With title to approximately 4.6 million acres of surface and
subsurface estate, our regional corporation represents the biggest
North Slope landowner outside of the federal government. ASRC lands
include the subsurface estate to 92,160 acres of land within the Arctic
National Wildlife Refuge (ANWR) Coastal Plain. The ASRC-owned ANWR
subsurface estate lies under and adjacent to the Inupiaq village of
Kaktovik. The Kaktovik Native village corporation, KIC, holds the
surface title to these same lands.
More than eight thousand Inupiat comprise the membership of ASRC,
seventy-five percent of whom live in Arctic Slope communities scattered
from the Canadian border in the east to the Chukchi Sea in the west,
covering an area about the size of the state of Minnesota. We live
close to the land and sea and depend on the resources they provide,
including caribou, fish, seabirds and marine mammals. In addition, we
also depend on jobs, because today's subsistence lifestyle demands a
mix of financial resources and traditional resources. As a result, the
values of our people and of our regional corporation reflect our
recognition of the benefits of careful stewardship of the land and the
need for gainful employment for our people. This blend of development
and stewardship is reflected in a core value statement of our
corporation, which states that we ``shall develop our lands and
resources by means that respect Inupiat subsistence values and ensure
proper care of the environment, habitat and wildlife.''
As owners of lands which we view as our traditional homeland, as
subsistence hunters who have close ties to the land and sea and the
resources they provide, and as village and North Slope community
residents who have witnessed firsthand the exploration and development
of Alaskan North Slope by the oil industry, we offer our support of the
Arctic Coastal Plain Energy Security Act of 2001. In doing so, we have
three main priorities: First, the protection of our subsistence way of
life and the resources upon which we depend. Second, the opportunity
for economic self-determination by allowing environmentally responsible
exploration and development of Native-owned lands within ANWR. Third,
the opening of the public lands of the Coastal Plain to responsible oil
and gas exploration and development.
A BALANCE OF STEWARDSHIP AND RESPONSIBLE DEVELOPMENT
In our region we constantly balance the protection of the land with
the need for environmentally sound exploration and development of
natural resources. In our view, the Act provides this kind of balance,
and it obligates the Secretary of Interior to follow a method of
careful stewardship regarding oil and gas exploration and development
in the ANWR Coastal Plain. The method has proved itself with successful
exploration and development of other federal North Slope lands--most
recently in the National Petroleum Reserve in Alaska (NPR-A).
The Inupiat people have contributed to responsible North Slope oil
and gas development. Thirty years ago, our people were strongly opposed
to all forms of oil and gas development in our region. We feared it.
With our regard for the environment in mind, we created strong
permitting and zoning policies within our local borough government. We
were not complacent with oil development, we were--and still remain--
vigilant. In the face of strong local development ordinances, oil
industry exploration and development methods have improved over the
last twenty-five years. We have fought, argued, commented and
complained, an on occasion we have said, ``No''; and the industry has
listened. As a result, today's oil industry on the North Slope is a far
cry from the industry of the past. In fact, we believe that the North
Slope oil and gas practices of today are the best examples of
environmentally responsible development. Industry practices still are
not perfect, and we remain vigilant, in an effort to continually
improve industry's performance in our environment. We are confident
that with the appropriate level of local consultation and control, the
Coastal Plain of ANWR can be explored and developed in a way that
protects natural resources for everyone.
The oil industry of today follows a strict local permitting and
zoning process that protects areas warranting special designation. Our
Inupiat people have a part in this process at all governmental levels.
Today's drill rigs explore in the winter season, when a snow and ice
cover has formed a protective layer between exploration equipment and
the underlying tundra. Seismic acquisition is now conducted by
vibrating vehicles rather than the shothole/dynamite methods of the
past. Drilling practices are strongly regulated by state and federal
agencies, and no drilling wastes or equipment are left onsite after an
exploratory well is completed. Finally, production facilities are
located only in acceptable areas, and occupy a small fraction of their
former area. The advent of directional drilling and the streamlining of
production methodology has allowed for the smaller footprint of
infrastructure in Alaska's oil fields. Once in place, production
facilities have little or no impact on local fish and wildlife
resources of the area.
ECONOMIC SELF-DETERMINATION FOR ALASKA'S INUPIAT PEOPLE
In northern and northwestern Alaska, there is no industry except
for resource extraction. The land is too cold for agriculture, and too
remote for refined manufactured products. In addition, the way of life
in our rural communities has with time become a combination of
subsistence and cash economies. As a result, our people are needful of
both a healthy natural environment and access to gainful employment.
With the exception of a small amount of tourism and government service
positions, our people can look only to resource development for jobs
within our region. Hence, we have assisted with the development of the
North Slope oil and gas resources through our own Native-owned oil
field service company subsidiaries, which has employed and developed
the skills of our people. In addition, we have made efforts to seek
title to subsurface and surface lands, including the KIC lands acreage,
that hold natural resource potential, that we might benefit from the
oil and gas industry as a resource owner of lands that have been
traditionally used by our people. As it now stands, we are prevented
from developing our Kaktovik-area lands due to Section 1003 of ANILCA.
The exploration and development of the Coastal Plain of ANWR, including
the KIC lands, then represents an issue of economic self-determination
for our people.
In addition, our local government and village residents realize
great benefit from the sustained presence of the oil and gas industry
on the North Slope. Because of the practices developed over time on
Alaska's North Slope, the residents of the North Slope Borough live in
a land with few environmental hazards, and have begun to build in their
communities what is often taken for granted in the rest of this
country. Facilities for education, health care, police and fire
protection, reliable power generation, and sanitation all have been
initiated by the North Slope Borough, thanks to a revenue stream
generated by the taxation of property including oilfield
infrastructure. In the absence of new development such as the potential
development of the Coastal Plain, the North Slope Borough revenues
would see a sharp decline, due to the depreciation of the older Prudhoe
Bay infrastructure. Our communities are cleaner and safer, our people
are living longer, and our children no longer have to travel a thousand
miles or more to get a primary and secondary education.
With Borough operating revenue as well as programs initiated by our
Native organizations, we are building training programs to give our
local workforce skills to participate anywhere in today's economy. For
example, we have established an education foundation at ASRC that
provides financial assistance to Inupiat members interested in
obtaining a college degree or technical training. Finally, ASRC
continues to incorporate into its business the Inupiat value of
respecting and taking care of our elders. ASRC has established an
elders benefit trust that provides elderly Inupiat members with a
monthly stipend to offset the high cost of living in the region. Many
of our elders do not have retirement funds as many did not work prior
to the introduction of the oil industry within our region. The reason
for this is simply because prior to the oil industry we did not have an
economy, and thus no jobs for our elders to work at to save for a
retirement fund.
IN THE NATIONAL INTEREST
Finally, we view the exploration and development of the ANWR
Coastal Plain as in the nation's interest. This ANWR Coastal Plain
marks the most significant onshore area for potentially large
accumulations of oil and gas in the nation. Even with conservation and
assuming that the United States oil demand remains static, there needs
to be new production to replace production from older declining fields.
The supergiant Prudhoe Bay oil field, which once produced twenty
percent of the nation's crude supply, has declined to less than half of
its peak production. America needs a continuing source of domestically
produced oil. The alternative, importing oil from countries of
political instability, or from countries with less than acceptable
environmental practices, will surely do more harm than good.
COMMENTS ON SPECIFIC PROVISIONS WITHIN TITLE V OF THE ACT
Section 503 (d)--Relationship to State and Local Authority--ASRC
strongly supports this provision, and the desire of the North Slope
Borough to retain its broad governmental powers regarding development
in the Coastal Plain. These powers, including planning, permitting,
zoning, right-of-way determination, and taxation are the tools by which
the residents of the North Slope become stakeholders in the development
of Coastal Plain lands.
Section 503 (e)--Special Areas--ASRC strongly supports the
provision that mandates the participation of Kaktovik and the North
Slope Borough in the selection of lands, if any, for designation of
special areas worthy of special management or protection. The local
residents have the most to offer in determining the special status of
any lands, and should be consulted.
Section 506 (a) (7)--ASRC strongly supports the provision that
mandates lessees, agents and contractors of Coastal Plain exploration
and development follow the terms of section 29 of the 1974 Federal
Agreement and Grant of Right of Way for the Operation of the Trans-
Alaska Pipeline, of employment and contracting for Alaska Natives and
Alaska Native Corporations from throughout the State.
Section 507 Coastal Plain Environmental Protection--ASRC Strongly
encourages local consultation for all the terms of Section 507 Parts a-
through f. In light of the successful process adopted by the Department
of Interior for the exploration and development of the northeastern
part of the National Petroleum Reserve in Alaska, ASRC suggests that
Interior adopt a similar framework to incorporate consideration of
local input from the village of Kaktovik and from the North Slope
Borough for environmental protection measures regarding the Coastal
Plain of ANWR. Such input would include strong recommendations for
siting of consolidated facilities where the local population desires,
so that village residents can benefit from jobs, and the proposed
facilities can benefit from existing infrastructure.
Section 507 (d)- ASRC recommends strengthening this section to
mandate that subsistence access is ensured.
Section 510 Conveyance--ASRC strongly supports the entirety of
Section 510, which addresses the completion of conveyance of the
surface title of the KIC lands to the Village Corporation and
conveyance of the subsurface title of the same lands to ASRC, in the
interest of removing any clouds on title.
Section 511 Impact Fund Assistance--ASRC strongly supports Section
511 of the Act, which provides for Impact Fund Assistance, following
the model of the NPR-A impact fund assistance program. Although the
positive impacts of development may often outweigh any negative ones,
the negative impacts still do exist. The villages closest to the
effects of oil and gas development are always in the most need of
impact fund assistance to address some of the direct negative effects
of development.
______
The Chairman. Thank you.
Mr. Young, you have a motion?
Mr. Young. Mr. Chairman, I ask unanimous consent to have
the testimony of the mayor of the North Slope Borough submitted
for the record at this time.
The Chairman. Without objection, so ordered.
[The statement of Mr. Ahmaogak, Mayor, North Slope Borough,
follows:]
Statement of The Honorable George Ahmaogak, Sr., Mayor, North Slope
Borough
Mr. Chairman and Members of the House Committee on Resources, my
name is George Ahmaogak, Sr., and I am the Mayor of the North Slope
Borough (Borough). I greatly appreciate the opportunity to submit
written testimony to you regarding H.R. 2436, the Energy Security Act,
which was introduced yesterday, July 10, 2001, by Chairman Hansen. My
specific purpose is to provide testimony regarding the Borough's
support for oil and gas exploration and development on the Coastal
Plain of the Arctic National Wildlife Refuge (ANWR).
ANWR's Coastal Plain is this Nation's best prospect for major new
oil discoveries. The ANWR Coastal Plain is located within the
boundaries of the Borough. The only community within the Coastal Plain
is the Village of Kaktovik. The residents of both the Borough and
Kaktovik strongly support exploration and development of the Coastal
Plain. These activities, however, must be subject to appropriate
measures to protect subsistence uses, the environment, the caribou, and
other fish and wildlife.
1. Introduction
The Coastal Plain portion of the 19 million acre ANWR is very
important to the nation's economic well-being and to its energy
security. This 1.5 million acre area is also of critical importance to
the Inupiat Eskimos and residents of the Borough. We are the full-time
residents of the North Slope. Our ancestors have lived in the Arctic
for thousands of years. They have been the stewards of its land,
environment and wildlife. We have an Eskimo Village with 240 residents
located in the heart of the Coastal Plain.
2. National Interest in the Coastal Plain
Mr. Chairman, Members of this Committee have made a compelling case
for opening the Coastal Plain to oil and gas exploration and
development. With gasoline prices approaching--and in some states
exceeding--$2.00 a gallon, the American people are looking for action.
Citizens are concerned about rising energy prices and about who
controls oil supplies. This is a complex issue. But one thing is very
clear. Opening the Coastal Plain now is the right thing to do. The
Coastal Plain area:
<bullet> Lhas the potential for major new oil reserves, estimated
at 9 to 16 billion barrels of economically recoverable oil;
<bullet> Lcould slow or reduce our growing oil import dependence,
currently at over 56%;
<bullet> Lcould be developed with minimal impact on the environment
and wildlife;
<bullet> Lcould generate billions of dollars in new Federal revenue
from bonus bids, royalty and corporate taxes; and
<bullet> Lcould address the need for increased national energy
security.
3. The Borough's Interest in the Coastal Plain
The interests of the residents and the Inupiat people in the
Coastal Plain are both economic and cultural. Congressional action on
legislation to open the Coastal Plain will determine whether or not my
constituents will have a long-term tax base from which to provide
essential public services. It will determine whether there will be jobs
and economic activity for our young people and our children. It will
also determine whether the Inupiat people, who once held aboriginal
title to all of the North Slope's 56 million acres, will be permitted
to develop the economic potential of the 92,160 acres of private lands
that they own in the Coastal Plain at the Village of Kaktovik, pursuant
to an act of Congress.
Let me summarize my constituents' specific interests in the Coastal
Plain.
a. Tax Base, Public Services and Local Government
Prior to the discovery of Prudhoe Bay in 1968, there was no tax
base on the North Slope and no effective means to provide essential
public services to the Inupiat people. Sewage service was by ``honey
bucket.'' Ice was hauled by dog sled from lakes for household water.
Children were sent to Bureau of Indian Affairs (BIA) high schools
thousands of miles away. There was little to no medical care. Fire and
police protection did not exist. Electrical services were unreliable.
Communication with persons and communities outside of the Borough was
sporadic. Housing conditions were very poor. The cost of food and many
other essentials was significant. Our people only managed to survive by
their wits, by barter, by subsistence hunting, and by continuing the
Inupiat tradition of ``sharing.''
Prudhoe Bay's discovery brought major changes. These changes
included, for the first time, jobs, economic activity, a tax base, and
an opportunity to establish a local government. We established the
``North Slope Borough'' in 1972 to address our need for vital public
services
b. Uncertain Economic Future
Oil development in the Arctic has improved the quality of life of
the people of the North Slope in many ways. But our future is still
very uncertain. Prudhoe Bay's oil production began in 1977. Oil
production peaked at over 2.1 million barrels per day in 1988, but is
now in decline and down to about 1.2 million barrels per day.
Already, we are seeing job opportunities disappear as oil
production declines and many oil industry activities are down-sized,
consolidated and reduced to ``maintenance'' level operations.
New oil prospects need to be opened to attract exploration capital
and extend the economic life of the Trans Alaska pipeline for 30 years
or more. If discoveries are not made soon, we will see our tax base
further eroded. This means the minimal public services that the Eskimo
people enjoy today will have to be cut back.
Without Congressional action, the economic opportunities for the
people of the North Slope will decline, and our nation's dependence on
high cost OPEC oil will grow.
4. Nation's Best Oil and Gas Prospect
If Congress adopts a National Energy Policy that opens the Coastal
Plain to oil and gas exploration and development--we see a brighter
future for all of Alaska's Native people, for the State of Alaska, and
for the nation. This future could mean as many as 250,000 to 735,000
new jobs in all fifty states; an increase in our gross national product
of $50 billion; a major reduction in the $100 billion annually we now
spend for imported oil; and a significant source of new revenue to
reduce the Federal deficit.
No one disputes that the Coastal Plain is the nation's best
prospect for major new oil and gas reserves. Government and private
geologists are in agreement here. They have identified 26 separate
major oil and gas prospects in the Coastal Plain. This does not
necessarily mean Prudhoe Bay's 10 billion barrel discovery will be
repeated. But it does mean that the potential is there for both another
giant oil discovery and for many smaller oil fields.
Domestic oil companies are willing to commit additional resources
and capital to areas on the North Slope with high potential. But,
absent authorization for leasing in prime areas such as the Coastal
Plain, these resources and jobs will be allocated to major prospects in
other countries.
5. Precedent for Development
Opening the Coastal Plain to leasing does not set new a precedent.
Prudhoe Bay and other fields next to the Coastal Plain were leased
forty years ago. They have produced as much as 25 percent of the
nation's oil production since 1977. This production has been occurred
safely, with no harm to the environment, the land, the wildlife, or to
Native subsistence users.
The Department of the Interior and the Mineral Management Service
has had an aggressive Beaufort Sea OCS leasing policy in offshore
waters adjacent to the Coastal Plain for more than two decades. The
State of Alaska has been leasing lands within the three mile limit--
some areas touching the shore of the Coastal Plain--for years. Wells
are being drilled in these waters and discoveries are being made. Yet,
the environmental dangers presented by development in these icy,
turbulent, wind-driven waters far exceed any conceivable risk of
development in the flat onshore Coastal Plain.
6. Support for Specific Legislative Provisions and Regulations
a. Impact Aid for North Slope Communities
The Borough supports the provisions of the Energy Security Act of
2001, that recognize the need for ``impact aid'' for Kaktovik Village
and the North Slope Borough to provide essential infrastructure and
necessary social services. A decision to open this area will greatly
increase visitor traffic and other social pressures on this small
Village. The people who live there support oil development, but they
want to retain their privacy, their culture and their character as a
traditional subsistence Eskimo community. With advance planning and
impact aid, both the Borough and Kaktovik can play an important role in
meeting the legitimate needs of the industry and government in
connection with Coastal Plain exploration and development. The impact
aid provision should also be made available for any other community
that might be affected by leasing and development.
Land Use and Environmental Provisions
I have carefully watched oil development on the North Slope. In the
1960's, like many of my people, I had concerns, about the social and
cultural impact of development. Thirty years of experience demonstrate
that our initial fears were unfounded. A quality environment and
healthy stocks of fish and wildlife are compatible with responsible oil
development. Our lands remain pristine. Our subsistence lifestyle has
not been adversely impacted. The Central Arctic caribou herd at Prudhoe
Bay is larger than ever--3,000 in 1972 and as high as 24,000 in recent
years--and thriving.
The footprint of oil development is constantly decreasing in size.
Technology has made major gains. Horizontal drilling means more wells
are able to reach out much farther from small drilling pads. Better
land use planning consolidates common facilities. Gravel roads are
being replaced by winter ice roads and drill pads which melt without
leaving a trace of man's activity.
These gains did not happen by chance. They are the product of
regulation and hard work by an industry that is constantly being pushed
by the Borough, by the State of Alaska and by the Federal government.
The regulatory objective is to produce the oil we need more efficiently
with fewer and fewer impacts on the land, the environment, fish and
wildlife and the subsistence activities of the people of the North
Slope.
The Borough recommends that Coastal Plain leases incorporate the
state- of-the-art lease provisions approved by the Department of the
Interior in the recent National Petroleum Reserve-Alaska (NPR-A) lease
sale.
7. Wildlife in the Coastal Plain
Mr. Chairman, there are those who oppose leasing and advocate
designation of the Coastal Plain as Wilderness. They have advanced a
wide range of shifting arguments over the years. In recent times, they
have turned their arguments on the need to protect the Porcupine
Caribou herd.
My people are subsistence hunters. We live on the North Slope. We
give priority to the need to protect all forms of fish and wildlife.
This includes caribou. Fortunately, we know how to do this. Prudhoe Bay
demonstrates compatibility with the Central Arctic Herd. It also
demonstrates years of caribou-friendly planning and operational
experience.
The caribou is a very adaptive animal. The Canadians showed us this
when they drilled fifty or more oil wells just east of the Coastal
Plain over the past twenty-five years. They also demonstrated this when
they constructed the Dempster Highway through the heart of the range of
the Porcupine Caribou herd.
There are many known and proven ways to explore for and develop oil
fields in ways that are compatible with caribou. These included raised
pipelines and covered ramps to assist pipeline crossing; seasonal
closing of exploration during the short calving season; and
concentrating year round activities such as maintenance facilities in
areas least used by caribou and other wildlife.
8. Alaska Federation of Natives' Support
The Alaska Federation of Natives (AFN), the state-wide organization
of Alaska's Native institutions, is on the record in support of leasing
the Coastal Plain. AFN supports leasing in the Coastal Plain for
reasons that are very important to Alaska's Native Americans. Over 80
percent of our State's revenues for education, medical care, public
sanitation and other programs come from taxes and royalty on North
Slope oil. North Slope oil provides many of the jobs for Native people
and much of the economic activity that is essential to Native-owned
businesses and our State economy.
Many of Alaska's rural native villages lag behind urban areas in
employment, public services and opportunity. Closing this gap requires
the resources that North Slope oil and gas and the Coastal Plain can
provide.
9. Local Opposition
In recent years The Gwich'in Steering Committee has been vocal in
opposition to Coastal Plain development. I want to make a couple of
points about this opposition.
First, I do not believe the Steering Committee represents the views
of the majority of the Athabascan Indians who live in the interior of
Alaska or of Doyon, Ltd., their Regional Corporation. A major Doyon
business enterprise owns and operates the rigs used in drilling North
Slope oil wells.
Second, in 1980 the Gwich'in tribe leased all of their 1.8 million
acres of land on the Venetie Indian Reservation. This oil and gas lease
was sold to the Rouget Oil Company for $1.8 million.
Third, this oil and gas lease, which was recorded as a matter of
public record, did not contain any provisions to protect the Porcupine
Caribou herd that often passes through the reservation during its
annual migration.
Fourth, after the expiration of the original oil and gas lease, the
tribal government for the 350 residents of the two Villages on the
Venetie Reservation again advertised and offered to lease all of their
1.8 million acres of land to any other oil company.
Fifth, a number of the present members of today's Gwich'in Steering
Committee were among the officials who signed the oil and gas leases as
well as the subsequent offer to lease.
The Inupiat people want what the Gwich'in people have already had.
We want the opportunity to have the economic benefit of developing our
private lands at Kaktovik Village. We also believe that the public land
area of the Coastal Plain should be developed for its highest and best
use--oil and gas. This will benefit the American public and all
residents and Native people in Alaska.
10. The NPR-A Precedent
The Clinton Administration prepared a comprehensive EIS and
conducted an in-depth review of all issues associated with the 1998
decision to lease 5 million Northeast portion of the (NPR-A). As a part
of this review, then-Secretary of the Interior Babbitt personally
visited the North Slope. He camped out, ran rivers and toured NPR-A. He
also visited the new Alpine oil field near our Village of Nuiqsut, west
of the Kuparuk field. The former Secretary Babbitt reviewed the latest
in land use plans, saw the newest oil field technology, and weighed the
benefits of development against the environmental impacts within NPR-A.
The former Secretary also visited subsistence hunting and fishing
camps and dined on Native food in a subsistence camp site. He learned a
good deal about Native culture, the subsistence life style, and Native
knowledge about our land and wildlife resources. According to press
reports, the former Secretary Babbitt enjoyed his time at the camp.
Subsequently, former Secretary Babbitt approved the lease sales and
exploration and development in the Northeast NPR-A. This approval
reflected scientific judgments in the Department about the
compatibility of oil development in NPR-A with wildlife, environmental,
and subsistence values. The Secretary personally weighed the evidence.
We believe he made the right decision. And the Nation will benefit.
It is important to recognize that the same careful land use
planning and new technology used at Alpine, in partnership with the
State of Alaska and Native Corporations, and at other new fields and in
the NPR-A, would also be used in the Coastal Plain. The differences are
that:
<bullet> LThe Coastal Plain's wildlife, environmental and scenic
values are not as significant as the Northeast NPR-A's values;
<bullet> LThe oil and gas potential of the smaller Coastal Plain
area are, according to geologic studies, greater than the potential of
the Northeast NPR-A; and
<bullet> LMost land-based subsistence activities of the Inupiat
people on the North Slope occur within the NPR-A, where the majority of
our people live.
I urge the Bush Administration, this Committee, and Congress to
look at the Coastal Plain on the merits. If they apply the same
standards that were applied in opening Northeast NPR-A, they should
support legislation to open the Coastal Plain.
11. CONCLUSION
Mr. Chairman, I appreciate the opportunity to present the North
Slope Borough's views. Development of the Coastal Plain is of critical
importance to our children's future and maintaining our culture.
We strongly urge the Committee to adopt energy legislation to open
the Coastal Plain to a carefully regulated, environmentally sensitive
program of leasing, exploration and development. Thank you.
______
The Chairman. Mr. Hood?
STATEMENT OF JERRY HOOD, INTERNATIONAL BROTHERHOOD OF
TEAMSTERS, WASHINGTON, DC
Mr. Hood. Mr. Chairman, I am Jerry Hood. I serve as special
assistant to the general president for the International
Brotherhood of Teamsters on energy. I am also the principal
officer of local union servicing the entire State of Alaska.
I am here today in both my roles on a local level and an
international level to convey our support and general president
Hoffa's support for the Energy Security Act that you have
introduced today.
I am going go abbreviate my comments due to the length of
the hearing today. I would ask that my written statement be
entered in the record.
Mr. Young. Without objection.
Mr. Hood. I would like to clarify some misconceptions
Congressman Markey brought forward with regard to the red dot.
The drillers didn't submit that mousepad to the Members of
Congress. It was not Arctic Power that submitted the mousepad
to the Members of Congress with the red dot. It was the
Teamsters.
And we take umbrage, as well as Mr. Markey did, to some of
the distortions that take place when discussions of development
of the Coastal Plain of ANWR take place.
Everywhere I go, I see pictures of beautiful mountains and
caribou on those mountains and saying that we are going to
drill there. That is not true. We are not going to drill in
those mountains.
We are going to drill on the Coastal Plain section 1002
that was designated by Congress for that purpose because of its
potential for oil and gas contribution to America's energy
independence.
Alaskans have a 30-year history of prudent, safe, sound,
environmentally responsible oil development in our state. We
think that the same attitude can be accomplished in the Coastal
Plain of ANWR as well with the technology that exists today.
There is a group of people in Alaska that were
environmentalists long before there were bullet faxes, mail
solicitations, and phone banks. They have cared for that land
for centuries. They are the Inupiat Eskimos.
They live off that land. They don't have 7-11 stores. They
don't have Safeway stores to go buy groceries. That land is
their grocery store.
And I submit to you, Mr. Chairman, that if there was a
chance that this land would be destroyed, it would decimate
their subsistence lifestyle, and they would not be here today
supporting this issue.
So I think it is a native rights issue. They own 92,000
acres of land within the Coastal Plain. That is private land
that they cannot touch unless Congress says they can. And I
think that is an important consideration for this Committee and
this Congress as well.
OPEC has been mentioned, the importation of foreign oil. Up
until recently, we imported 700,000 barrels of oil a day from
Iraq. At the same time, our military forces have put their
lives on the line defending the no-fly zone for what purpose?
To protect that foreign source of oil for this country.
The money we spend in Iraq goes to build missiles and
chemical weapons that are aimed at our allies, Israel. That
doesn't make a whole lot of sense to me or the members that we
represent.
We represent 600,000 truckers across this country that
deliver 80 percent of the freight. They depend on a reliable
and dependable and affordable source of fuel for their trucks.
It was mentioned in earlier testimony that some of those
truckers have gone out of business because they couldn't
compete in the marketplace. We are messing with an
infrastructure in our country, the delivery of freight, that is
going to have severe ramifications on each and every American,
not just those of us in Alaska that support this issue.
So while many may consider a vote for this bill as a vote
for the big, bad oil industry, I see it as something else. I
see it as a vote for increasing the United States energy
independence. I see it as a vote for national security. I see
it as a vote to support oil production where it is done using
the most environmentally sensitive methodology in the entire
world. I see it as a vote for American rights. I see it as a
vote to keep the power on in 12,000 low-income Maryland homes
that was just reported Sunday that they may lose their
utilities because they can't afford to pay their bills.
But most importantly, I see it as an opportunity to put
Americans, and specifically Teamsters, to work. When we have
lost 400,000 jobs since the first of the year in this country--
good-paying jobs, not service sector jobs but high-tech, high-
skilled and well-paying jobs--we have lost 500,000 jobs in the
oil industry over the last decade, many of whom were Teamster
members and many of whom were the members that I represent in
the State of Alaska.
So I urge the support this legislation. Thank you.
[The prepared statement of Mr. Hood follows:]
Statement of Jerry Hood, Special Assistant to the General President for
Energy, International Brotherhood of Teamsters
Mr. Chairman and Members of the Committee:
My name is Jerry Hood, Special Assistant to the General President
for Energy at the International Brotherhood of Teamsters and Principal
Officer of Teamsters Local 959 in Alaska. In my roles as a Teamster
official at the local and international levels, I am here today to
convey the support of my union, its 1.5 million members, and our
General President James P. Hoffa, for the House ``Energy Security
Act.''
However, my support of this legislation does not end with my union
affiliation. As a consumer, as an Alaskan, and as a father, I urge you
to vote for the ``Energy Security Act.''
As a consumer, I support this bill. While some opponents of
increasing energy supply would like you to believe that there is no
energy crisis, the evidence is incontrovertible. This past winter,
working families from central and northeast states were faced with
record high home heating bills. Rolling blackouts have plagued
California for two straight summers. Gasoline prices continue to put
the squeeze on low and middle income Americans, forcing many to cancel
summer vacations.
And, just this past Sunday, the Baltimore Sun ran a story on 12,000
low-income Maryland families who face the very real possibility of
having their utilities cut off. According to the article, these
families are still trying to find a way to pay for their winter heating
bills, due to the fact that the cost of fuel has doubled and tripled
over the previous year.
While the article focuses on metropolitan Baltimore, it also paints
the picture of a growing national crisis. More than four million
households in 19 states face a similar fate--having their power cut off
during the hottest days of summer. The article also notes that low-
income families are hit especially hard by skyrocketing energy costs,
as they tend to spend three times more of their income on energy costs
than medium-income families.
For these consumers--the 12,000 in Maryland and the 4.3 million
nationwide--the energy crisis is more than a subject to be debated on
Sunday mornings. It is a reality that hit them this winter, continues
to haunt them today, and threatens to permanently harm their ability to
provide for their families.
As an Alaskan, I support this bill. For decades, we have been
proving that the need to provide energy for Americans can be balanced
with the need to protect the environment. Since the opening of Prudhoe
Bay in the early 1970's, the State of Alaska played a critical role in
increasing the United States' energy independence--providing, at its
peak, more than 2 million barrels a day. Even with the recent decline
in oil production, Alaska still supplies the country with one fifth of
its domestic oil. And we have accomplished this with minimal impact to
the environment, which is one of the reasons why 75% of Alaskans
support the opening of ANWR.
Alaskan oil is produced using the cleanest, most technologically
advanced, environmentally sensitive methods in the world. We--
Alaskans--set the standard for the industry. This is due, in no small
part, to a group of environmentalists who have played a critical role
in ensuring that we produce oil in Alaska in the most responsible
manner possible. Unlike most environmental groups, this one does not
have an office in Washington, D.C. That is because this group has, for
generations, lived in Alaska, in ANWR, in Section 1002, in the village
of Kaktovik.
This group is the Inupiat--a community indigenous to the North
Slope of Alaska. Long before there were phone banks, blast faxes, or
direct mail solicitations, the Inupiat cared for the land in and around
ANWR. For centuries, the Inupiat have balanced their need to use the
land and its resources with a desire to ensure that those resources
would remain for future generations. With the introduction of oil
production in the 1970's, the Inupiat continued their role as stewards
of the land.
In light of this history, I find it unconscionable that Congress
would prohibit the people of Kaktovik from utilizing the petroleum
resources that lie beneath their own, private lands. However, that is
the reality today. If any member of Congress considers himself or
herself to be an advocate for the native peoples of this country, then
there is only one option--give the Inupiat people the right to use
their lands to provide for their families. I ask you--Who in this room
could possibly believe that he or she is more qualified than the
Inupiat on the issue of protecting the North Slope of Alaska?
As a father, I support this bill. The United States is increasingly
dependent on foreign nations for its energy needs. Our dependence on
foreign oil, in particular, leaves us vulnerable to the whims and
machinations of unscrupulous foreign nations.
Earlier this year, Iraq was supplying 700,000 barrels of oil to our
country every day and using the revenues to buy chemicals, missiles,
and other weapons of mass destruction that are designed for use against
our allies--particularly Israel. At the same time, United States
military personnel put their lives on the line every day to enforce the
no fly zone, all because of our need to protect the oil supply in the
region. This makes no sense.
Even nations that are not preparing for war against our allies do
not hold paramount the effect of oil pricing on our national security.
Their chief concern, of course, is profit. OPEC unabashedly holds back
supply in order to keep prices high; as our domestic energy supplies
decrease, so does our ability to respond to this price fixing.
Today, we are dependent on foreign nations for more than 50% of our
oil supply. While this may not seem that dire under current
circumstances, it will become a real problem in a time of crisis or
international conflict. We should set, as a minimum, the goal of
decreasing our dependence on foreign oil to less than 50%. While
conservation and efficiency measures can help us in meeting that goal,
it cannot be done without increasing domestic supply. It cannot be done
without the efforts set forth in this bill.
Finally, as a Teamster, I support this bill. Every day, more than
600,000 Teamsters start their day by turning a key to an 18-wheeler, a
bus, a cab, or a delivery van. Two hundred thousand Teamsters work in
industries or for companies that would directly benefit from the
opening of ANWR. For these men and women, a reliable and affordable
source of petroleum isn't just important--it is critical to their
livelihood.
In addition, the Wharton Econometrics Institute estimates that
opening ANWR will create 735,000 jobs throughout the United States.
Many of these jobs will be in the energy industry, which is among the
most unionized industries in the country. We estimate that over 25,000
of those jobs will go to Teamsters--in direct oil production related
jobs alone. The potential to create jobs--good paying, secure jobs with
decent benefits--is overwhelming.
However, this is not just about job creation; it is about job
preservation. In the last decade, more that 500,000 jobs have been lost
in the domestic oil and gas industries. Many of those were Teamsters
jobs. Many of those were members of my local. In every industry, the
jobs losses are mounting. Already this year, 400,000 jobs have
disappeared from the American economic landscape. If we do not act now
to reinvigorate the economy, particularly the domestic energy industry,
this trend will continue. Congress must act now to reverse it.
In other words, while many of you may consider a vote for this bill
as a vote for the big, bad oil industry, I see it as something else.
I see it as a vote for increasing the United States' energy
independence. I see it as a vote for national security. I see it as a
vote to support oil production where it is done using the most
environmentally sensitive methods in the world. I see it as a vote for
Native American rights. I see it as a vote to keep the power on for
12,000 low income Marylanders.
Most importantly, I see it as a vote to put Americans, including
Teamsters, to work.
For these reasons, I urge you to vote for the ``Energy Security
Act.''
______
The Chairman. I thank you, Mr. Hood.
Mr. Kolton?
STATEMENT OF ADAM MICHAEL KOLTON, ALASKA WILDERNESS LEAGUE,
WASHINGTON, DC
Mr. Kolton. Mr. Chairman and members of the Committee,
thank you for the opportunity to testify on the Energy Security
Act, H.R. 2436.
My name is Adam Kolton, and I am the Arctic campaign
director for the Alaska Wilderness League, a nonprofit
organization based here in Washington, D.C., that serves as a
voice for Alaska's wilderness.
I am pleased to be accompanied today by Ken Whitten, who
was a chief caribou research biologist for Alaska's Department
of Fish and Game for two decades before retiring last year. Ken
will be happy to answer any questions members of the Committee
might have.
Mr. Chairman, we strongly oppose Title V of H.R. 2436 as it
would change the law to mandate oil and gas leasing,
exploration and development in the Arctic National Wildlife
Refuge Coastal Plain, the area that the United States Fish and
Wildlife Service considers the biological heart of the Arctic
refuge.
If enacted, Title V would reverse more than four decades of
environmental progress begun under President Eisenhower, who
had the vision and foresight to protect the northeast corner of
Alaska in 1960. Drilling would drive a stake in the heart of
the wildest place left in America.
Far from a mere footprint, drilling would require hundreds
of miles of roads, pipelines, and other industrial facilities
scattered all across the Delaware-size Coastal Plain.
Critical habitat for vast free-roaming herds of caribou,
denning polar bears, grazing musk oxen, and nesting migratory
birds would be destroyed, and the wilderness values of the last
5 percent of Alaska's North Slope still off-limits for oil
exploration and development would be lost forever.
What is the payoff? Ten years from now, after exploratory
wells and drill pads and airstrips and roads invade this
landscape that William O. Douglas once called ``the most
wondrous on God's Earth,'' we might just tap enough oil to meet
1 percent of our daily demand. Not enough to lower electricity,
home heating oil or gasoline prices for consumers anywhere in
America, and certainly not enough to lessen our dependence on
imported oil.
Of course, drilling proponents argue the opposite. But the
facts are inescapable. With less than 3 percent of the world's
oil reserves, we cannot drill our way to energy independence.
Recall that when Alaska's Prudhoe Bay oil field came online
in 1977, average United States gasoline prices nearly doubled
within 4 years. And if one looks at realistic estimates from
the United States Geological Survey, the Arctic refuge is
unlikely to produce anything close to that giant field.
Mr. Chairman, with your permission, I would like to submit
for the record a new report by an Alaskan economist that puts
in better perspective the USGS numbers in terms of what is
economically recoverable from the refuge.
The Chairman. Without objection.
[The report has been retained in the Committee's official
files.]
Mr. Kolton. Thank you.
If the Energy Information Agency is right about oil prices
in 2010, roughly 3.2 billion barrels of oil will be
economically recoverable from the refuge.
Far from the only option for increasing Alaska oil
production, even the industry projects having enough oil from
lands already open to development to keep the Trans-Alaska
pipeline flowing with oil for at least another three decades.
What about creating jobs or helping to address California's
needs? We do not oppose a new natural gas pipeline, provided it
complies with environmental laws and stays within existing
right-of-way corridor, such as the Alaska and Alcan Highways.
But let's be clear: Government estimates demonstrate that
there is five times the amount of natural gas outside the
refuge, elsewhere in the North Slope, than might exist in it.
Of course, before any major new projects are undertaken, we
would like to see the industry clean up the mess it has already
made. More than 55 contaminated waste sites and 250 reserve
pits litter the North Slope; 400 spills of diesel crude oil,
acid seawater, and other substances have been occurring each
year.
Like the more than 500 scientists who recently wrote
President Bush to oppose drilling in the Arctic refuge, we do
not believe it is possible to explore, drill and produce oil
from the Coastal Plain without undermining its incomparable
wildlife and wilderness values.
Still, with this being the goal to Title V, it is
remarkable how little its specific provisions would do to limit
the damage to the Coastal Plain. Among other things, the bill
eviscerates National Environmental Policy Act, gives the
Secretary the discretion to allow drilling during critical
wildlife cycles, allows the industry to drain the Coastal
Plain's scarce supplies of freshwater, places no limitations on
intrusive seismic exploration, and fails to ban gravel mining
or even permanent road construction.
We respectively urge the Committee to reject Title V of the
Energy Security Act. History, our children, and our
grandchildren will judge us well if we have the courage and
foresight to leave this incomparable national treasure alone.
Thank you for the opportunity to testify.
[The prepared statement of Mr. Kolton follows:]
Statement of Adam Kolton, Arctic Campaign Director, Alaska Wilderness
League
Mr. Chairman, Congressman Rahall, and members of the committee,
thank you for the opportunity to testify on the ``The National Energy
Security Act (NESA) of 2001.'' My comments focus on Title V of the
legislation, which would authorize exploration and development of the
Coastal Plain of the Arctic National Wildlife Refuge in Alaska.
My testimony has been endorsed by the Alaska Center for the
Environment, the Alaska Conservation Alliance, the Alaska Chapter of
Sierra Club, and Trustees for Alaska. It has also been endorsed by the
Alaska Coalition, which is made up of more than 500 conservation,
sporting, religious and other public interest groups representing
millions of Americans.
SUMMARY
We oppose Title V of NESA as it would change the law to allow oil
and gas exploration and development in the Arctic National Wildlife
Refuge. The Arctic Refuge is America's greatest wilderness, protecting
more abundant and diverse wildlife than any area in the circumpolar
north. The U.S. Fish and Wildlife Service considers the 1.5 million-
acre Coastal Plain, the area now targeted for prospective oil and gas
development, to be the ``biological heart'' of the entire refuge and
its ``center of wildlife activity.'' The Coastal Plain also represents
the only five percent of Alaska's North Slope that is protected, by
law, from oil and gas exploration or development. In short, we firmly
believe the Arctic National Wildlife Refuge is unique, not only to
Alaska, but to the world, and should remain as it has since President
Dwight Eisenhower first protected the northeast corner of Alaska in
1960, free of industrialization.
I. POLITICAL HISTORY OF THE ARCTIC NATIONAL WILDLIFE REFUGE
Some have argued that the Coastal Plain--the so-called ``1002
Area''--was expressly set aside for its oil and gas potential. This
claim relies primarily on the fact that Congress failed to designate
the area as Wilderness in ANILCA and, in the same law, authorized
limited, one-time seismic studies of the area's energy potential.
<SUP>1</SUP> This argument ignores the purposes for which the area was
originally protected and the real history of ANILCA.
---------------------------------------------------------------------------
\1\ Alaska National Interest Lands Conservation Act, Section 1002,
16 USC 3143
---------------------------------------------------------------------------
Research and field studies by government and independent scientists
in the 1930's, 40's and 50's led the Department of the Interior to
recommend that the Northeast corner of Alaska be protected as part of a
new conservation area. In response, in 1960 President Dwight Eisenhower
urged Congress to pass legislation preserving this ``priceless''
wilderness of the Arctic. <SUP>2</SUP>
---------------------------------------------------------------------------
\2\ Special Message to the Congress on the Legislative Program, May
3, 1960.
---------------------------------------------------------------------------
Eisenhower's Arctic Wilderness Bill. In sending Eisenhower's Arctic
Wildlife Range legislation to the Congress, Secretary of the Interior
Fred A. Seaton singled out this 9-million-acre area as ``biologically
irreplaceable land,'' explaining that it ``offers the only opportunity
for this Nation to preserve an undisturbed portion of the Arctic large
enough to be biologically self-sufficient.'' <SUP>3</SUP>
---------------------------------------------------------------------------
\3\ ``Secretary Seaton Sends Arctic Wildlife Range Bill to
Congress,'' U.S. Department of the Interior press release, May 1, 1959.
---------------------------------------------------------------------------
Eisenhower's Arctic wilderness legislation proposed to establish
the area ``in order to preserve, in the public interest, a magnificent
wildlife and wilderness area.'' <SUP>4</SUP> Thus, as a matter of
conservation history, Eisenhower's Arctic Wildlife Range bill was the
first legislation ever proposed by a president explicitly linking
preservation of wilderness habitat to the achievement of wildlife
refuge goals--an ecologically-enlightened concept now accepted as
fundamental to preserving complex communities of wildlife species
which, as Seaton said, ``require a sizeable unrestricted range''.
---------------------------------------------------------------------------
\4\ Section 1 of draft legislation to authorize the establishment
of the Arctic Wildlife Range, Alaska, as transmitted with a covering
letter from Fred. A. Seaton to Hon. Sam Rayburn, April 30, 1959
(emphasis added).
---------------------------------------------------------------------------
Stressing that the purpose of the Range would be the preservation
of ``wildlife and wilderness values,'' Seaton stressed that use of the
area for other purposes would be ``permitted in a manner that would not
impair the intent of this legislation.'' With extraordinary foresight,
Seaton told Congress ``
Looking ahead 50 years to the unfolding story of Alaska's
development, it is clear that the only economically feasible
opportunity for maintaining a wilderness frontier large enough for the
preservation of the caribou, the grizzly, the Dall sheep, the
wolverine, and the polar bear, all of which require a sizeable
unrestricted range, lies in this northeastern Arctic region of the
State''.
For the wilderness explorer, whether primarily a fisherman, hunter,
photographer, or mountain climber, certain portions of the Arctic coast
and the north slope river valleys, such as the Canning, Hulahula,
Okpilak, Aichilik, Kongakut, and Firth, and their great background of
lofty mountains, offer a wilderness experience not duplicated elsewhere
in our country. <SUP>5</SUP>
---------------------------------------------------------------------------
\5\ Fred A. Seaton to Hon. Sam Rayburn, April 30, 1959,
transmitting draft legislation to authorize the establishment of the
Arctic Wildlife Range, Alaska.
---------------------------------------------------------------------------
Senate Failed to Act, So Eisenhower Used Executive Authority to
establish the Arctic Wildlife Range
In one of its proudest achievements for conservation, the House of
Representatives passed Eisenhower's bill to establish the Arctic
Wildlife Range in February 1960. However, opposition from Alaska's
senators blocked any Senate action on the bill. In response, Eisenhower
instructed Secretary Seaton to use executive authority to protect the
area.
Eisenhower's Public Land Order Establishes the Wilderness Refuge.
On December 6, 1960, as instructed by Eisenhower, Secretary Seaton
issued a Public Land Order establishing the Arctic National Wildlife
Range ``by virtue of the authority vested in the President'' ``for the
purpose of preserving unique wildlife, wilderness and recreational
values.'' <SUP>6</SUP> In a press release, Secretary Seaton explained:
``In these circumstances I felt it my duty, in the public interest, to
move as promptly as possible to take the steps administratively which
would assure protection and preservation of the priceless resource
values contained in the proposed Arctic National Wildlife Range.''
<SUP>7</SUP>
---------------------------------------------------------------------------
\6\ Public Land Order 2214, December 6, 1960, 25 Fed. Reg. 12598
(emphasis added). The Secretarial Order was based on an application
from the Bureau of Sports Fisheries and Wildlife, November 18, 1957. A
notice of this application was published in January 1958, explaining
that ``The applicant desires the land for an Arctic Wildlife Range for
the preservation of the wildlife and wilderness of northeastern
Alaska.'' 23 Fed. Reg. 364.
\7\ ``Secretary Seaton Establishes New Arctic National Wildlife
Range,'' U.S. Department of the Interior press release, December 7,
1960.
---------------------------------------------------------------------------
Quid Pro Quo Opens Other Federal Lands to Oil Development. At the
same time, Seaton lifted withdrawals on approximately 20 million acres
of North Slope federal lands to the west of the new Arctic Wildlife
Range. An assistant to Secretary Seaton acknowledged that the opening
of the federal lands to the West for state selection and potential oil
development was a quid pro quo for leaving the new Arctic Wildlife
Range undeveloped. <SUP>8</SUP> Large portions of those lands were soon
selected by the State of Alaska under its statehood grant and became
the site of the extensive petroleum operations in the Prudhoe Bay area.
---------------------------------------------------------------------------
\8\ ``Some of the very interests [conservation groups in Alaska and
nationally] which are pressing for the establishment of this area [the
Arctic Wildlife Range] have withstood or resisted the attempts to
restore this Public Land Order 82 area [west of the Range] to public
domain previously. We think that this [establishment of the Wildlife
Range] is a confidence-building factor as we move step by step to
demonstrate to these people who are so interested in the preservation
of some conservation lands in Alaska.'' U.S. Congress, Senate, Arctic
Wildlife Range--Alaska, Hearings before the Merchant Marine and
Fisheries Subcommittee of the Committee on Interstate and Foreign
Commerce on S. 1899, a bill to authorize the establishment of the
Arctic National Wildlife Range, Alaska, and for other purposes, 86th
Congress, 1st Session, 1959.
---------------------------------------------------------------------------
Expanding the Arctic Refuge and Further Protecting the Arctic Coastal
Plain
As was common at the time, the original Wildlife Range was viewed
as a multiple purpose area, but other uses--such as mineral leasing--
were secondary to ``a primary purpose of providing permanent habitat
for Arctic wildlife.'' Since 1960 we have learned much more about the
complex and fragile wilderness ecosystem, and ever greater value has
been placed on the preservation of the totally unmarred wilderness of
the Arctic Refuge.
In what was to become a pattern, the Alaska congressional
delegation strongly opposed the Eisenhower Administration's
establishment of the Arctic National Wildlife Range. In a statement
that was to prove prophetic, Secretary Seaton noted that while Congress
could override his Public Land Order, ``I cannot believe that such
action would be taken in view of the unparalleled wildlife, wilderness
and scenic values involved in the new range.'' <SUP>9</SUP> Indeed, in
subsequent decades, Congress--led by the House of Representatives--has
repeatedly strengthened the protection of the Arctic Range.
---------------------------------------------------------------------------
\9\ ``Secretary Seaton Establishes New Arctic National Wildlife
Range,'' U.S. Department of the Interior press release, December 7,
1960.
---------------------------------------------------------------------------
Alaska National Interest Lands Conservation Act of 1980 (ANILCA).
In 1971, President Richard Nixon signed the Alaska Native Claims
Settlement Act (ANCSA), which also set in motion comprehensive studies
of federal lands in Alaska that might be given stronger conservation
protection. As a result of these studies, developed during the
administrations of Presidents Nixon and Gerald Ford by Secretary Rogers
C.B. Morton, in 1980 the Congress and President Jimmy Carter doubled
the size of the Range through ANILCA. Most of the core Refuge area
originally set aside by President Eisenhower in 1960 was further
protected as an 8-million-acre statutory wilderness pursuant to the
1964 Wilderness Act. Thus, as the heritage of great bipartisan effort
over more than four decades, with particular leadership from the House
of Representatives, today we have the 19-million-acre Arctic National
Wildlife Refuge.
The Arctic Coastal Plain. In the 1980 law, a portion of the Coastal
Plain of the original Eisenhower wildlife range was not designated as
Wilderness, but the wildlife and wilderness values--having been so
strongly supported in the House passed version of the bill, were given
the next best thing: a prohibition on commercial oil leasing,
exploration, development and production that could only be reversed by
a future Act of Congress. <SUP>10</SUP> Furthermore, the Coastal Plain
area was withdrawn from mining and mineral leasing laws. <SUP>11</SUP>
This is the area that continues under debate today.
---------------------------------------------------------------------------
\10\ ANILCA, Section 1003.
\11\ ANILCA, Section 1002(i).
---------------------------------------------------------------------------
It is worth noting that the House of Representatives overwhelmingly
passed full statutory wilderness protection for the Coastal Plain in
1978 and again in 1979. The Senate had been poised to do the same, but
negotiations led to the compromise language that expressly prohibited
oil development on the Coastal Plain. While authorizing further study
of the area's oil potential, the legislation also required an
assessment of its wildlife and wilderness values--oil was certainly
given no preference. In neither the proclamation establishing the
Arctic Wildlife Range nor in ANILCA were the purposes of the Coastal
Plain defined to include oil exploration and development. Given that
the Coastal Plain was part of Eisenhower's original Range and that
ANILCA only strengthened statutory protections for the area, it is not
reasonable to conclude, as some have, that the Coastal Plain was set
aside for its energy resources.
II. WHY THE COASTAL PLAIN MERITS PERMANENT PROTECTION
Nowhere else in Alaska's Arctic are the mountains and glaciers of
the Brooks Range as dramatically close to the coastline as in the
Arctic Refuge. Looking back across the Coastal Plain from the shoreline
of the Beaufort Sea, the mountains lie only ten to forty miles away.
Farther west, near the oil fields at Prudhoe Bay and the National
Petroleum Reserve, the mountains are between 100 and 200 miles in the
distance. Those who surveyed Alaska's Arctic in the last century
determined that the Northeast corner of the state provided the best
opportunity to protect a complete range of arctic and sub-arctic
ecosystems. It was the only place where, in one conservation system
unit, America's northernmost forest, the highest peaks and glaciers of
the Brooks Range, and the barrier islands, lagoons, braided rivers, and
rolling tundra of the Coastal Plain could be protected.
Some have sought to belittle the wilderness values of this area,
noting that it is ``flat'' and ``treeless.'' Yet, the Reagan
Administration's 1987 Arctic National Wildlife Refuge Coastal Plain
Resource Assessment Report concluded that the area ``has outstanding
wilderness qualities: scenic vistas, varied wildlife, excellent
opportunities for solitude, recreational challenges, and scientific and
historic values.'' The Reagan report also determined that, with the
exception of two abandoned DEW (Defense Early Warning) line sites along
the coast, the entire Coastal Plain meets the criteria under the 1964
Wilderness Act. During the summer of 2000 the buildings and
infrastructure from these sites was removed.
Wilderness designation of the Coastal Plain will ensure that at
least one portion of Alaska's North Slope will forever remain free from
industrialization. Because of the primary ecological value of the
Coastal Plain to the remainder of the Refuge as well as the adjacent
lands in Canada (some of which are protected as National Parks), it is
imperative that the strongest protection be given to this very special
area.
Wilderness designation of the Coastal Plain will also afford
permanent protection to the greatest abundance and diversity of
wildlife along Alaska's arctic coast. More than 200 species call the
Coastal Plain home, including musk oxen, polar bears and grizzlies,
wolves and wolverines, and migratory birds that fly to or through four
continents and nearly every state.
Most notably, the Coastal Plain is the site of one of our
continent's most awe-inspiring wildlife spectacles: the annual
gathering of nearly 130,000 caribou. Each year, the Porcupine (River)
Caribou Herd migrates 1,400 miles across Alaska and Canada, typically
arriving on the Coastal Plain in late May where the females give birth
to as many as 50,000 calves. Even in the rare years when the Porcupine
Herd has calved in Canada because of snow conditions, the herd has
always moved west to the Arctic Refuge Coastal Plain for the post-
calving season. The desirable coastal habitat has served as a
birthplace and a nursery ground for these caribou for centuries.
While there are larger herds of caribou in Alaska, none calve in so
restricted an area as the Porcupine Herd. The relatively narrow Coastal
Plain has fewer predators and far better foraging opportunities than
the adjacent Brooks Range and provides extremely favorable insect
relief habitat due to its close proximity to the Beaufort Sea and
lagoons.
No other caribou herd in North America is subject to international
treaty obligations, and no other herd is as heavily relied upon by
native people for sustenance and as a central part of their culture.
The Gwich'in people of Alaska and Canada have settled in 15 villages
along the migratory route of the herd. In some of their communities, up
to 80 percent of their diet comes from caribou and other wild meat.
The United States is also party to an agreement on the conservation
of polar bears. That treaty obligates our nation to protect polar bear
ecosystems with special attention given to denning and feeding sites.
The Coastal Plain has the highest density of land-denning polar bears
on Alaska's North Slope.
BIPARTISAN SUPPORT FOR WILDERNESS DESIGNATION
Several years after passage of the 1980 Alaska Lands Act,
Representative Morris K. Udall (D-AZ) introduced legislation to
designate the Coastal Plain as Wilderness. Senator William Roth (R-DE)
introduced a companion measure in the Senate. This year,
Representatives Ed Markey (D-MA) and Nancy Johnson (R-CT) are
sponsoring that same legislation, now named the Morris K. Udall
Wilderness Act (H.R. 770). Together with its Senate companion measure
sponsored by Senator Joseph Lieberman (D-CT), H.R. 770 has more
bipartisan cosponsors than any other wilderness proposal before this
Congress.
In simple fairness, we urge the Committee to hold hearings on this
legislation and provide an opportunity for its consideration when the
House debates the fate of the Arctic National Wildlife Refuge in the
coming weeks.
The American people want to see the Arctic Refuge protected for
future generations, not exploited for a short-term supply of oil. In a
recent bipartisan poll conducted by Greenberg Quinlan Research and the
Tarrance Group, 62% of Americans opposed drilling in the Arctic Refuge
while only 34% supported development. Similarly, a new Gallup poll
released last week demonstrated that proposed Arctic Refuge drilling is
the least popular part of President George W. Bush's proposed
``National Energy Strategy.''
III. ARCTIC REFUGE OIL POTENTIAL: A DROP IN THE NATIONAL BUCKET
Policy-makers and the press have used a wide range of numbers to
characterize the potential oil and gas resources of the Coastal Plain.
Although no one can say for sure how much oil and natural gas--if any--
the area may hold, a great deal of information is available from the
U.S. Geological Survey's 1998 report which summarized a three year
analysis of geologic information, re-processed seismic data, results
from nearby test wells, and economic modeling to come up with a range
of projections of the area's oil and gas resources.
As the attached new report, ``Understanding the U.S. Geological
Survey Analysis of Estimated Oil Beneath the Coastal Plain of the
Arctic National Wildlife Refuge,'' prepared for the Alaska Wilderness
League by Dr. Richard Fineberg, <SUP>12</SUP> makes clear, drilling
proponents have significantly exaggerated the area's energy potential.
For example, some have claimed that the Coastal Plain is likely to hold
up to 16 billion barrels of oil. This figure comes from the USGS's 5%
probability-estimate (1-in-20 chance) of finding technically
recoverable oil from an area larger than the actual Coastal Plain (1002
study-area) that includes the adjacent State offshore and Native lands.
The correct 5% (low probability) estimate for technically recoverable
oil from the actual 1002 area is 11.8 billion barrels of oil and the
mean estimate is 7.7 billion barrels. It is important to note, however,
that these estimates do not take into account the costs associated with
producing that oil, or the effects of oil prices on commercial
viability.
---------------------------------------------------------------------------
\12\ The author, Dr. Richard A. Fineberg of Ester (Fairbanks),
Alaska, is an independent analyst who specializes in economic and
environmental issues related to North Slope development and the Trans-
Alaska Pipeline System. A copy of the report may be obtained by
contacting the Alaska Wilderness League.
---------------------------------------------------------------------------
Large oil fields that demonstrate the importance of the distinction
between a technically recoverable resource and an economically
recoverable resource have already been discovered on the North Slope.
One example is the West Sak field near Prudhoe Bay. That field is
estimated to hold approximately 20 billion barrels of heavy oil. Much
of that oil is technically recoverable, but the economics are not
favorable--it would cost too much to produce. To deal with problems of
this nature, it is customary to apply economic analysis to geological
information. USGS followed this customary practice.
The USGS projected that oil prices would have to be sustained at
above $15.30 per barrel (in 1996 dollars) for any oil from the Arctic
Refuge to be commercially viable . Adjusting for inflation, this
translates to $16.53 per barrel in current dollars. While lower than
today's average prices, the Alaska Department of Revenue projects that
average prices in 2010, when Arctic Refuge oil might first be available
(if leasing were approved and oil were discovered), would average
$17.30 per barrel. Adjusting for inflation, this figure equates to
$14.19 per barrel in today's dollars. If the State of Alaska's forecast
is correct, then it's possible that no oil from the Coastal Plain will
be economic to produce.
According to the USGS, at a price of $20 per barrel (in 1996
dollars) the Coastal Plain would likely yield 3.2 billion barrels of
oil or the equivalent of what the U.S. consumes in less than 6 months.
Adjusting for inflation, the price necessary to sustain production at
this level would be $21.60 in 2001 dollars. The Energy Information
Agency forecasts that prices will average $22.12 in 2010, slightly
above the price necessary to yield this amount of oil.
To be sure, oil prices are higher than that today. But the sudden,
unpredicted and precipitous price swings that have characterized world
oil prices for the past three decades have taught the industry the
perils of basing tomorrow's forecast on today's oil prices.
<SUP>13</SUP> Oil executives will tell you that their investment
decisions are not made on today's prices, but on their assessment of
future conditions.
---------------------------------------------------------------------------
\13\ The Future of Oil Prices: The Perils of Prophecy (Cambridge,
MA and Chicago: Cambridge Energy Research Associates and Arthur
Andersen & Co., 1984), p. iii.
---------------------------------------------------------------------------
One of the most important conclusions of the USGS report is that
the geology of the Arctic Refuge Coastal Plain does not favor discovery
of oil in one super-giant field like Prudhoe Bay. In contrast to
previous analyses, USGS now believes that production from the Coastal
Plain is likely to come from approximately five smaller accumulations
that might be discovered among 33 discrete pockets spread out across
the entire Delaware-sized area. In other words, production of mean
estimate volumes would require development of multiple fields across a
wide area, not a mere ``footprint the size of Dulles Airport,'' as some
have suggested.
Proponents of Arctic Refuge oil drilling have not only
mischaracterized the amount of oil that might lie beneath the Coastal
Plain, but the impact this oil might have on energy costs paid by
American consumers and our nation's energy security.
Oil prices are determined principally by global supply and demand,
not the presence or absence of an individual field. Consider the case
of Prudhoe Bay. In 1976--the year before the nation's largest oil field
ever discovered entered production--a barrel of West Texas Intermediate
(WTI) crude oil sold for $12.65 and standard gasoline averaged $0.59
per gallon. Two years later, with Prudhoe Bay adding more than a
million barrels per day to domestic supply, WTI had increased by more
than 15% (to $14.85 per barrel) and gasoline averaged $0.63 per gallon.
During the next two years, as Prudhoe production increased, oil prices
skyrocketed to $37.37, while gasoline nearly doubled, to $1.19 per
gallon. In 1985, with Prudhoe Bay and Kuparuk both operating at full
throttle, a barrel of WTI sold for more than $28 and gasoline averaged
$1.12. <SUP>14</SUP>
---------------------------------------------------------------------------
\14\ ``Price history, crude oil, natural gas and motor gasoline,''
International Petroleum Encyclopedia, 1989 (Tulsa: Pennwell, 1989),
p.337.
---------------------------------------------------------------------------
Similarly, Arctic Refuge oil would do nothing to reduce the price
that consumers pay for gasoline, home heating oil, or electricity. When
Congress lifted a two-decade-old ban on the export of Alaska oil in
1995, the oil companies vociferously argued that there is no connection
between Alaska oil production and prices paid by U.S. consumers. Last
year, British Petroleum made the same argument in its filings with the
Federal Trade Commission during that agency's consideration of its
proposed takeover of Arco.
More egregiously, some have tried to use the current electricity
crisis in California to make the case for oil drilling in the Arctic
Refuge. With less than 1% of its electricity derived from oil,
California would realize no benefit from Arctic Refuge oil. Some have
suggested that natural gas could be produced from the Coastal Plain and
be used for electricity and other purposes. This assertion ignores two
basic facts. First, tapping any natural gas from any part of Alaska
will require the construction of a new pipeline costing $10-15 billion
to which the industry has yet to commit. Secondly, there are between
26-35 TCF of gas already discovered in the immediate vicinity of
Prudhoe Bay compared to the 7 TCF of technically recoverable natural
gas the USGS says might lie beneath the Coastal Plain. <SUP>15</SUP>
---------------------------------------------------------------------------
\15\ John H. Schuenemeyer, ``Assessment Results,'' U.S. Geological
Survey, The Oil and Gas Resource Potential of the Arctic National
Wildlife Refuge 1002 Area, Alaska (Open File Report 98-34, 1999),
Chapter RS, Table RS14.
---------------------------------------------------------------------------
With respect to arguments that drilling the Coastal Plain would
somehow enhance our nation's energy security, I would simply point out
that using any of the realistic USGS estimates of economically
recoverable oil, which range from 0 to 5.2 billion barrels of oil,
Arctic Refuge oil drilling will not curb our nation's dependence on
imports. Since the U.S. has less than 3% of the world's oil reserves
and no prospective provinces that rival the much larger fields of the
Middle East and the former Soviet Union, it is simply not possible for
us to drill our way to energy independence.
By contrast, increasing the average fuel economy of our nation's
cars and sport utility vehicles to 39 miles per gallon would save 15
times the amount of oil that the Coastal Plain might yield. This far
more rational investment would dramatically lower prices for American
consumers and greatly reduce our tab for, and dependence on, imported
oil. Simply requiring that replacement tires on American automobiles be
just as good as those outfitted on new cars would also save more oil
than the Arctic Refuge might hold.
IV. NORTH SLOPE: SIGNIFICANT OIL RESOURCES OUTSIDE REFUGE
As recently as 1995, drilling proponents asserted that the Trans-
Alaska Pipeline System (TAPS) would run dry shortly after the turn of
the century without oil from the Arctic National Wildlife Refuge.
<SUP>16</SUP> These claims looked specious and misleading at the time;
it is now clear how wrong they were. Enhanced oil recovery from
existing fields and discoveries of new ones have prompted the TAPS
owners to predict at least another three decades of Alaska oil
production without drilling the Arctic Refuge or even the National
Petroleum Reserve-Alaska (NPR-A). In the oil companies' application to
renew their State lease and Federal right-of-way grant to operate TAPS,
submitted May 2, 2001, they assume that North Slope production declines
until 2020 but then levels out at 490,000 barrels per day (bpd) through
2034, the end of the proposed lease renewal period. <SUP>17</SUP>
---------------------------------------------------------------------------
\16\ For example, in the forward to the 1995 edition of a booklet
advocating drilling in the Arctic Refuge, Alaska Governor Tony Knowles
wrote, ``According to a 1991 report by the U.S. Dept. of Energy, the
North Slope fields currently using the Trans-Alaska Pipeline are
expected to produce so little oil by the year 2009 that the pipeline
could be abandoned'' (The Arctic National Wildlife Refuge: Its People,
Wildlife Potential, and Oil and Gas Resources [State of Alaska, Arctic
Slope Regional Corporation and North Slope Borough, June 1995]). At the
time the estimate used by the Governor was widely recognized as being
out of date and probably wrong. In a letter to all employees dated Oct.
6, 1994, Alyeska Pipeline Service Co. President David Pritchard told
Alyeska employees that expected investment in existing fields would
keep the Trans-Alaska Pipeline operating until at least 2030. (See:
Alaska Wilderness League, Litany of Lies Nov. 28, 1995, Attachment 1A.)
\17\ L.D. Maxim, ``Trans Alaska Pipeline System Throughput
Analysis,'' Feb. 15, 2001 (draft), in Trans Alaska Pipeline System
Owners, Environmental Report for Trans Alaska Pipeline System Right-of-
Way Renewal [draft], Vol. 2, Appendix A, pp. A-1--A-4 (May 2, 2001).
---------------------------------------------------------------------------
Still, the TAPS owners' report suggests that even these production
levels may be too low. For example, the report notes that rapid
technological progress could result in a higher production level from
existing fields in 2020 of 660,000 bpd; in this case, total production
and production in 2034 could be higher than their baseline level.
The State of Alaska's own estimates confirm these optimistic
projections. The Alaska Department of Revenue forecasts higher
production levels for this decade than the TAPS owners baseline
scenario, declining to 302,000 bpd in 2034. <SUP>18</SUP> According to
the TAPS owners' report, the State's projections ``have consistently
proven to be reliable over the near term ... [but] have proven to be
conservative over the long term,'' and ``successive projections have
generally resulted in upward revisions ... as well as postponement of
the year at which production is expected to fall below a certain
benchmark.'' <SUP>19</SUP>
---------------------------------------------------------------------------
\18\ Alaska Department of Revenue, ``Spring 2001 ANS Production
Forecast--Total Liquids'' (forecast through 2034), provided by Alaska
Dept. of Revenue (calendar year = average of [state fiscal year +
following state fiscal year]); for forecast through 2010 see: Alaska
Department of Revenue Tax Division, ``Historical and Projected ANS
Production,'' Fall 2000 Revenue Sources Book, p. 90 (on-line at State
of Alaska, Dept. of Revenue, Tax Division).
\19\ Trans-Alaska Pipeline System Throughput Analysis, p. A-1. In
this regard, it is interesting to note that the State's current
forecast exceeds its 1996 long-term production estimates by
approximately 18 per cent (author's calculation).
---------------------------------------------------------------------------
Both the State of Alaska and the industry's forecasts indicate that
the North Slope can be expected to produce over seven (7.0) billion
barrels of oil between 2002 and 2034--an average of more than 600,000
barrels per day. The TAPS owners' assumptions result in total
production ranging from 7.1 billion barrels (declining scenario) to 7.8
billion barrels (baseline). With production from known fields and no
production from the Arctic Refuge or NPR-A, the State of Alaska's
production forecast for the same period is 7.7 billion barrels--more
than double what USGS estimates might be produced from the Arctic
Refuge Coastal Plain at oil prices of $21.60 in 2001 dollars.
Recent discoveries in NPR-A and more aggressive development of the
heavy oil deposits near Prudhoe Bay are likely to increase forecast
production and further extend the life expectancy of TAPS.
Last winter, the National Petroleum Reserve-Alaska (NPR-A), to the
west of Prudhoe Bay was the focus of intensive exploration by both
Phillips Petroleum and BP. In May Phillips Petroleum announced the
discovery of what the company believes to be three separate hydrocarbon
deposits in NPR-A. Further evaluation of those discoveries is Phillips'
top priority for next winter's drilling, while the company also plans
additional NPR-A exploration. <SUP>20</SUP> News reports from the North
Slope hint at the potential of the region to the west of the Prudhoe
Bay complex, while the largest discovery in that region to enter
production--Alpine--began producing in November. Said to be one of the
ten largest fields in the United States, Alpine presently accounts for
nearly ten per cent of the North Slope's oil. <SUP>21</SUP> As noted
above, the Alaska Department of Revenue production totals do not
include production from NPR-A.
---------------------------------------------------------------------------
\20\ ``Evaluation of Three NPR-A Discoveries Phillips' Top
Priority,'' Petroleum News Alaska, June 2001, p. A13.
\21\ See: ``Spring 2001 ANS Production Forecast--Total Liquids''
and Petroleum News Alaska, Feb. 2001, p. A24.
---------------------------------------------------------------------------
Another source of potential future production is the large deposits
of heavy oil in the West Sak and Schrader Bluff formations in the
existing Prudhoe Bay complex. These deposits contain an estimated 20
billion barrels of heavy oil. The Alaska Department of Revenue's long-
range forecast includes approximately 740 million barrels of West Sak
and Schrader Bluffs oil--less than four per cent of the total
accumulation. <SUP>22</SUP> The oil in these formations is comparable
in quality to heavy crude oil in production in California; with
production and transportation infrastructure in place, it is possible
that the industry will find a way to bring greater quantities of this
commodity to market. <SUP>23</SUP>
---------------------------------------------------------------------------
\22\ ``Spring 2001 ANS Production Forecast--Total Liquids.''
\23\ Earlier this year, BP Exploration (Alaska) Inc. President
Richard Campbell noted the potential of the West Sak and Schrader Bluff
deposits, which he said contain an estimated 15 billion barrels of
heavy oil that he described as ``cold, viscous and very difficult to
produce.'' According to Campbell, ``our heavy oil production technology
is improving, and some of our recent wells have been very promising.''
He added that recovery of just 10 per cent of that heavy oil ``would be
like finding another Kuparuk,'' the nation's second largest producing
field, just west of Prudhoe Bay (Richard Campbell, ``BP's future in a
word: Growth,'' Petroleum News Alaska, January 2001, p. A1 [guest
editorial]).
---------------------------------------------------------------------------
The oil and gas industry companies that earned record-breaking
profits for the year 2000 include the three major North Slope
producers: BP, Exxon and Phillips Petroleum. An indication of the
strength of these companies can be gleaned from recent Argus Research
Company reports. This independent research company recommends the stock
of all three companies and anticipates that the share price of each
will increase significantly during the next 12 months. <SUP>24</SUP>
Argus is particularly enthusiastic about BP, citing the company's
Alaska trade as a major reason for its optimism.
---------------------------------------------------------------------------
\24\ For a brief rundown of Phillips Petroleum's stellar results
since its acquisition of ARCO's Alaska properties in March 2000, see
section III. of my February 8, 2000 memorandum, ``Alaska North Slope
Development Prospects.'' Argus Company Reports on the major North Slope
companies were issued May 9 (BP Amoco PLC; rated ``buy'' with a 12-
month target price of $72 per share, approximately 44% above present
levels), June 1 (Phillips Petroleum; rated ``buy'' with a 12-month
target price of $72 per share, approximately 30% above present levels)
and June 12 (Exxon Mobil; rated ``buy'' with a 12-month target price of
$100 per share, approximately 15% above present levels).
---------------------------------------------------------------------------
While government agencies do not publish reckonings of North Slope
profits, a preliminary estimate indicates that during 2000 the North
Slope producers earned more than $9.50 per barrel after taxes on every
barrel of North Slope oil they produced and delivered to refineries,
resulting in total annualized profits of approximately $3.5 billion.
<SUP>25</SUP> The lion's share of those hefty profits are shared by
three major oil companies that control more than 90 per cent of both
North Slope production and TAPS. <SUP>26</SUP>
---------------------------------------------------------------------------
\25\ This preliminary estimate of Alaska production and pipeline is
based on the model developed in the author's report, How Much Is
Enough? Estimated Industry Profits from Alaska North Slope Production
and Associated Pipeline Operations, 1993--1998 (Anchorage: Oilwatch
Alaska, 1998, Ch. 2), with revisions to 1998 data for changes in
production, price, pipeline tariff and tanker costs. (Note: This
estimate is limited to Alaska operations and therefore does not include
profits on tanker, refining and marketing activities.)
\26\ British Petroleum (BP), Exxon Corporation and Phillips
Petroleum produce more than 90 per cent of the North Slope's crude oil
and own more than 90 per cent of TAPS (see: Richard A. Fineberg, The
Big Squeeze: TAPS and the Departure of Major Oil Companies Who Found
Oil on Alaska's North Slope (Anchorage: Oilwatch Alaska, 1997).
---------------------------------------------------------------------------
V. PROVISIONS OF NESA INADEQUATE TO PROTECT UNIQUE ENVIRONMENT OF
ARCTIC REFUGE COASTAL PLAIN
The National Energy Security Act (NESA) of 2000 asserts up front
that a Coastal Plain leasing program will be ``environmentally sound''
and ``will result in no significant adverse effect on fish and
wildlife, their habitat, subsistence resources and the environment.''
Yet NESA's specific provisions fail to ensure that these lofty goals be
met. Simply put, NESA fails to safeguard the extraordinary wildlife and
wilderness resources of the Arctic National Wildlife Refuge Coastal
Plain.
As an initial matter, NESA is remarkable for what it does not do to
protect the Refuge. For example, the U.S. Fish and Wildlife Service
states that the Coastal Plain does not have an adequate supply of fresh
water to support both fish and wildlife and winter ice road
construction or oil field operations. Yet the bill fails to ban the use
of water from the braided rivers, ponds, and lakes of the Coastal
Plain.
Similarly, the legislation does not prohibit the construction of
permanent roads, either within individual fields or to connect separate
ones. As a result, millions of cubic feet of gravel could be dredged
from riverbeds to build these roads. This also belies the ``small
footprint'' argument, as the failure to prohibit permanent roads make
it more likely that the impact of development would spread throughout
the Coastal Plain in all seasons.
NESA also exempts leasing regulations from analysis under the
landmark precautionary environmental law of our nation--the National
Environmental Policy Act. The bill declares that a 14-year-old analysis
is sufficient for NEPA purposes. The fallacy of this provision is
revealed by other provisions of the proposed legislation, which
require, for example, that the Secretary ``prescribe such regulations
as may be necessary'' to protect fish and wildlife, their habitat,
subsistence resources, and the environment of the Coastal Plain. See
Section 503(g)(1).
Moreover, the proposed legislation artificially restricts NEPA
review of lease sales themselves by providing that only leasing
alternatives can be considered and that only a preferred and a single
leasing alternative be analyzed. The alternatives analysis is
considered the ``heart of NEPA'' because it allows decision makers to
evaluate the environmental impacts of the proposal as compared with the
impacts of a number of possible alternatives to the proposal. This type
of comparative analysis is critical to clearly defining the
environmental issues at stake and to providing ``a clear basis for
choice among options.'' (40 CFR 1502.14). By artificially restricting
the alternatives to be evaluated, the legislation ensures that decision
makers and the public will be ill-informed about the environmental
consequences of any lease sale proposal and will be forced to make
decisions in a vacuum.
Additionally, the bill only allows the Secretary of the Interior to
designate 45,000 acres of ``Special Areas'' in the Coastal Plain, an
insignificant amount given the important calving, denning, and nesting
habitat found throughout the 1.5 million acre area. Furthermore, NESA
does not prohibit intrusive seismic exploration of Special Areas.
NESA also gives the Secretary the discretion to allow year round
drilling of the Coastal Plain, rather than simply directing the
Secretary to ban exploratory and development activities during critical
denning, calving, and nesting periods for migratory or resident
wildlife populations.
Further, NESA merely requires the use of the ``best commercially
available technology'' for oil and gas operations. A more protective
standard, used in clean water and other applications, would require
that companies exploring, drilling, and producing oil from the Coastal
Plain use the ``best available technology,'' regardless of economic
considerations. The proposed standard is thus not the most protective
of the environment, as the Coastal Plain's status should compel. The
bill does include a range of other environmental stipulations and
mitigation measures, however all give the Secretary broad discretion in
their interpretation and application.
Additionally, through both limitations on public comment under NEPA
and limitations on judicial review NESA restricts the public's ability
to participate in crafting a leasing program on the Coastal Plain.
Finally, NESA also fails to reinstate the ban on the export of
Alaska North Slope crude oil that had been in effect prior to 1995. As
a result, any oil discovered and produced from the Arctic Refuge under
this Act could be exported to foreign countries, undercutting the
purported ``national security'' justification for this bill. The bill
moreover grants an enormous 90% of the royalties from lease sales to
the State of Alaska, rather than the traditional 50% royalty. The bill
does include ``project-labor agreement'' language, but only applies
this to the Arctic Refuge and to no other federal lands on the North
Slope or to the construction of a new natural gas pipeline in the
State, which would necessitate many times more jobs than refuge
drilling.
In summary, while NESA states that ``oil and gas exploration,
development, and production activities on the Coastal Plain will result
in no significant adverse impact on fish and wildlife, their habitat
and the environment,'' provisions included and not included in the bill
ensure that this standard will not be met.
CONCLUSION
We respectfully urge the committee to reject Title V of the
National Energy Security Act of 2001. This section of the bill would
mandate oil exploration and drilling in the wildest place left in
America for a speculative short-term supply of oil that would do
nothing to lower prices for American consumers or enhance U.S. energy
security. The bill would rollback decades of environmental progress,
originally initiated by President Dwight Eisenhower, effectively
allowing oil exploration or development to occur along America's entire
Arctic coastline. Despite language in Title V that attempts to limit
and mitigate the environmental consequences of leasing the Coastal
Plain, its provisions are inadequate to protect its irreplaceable
wildlife and wilderness values. The American people do not support
drilling in the Arctic Refuge nor is drilling in the Arctic Refuge
necessary to maintain robust oil and gas activity in Alaska for decades
to come.
Thank you for the opportunity to testify. I'm happy to answer any
questions the committee might have.
______
The Chairman. I thank the gentleman.
Linda Lance?
STATEMENT OF LINDA LANCE, THE WILDERNESS SOCIETY, WASHINGTON,
DC
Ms. Lance. Thank you, Mr. Chairman.
I am Linda Lance. I am the vice president for policy at the
Wilderness Society, and I very much appreciate the opportunity
to testify on this important issue today.
I did want to introduce the Committee to two people who are
with me today and who will also be available for questions,
should the Committee wish to ask them.
Jim Waltman is our program director for wildlife refuges at
the Wilderness Society, and Luci Beach is the executive
director of the Gwich'in Steering Committee and represents the
7,000-member Gwich'in nation. And as the Committee is aware
based on the earlier discussion, the Gwich'in nation is opposed
to drilling in the Arctic Refuge.
Mr. Chairman, we also are strenuously opposed to this bill,
and our concern is generally stated that this bill, rather than
providing an abundant and affordable energy supply for the
country, which is a goal that we very much share with the
Committee, this bill will put our most precious lands not only
at risk, but in a situation in which they are irreplaceably
lost. We don't think that that is a price that country needs to
pay for an affordable, abundant energy supply.
Some of these places are well-known. The Arctic National
Wildlife Refuge has been discussed at considerable length
today, and I won't spend a lot of time on that in my statement.
But there are other places as well in the lower 48 that are
not nearly as well-known, but they currently have protection
from oil and gas drilling that are put in risk in this bill.
There are also incredible resources for this country that will
be irreplaceably lost if oil and gas production proceeds on
those places.
The concern that we have in particular about this bill is
it seems to be based on the premise that there is an enormous
amount of oil and gas resources that exist on public lands and
that are locked up somehow and put off limits from production.
We simply don't see any evidence that that is the case.
In fact, what really seems to be happening as the price of
natural gas, for example, increases, is that we have what is
reasonably viewed as a boom in gas production in particular on
public lands, particularly in the lower 48.
Some numbers I thought would be useful for comparison:
The acres of public lands that have been leased for oil and
gas development since 1993: 64 million.
The acres in the Rocky Mountain states that are available
for oil and gas leasing: 110 million. This is of course larger
than the State of California.
The number of operating oil and gas wells on public lands:
57,000.
The number of drilling permits issued on the public lands
in 1990: 2,617.
The number of drilling permits on public lands that were
issued in 2000: 3,496.
And I thought the Chairman might be interest in, and is
probably well-aware, in the increase in activity that is going
on in his own state. The number of drilling permits on public
lands in Utah that have been issued so far this year: 438. And
that is 146 percent of the number of drill permits issued all
of last year.
The percentage of United States oil and gas production that
comes from the Federal lands has increased considerably over
the last decade. Thirteen percent of our oil and gas, domestic
oil and gas production, came from public lands in 1992. Twenty-
five percent of our domestic oil and gas production came from
public lands in 1999.
And as Senator Johnston so eloquently described, offshore
oil production is up 65 percent since 1993, and Gulf of Mexico
gas production is up 80 percent in just the last 2 years.
So there are some very special places in this country that
have been put off-limits, typically by Congress, from oil and
gas drilling because of their unique and special qualities. But
the vast majority of public lands and offshore areas that are
productive in this country are very much available, are being
produced, and are increasingly being produced as the price
signals send the industry into those places.
For example, the acres of public lands that have been
protected as national monuments increase 1993: 5,568,000. But
in many of those monuments, there are existing oil and gas
leases and those valid existing rights have been protected.
The point here is that there is a myth, we believe, driving
this push to drill in the public lands, and that myth is that
the significant resources on the public lands are somehow
locked up. They simply are not.
A moment on the Arctic refuge. It has been discussed at
some length, and I won't spend a lot of time.
If I might have one more minute, Mr. Chairman?
The Chairman. Go ahead.
Ms. Lance. I do think that it is important that the views
of the Gwich'in nation be recognized by the Committee. Some of
the other witnesses have made the point that there is obviously
a difference of opinion among Alaskan natives about whether it
is appropriate to drill in the Arctic refuge. The Gwich'in
nation makes their living off of the Porcupine caribou herd in
the refuge and is very much opposed drilling.
And just in closing, Mr. Chairman, as this Committee is
well-aware, its responsibilities here are enormous. The stakes
are very, very high. But unlike with some legislation where if
mistakes are made, they are reversible, in this case, some of
the mistakes that could be made and that would be made by this
bill are irreversible. Once there is drilling in the Arctic
refuge, once there is drilling in some of the other places in
the lower 48 that are protected today, you can't go back.
So we would urge this Committee not to act to do that, and
to look at the facts, and rely on what the facts are as opposed
to some mythical desire to drill all over our public lands.
Thank you, Mr. Chairman.
[The prepared statement of Ms. Lance follows:]
Statement of Linda Lance, Vice President, Public Policy, The Wilderness
Society
Mr. Chairman and Members of the Committee, thank you for the
opportunity to testify on the H.R. --, ``Energy Security Act,'' on
behalf of the Wilderness Society. The Wilderness Society is an
organization of 200,000 members nationwide. Since its founding in 1935,
it has been dedicated, to ensuring that future generations will enjoy
the clean air and water, wildlife, beauty and opportunities for
recreation and renewal that pristine forests, rivers, deserts and
mountains provide.
We also understand clearly the vital importance to our country of a
reliable, affordable energy supply. However, we believe that
achievement of our energy goals without appropriate protection of the
natural environment does the nation permanent, irreversible damage. We
can meet our energy needs without sacrificing our most precious lands.
Both goals should guide the formulation of an energy policy, and that
policy should be balanced, well-informed, and carefully crafted.
We appreciate the Committee's expeditious attention to the energy
issue through preparation of this draft legislation. We are concerned,
however, that the draft bill takes too narrow a view of the energy
issue and focuses only on maximizing energy resources from the public
lands owned by all Americans. We believe the bill as currently drafted
will sacrifice the lands Americans hold most dear--including the Arctic
National Wildlife Refuge--and will do so without any appreciable effect
on our energy supply. For that reason, we are strenuously opposed to
this bill.
This statement will first set out some factual background that we
believe provides important context for any consideration of this issue.
It then will address specific concerns about the bill as drafted.
I. Background on Energy Supply and Production on Federal Lands
A. Most Public Lands Are Open to Production
Much of the discussion of energy production from federal lands
appears to be driven by the perception that abundant resources have
been ``locked-up'' or put off limits, to the detriment of the country's
energy future. This is a myth that should not drive the energy policy
debate. The facts show that the vast majority of federal lands are open
to energy production. Significant efforts were made in the last few
years to enhance, where appropriate, oil and gas production on these
lands even in the face of falling prices. Important new areas were
opened and are being leased.
Domestic oil production declining for several decades after peaking
in 1970 at 9.6 million barrels per day. During the prior Bush
Administration, domestic oil production decreased by an average of
250,000 barrels per day each year. During 1992 alone domestic gas and
oil drilling activity decreased by nearly 17% and was at its lowest
level since 1942.
The causes for these declines were varied, but included plentiful
global supplies and correspondingly depressed prices. Despite these
price pressures, overall oil and gas production on federal lands and
offshore have continued to increase throughout the past decade.
According to Department of the Interior data, the contribution of oil
and gas production from federal lands, as a percentage of overall
domestic oil and gas production, increased from 13% in 1992 to 25% in
1999. See Attachment I.
From 1992 to 2000, 7091 new leases were issued on the Outer
Continental shelf, covering approximately 38 million acres. Nearly four
million acres of the National Petroleum Reserve in Alaska, adjacent to
the existing Prudhoe Bay fields, were opened for oil and gas
exploration and production in 1998. Exploration is underway following
an initial lease sale that netted more than $100 million for the U.S.
treasury.
As of September 30, 2000, oil and gas leases were issued on more
than 35 million acres of public lands. See, BLM, ``Public Land
Statistics 2000,'' Tables 3-13 and 3-14. There are nearly 60,000
producing oil and gas wells on the public lands. See BLM, ``Public
Rewards for Public Lands 2000,'' Attachment II. Thousands of new
drilling permits have been issued during the past eight years--3400 by
the Bureau of Land Management in fiscal year 2000 alone. See BLM,
``Public Land Statistics 2000,'' Table 3-16. According to BLM data,
over 95% of BLM lands in the Overthrust Belt states of Colorado,
Montana, New Mexico, Utah and Wyoming (the areas believed to have the
largest oil and gas resources) are available for oil and gas leasing.
See Attachment III. Over one third of our nation's yearly coal
production is derived from federal land. See Attachment II.
Some in industry have claimed that they lack access to these lands.
Upon closer examination, these claims deal with two very different
categories: lands that are entirely off limits to development; and
lands that are open subject to ``stipulations'' or provisions in the
leases requiring that the operations take particular precautions to
protect the environment or other resources.
The former areas include, for example, designated wilderness areas,
offshore moratorium areas, portions of national monuments, and areas
where other mineral activities are taking place. These are places where
oil and gas activities could pose extreme environmental or safety
hazards, or be incompatible with other values. Currently, such areas
comprise roughly five percent of BLM-managed land in the five states of
the Overthrust Belt. See Attachment III.
Many of these areas have been off-limits to development for many
years, in a shared public recognition that they are simply
inappropriate for such use. For example, Congress placed the Arctic
National Wildlife Refuge off-limits in 1980, following executive action
in 1960. There have been longstanding moratoria on offshore oil and gas
production off certain areas of the east, west and Gulf Coasts, and the
House recently passed a moratorium on Lease Sale 181 off the Florida
Coast. We have a long history of restricting oil and gas drilling in
our national parks, thereby voluntarily losing the potential geothermal
resources in Yellowstone National park or the hydropower in the Grand
Canyon. Finally, national monuments generally prohibit new oil and gas
drilling, and the House recently acted in the Interior Appropriations
bill to reinforce that limitation for existing monuments.
The latter ``stipulations``category is designed by agency land
managers to protect multiple resources while allowing for oil and gas
production. They protect such values as water quality, critical
seasonal habitat for elk, antelope and other wildlife, archaeological
sites, and recreational sites. BLM may require that operations only
occur at certain times of the year, when such areas are not in use by
wildlife species. In other cases, BLM imposes ``No Surface Occupancy''
requirements in which the lessee is required to access the oil and gas
from off-site. This restriction is usually done to protect some other
resource that may be in conflict with oil and gas production such as
underground mining operations, archaeological sites, campsites, or
important wildlife habitat. These leases may be accessed from another
location via directional drilling.
These stipulations do not put oil and gas off limits, but merely
balance the need for oil and gas with the BLM's responsibility to
manage other resources on these public lands. Industry often touts the
benign nature of advanced exploration and development technology.
However, many of their complaints about lack of access are over areas
with ``No Surface Occupancy'' limitations that merely require the use
of this advanced technology for directional drilling.
These stipulations are often misunderstood or used to overstate the
extent to which oil and gas resources are off limits. An example is a
report issued on June 6, 2001 by the Department of Energy, ``Federal
Lands Analysis , Natural Gas Assessment, Southern Wyoming and
Northwestern Colorado.'' As pointed out in a review of this report by
Dr. Peter Morton, Resource Economist for the Wilderness Society,
(Attachment IV) this report uses flawed methodology to overstate the
effect on the availability of oil and gas. It includes ``No Surface
Occupancy'' stipulations in the category of those areas that are off
limits; focuses only on ``technically'' as opposed to ``economically''
recoverable gas, vastly overstating the gas resources involved; and
focuses only on undiscovered gas resources as opposed to the extensive
development of known reserves already underway in the area.
B. Oil and Gas Resources in Protected Areas Are Not Significant
Those special places--such as national monuments or national forest
roadless areas--that are off-limits contain at most very small amounts
of oil or gas. The Arctic National Wildlife Refuge contains no more
than six months' worth of U.S. oil consumption. Its destruction for oil
production would have negligible impact on the country's energy
security and no impact on the price of gasoline at the pump. The same
is true for the other special areas now off limits.
All national forests currently supply only 0.4% of total U.S. oil
and gas production, half of which occurs on Little Missouri Grasslands
(Forest Service Roadless Area Conservation EIS, 2000, pages 3-312 and
3-316). The vast majority of national forest lands subject to roadless
area protection have been open to leasing for decades, and there has
been little interest in exploiting potential resources.
This is likely because there are only small amounts of undeveloped,
resources in these areas. A recent Wilderness Society assessment of the
energy potential of national forest roadless areas in six Rocky
Mountain States shows that these areas contain only 0.4% of the total
U.S. oil resources (on and off shore), and only 0.6% of total U.S. gas
resources. See Attachment V.
Similarly, in the fifteen recently created national monuments in
the West managed by BLM there are only about 15 days worth of total
U.S. consumption of oil, and about 7 days worth of the total U.S.
consumption of gas. See Attachment VI. The U.S. Geological Survey
recently confirmed that only five out of the 21 new national monuments
had a moderate to high possibility for the occurrence of any oil and
gas. As attachment VI shows, even those five taken together have a very
small amount of potential energy. Four of the five currently allow for
continued development under existing leases (Canyon of the Ancients,
Carrizo Plain, Hanford Reach, Upper Missouri Breaks.) The fifth,
California Coastal, is surrounded by waters covered by the existing
moratorium against off-shore drilling.
II. Specific Concerns About Draft Legislation
The Federal Land Policy and Management Act (FLPMA) and the National
Forest legislation provide a useful context for consideration of oil
and gas production on public lands. According to FLPMA, in addition to
providing for the development of minerals, the public lands under the
jurisdiction of the Secretary of the Interior are to be managed:
``...in a manner that will protect the quality of scientific,
scenic, historical, ecological, environmental, air and atmospheric,
water resource, and archaeological values; that, where appropriate,
will preserve and protect certain public lands in their natural
condition; that will provide food and habitat for fish and wildlife and
domestic animals; and that will provide for outdoor recreation and
human occupancy and use...'' (43 U.S.C. 1701(a)(8))
See also Forest and Rangeland Renewable Resources Planning Act of
1974, 16 U.S.C. 1600.
Unfortunately, the ``Energy Security Act'' appears to be focused
solely on ``expediting'' energy development proposals, surmounting
``impediments'' to energy development and ``streamlining''
environmental review procedures, while ignoring the other resources
that exist on the public lands and national forests. This is an
unprecedented and extremely narrow perspective on the values of our
public lands that is not reflected in existing land management laws,
and causes serious concern about the bill in its entirety. The
following sections are of particular concern.
Title I -- Section 102 of the bill requires the Secretary to
inventory all ``federal public lands'' except for national parks and
designated wilderness areas for their potential to produce wind, solar,
coal, and geothermal energy. All national monuments, national wildlife
refuges, Bureau of Land Management Wilderness Study Areas, National
Conservation Areas, national forest roadless areas, Wild and Scenic
River corridors, National Recreation Areas, units of the National
Trails System, and BLM Areas of Critical Environmental Concern
apparently are eligible for future energy production sites. If so, this
evidences a serious disregard for the special qualities of these areas,
which also should be exempted from inventory proposals.
We do believe, however, that additional reporting and analysis in
the area of the public lands and energy production would be useful and
that this section should be revised to ensure such reporting. For
example, a comprehensive report, regularly updated, could provide the
acreage of public lands and national forests available for energy
activities, with descriptions of any special safeguards imposed on such
lands to protect other resources. In addition, the BLM currently
reports on drilling activity long after it has taken place. It would be
very useful to have a system that makes publicly available the status
of applications for permits to drill (APDs) and drilling activities on
the public lands on a periodic basis, perhaps monthly or quarterly.
Such information could directly address what we believe to be the
myth discussed above--that vast areas of resources are off limits. In
addition, a cumulative analysis of the overall impacts of energy
production on the other values to be protected by the BLM and the
Forest Service has never been done and is vital, certainly before
consideration of any major expansion of energy production on these
lands. As stated, there are now almost 60,000 producing oil and gas
wells on the public lands; thousands of well sites have been abandoned,
and not reclaimed; millions of acres of the public lands are now
devoted to oil and gas activities; thousands of miles of rights-of-way
are devoted to various energy development infrastructure requirements;
and there are increasing demands for more of this. Analysis that
describes the current situation not only for the energy resources but
for all of the resources on these public lands is clearly warranted.
In addition, Congress should review and upgrade the BLM's
reclamation bonding program before it is allowed to lease millions more
acres and permit thousands more wells. It is our understanding that the
BLM has not increased the amount of its reclamation bonds since 1960.
Moreover, the BLM has no program and no money to reclaim thousands of
abandoned wells. Addressing this situation should take precedence over
additional financial relief for the industry as provided in later
titles of the bill.
Titles II and III -- Section 202 requires suspension of royalties
for certain sales in federal waters in the Outer Continental Shelf. As
we understand it, the rationale for the existing law, which gives the
Secretary of the Interior the discretion to suspend these royalties,
was unusually low world oil prices. With oil prices more robust, and
deepwater drilling increased, it is unclear why this royalty relief
must now be mandated. The taxpayers deserve to receive fair market
value for the commodities extracted from the public lands. As stated,
the Secretary currently has the authority to suspend these royalties if
necessary (43 U.S.C.1337 (3). Under the provisions of this section oil
and gas companies could produce quantities of oil worth $1.4 billion
before paying any royalties to the taxpayer--a loss of hundreds of
millions of dollars to the taxpayer.
Section 222 requires the Department of the Interior and the
Department of Agriculture to perform a study of ``impediments to
efficient oil and gas leasing and operations on Federal onshore lands
in order to identify means by which unnecessary impediments to the
expeditious exploration and production of oil and natural gas on such
lands can be removed.'' Moreover, Section 223 limits the ability of the
BLM and Forest Service to require environmental safeguards for oil and
gas activities on the public lands and national forests that are more
stringent than those imposed by state oil and gas conservation
commissions. The obvious intent is to discourage the federal land
managers from providing the environmental safeguards and balanced
management they believe to be necessary in a particular area. This is a
totally unwarranted bias toward energy production above all other
resource values.
Sections 225 and 303 remove the requirement in existing law that
the Secretary of Agriculture must consent to any oil, gas or geothermal
leasing on the national forests. This is an apparent reaction to
decisions advanced in recent years by the Forest Service through its
land use planning program and with vast public support, to restrict
certain areas of the national forests from oil and gas development. It
is completely inappropriate to remove the decision making authority of
the agency with the greatest expertise on, and responsibility for,
protection of all the resources of our national forests.
Title V--Title V of the bill would mandate opening the coastal
plain of the Arctic National Wildlife Refuge to oil and gas drilling.
It is hard to imagine a more inappropriate and unnecessary action. Any
legislation directed to this purpose should be summarily rejected.
Protecting this special place has been the unyielding commitment of
many thousands of conservationists, scientists, sportsmen and women,
religious and human rights leaders, and countless other Americans
throughout the 50 states.
At The Wilderness Society, we say that the Arctic Refuge is in our
blood. The Wilderness Society founder, Bob Marshall traveled
extensively in the Brooks Range. He was among the first to suggest that
large tracts of Alaska be preserved. Longtime Wilderness Society
leaders Olaus and Mardie Murie are described by the U.S. Fish and
Wildlife Service as ``founders'' of the Arctic Refuge. They and others
waged a campaign to protect the area that led to the establishment of
the Arctic National Wildlife Range in 1960 by executive authority under
President Eisenhower.
Resource Values in the Refuge
The 19.6 million-acre Arctic National Wildlife Refuge is a
spectacular wilderness of boreal forests, rugged mountains, undulating
tundra, coastal lagoons, and barrier islands. Located in the
northeastern corner of Alaska, the Arctic Refuge is the only
conservation area in America that protects a complete range of arctic
and sub-arctic ecosystems.
The refuge has been called ``America's last great wilderness''
since the 1950s when a concerted effort was made to protect the area as
a wildlife refuge. In fact, the Arctic Refuge is unique to the National
Wildlife Refuge System in that it was established specifically to
preserve wilderness. Public Land Order 2214, issued by President
Eisenhower's Interior Secretary Fred Seaton in 1960, created the refuge
``for the purpose of preserving unique wildlife, wilderness, and
recreational values.'' Seaton explained that the refuge was ``the only
economically feasible opportunity for maintaining a wilderness frontier
large enough for the preservation of the caribou, the grizzly, the Dall
sheep, the wolverine, and the polar bear, all of which require a
sizeable unrestricted range.''
At the heart of the Arctic Refuge stands the 1.5 million acre
coastal plain-the very portion of the refuge that the legislation
before the committee would open to oil and gas drilling. The U.S. Fish
and Wildlife Service has called the coastal plain ``the center for
wildlife activity'' for the entire refuge.
Polar and grizzly bears, wolves, and muskoxen, are just a few of
the more than 200 animal species that use the coastal plain of the
refuge. Millions of birds, representing some 125 species, migrate from
as far away as the Southeastern United States, South America, and Asia
to nest, rear their young, molt, and feed on the Coastal Plain--
preparing themselves for their long return migrations. Many of these
birds grace local parks and refuges across the coterminous U.S. during
their migrations and during the winter months. According to the Fish
and Wildlife Service, the coastal plain is also the most significant
on-shore polar bear denning habitat in the U.S.
The Arctic Refuge is perhaps most famous for the 129,000-member
Porcupine River Caribou herd that has used the coastal plain as a
calving area for millennia, traveling hundreds of miles from wintering
grounds in Canada and the U.S. There is no alternative to this
sensitive habitat for the caribou herd. The gathering of the herd
following calving is a spectacle reminiscent of Africa's Serengeti and
of the enormous herds of buffalo that once thundered across the Great
Plains.
The Gwich'n (Athabaskan) people depend on the Porcupine Caribou
Herd for their subsistence and culture, a relationship that has existed
for thousands of years. The close association of the Gwich'in people
and the Porcupine caribou herd have prompted opposition to oil drilling
schemes in the refuge from a diverse array of organizations: the
Canadian government, National Congress of American Indians, National
Council of Churches, Native American Rights Fund, Episcopal Church,
United Methodist Church among many others.
Oil drilling on the coastal plain would irrevocably destroy the
unparalleled wilderness character of the area, pollute air and water,
and threaten fish and wildlife populations and subsistence hunting that
relies on them. And for what? In 1998, the U.S. Geological Survey has
estimated that the most likely amount of oil that could be recovered
economically would be 3.2 billion barrels-less than what the U.S.
consumes in six months. At no time would oil from the refuge be
expected to supply more than two percent of America's demand. The U.S.
Geological Survey's' mean estimate for technically recoverable natural
gas from the refuge is 7 trillion cubic feet-about what the U.S.
consumes in four months (none of this gas was projected to be
economically recoverable at the time of the report). Using updated
projections for future oil prices, the Congressional Budget Office
estimated this February that the mean estimate for economically
recoverable oil from the refuge would be 2.4 billion barrels-about what
the U.S. consumes in four months.
Effects of Drilling
The oil industry claims it can develop the Arctic Refuge in an
``environmentally sensitive'' manner and points to its history in
Prudhoe Bay. Nothing could be further from the truth. Oil drilling in
the Arctic Refuge would introduce a major industrial facility in the
heart of this magnificent wilderness. This activity is fundamentally
incompatible with the purposes for which the Arctic National Wildlife
Refuge was established. Development would bring the following to this
pristine area:
* LHundreds of miles of roads and pipelines leading to dozens of
oil fields;
* LChronic spills of oil and other toxic substances onto the
fragile tundra;
* LRivers and streambeds--key habitat for wildlife--stripped of
millions of cubic yards of gravel for road, airstrip, and drillpad
construction;
* LEnormous water diversions to support drilling at the expense of
pristine rivers and wetlands;
* LLiving quarters, sewage treatment, and other infrastructure for
several thousand workers;
* LHelicopters, cargo planes, dump trucks and bulldozers; the
sights and sounds of heavy equipment would be almost constant for long
periods. See also, ``Oil in America's Arctic,'' prepared by Trustees
for Alaska, Attachment VII.
Spills
Spills of oil and various other toxic substances are a chronic
problem on the North Slope and the Trans-Alaska Pipeline. According to
the Alaska Department of Environmental Conservation, oil companies emit
more than a spill and day of oil and other toxic substances-over 1.3
million gallons between 1996 and 1999.
One would think that, with their desire to gain access to the
Arctic Refuge in the public eye, oil companies would be particularly
careful this year. But on April 15, Phillips Petroleum spilled more
than 92,000 gallons of saltwater and crude oil on Alaska's North Slope.
Between January 16 and March 3 of this year, BP had three spills of oil
and drilling fluids on the North Slope of between 3,000 and 18,000
gallons. In 2000, BP Amoco and its subcontractor pled guilty to
illegally dumping hazardous waste at the supposedly benign Endicott oil
field near Prudhoe Bay and were fined $22 million.
The number of spills and the high proportion with unknown causes
suggest faulty spill prevention systems, sloppy practices, and
inadequate government oversight and enforcement. Between 10 and 30
percent of safety shut-off valves in BP Amoco's drilling operations on
Alaska's Prudhoe Bay failed to pass state safety tests during the first
quarter of 2001. The failures were reported by the Wall Street Journal
in April, 2001 which described the safety shut-off valves as ``the main
line of defense against pipeline ruptures that could spew thousands of
barrels of hot underground crude oil across the Arctic tundra.'' The
Journal also reported that ``secondary valves, which connect the
platforms with nearby processing plants, often fail to close properly
as well, according to employees of BP Amoco PLC's Prudhoe Bay
operations. In other words, they say, the valves can't be relied upon
to shut in an emergency, creating the potential for a natural
catastrophe.''
Air Pollution
Prudhoe Bay oilfields emit large quantities of nitrogen oxides,
carbon monoxide, sulfur dioxide, volatile organic compounds,
particulate matter, and other pollutants. The quantity of emissions is
so great that it may endanger the health of the workers and contribute
to global warming.
Water Diversions
Over 400 pollution control and discharge permits issued by both
state and federal governments govern wastewater discharges from oil
field operations at Prudhoe Bay. From 1991 through 1997, approximately
25 billion gallons of contaminants were discharged into surface waters
under such permits. Permitted wastes include discharges from water
flood and sewage treatment plants, drilling muds and cuttings, and
gravel pit de-watering discharges.
Industrial ``Footprint''
Arctic drilling proponents claim that this activity can be done
with a minimal ``footprint,'' which may impact as little as a few
thousand acres. These same people have made the same arguments about
Prudhoe Bay-that oil field development has only impacted some 10,000
acres. In reality, oil field development in America's Arctic includes a
vast network of seismic exploration trails, gravel mines, roads, drill
pads, pipelines, processing facilities, operating and housing
facilities, and waste and sewer treatment plants that stretches across
1,000 square miles of tundra and has changed forever the Arctic
ecosystem. It is one of the largest industrial complexes in the world.
Besides the huge volume of industrial wastes produced by any other
large industrial complex, oil drilling operations also generate tens of
thousands of cubic yards per day of drilling muds and cuttings, oil
contaminated wastes and sludges, and produced water from drill sites.
Drilling wastes typically contain a variety of toxic metals as well as
petroleum hydrocarbons and other harmful substances. Over 325 million
gallons of wastes have been injected into Class I waste disposal
injection wells and 40 billion gallons have been injected into Class II
wells. Between 2 and 6 billion gallons of drilling wastes were dumped
into 450 reserve pits before this practice was banned.
In addition, the oil industry on the North Slope uses immense
amounts of water for drilling activities. Twenty-seven billion gallons
of water are used per year for oil exploration and development on the
North Slope. Removing water and building drilling facilities have
severely damaged the Arctic ecosystem.
Finally, a layer of gravel at least five feet thick is needed as an
insulating foundation under production wells, permanent roads,
causeways, offshore man-made islands, airstrips, pump stations, and all
other oil field facilities. ARCO needed over 1.3 million cubic yards of
gravel to fill 115 acres of wetlands tundra at its supposedly
environmentally benign Alpine oil development.
Some have suggested that work in the Refuge can be done solely on
``ice roads'' that have no permanent impact and disappear in the
summers. Again, this is a myth. First, ice roads require enormous
amounts of water to produce. Unlike Prudhoe Bay, for example, the
Refuge has a relatively limited water supply that could not support
such roads without damage to the ecosystem. Also, this argument ignores
the infrastructure necessary to support construction of the ice roads
and the serious impact these roads would have on polar bear denning
activity. Finally, this argument focuses only on exploratory drilling
and has no application to production, which would require significantly
more permanent infrastructure.
Oil Industry Exemptions From Environmental Regulations
Congress and the Alaska legislature already have granted the oil
industry lowered standards and exemptions from basic environmental
regulations, resulting in high profits for oil companies at the expense
of a healthy, sustainable environment. This bill would grant the
industry even more special treatment under environmental laws. Existing
exemptions include:
* LClean Air Act. Sulfur content in motor vehicle fuels is strictly
regulated under the Clean Air Act. However, Alaska is exempt from this
regulation.
* LResource Conservation and Recovery Act (RCRA). Disposal of
hazardous and ``general'' solid waste is regulated under the Resources
Conservation and Recovery Act. However, certain oil and gas extraction
wastes are exempted from regulation as hazardous wastes. Exempted
materials include drilling muds and cuttings, rig wastes, produced
water, tank bottoms, pit sludges and workover wastes produced during
oil industry operations.
* LEmergency Planning and Community Right to Know Act. This law
requires polluters to report their toxic releases annually to the
public. The oil industry was granted an exemption from this Act for
most of their exploration and production facilities in 1996. No North
Slope facilities are required to report their toxic releases.
Proponents of oil drilling in the Arctic Refuge have claimed that
such activity could be done in an environmentally benign way. If so,
one would expect that the oil companies would have no trouble complying
with U.S. environmental laws. But the ``Energy Security Act'' provides
the following new exemptions:
* LNational Wildlife Refuge System Administration Act. Under this
act, activities can only be permitted on a national wildlife refuge if
the Fish and Wildlife Service can demonstrate that such uses are
``compatible'' with the wildlife conservation purposes of the refuge
and the mission of the National Wildlife Refuge System. The draft
energy legislation just simply declares that oil drilling in the refuge
is a compatible activity when it clearly was not.
* LNational Environmental Policy Act. Under this Act, federal
agencies are required to analyze the environmental consequence of their
proposed actions and a range of alternative actions prior to
proceeding. That Act requires that the analysis use up-to-date
information. The draft energy legislation declares that an
Environmental Impact Statement prepared by the Reagan Administration in
1987 is sufficient.
* LAlaska National Interest Lands Conservation Act (ANILCA). Title
XI of ANILCA established a process and strict standards for sighting
roads, pipelines, and powerlines through national wildlife refuges and
other federal conservation areas in Alaska. The draft energy
legislation exempts any pipelines necessary to transport oil and gas
across the refuge from this provision.
Arctic Refuge Jobs Myth
Proponents of oil drilling in the Arctic Refuge have suggested that
hundreds of thousands of jobs would be created from opening the refuge
to drilling. What they don't tell you is that their job figures are
based on a highly criticized 1990 report done for the American
Petroleum Institute (API).
Among its inaccuracies, the API report assumed that the price of
crude oil would be nearly $58 per barrel in 2000 ($42.84 a barrel in
1988 dollars). Oil prices, of course, are hovering in the middle to
high twenties. The U.S. Geological Survey concluded that the mean
estimate for oil that could be economically recovered from the refuge
is 3.2 billion barrels--about a third of the API assumption and less
than what the U.S. consumes in six months.
Most of the jobs estimated in the API report were not directly
related to drilling but were jobs assumed to occur if refuge drilling
reduced oil prices and that such reductions would stimulate additional
economic growth.
Other reports have reached dramatically different conclusions than
API's. A 1994 report by the Economic Policy Institute (EPI) concluded
that the most realistic number of jobs that could be created from
drilling the refuge would be less than 8 percent of the jobs projected
by the American Petroleum Institute. The EPI report stated that the API
study assumes a ``hypothetical oil strike deemed highly unlikely by
government scientists'' in creating their employment projection.
A report by the Congressional Research Service (1992) on the
economic impact of refuge development concluded that, ``only a
magnitude of oil production that would be associated with a very large
discovery (in terms of present assessments) could produce conditions
that could lead to readily apparent benefits to the economy.''
A 1993 study by the Tellus Institute, prepared for The Wilderness
Society, concluded that initiatives to increase vehicle and non-
transport energy efficiency would result in nearly ten times as many
jobs as drilling in the refuge.
Conclusion
This bill is inappropriately focused only on increasing energy
production from federal lands. It contains no recognition of the
importance of protecting other resources on federal land, or of viewing
the issue in a balanced, comprehensive manner. We urge the Committee to
reject this legislation and approach the issue in a way that protects
both the energy supply and our most precious natural areas.
Thank you for the opportunity to testify on this important issue.
______
The Chairman. I thank you.
The gentleman from American Samoa?
Mr. Faleomavaega. Thank you, Mr. Chairman.
And I want to thank the members of the panel for their fine
testimony. And I certainly apologize for the long, arduous
hours that we have had in going in through the hearing process.
However, it is a necessary process.
I would like to ask Mr. Glenn, I plead ignorance with
understanding the situation with the native Alaskan regional
corporations. That was part, I think, of the congressional
enactment of the Alaska Native Claims Settlement Act.
How many regional corporations are there in existence among
the native Alaskans?
Mr. Glenn. Thank you.
Mr. Chairman, I would like to answer the question.
There are 12 native regional corporations in Alaska. In
addition to that, there is a thirteenth regional corporation
that represents natives who are abroad and was created in an
effort to answer the claims for those who had scattered before
the passage of the Native Claims Settlement Act.
In addition, there are more than 200 federally recognized
tribes in Alaska. So the tribal organizations coalesced into
these 12 major groups.
It doesn't mean that the regional corporations speak for
the tribes, for example, but that, in large part, in my region,
for example, our regional corporation contains eight different
tribal organizations.
Mr. Faleomavaega. Okay, that is what I wanted to ask.
Among the eight different tribes in your regional
corporation, is the Inupiat the largest number?
Mr. Glenn. They are all Inupiat. It is just village subsets
of the Inupiat people.
Mr. Faleomavaega. I see. So among the Inupiat generally,
the Gwich'in is part of your tribal--
Mr. Glenn. No. The Gwich'in--and we have a representative
from the Gwich'in Steering Committee here.
We are neighbors. The Gwich'in people are Athabaskans and
they number within about 10 villages, spanning the Canadian
border between Alaska and Canada, with several villages on each
side of the border.
Mr. Faleomavaega. I see. And they number about, what, 450,
compared to 8,000 Inupiats?
Mr. Glenn. I imagine there is a lot more Gwich'in than 450.
Ms. Lance. Seven thousand.
Mr. Faleomavaega. I see. I just kind of want to get a
better sense.
Mr. Glenn. There are 7,000 Gwich'in.
Ms. Lance. There are 7,000.
Mr. Faleomavaega. There are 7,000 Gwich'in.
Mr. Glenn. Some in Canada, some in the United States.
Mr. Faleomavaega. Okay. Is this also true with the Inupiat
tribe?
Mr. Glenn. The Inupiat people stretch from northwestern
Alaska in kind of a spectrum all the way over to Greenland.
Mr. Faleomavaega. I don't want to make this kind of like a
majority rules, in terms of the number of native Alaska tribes
which support and which do not support, but I can just tell you
quite seriously that my vote is going to come heavily in terms
of how the native Alaska tribes look at this issue in terms of
their needs and the question of development. And I just wanted
to share that with you, Mr. Glenn.
Mr. Glenn. Excuse me, I would not want to mislead you
either, that there would 100 percent unanimity among the Alaska
natives regarding this issue.
In addition, it is in our interest to see that if
development comes to the Coastal Plain, we want it to be done
right. We want the Gwich'in Athabaskan people to be by our side
to make sure that it happens.
It is not an issue where we see division. There are more
things that we have in common than separate us by difference.
Mr. Faleomavaega. Basically, the land area involved for
drilling, if there would be drilling, is the land belonging to
the Inupiat people?
Mr. Glenn. The Coastal Plain of ANWR lies within the area
that we claimed as aboriginal title, a portion of which we
received actual legal title in the Alaska Native Claims
Settlement Act. It is our lands that lie within the Coastal
Plain of ANWR.
Mr. Faleomavaega. Thank you.
Mr. Hood, I am being very tribal, too, because I am a
member of the Samoan tribe, and if I don't do this, my cousin
is going to kill me.
Mr. Leo Reed wanted to be absolutely certain that I would
attend the hearing and make sure that I give my courtesy to Mr.
Hood when he attends today's hearing this afternoon. And I want
to convey best regards from Mr. Reed.
Mr. Hood. I will report dutifully back to him.
Mr. Faleomavaega. All right, please. I appreciate that.
Ms. Lance, you mentioned the strong opposition of the
Wilderness Society to this proposed legislation, especially
dealing with ANWR. You mentioned that there really is not a
sense of supporting of the native Alaska tribes on this
proposed project. You are pretty firm on that, in terms of the
numbers?
Ms. Lance. As I said, the Gwich'in nation--and there are
7,000 members of the Gwich'in nation--have been consistently
opposed to drilling in the Arctic refuge.
Mr. Faleomavaega. I see.
Ms. Lance. And Ms. Beach, who is here today, can speak much
more eloquently than I about the reasons for that opposition.
Mr. Faleomavaega. And, Mr. Hood, on the labor-management
aspects, I think, of the legislation, is the Teamsters union
the only union that is supporting this? Are there other unions
that are supporting--
Mr. Hood. No, sir. The Operating Engineers, the Laborers
International Union, the Building Trades, the maritime union,
and many others are totally supportive of the environmentally
responsible opening of ANWR.
Again, primarily for the craft unions, it is a job issue.
Mr. Faleomavaega. Of course, as I have mentioned the job
issue, what will this entail, as far as jobs for the working
people in the ANWR, if this project ever should--
Mr. Hood. Wharton business school did a study some years
ago and estimated that the successful opening of ANWR would
create somewhere in the neighborhood of 735,000 jobs throughout
the country. Some of the information that this is developed
from was actual vendor invoices that the producers on the North
Slope spent with vendor companies in various states.
And so it does show that the job impact--and it varies by
degree.
Some states will benefit more, and others will benefit a
little bit less, but that each state is impacted by job
creation by North Slope production in ANWR.
Mr. Faleomavaega. I am little confused--I am sorry, Mr.
Chairman, I think my time is up, but just one more minute?
I keep hearing this figure that ANWR is only going to
supply about 3 percent of the oil. And I hear from Ms. Lance
there is a tremendous amount of production in other drilling
activities going on in the lower 48 states.
Has there been any real accurate assessment in terms of
what would be the total production level? How much are we
really going to be getting out of ANWR if and when they should
ever get off--
Mr. Hood. Well, there was a 1995 USGS study that said that
there was a 95 percent chance that we would find 5.7 billion
barrels of oil, and there was a 5 percent chance that we would
discover 16 billion barrels of oil. And the Secretary testified
earlier today that they did a study and they were talking about
7 billion barrels of oil.
If you want analogize it Prudhoe Bay, when we started there
almost 30 years ago, they predicted that we would find 9
billion barrels of oil. To date, we have already pumped 13
billion barrels of oil.
And I guess if you look at the opposition's analogy, that
it is only 180 days' supply, that is of course given the fact
that we could fact that we could pump all of that oil out of
there that fast, which is not possible. But it would fuel
everything in America for 6 months. That's a lot of oil.
But in reality, we could replace Iraqi oil for 58 years. We
could fuel every car in America with what is in ANWR for 8
years.
But the reality of the situation is it will contribute to
America's domestic supply of oil for 30 years or more. So it is
probably the largest single domestic find that we will
experience in North America as we have in the last 30 years.
So it is a tremendous amount of oil.
As long as we are talking about domestic supplies and you
have raised the issue, you know, it was testified earlier that
we import today 58 percent of our petroleum. By 2010, that is
going to be 70 percent.
We ought to set as a goal as a country to reduce our
dependence on foreign oil to below 50 percent. I think that is
realistic. With crises that may face us in the future, energy
independence is going to be crucial to the success of our
endeavors.
So I think that is a realistic figure that could be
achieved as we increase our domestic supplies. And Alaska can
contribute greatly. We currently contribute one-fifth of the
supply of domestic oil.
Mr. Faleomavaega. Mr. Chairman, thank you.
Thank you, gentlemen and Ms. Lance.
The Chairman. I thank the gentleman.
The gentlelady from Wyoming.
Mrs. Cubin. Thank you, Mr. Chairman.
I would like to address a couple of questions to Ms. Lance.
You referred in your testimony to the myth that is out
there, that the Federal lands really are available for
exploration for energy. But I want to talk about the real myth
or several real myths that I see in your testimony.
In your statement you said that based on a 1995 report from
the BLM, that 95 percent of the lands in the Rocky Mountains
are available for oil and gas leasing. Well, I want to talk
about what you mean by oil and gas leasing.
A direct result of the section 604 amendment on the
inventory of oil and gas that was in last year's energy bill, a
report came out last month called, ``Federal Lands Analysis:
Natural Gas Assessment, Southern Wyoming and Northwestern
Colorado.''
This analysis basically says that 21 percent of the lands
are off-limits and an additional 32 percent of the lands in
that area are restricted.
So I wonder if you could explain to me, based on this new
information versus 1995 information, how you can possibly sit
there today and say that 95 percent is available? And if it
really is available, is it economically feasible?
Ms. Lance. Sure. And I am happy you raised that. I couldn't
quite fit that into my 5 minutes, but I think it is a very
important issue.
And, Mr. Chairman, one of the documents submitted with my
testimony, which I would ask to be made a part of the record,
is a review of the report that you refer to on the Green River
basin done by our resource economist in Denver, pointing out
some of the concerns that we have about the methodology that
was used there.
So I was--
Mrs. Cubin. I am aware that you some reservations about it.
One of those was that no surface occupancy was considered in
the report as a way that land is not available.
But you think no surface occupancy says land still is
available.
Ms. Lance. Well, I--
Mrs. Cubin. Even if it isn't geologically or
technologically possible to do horizontal drilling or whatever,
you still consider it all no surface occupancy available.
Ms. Lance. I don't want to be so categorical. I think it is
important to really--
Mrs. Cubin. But your testimony is that categorical.
Ms. Lance. No, I don't believe so. What our concern is, is
that when you assume that no surface occupancy stipulation--and
maybe I should just back up and, for the record, what we are
talking about here is stipulations on leases. The area is
available for leasing, but the leases contain certain
stipulations and they vary from--
Mrs. Cubin. Which make it economically unfeasible in most
cases to be able to produce the energy.
Ms. Lance. Well, here is the concern that we have. The no
surface occupancy stipulation says that you cannot put your
drill rig on that area--
Mrs. Cubin. Right.
Ms. Lance. --but you could--and the concern that we have is
that industry very often says and has said here today, we use
very advanced technology and that allows us to have a very
small or no footprint in a sensitive area because we can drill,
as you say, horizontally or directionally into an area.
So if that is the case, then it just doesn't seem to be
consistent to say--
Mrs. Cubin. So what you are saying is quite a sweeping
statement, when you say that no surface occupancy, that
classification, that that means that it is still accessible.
That makes no sense to me. Let's change subjects.
The BLM proposed raising oil and gas lease bonding in its
rewrite of the oil and gas regulations, which are now awaiting
final publication. And you state in your testimony that
thousands of well sites have been abandoned and not reclaimed.
I take issue with that. But if it were the case, do you
think that the Federal Government should take over those wells
and pay for the reclamation?
Ms. Lance. I think that this is a very difficult policy
choice. And I haven't done enough research on it to give you a
educated answer. So I--
Mrs. Cubin. Well, just for your information, the BLM says
that there are actually fewer than 200 orphan wells out of over
60,000 wells that are capable of production. Not thousands, but
fewer than 200.
Ms. Lance. Well, the information that we had is from the
public lands statistics that BLM has produced. So I would be
interested in the additional BLM data. But I, too, would be
guided by BLM's data, and that is what I have indicated.
Mrs. Cubin. You state that the obvious purpose of section
222 is to discourage Federal land managers from providing
environmental safeguards to oil and gas operations. Do you
believe that state oil and gas conservation commissions are not
adequate in their requirements for environmental protection and
for reclamation?
Ms. Lance. Well, I think two things.
One is that they are not required to apply Federal law, so
if it devolves to state-level regulation, it is not clear then
that the Federal law will be applicable.
Second--
Mrs. Cubin. Are you aware that most state regulations are
at least as stringent as Federal regulations? In my own state,
every regulation is at least environmentally as stringent as
the Federal.
So my question to you is really simple: Do you think that
the state conservation commissions are not qualified or do not
protect the environment as well as they should?
Ms. Lance. Well, two points. One is that if in fact they
apply the exactly the same rules as the Federal regulators,
then certainly they do provide the same level of protection.
But this provision would not be necessary in this bill if
there weren't some differences between Federal and state law,
because clearly it anticipates that there may situations in
which the state and Federal regulators will differ.
The second point, I thought it was interesting today when
Secretary Norton testified about the Wall Street Journal story
and the Alaska State regulation. She said something to the
effect that: Well, that was about state regulation on state
land. And I can assure you that if we go into the North Slope
of the Arctic refuge, we will have Federal regulators applying
Federal law.
So--
Mrs. Cubin. On Federal land.
Ms. Lance. Exactly. But that is what the telling--
Mrs. Cubin. And that is my point--
Ms. Lance. --thing is as well.
Mrs. Cubin. --that that is the status quo. Federal
requirements are required on Federal land.
Ms. Lance. But this bill tries to change that, is our
concern.
Mrs. Cubin. Well, it doesn't. But I have used up my time.
Thank you, Mr. Chairman.
The Chairman. Mr. Carson?
Mr. Carson. Let me apologize for missing the last two
witnesses' testimony. I was called out to a meeting.
Let me direct my questions to Mr. Herrera, who in his
written testimony--I apologize for--our view is blocked here--
but in your written testimony, you addressed an issue that I am
interested in, that I brought up with the Secretary as well,
and that is about the amount of recoverable oil in ANWR. And I
specifically was thinking, it has obviously been a raging
dispute about how much is there, under what conditions and what
assumptions you have to have it be recoverable.
There was a recent article in Foreign Affairs that talked
about the so-called false promise of Alaskan oil that doesn't
attack it from the environmental angle that is often done here,
but really about the economics of oil recovery in ANWR.
I was talking to Mr. Young a moment ago and he was saying
he thinks there is going to be, you know, 30 billion barrels of
oil recoverable out of the 1002 area before it is all said and
done.
I wonder if you could talk a bit--and in your testimony it
does talk a bit about some of the assumptions on what you
consider conservative and pessimistic assumption of the USGS.
But what about, given what world oil conditions are speculated
to be over the next 5 to 10 years, when leasing activity is
going occur, what you think the amount of recoverable oil is
and under what economic assumptions we should be operating.
Mr. Herrera. Well, that is a big question to answer, but I
will give it a try.
Let me go to the back half of your question first, because
it is something which is rarely considered, albeit there is
lots of information in the record, and that is what is going to
happen in 5 years' time or 10 years' time with world oil
supply.
The point I would make in commenting on that is there are
about, let's say, 44--it might be 45 or 43, I have forgotten--
producing oil countries in the world. And of those 44, 39 of
them have already reached their peak of production and
production of oil in those countries is in decline, as it is in
the United States of America.
There are only five countries, all of which are around the
Persian Gulf, which have not yet reached the peak of
production. Now, they all happen to be OPEC producing
countries.
My point is that we become, as time goes on, we become more
and more reliant on OPEC oil because that is where the world
reserves are, those are the only countries that can increase
production.
And quite soon now, it is estimated that even those will
reach their peak and start to decline within perhaps 3 to 5
years from the present time.
So we are looking forward, if we are looking in a decade
timeframe in the future, into a brand new energy time zone that
we have never encountered before, where there is still plenty
of oil in the world--don't get me wrong.
But the world does not have infinite capacity to increase
production. It will have reached its peak of production and so
presumably demand will start to impose its influence on price.
That is one comment.
The other comment, you asked about the USGS figures, and
they are misused and sometimes misrepresented. In my testimony,
I argued that there are three factors which any geologist or
any organization uses to make resource estimates.
One is, obviously, the geology. The geology doesn't change
over time. It is there, it is static, it is not going to
change. The technology of it might change, but it actually
stays the same.
The other thing that affects resource estimates are the
price of oil because if oil is at $10 a barrel, there is
probably very little oil in the Arctic which is economically
viable. If, on the other hand, oil is at $20 or $25 a barrel,
probably all of it is economically viable even today.
So price is important. And obviously, therefore, one has to
predict price in the future, which is difficult to do, but I
just mention the likelihood that it is probably going to go up.
The third factor, of course, is technical ability to
recover oil out of the reservoir, and this is the factor where
I disagree with the USGS because their figures assume that 37
or 38 percent of the oil in the reservoir can be pulled out of
the ground and sent to market.
Now, that assumption is a good historical assumption. As a
rule of thumb, over the last 40 years, most reservoirs gave up
a third of their oil, more or less what the USGS is using for
their assumed figures of extractability.
However, in the last 10 or 15 years, with the huge
technological changes which have been introduced largely in the
Arctic, certainly in the existing Alaskan oil fields, the
recoverability of oil from the existing fields varies from 50
to 65 percent of the oil in the reservoir that can be brought
out of the ground.
That is significantly higher than the estimates that the
USGS uses. And if you believe the reality of those figures
which are being proven as we speak, on the North Slope of
Alaska, and assume that the geology is quite similar beneath
the Coastal Plain, which demonstrably it is, then clearly 37
percent is wrong and probably 50 percent of extraction of the
oil is closer to reality.
Therefore, the USGS resource estimates are very low. They
are very conservative, and probably too low and unrealistic.
Mr. Carson. If oil is at the price of $25 a barrel and
there is 55, 60 percent recovery of ANWR, do you have an
estimate yourself, just back-of-the-envelop calculation or
hunch, about the kind of reserves we would be looking at?
Mr. Herrera. Yes. Then you would go from the high-end
probability of 95 percent chance of the amount of oil being
present reaches about 10 billion barrels, and the low end, 5
percent chance goes up to about 27 billion barrels.
Mr. Carson. Very good.
Mr. Herrera. And as I mentioned, 10 billion barrels of new
oil would be probably the largest oil resource found in the
world in the last 30 years.
Mr. Carson. Do either of the last two witnesses want to
comment on that issue of the economics of oil recovery there?
Mr. Kolton. Thanks, Congressman Carson, if I might just
respond to some of the things that Mr. Herrera said.
First, I think it is a very important point that the
technology is allowing greater recovery from oil fields. And if
you look back at the record of this debate of the years, in
1995, for example, there were claims made to this Committee, to
Congress, that the Trans-Alaska Pipeline would run dry by the
turn of the century unless we drilled in the Arctic National
Wildlife Refuge.
The fact is, as I pointed out in my testimony, that even
the industry now acknowledges in its own filings for renewal
permits for the Trans-Alaska Pipeline that it has 30 years'
more oil in the existing state lands. This doesn't even include
the National Petroleum Reserve, an area about the size of
Indiana where as recently as 1995 Mr. Herrera said there was no
oil potential.
You know, the fact is that Phillips and British Petroleum
have been in aggressive exploration there. And they may have
discovered what could amount to a billion-barrel field.
So there is significant production on the North Slope
outside of the refuge. And the new technological advances that
are referred to are one of the reasons why we can leave the
Coastal Plain alone.
With respect to our dependence on OPEC, I think it is
important to point out that as a percentage of our total
petroleum use, a percentage of our total imports, we are
actually less dependent on OPEC today than we were in the
1970's. We get more oil from Canada than we do Saudi Arabia.
So simply using the total foreign import figure is
misleading.
With respect to the USGS study and the comments made there,
Mr. Herrera is willing to accept the geology somewhat but
reject the economics. Parts of the report he likes, and other
parts he doesn't.
Yet we heard today about all kinds of things, new
technology that is going to be deployed. We are going to
distill the water to make the ice roads.
A lot of the expense of some of this was not taken into
account in the USGS report. They didn't calculate all the
expenses of all these great new technologies and regulations
that are being proposed.
So I would submit that, if anything, the economic report of
the USGS was off and the cost will be much greater.
As I indicated in my testimony, according to the USGS, it
is possible that there could be no economically recoverable oil
in the refuge, depending on prices. There could be 3.2 billion.
But not in one field like Prudhoe Bay, spread out in 33
discrete pockets the all across Delaware-size Coastal Plain.
Mr. Carson. I see my time is up.
The Chairman. I thank the gentleman.
I thank the Committee, those who have remained. And I thank
all those who have been here. It has been a very long hearing,
but extremely informative.
And I would want to say to the folks from Interior, the
Secretary did a fantastic job and thank you for her being here.
And Senator Johnston and this panel, I appreciate your
great input on this.
I hope we don't get lost in the minutiae of this thing
because the whole thing is predicated on dependence. And as Mr.
Hood pointed out, the goal of many of us is to get below 50
percent. It may be very difficult. We do have a heavy
dependency on Saudi Arabia.
I have been there, in Kuwait and those areas, and looked
them over. We have talked to everyone who develops in those
areas. We are becoming more and more dependent on those areas.
What bothers a lot of us is we are becoming dependent on
those we can least depend on.
And as one of the senior, senior guys on the Armed Services
Committee, I can tell you, it is of great, great concern to us.
And you get down to the point of the realistic part of it.
I think President Bush has put together a realistic piece
of legislation, and the 105 points he has brought up, of which
today we are talking about maybe 15 are going to be very
important to America.
As a past military man myself, and one of the guys on the
Armed Services Committee, I can just tell you, it is nice to
talk in theory on all of these things, but when it gets down to
reality, those planes have to fly, those subs have to go, those
carriers have to move, and we move on fossil fuels.
Fortunately, in some of our big ships now, we do use
nuclear, which you bring that up and you hear nothing but gasps
from people, saying that is the worst thing in the world. I
surely would hope that some people could understand how
important that is.
And we have gone from 12 percent to 20 percent on nuclear,
just through efficiency and putting another plant in.
The dependency is going to be a whole question. We are
going to get caught in a bad situation if we don't do this. It
is not only the workers of America, it is the security of
America.
And in my many years, I have never driven up to a gas
station where there was pump that said ``alternative energy.''
I hope they do that. I hope we are able to develop a lot of
those.
But right now, we are depending on fossil fuels.
So we will continue with this particular piece of
legislation.
I think back in September 1996 when President Clinton went
to the South Rim of the Grand Canyon to declare the Grand
Staircase-Escalante. The interesting thing was, he had never
been there. And when he was asked where it was on the map, he
put it in Nevada. It is Utah.
And when he talked about the coal reserve--and for those
folks who don't realize this, the Grand Staircase-Escalante has
the highest amount of low-sulfur coal known in the world. I
mean, we are talking billions of tons of coal.
And I keep telling people, if you haven't been there, don't
complain about it.
I had John Leshy sitting in front of our Subcommittee years
ago to tell me about this pristine area, and my dad had mines
on that area. I have flown airplanes into that area. I have put
down a Piper SuperCub less than 100 yards from where that thing
is. I am very familiar with it.
There is nothing there that Mr. Leshy described. There is
no water. There is not cottonwood trees. There is no green
glens. Nothing but sagebrush.
And I would really appreciate it if most members of the
Committee would do the very same thing when they go talk about
ANWR, they go up there.
But don't get it wrong, we do appreciate your testimony.
One thing I have got to add is President Clinton made the
statement in his proclamation on the Grand Staircase, he said,
we can't have mines everywhere. The answer to that is, true,
only where there is ore.
And that is what we have here. I mean, we talk about public
areas, we talk about areas that are off-limits. And believe me,
a lot of America is off-limits right now.
I have been on this Committee 21 years and I have been all
over this country, and it is off-limits. And so you can only go
where it is on-limits to get that small amount that is left.
When it comes down to the security of America, I think of
the guy who was chairing this Committee when I was sitting way
down on the end there, 21 years ago, and he said, if it is
necessary, we will go in the bottom of the Grand Canyon to get
something, if it means the security of America.
We would hope we would never get to that. I would hate to
go into that pristine area.
On the other side of the coin, keeping this country free
and keeping the world free falls on the lot of Americans. We
have to be very, very careful.
I do want to thank each one of you. Your testimony has been
good. A lot of controversy here today. It has kind of been fun
to listen to it. I have enjoyed it.
And believe me, we don't discount anything that anybody
says. It is one thing nice about America; we can say what we
think.
So we thank each and every one of you for being here and
for enduring this long testimony. I think we all learned a lot.
And we stand adjourned.
Whereupon, at 2:05 p.m., the Subcommittee was adjourned.]
Statements of Members submitted for the record follow:
[The prepared statement of Mr. Pallone follows:]
Statement of The Honorable Frank Pallone, Jr., a Representative in
Congress from the State of New Jersey
Thank you, Mr. Chairman, for convening this hearing on the ``Energy
Security Act''.
I am very interested in hearing from our witnesses today and I
think there are a lot of questions that need to be answered.
In the 1970's we saw our Nation's energy security threatened by
OPEC. The result was chaos in the marketplace. We quickly found out
that our energy base was not diversified. We were not only dependent on
oil, but we were dependent upon oil supplied by other countries whose
behavior was beyond our control.
Following our experiences with OPEC, we created policies that
encouraged energy diversification and conservation. We made our
Nation's energy security a priority and we managed that crisis.
However, that dependence on oil has not changed. In fact, I believe
it will never change. Our country will never be able to produce enough
oil to supply the needs of Americans and we will never be able to
economically recover enough oil to alter the world's oil prices and be
free from foreign oil use.
Today, we in Congress are managing a different energy condition. It
is not the same as the critical shortages of thirty years ago but we
are finding ourselves once again focusing on the nation's energy
future. We find that demand, through our own growth, has placed a
stress on the market's supply.
But instead of looking at the outdated ``traditional'' means of
meeting energy demands such as drilling hundreds of wells with towering
rigs, constructing thousands of miles of new roads, transmission lines,
waste pits, pipelines and pollution, I challenge us to create
alternatives--alternatives that do not create such a negative impact on
our country's natural resources.
The answer to today's energy condition is not opening up the Arctic
National Wildlife Preserve. It is not removing the environmental
protection on public lands. It is not removing the Forest Service in
leasing decisions--and it is not providing royalty relief to oil
companies who in the last couple months have shown record profits.
The answer to today's condition, to protecting our nation's energy
security, must be tackling the demand side of this equation. We must
decrease our need for oil--whether domestic or imported.
As the largest user of oil, I would argue that the most effective
thing we could do to protect our energy security it to strengthen our
policies to encourage the development of transportation alternatives
and better mass transit infrastructure. Secondly, we need to fund
conservation projects that help us reduce our demand and finally we
need to add even more alternative energy sources to our energy mix. We
must provide encouragement for American ingenuity to create
alternatives to oil consumption.
Finally, I would like to touch on drilling in the Arctic National
Wildlife Refuge--possibly the most controversial component of the
Chairman's bill. Drilling in the Arctic refuge is not a benign activity
and industrialization is inherently incompatible with wilderness.
I have questioned what the Administration calls, ``environmentally
friendly'' technology and have yet to have a satisfactory definition to
this process. In fact, an April 13 Wall Street Journal article reported
that the oil-rig technology supported by President Bush as
environmentally friendly has malfunctioned at rising rates in the past
five years on rigs in western Prudhoe Bay. It seems that
environmentally friendly drilling technology is not exactly what it
sounds like.
I was also disturbed to read, just yesterday, that Alaska supports
only 5 safety inspectors, five, to inspect the production of Alaska's
400 million barrels of oil per year. The Wall Street Journal compared
this to Indiana that produces 2.5 million barrels of oil per year and
employs nine safety inspectors and California that produces 300 million
barrels per year has 40 oil-field safety inspectors. Quite plainly, the
5 percent of Alaska's protected wilderness could face devastating
affects from oil and gas exploration.
But, with this all said, I can't say that I'm surprised by the
leadership's actions. The Administration has made it very clear to the
American people that his term as President is a gift-giving season to
the oil industry. This has trickled through to the members of this
House. The legislation before us places the oil industry first by
opening more land to exploration and profits and by providing royalty
``relief''--and it places consumers and environmental protection last.
______
[The prepared statement of Mr. Kind follows:]
Statement of The Honorable Ron Kind, Ranking Democrat, Subcommittee on
Energy and Minerals
Thank you Mr. Chairman. Two weeks ago, a bipartisan House and
Senate Congressional delegation was invited by President Bush to the
White House to discuss energy issues. At that meeting, the President
expressed concern that he was unfairly being characterized as ``the Big
Oil President'' and asked us to work in a bipartisan fashion to develop
a balanced national energy policy. I'm sad to say, Mr. Chairman, that
this bill does not get us there and did not heed the President's
advice. H.R. 2436 is largely a license for the oil and gas industry to
accelerate drilling activity while at the same time scaling back
important environmental protections. Rather than developing a balanced
energy policy, H.R. 2436 provides royalty holidays worth billions of
dollars to the oil industry, allows industry to perform its own
environmental impact analysis and requires that the federal government
reimburse industry for these same analyses. The bill also usurps
important federal environment protections by limiting environmental
protection oriented lease stipulations to those allowed by state law.
In addition, the bill strips the Forest Service of its authority to
consent to proposed leases in National Forest lands, thus opening the
way to drilling in roadless areas and other sensitive lands.
We hear good words from the President and our Republican colleagues
regarding renewable energy and conservation, but where the rubber meets
the road, this legislation's answer to the country's energy crisis is
to provide billion dollar royalty holidays to the oil companies, open
national monuments to drilling, and scale back environmental
protections. This bill is clearly out of touch with what the American
people want and expect of us. I challenge our Republican colleagues to
work with us to develop a bipartisan energy policy that is balanced and
also focuses on renewable energy and advanced technology to increase
energy efficiency and conservation to meet our energy needs.
Over the short term, we need to increase domestic production of our
traditional energy sources to meet our needs. However, this must be
done in a manner that is sensitive to the equal need to protect our
environment. We should not allow the current situation to be used as an
excuse to rollback environmental protection. Over the long term, our
economic and environmental future depends on us finding 21st century
solutions to our 21st century energy challenges, which means using
advanced technology to develop clean, renewable energy sources and
becoming more energy efficient.
______
[The prepared statement of Mr. Tom Udall follows:]
Statement of The Honorable Tom Udall, a Representative in Congress from
the State of New Mexico
Mr. Chairman, Mr. Ranking Member:
The Energy Security Act, sponsored by Chairman Hansen, supports
several recommendations of the National Energy Policy that was released
by the National Energy Policy Group on May 17. Thus, the Energy
Security Act promotes an increase in domestic oil, gas, coal,
geothermal and solar production on federal public lands. This includes
opening national monuments for coal and geothermal energy, which is
contrary to the recent House Interior Appropriations bill vote.
Moreover, the bill specifically repeals provisions of the Alaska
National Interest Lands Act of 1980 and opens 1.5 million acres of the
Arctic National Wildlife Refuge (ANWR) to oil and gas leasing and
development.
The U.S. Energy Information Administration projects that U.S.
demand for refined petroleum products will grow over 35 percent by year
2020, and natural gas is expected to rise in that same time by 45
percent. Instead of reducing this escalating rate of consumption, this
legislation suggests, among other things, that the answer to our energy
crises is to increase our energy supplies, remove regulatory hurdles,
and expedite the permit process for new projects.
A key component of the Energy Security Act is to promote domestic
energy security and reduce our reliance on foreign oil. I agree with
that premise, but I cannot agree to pursuing that plan by opening the
coastal plain of ANWR to oil and gas drilling. Focusing on drilling in
ANWR is an unrealistic and misplaced priority because it does not
exercise proper stewardship responsibility of our federally managed
lands. Moreover, with small changes in vehicle fuel efficiency, we
could save many times over the amount of energy at stake. After all,
the oil and gas under the coastal plain isn't going anywhere and we may
develop future technologies which are much less damaging to this
magnificent resource.
The coastal plain of ANWR is the most biologically productive part
of the refuge and the heart of its wildlife activity. In the mid-
1980's, I rafted the Hula Hula River traveling over 100 miles from the
mountains of the Brooks Range, through the coastal plain to the
Beaufort Sea. I viewed first-hand the critical habitat for caribou,
muskox, swans, snow geese as well as the Porcupine Caribou Herd which
supports the subsistence lifestyle of over 7,000 Gwich'in (gwe-CHEEN')
American and Canadian Indians who oppose the drilling in ANWR because
of the potential disruption of the caribou herd. As such, I question
whether this legislation the energy plan in general intends to protect
federal lands appropriately and take into consideration the input of
the general population and our nation's native and traditional
communities who will be most affected by such an initiative.
The Arctic Refuge is the only area on the North Slope of Alaska
that has been set aside as off limits to oil and gas leasing. The 23
million acre National Petroleum Reserve-Alaska (NPR-A) was set aside by
Congress in 1923 for preservation as a future supply of oil, and was
specifically opened for leasing in 1980. With recent discoveries of oil
and gas reserves on the North Slope, it makes much more sense to
explore for more production in NPR-A instead of squandering the time,
energy, and resources on ANWR. Moreover, H.R. 2436 authorizes oil and
gas leasing in the Arctic Refuge under broad exemptions from
environmental laws. The potential environmental consequences of such
legislation could be devastating to the fragile coastal ecosystem of
the North Slope.
(Gas Pipelines)
The Energy Security Act would also establish an administrative
interagency task force to develop an agreement to expedite and
facilitate the environmental review and permitting of interstate
natural gas pipelines. However, nowhere in this section does the bill
discuss safety during the review and permitting of natural gas
pipelines. This is not only important environmentally, but also of
great importance to the many safety issues involved.
Reflecting on the horrible pipeline explosion near Carlsbad, New
Mexico last August that killed 12 people and on the Bellingham,
Washington gas pipeline tragedy, I want to further ensure that our
existing and future gas pipelines across the U.S. are safe. With that
in mind, the Administration and Congress must strengthen our current
oversight program for pipelines in order to enhance safety and
reliability. The Secretary of the Interior should take the lead in the
administration and work with Secretaries Abraham and Mineta to provide
to Congress ideas on how to provide the maximum safety to our
committees and to our workers in the industry.
Efforts to expedite and facilitate the environmental review and
permitting of interstate natural gas pipelines as outlined in this
measure give me concern that an increase in production capacities will
have serious environmental consequences. Since many of gas pipelines
cross Bureau of Land Management lands, the Department of the Interior
should make regulatory law compliance a priority, specifically in
regards to environmental analysis and the permitting process.
The projected growth in energy has called into question whether
regulatory actions and permitting processes can keep pace with the
necessary construction of new delivery facilities. The current staffing
and budget levels at the BLM field offices for these efforts are
inadequate. I look forward to hearing from Secretary Norton how the
Department of the Interior intends to address this issue. Without
focusing on this aspect, I do not see how the BLM can effectively
implement its resource management program in the lower 48 states with
the proposed President's budget. The President's BLM budget for fiscal
year 2002 identifies an overall decrease of $2.1 billion from fiscal
year 2001 to $1.8 billion for fiscal year 2002. Although the
administration intends to increase the BLM's energy and mineral program
by $15 million, a large portion of that will be going toward
exploration on Alaska's North Slope and completion of the BLM's land
management planning process. That doesn't leave much money for the BLM
to manage its other programs, and the programs will suffer tremendously
because of the budget cuts.
In conclusion, let me say that the key elements for a balanced,
long-term comprehensive energy strategy must be the reduction of our
consumption levels and diversification of our energy base in an
environmentally sound manner. Let me stress that last element--
environmentally sound. These basic goals can be accomplished through a
variety of measures including improving energy efficiency, promoting
the use of renewable energy sources, and enhancing the productive
capacity of the domestic oil industry. Thus, a comprehensive strategy
should ensure that energy and environmental policies are complementary,
and work together to support long term energy goals as opposed to
implementing a policy at either extreme. America has placed its trust
in this Administration and in Congress to implement an energy policy
that is balanced and that serves not only our present environmental and
energy interest, but also those of future generations.
______
-