During a final legislative hearing preceding the introduction of an overall energy package, Sen. Lisa Murkowski—chairwoman of the Senate Energy & Natural Resources Committee—released a report entitled, “Rendering Vital Assistance Allowing Oil Shipments to U.S. Allies” as the committee considered S.1312, which would authorize the export of all U.S. crude oil and condensate.
The following is a list of witnesses at the hearing, along with links to their opening statements:
- The Honorable Lynn Orr, Under Secretary for Science and Energy, U.S. Department of Energy (DOE). Full Testimony.
- The Honorable Colleen McAleer, Commissioner, Port of Port Angeles, WA. Full Testimony.
- Norman Augustine, Board Member, Bipartisan Policy Center. Full Testimony.
- The Honorable Karen Harbert, President and CEO, Institute for 21st Century Energy. Full Testimony.
- Duane Highly, President, CEO and Chief Accountability Officer, Electric Cooperatives of Arkansas. Full Testimony.
- Mark Mills, Senior Fellow, Manhattan Institute for Policy Research. Full Testimony.
A full list of the 42 bills considered during the hearing can be found here.
In her opening statement, Sen. Murkowski said lifting the crude oil export ban would bring more jobs, revenues, energy production, energy security, and “diplomatic leverage.”
“You don’t have to take my word for that, you can also look at the growing list of experts and studies that agree with my analysis,” she said.
Sen. Murkowski added, “Substantial precedent exists for such exemptions to be granted, particularly to U.S. allies. A national interest finding by the President could be implemented immediately by the Department of Commerce and exports could set sail as soon as the commercial and logistical arrangements were made.”
Sen. Murkowski’s full opening statement can be found here.
Specifically relevant to the Arctic, Orr testified about the effort to integrate North American energy markets, as Secretary of Energy Ernest Moniz had discussed in the Quadrennial Energy Review hearing. (See the 5th Edition of the Arctic Report.)
Orr said the thawing permafrost, reduced sea ice, and other results of a changing Arctic climate directly affect transmission, storage, and distribution (TS&D) infrastructure in the OCS for energy and mineral exploration. He said these challenges bring opportunity for new cooperation with the U.S. and Canada as both countries face risk mitigation in the Arctic.
Orr also presented several ways in which the Obama Administration is addressing the changing Arctic through North American energy integration, including:
- Formulate a framework between U.S., Canada and Mexico on sharing publicly available data for energy programs.
- Increase cooperation with Canada on Arctic energy infrastructure and climate and ocean science through the Arctic Council chairmanship.
- Have the Department of Energy and Department of the Interior use Remote Communities Renewable Energy partnerships to develop and deploy smaller-scale local renewable energy resources in remote communities, such as in the Arctic, to create an independent microgrid operation.
Following the testimony, Sen. Murkowski said many U.S. allies and trading partners are interested in buying American oil in order to diversify their sources and not rely on countries such as Russia and Iran.
Sen. Murkowski also said many people forget that Alaska has an exemption for crude oil exports, and Alaska had exported 975,000 barrels of oil to South Korea in May, noting that her “pitch” is not necessarily because she comes from an oil producing state. She asked Harbert why lifting the export ban would help non-producing states. Harbert said this would allow all 48 states to be in the business because 30 percent of the 400,000 jobs created are in the supply chain. Illinois would have the most to gain because of its service and supply industries.
In response to a question from Sen. Murkowski, Mills said there is a link between oil and natural gas exports and advancing infrastructure.
“If the United States took the posture of reorienting the foundational energy policy toward selling to the world—not becoming independent, but becoming a player on the world stage–this would stimulate profound reactions in the private sector,” he said. “And if we did not constrain the private market ability to invest based on market access to buyers around the world, we would see an incredible increase in the building of pipelines and ports.”
Sen. Murkowski said Alaska has several loan programs designed to improve fuel efficiency in Alaska, including through the Alaska Industrial Development and Export Authority (AIDEA), Alaska Energy Authority (AEA), and Alaska Housing Finance Corporation to help build energy projects to get small villages off diesel. But because the villages are so small, she said, it is difficult to get them off of DOE Loan Programs.
She asked Orr if state entities such as AEA or AIDEA could be a recipient of DOE loan guarantees as an aggregator of qualifying projects. “Right now we just don’t fit. Is this something we can work with DOE to better facilitate some of these programs for smaller communities, both in Alaska and outside?”
While he is not in charge of the DOE Loan Program office, Orr said that in addressing remote communities anywhere in the country, there is no prohibition on state, local or tribal entities participating in the programs. He said it would be possible for the state to make a proposal to the Loan Program office, though he does not know how it would be considered.
Sen. Murkowski responded that she wants the committee to ensure no obstacles prohibit state, local or tribal entities from participating in DOE loan programs, noting that to be eligible, there is a distinction between “innovative” and “commercial” technologies, with the latter being different in Alaska compared to elsewhere.
She said DOE may have proven technology that works everywhere else in the U.S., but in a remote Alaskan village where the technology could be considered very cutting edge and innovative, she wants to double check to find out if there are any obstacles in Section 1703 that could create more opportunities.
Sen. Murkowski said the Congress had good intentions regarding regulations and oversight. She pointed to Alaska where 17 billion barrels of oil have been produced over the decades with only 29.9 million barrels of that coming from federal land. The rest has come from state production on state land under state regulations.
She said federal lands and the Bureau of Land Management (BLM) have their own regulations, meters, operations, inspections, etc., and, in many cases, the state laws are clearly superior to federal laws. “Now there’s this duplication of effort and redundancy that doesn’t ensure greater protection to the taxpayer, and is creating a more complex operating environment.”
To that end, Sen. Murkowski said she introduced S.1230 to require the Secretary of Interior to direct the BLM to enter an agreement with a state to create a consistent operating environment, which would help leverage state and federal resources to improve the federal investment climate. She said the bill will not reduce standards, but will instead use state programs that are sufficient to meet oversight and enforcement, and lead the way on setting new standards.
Addressing Mills and Harbert, Sen. Murkowski asked, “What can Congress do to ensure good standards in place, and to assure there is no overlap for duplicative process that doesn’t contribute to better value?”
Mills responded that small businesses say they find the biggest problems with regulations. “A lot of shale production on federal land has not increased, while it has increased on state land. This is because of the difference in the permitting processes between the state and federal governments. Small energy companies will do business with the state instead of the federal government because of that.”
Sen. Murkowski agreed. “It’s not as if the state is not doing a good job,” she said, “but somehow we got to the point that if it’s not regulated by the feds, it’s not good. But, that’s the case. We need to recognize the exemplary job of the states, and get away from the lack of trust.”
As the hearing concluded, Sen. Murkowski noted a few other bills and committee goals.
She cited S.1218, the Nexus of Energy and Water for Sustainability Act of 2015. “We can’t have the energy we need unless we have water, and we can’t have the water unless we have energy,” she explained. “This bill would make sure we pay attention to this nexus.”
By advancing research, building technologies, and Research & Development programs, she said the committee should continue to support programs such as ARPA-E and will work to advance the America COMPETES Act.
Regarding cybersecurity, Sen. Murkowski said rural places with municipally-owned cooperatives need to be provided with protection and resiliency that matches their scale. “If you’re a small remote utility not connected to others, there are unique challenges in regulations.”