Senate Energy and Natural Resources Committee Mulls Energy Supply Legislation

American Association of Petroleum Geologists (AAPG)

As part of Senator Lisa Murkowski’s (R-AK) efforts to craft comprehensive energy legislation, the Senate Energy and Natural Resources Committee recently held a hearing to discuss 26 bills that would expand energy supplies. In addition to several bills that look to expand domestic offshore oil and gas production, other topics covered included geothermal energy, methane hydrates, helium, hydropower, coal, and biomass.

In her opening statement, Senator Murkowski discussed the abundant amount of energy that the state of Alaska possesses and noted that there are already 35 wells that have been drilled in the Beaufort and Chukchi seas so she is unsure why many believe that drilling in the Arctic is unsafe. She also highlighted her bill, The Alaska Outercontinental Shelf Lease Sale Act (S 1278), which would increase the number and frequency of lease sales in Alaska and also include revenue sharing for the state.

Testifying on behalf of the Department of Interior (DOI), Bureau of Ocean Management Director, Abigail Hopper said that her agency opposes the Offshore Energy and Jobs Act (S 1276), the Alaska Outercontinental Shelf Lease Sale Act (S 1278), and the Southern Atlantic Energy Security Act (S 1279), which would allow for additional lease sales in the eastern Gulf of Mexico, Alaska, and the Atlantic and revenue sharing with those states. Hopper said that in addition to the fact that these bills would not give DOI the discretion to determine which areas are appropriate for development, that the agency does not support revenue sharing provisions in those bills. According to Hopper, DOI is in the process of looking to redirect state revenue sharing payments under the Gulf of Mexico Security Act of 2006 (GOMESA) because DOI believes that these revenues should go to federal natural resources, watershed, and conservation efforts which are of greater benefit to U.S. taxpayers. Hopper also expressed opposition to the Condensate Act (S 1224) which would require DOE to define the term “condensate” as well as have DOI consider condensates a separate commodity. Although DOI is not opposed to having a standard definition for what constitutes a “condensate”, Hopper said that that requiring the U.S. Geological Survey to perform undiscovered petroleum resource assessments for condensates would be burdensome.

Senator Murkowski made it clear that she was not at all pleased that DOI is considering a change in its revenue sharing policy with states and was hopeful that Secretary Jewell would keep her promise to consult Congress before implementing these changes. Senator Cassidy (R-LA) also noted that the revenues that the state of Louisiana is currently receiving under GOMESA are used for coastal restoration, which is a top priority for the state.

Testifying on behalf of the Alaska Center for Energy, Deputy Director Brad Sheets discussed some of the renewable and off grid energy research the Center is engaged in which looks to provide reliable and affordable energy to Alaskans, particularly to those in remote areas where power is extremely expensive. In addition to developing these important technologies, the Center also supports research to develop Alaska’s unconventional fossil resources, including methane hydrates. Sheets referenced a memorandum of understanding (MOU) between the Department of Energy and the Alaska Department of Natural Resources concerning the development of methane hydrates on Alaska’s North Slope that was signed in 2013. Under the MOU, DOE’s Office of Fossil Energy is charged with conducting research and development activities on methane hydrates in the state. He stressed that Alaska strongly supports this research and he is hopeful that it will lead to the commercialization of methane hydrates.

Senator Murkowski is expected to hold more hearings on legislative proposals that she hopes to include in a comprehensive energy bill. In addition to the energy supply hearing, the Committee has also held hearings on legislation addressing energy efficiency and energy infrastructure. A hearing on energy accountability and reform legislation has also been scheduled for early June. In addition to these topics, legislation to end the crude oil ban may also be included.

The House Energy and Commerce Committee is moving through a similar process. To date, the Energy and Commerce Committee has released discussion titles on several topics including: 21st Century Energy Workforce, energy reliability and security, energy efficiency, reform of the strategic petroleum reserve, Federal Energy Regulatory Commission permitting modernization for hydropower projects and natural gas pipelines, and energy diplomacy.

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