Jobs and Energy Permitting Act of 2011

Floor Speech

By:  Lee Terry
Date: June 22, 2011
Location: Washington, DC

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Mr. TERRY. Madam Chairman, Mr. Gardner's bill addresses this country's need on energy and power. Mr. Gardner's bill prevents the government from going out of its way to stop the private sector from creating jobs. This job alone in the Chukchi Sea will create 54,000 jobs sustained over 50 years. The economic report from Northern Economics and the University of Alaska I will submit for the Record.

And with 1 million barrels per day going to our country's need of about 19 million barrels per day makes us more energy secure. So what we hear from the EPA and the minority is they will do everything they can to stop fossil fuels even though this is a fossil fuel economy. Yes, we need all of the above, but to stop all fossil fuels creates national insecurity, making us more dependent on foreign oil, sending more of our financial resources and jobs overseas; and that's what we need to stop, and that's what this bill takes a large step towards doing.

Now, the EPA has made it impossible for new exploration off the coast of Alaska by continually changing the rules. The EPA has even testified before our committee that there is no anticipated human health risk at issue, and we've still been waiting 6 years and counting for this permit to be issued.

Let's make it clear: Bureaucratic delays are blocking energy development. While the EPA's regional office has granted air permits to allow this deep sea drilling, the process has repeatedly been stalled when the administrator's Environmental Appeals Board rejects the permits already granted. Yes, it gets to Washington; they stop it. And this process repeats itself. We'll have a bill maybe in a couple of weeks where the EPA's done the same thing, where they change the rules to stop a project.

The Federal Government's inability to issue viable permits to drill offshore Alaska is keeping resources and domestic jobs from the American people. The Gardner bill, H.R. 2021, aims to eliminate the uncertainty and confusion that has delayed oil exploration in deep sea Alaskan Outer Continental Shelf, and I hope my colleagues will support this bill.

Economic Report Overview
Potential National-Level Benefits of Oil and Gas Development in the Beaufort Sea and Chukchi Sea

A new study on potential national-level benefits of Alaska Arctic OCS development, by Northern Economics and the University of Alaska Anchorage's Institute of Social and Economic Research, builds on a previous study of potential state-level benefits using the same methodology and assumptions. Both reports are available for download from www.northerneconomics.com.

CREATES SIGNIFICANT ECONOMIC EFFECTS

Development of new oil and gas fields in the Beaufort and Chukchi Seas resulting in production of nearly 10 billion barrels of oil and 15 trillion cubic feet of natural gas over the next 50 years could create significant economic effects nationwide.

54,700 NEW JOBS

An estimated annual average of 54,700 new jobs that would be created by OCS-related development are sustained for 50 years. The total ramps up to 68,600 during production and 91,500 at peak employment. These direct and indirect jobs would be created both in Alaska and the rest of the United States.

$145 BILLION PAYROLL

An estimated $63 billion in payroll would be paid to employees in Alaska as a result of OCS oil and gas development and another $82 billion in payroll would be paid to employees in the rest of the United States. The sustained job creation increases income and further stimulates domestic economic activity.

$193 BILLION GOVERNMENT REVENUE

Federal, state, and local governments would all realize substantial revenue from OCS oil and gas development, with the base case totaling $193 billion:

$167 billion to the federal government

$15 billion to the State of Alaska

$4 billion to local Alaska governments

$7 billion to other state governments

SENSITIVITY CASES ARE ALL HIGHER

The study's base case assumed long-term average prices through the year 2030 of $65 per barrel (bbl) for oil and $6.40 per million Btu (mmBtu) for natural gas. The estimated total government revenue increases if energy prices remain higher in the future.


Total Government Revenue
[Dollars in billions]
Base Case ($65/bbl, $6.40/mmBtu) $193
Case 1 ($80/bbl, $7.80/mmBtu) 214
Case 2 ($100/bbl, $9.80/mmBtu) 263
Case 3 ($120/bbl, $11.80/mmBtu) 312

IMPLICATIONS OF THE STUDY

Critical Infrastructure Protection

The Trans-Alaska Pipeline System (TAPS) delivers approximately 14% of domestic oil production to refineries on the West Coast and has been identified as critical infrastructure for national security. Built at a cost of $8 billion in 1977, TAPS throughput has fallen from 2.1 million barrels per day in 1988 to less than 650,000 barrels per day as North Slope oil fields age. Without additional oil development, the TAPS is anticipated to encounter operating difficulty below about 500,000 barrels per day and shut down when it reaches 200,000 barrels per day. Alaska OCS development can help extend the operating life of this critical infrastructure.

Moreover, Arctic OCS development maximizes the value of Alaska's and the Nation's oil and gas resources. Much of the expected incremental revenue from OCS development for the State of Alaska (55%) comes from enhancement of existing onshore North Slope production, in both volume and value. This results from reduced transportation costs (from infrastructure operating at capacity), and from expanded infrastructure enabling development of small satellite fields. OCS development will also enhance the probability of an Alaska gas pipeline due to increased certainty in the available gas resource base.

U.S. Energy Production and National Security

Domestic energy production is important for the security and prosperity of the United States. The money spent on domestic energy cycles through in the U.S. economy, thereby increasing domestic economic activity and jobs; while money spent on imported energy leaves the U.S. economy.

The majority (77%) of world oil reserves are owned or controlled by national governments; only 23% are accessible for private sector investment. The United States currently imports over 60% of the crude oil we use. Arctic offshore development could cut this by about 9% for a period of 35 years. Increasing domestic energy production would improve the nation's trade balance.

Potential Benefits Delayed

When the first study of state-level economic impacts was written in 2009, first oil was anticipated in 2019 and first gas in 2029 for the Beaufort Sea (2022, 2036 for the Chukchi Sea). This timeline assumed no major regulatory impediments or delays.'' However, exploration has been slowed, thus delaying the potential benefits of OCS oil and gas development.

SOURCES

Northern Economics, Inc. (NEI) and Institute of Social and Economic Research (ISER) Potential National-Level Benefits of Alaska OCS Development.

NEI and ISER. Economic Analysis of Future Offshore Oil and Gas Development: Beaufort Sea, Chukchi Sea, and North Aleutian Basin.

Canadian Association of Petroleum Producers, www.capp.ca.

Shell Exploration and Production. Calculated from TAPS throughput data and EIA Annual Energy Outlook data for domestic oil production.

US Energy Information Administration Annual Energy Outlook 2010.

Minerals Management Service. 2006 Oil and Gas Assessment: Beaufort Sea Planning Area (Alaska) and Chukchi Sea Planning Province Summaries.

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