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Gulf of Mexico Energy Security Act of 2006--Motion to Proceed--Continued

Location: Washington, DC

GULF OF MEXICO ENERGY SECURITY ACT OF 2006--MOTION TO PROCEED--Continued -- (Senate - July 26, 2006)


Ms. MURKOWSKI. Thank you, Mr. President.

Mr. President, I rise to speak to the legislation before us, the OCS lease sale 181. I know there have been colleagues before me this afternoon who have spoken to the need for additional oil and gas reserves and resources in this country. The fact is, this Nation badly needs to accelerate its efforts to obtain more natural gas and more oil and doing it domestically.

We have heard the comments that we are addicted to oil, that we need to be looking to renewables, and I do not dispute or doubt that for one moment. We absolutely do. We need to be conserving more. We need to be focused more on renewables and alternatives. That is the next generation. But our reality is we are here and now with a reliance on fossilized fuels. We need to transition out of that to that next generation of fuels. But until we do so, we are in an extremely vulnerable spot, particularly with our oil and our nearly 60 percent dependency on foreign sources and with our natural gas and recognizing the trends in terms of our supply and the demand picture for natural gas.

In the past 5 years, the price of natural gas in this country has more than tripled, rising sevenfold after last summer's hurricanes. We all know the prices at the gasoline pump. There is not a day goes by where there is not some exchange about what somebody was paying somewhere for a gallon of gas at one location or another. And I can tell you, prices in my State--when you get out into the rural communities and you look at paying $4.50 for a gallon of gasoline, I can tell you, the hurt is real. The tripling of natural gas prices has had, of course, a very severe impact. And it is not just on those who heat their homes with natural gas. Manufacturing jobs--we have heard this today--manufacturing jobs have fallen by 3.1 million jobs, 18 percent in the past 6 years.

We talk to those in the petrochemical and chemical industry. Jobs in that industry are being forced to move overseas. We have had over 20 fertilizer plants in this country close. And as has been mentioned already on this floor, America's annual natural gas bill has risen to more than $200 billion a year. This is up from $50 billion, and that was just 6 years ago.

While natural gas prices today, following a warm winter, are temporarily below $6 per 1,000 cubic feet, we know the hurricane season is coming upon us in the gulf, we have global political disruptions, and we could have continued hot summer weather, and that we can anticipate a cold winter, and that any one of these--and certainly a combination of them--could promptly send our natural gas prices skyrocketing again.

I cannot speak to the issue of natural gas without mentioning the opportunity we have in Alaska for incredible quantities of natural gas coming down from Alaska's North Slope. And while we await the construction of a pipeline that can deliver this needed commodity from the North Slope into the lower 48, we have to recognize one of the best ways we can bring down prices that will increase the domestic supplies of gas is to produce more gas from the gulf coast, where the existing infrastructure is in place, and to figure out a way to get that gas to market quickly.

Mr. President, we cannot fool ourselves and say we can just snap our fingers and the price of natural gas is going to go down, we are going to have a ready and available supply just because we pass legislation. We recognize it is a period of time in coming. But what can be sent is the signal to the market that that supply of natural gas is on its way in an expedited manner.

The best way--the best way--to produce more gas quickly, to get it on more quickly, is to open parts of the eastern Gulf of Mexico. This proposal before us is to finally allow OCS development in part of formally proposed lease sale 181 off the Florida, Alabama, and Mississippi coasts and to open acreage south of that sale--some 8.3 million acres in all that have been previously closed in moratoria. In return for speeding such leasing, this bill prevents development within 125 miles of the Florida Peninsula, swaps out existing leases within that buffer, and prevents leasing east of the Military Mission Line to protect the military training facilities, at least until the year 2022.

This proposal, this legislation that we have in front of us, is a reasonable compromise. It was one that was attempted but not completed during the debate last year over the Energy Policy Act of 2005. So what we have in front of us today is an outgrowth of that bill.

In the Energy Policy Act, we allocated billions of dollars to foster energy conservation and greater energy efficiency. We moved toward and we pushed renewable energy development, such as wind, solar, and biomass. We funded new technology to further coal while working to help sequester the carbon. There was a push made on the front of a new generation of nuclear power. We funded hydrogen fuel-cell vehicle development and new transportation and building technology. There were good things contained within that Energy bill. But what was not contained in that legislation--or since that legislation was passed--was an increase in domestic production of fossil fuel.

This legislation will balance last year's Energy bill by actually letting us get up to 5.8 trillion cubic feet of natural gas flowing to the market and, again, flowing to the market in a more expedited manner than might otherwise be seen.

There have been those who have stood on the floor today speaking about the various protections contained in this legislation. There is a protection of Florida's tourism and military bases. It doesn't jeopardize the fisheries. When we look to what happened last year when these massive hurricanes came through the gulf, while there were a few minor spills following those hurricanes, there were no well failures or major pipeline breaks from the record intensity of the hurricanes. So we look to the development that is out there in the OCS area and can really point to environmental integrity.

The proposal before us gives the States of Alabama, Mississippi, Louisiana, and Texas reasonable revenues to offset the impacts of OCS development off of their coasts, particularly, again, in view of what they suffered after Hurricanes Rita and Katrina. It allows the Federal Government to keep 50 percent of the revenues in the Federal Treasury. This is the exact same percentage that it gets from oil and gas development onshore, whether the onshore development is in New Mexico or California or Oklahoma. It gives the coastal States 37.5 percent to offset their cost as being the host for that offshore development. It also shares 12.5 percent of such revenues with all the States for park and habitat improvements through contributions to the stateside Land and Water Conservation Fund. This is an effort to help alleviate the truly chronic underfunding of the Land and Water Conservation Fund without affecting land ownership and private property rights. This money would generally go toward building ballfields, neighborhood parks, recreational opportunities, not buy up the private land or to harm private property rights.

As I have reviewed this legislation and have worked with the sponsors, I do need to certainly give credit to the chairman of the Energy Committee, Mr. Domenici, for his efforts in bringing this matter to where we are today, and also to my colleague from Florida, Senator Martinez, who has been working with the chairman to craft legislation that he believes will work for the people of Florida, and certainly to my colleague and friend from Louisiana, who has been working for years to achieve a level of revenue sharing for her State, a battle we know has been waged for many years. That is what I would like to speak to right now.

My only major disappointment with this measure is that it doesn't provide revenue sharing to all the States that choose to allow OCS development off of their coasts. The question has to be asked, why not? Why would you not include all of those States which have made the choice to allow for that development off of their coasts? If they are going to allow for it, why would they not be eligible or able to take advantage of Federal revenue sharing as well? I don't believe there is a rational explanation for not including all the States.

We have heard some of the arguments--that the Federal Government should share revenues with the States only in those waters from 3 to 12 miles offshore where Federal production might drain onshore or State hydrocarbon reservoirs. Again, the question has to be asked: Why is that? For the past three decades, the Federal Government has shared revenues from onshore development with all States. The only possible excuse for not extending that policy to the offshore would be if the coastal States bore no impacts from offshore development. But that would imply that somehow or other the development offshore kind of sprouts magically from nowhere without any onshore activity. We know that is not the case.

I had the opportunity to go to Port Fourchon, LA, which is the jumping-off place for the offshore activity. It is a beehive of activity through there--airports and helicopter pads, all the services that have to come in, whether it is the food or the people moving back and forth, to support that offshore activity. We know that offshore activity just doesn't magically happen without some onshore impact. I know my friend from Louisiana has spoken quite eloquently to the impacts of OCS development in their waters. I will let her and others from the Gulf States speak to that impact.

I wish to talk about the impact of OCS development on my State of Alaska. In Alaska, we have been seeking some sort of Federal revenue sharing to offset the cost of OCS development along our 34,000 miles of shoreline for nearly two decades. For budget reasons, we lost out in the 1991-1992 Energy bill. We lost it again in 1995 with the Conservation and Recovery Act, CARA. It was proposed and debated. It ran into other political hurdles. And we lost again last year in the Energy bill. That was partially because you had certain landlocked States that didn't want to see current Federal revenues go to just the coastal States. But you have to stop and think, if there is not some fair form of revenue sharing to offset the impact costs, why should the coastal States allow OCS production, particularly given the recent ease of obtaining the moratorium to prevent them? And without such production, where are we going to be as a country? Americans will be paying even more when they fill up their cars, their trucks, cook their food, heat their homes. That is reality. That is the consequence.

In Alaska, we currently have OCS production from just one field. This is the Northstar field in the Beaufort Sea. It produced 22.4 million barrels of oil last year. Since it was within 12 miles of the shore, Alaska received $10.8 million in revenue sharing. If that field had been more than 12 miles from the shore, Alaska would have received nothing. There is actually a little bit of an exception to that because last year in the Energy Policy Act, there was a very small amount of aid that was directed to the State for 4 years to assist with the impact onshore of the offshore development.

Previously, Senator Bingaman made a point. I believe he was correct when he said that Alaska contains nearly a dozen OCS bases off of our coast, all but one of them--this is the North Aleutian Shelf, down near Alaska's Bristol Bay--being open to leasing. The North Aleutian Shelf is closed by Presidential moratorium. But when we look at Alaska's Outer Continental Shelf, we are looking at the potential of 26.6 billion barrels of oil and 132 trillion cubic feet of natural gas. This is according to the mean estimates. That production would more than double the Nation's known reserves of oil and nearly equal the amount of gas likely along the coasts of the rest of the Nation. But to accommodate OCS development and any proposed future OCS development in the Beaufort and Chukchi Seas--we have other potential areas, in Cook Inlet, the State governmental units--the State of Alaska, the North Slope Borough, local governments have to spend millions of dollars on hosts of services to protect, to regulate, to inspect, and to support the OCS development.

For instance, the State of Alaska's Department of Environmental Conservation spends more than half a million dollars a year to inspect and monitor oil and gas operations. This is just in northern Alaska. The State's Department of Transportation and Public Facilities spends nearly $10 million each year to keep the Dalton Highway going up to the North Slope open so that we can move oil and gas equipment and our supplies north. This also helps to maintain the Deadhorse Airport.

The North Slope Borough spends nearly $1 million for search-and-rescue capabilities. This is not counting the cost to the Alaska State troopers if they have to mobilize to assist oil workers who might perhaps get in trouble. The State of Alaska spends money on coastal zone planning to understand the impacts of OCS development. The State also spends millions of dollars on new infrastructure to handle the arrival and the movement of employees and materials that are needed to support the oil industry offshore.

Last week in Fairbanks, the State broke ground on a $90 million expansion of the Fairbanks International Airport terminal. This expansion is partially needed to accommodate the oil workers who may be jumping off for OCS work. Last year down in Anchorage, the State finished work on a 440,000-square-foot terminal expansion at the airport there, costing well over $100 million. So our airports are clearly impacted by the effects on the industry.

As things are happening, we see the impact within our communities. The local governments, smaller communities from Barrow to Kotzebue, Kenai to Dillingham, and Kodiak to Sitka, are all spending money to prepare for the possible development of the State's coast. The point is to recognize that there are very real costs to offshore development that are borne by the States that serve as service and support bases for the development.

It is true that States sometimes recoup part of the costs through income taxes on workers or through property taxes on businesses that will support the facilities onshore. They may gain a small stipend from Federal coastal zone planning funds. But when you look at how much is gained, it is fair to say that the recovery has seldom covered their costs.

So the question would be to the State: Why would you even welcome OCS development off of your coast? This is where you need to take the bigger picture. Our energy security, reliability, the whole issue surrounding the vulnerability we have as a nation because of our reliance on others for our energy sources, this is why it is essential that we as a nation figure out a way to produce more oil and gas domestically. Sharing oil and gas revenues with States in a fair manner will ensure that energy can get to market. It is that fact which is probably the difficulty with this legislation in terms of passage of a fair revenue-sharing system. That may be because we have some around here who would want to discourage States from allowing any OCS development, perhaps out of environmental concerns, perhaps displaced environmental concerns. But denying coastal States needed revenues is one way to discourage greater offshore oil and gas production.

Last week, Senator Stevens and I sought to ensure that any revenue sharing proposed in this bill would apply also to Alaska or to any State that allows OCS development off of its shores. We were told at that time that if that provision stays in, it would be a death sentence for this bill.

I have been asked many times in the past few days have I changed my position on this legislation, have I changed my position in support of opening lease sale 181 to exploration and development. I have not. I have not changed that. I remain committed to a sound policy, which I believe this is, that allows for the opening of lease sale 181.

I can appreciate why it was tailored so that revenue from the gulf would only be shared among the Gulf States. I can appreciate where they are coming from. I can appreciate the narrow scope of the Senate version and the delicate negotiation that went into it. But from a matter of equity, from a matter of fairness, for those States that are willing to open their coasts, their States, to allow for the development offshore, it is only right that allowing all the States who have OCS development off their shores to share in some form of revenue.

By structuring the revenue sharing that we have before us in this legislation in this manner, Alaska is the only currently producing OCS State that allows new development that would not receive any aid. It was suggested last week that, well, Alaska is asking for a special deal. That is absolutely not the case. We are asking to be treated the same as any other currently producing State when it comes to revenuesharing. So to those of you who suggested this was something special for Alaska, it was absolutely not. It was equitable for all those States that are currently producing. So by excluding Alaska, we are the only State that is disenfranchised when it comes to the Federal revenue sharing right now.

I have had an opportunity to go down and observe for myself--so I have seen with my own eyes--what is happening in Louisiana, in the gulf, with the erosion. As I was presiding earlier, I was reminded again by the minority leader that Louisiana loses three football fields of land a day. But we also, in the State of Alaska, face serious erosion challenges. We have some 80 villages that are facing coastal erosion problems. I use the word ``problems'' lightly, because in some of the communities it is an absolute crisis; the villages are dropping into the ocean. We may not be hit by the hurricane forces we see in the gulf that are given names and much publicity through the media, but many parts of coastal Alaska are hit by storms that meet the definition of hurricanes. There are winds exceeding 75 miles an hour, waves and storm surges that can equal those of the hurricanes. The big difference is they are not named as hurricanes. We don't get that attention or that focus. Money from OCS development could help pay for mitigation efforts and perhaps, in some cases, pay for village relocation costs. So Alaska is not unlike the other Gulf States--Louisiana, Mississippi, Alabama, and Texas--for coastal mitigation and habitat protection.

I am sure we will have an opportunity on this floor to discuss a lot more about the coastal erosion problems in Alaska in the future. I do feel strongly that we need to pass a bill to speed oil and natural gas leasing in the Gulf of Mexico. It will provide natural gas for our Nation, while helping the Gulf Coast States gain the revenues they need not just to recover from the hurricanes but to deal with the coastal erosion and wetlands habitat loss issues they face.

I believe the formula for such aid should cover all States that allow OCS development off their coasts, while providing other aid to all States that need it.

I tell my colleagues that, regardless of the outcome of the bill--and I intend to support the measure--I will continue to seek to provide aid to all of the coastal States that allow OCS development, especially since all other States gain an equal sharing of revenues from energy development on-shore. It truly is the only equitable thing to do.

With that, I yield the floor and suggest the absence of a quorum.

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