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Senate Committee Approves ANWR Drilling Proposal

After more than three hours of debate, lawmakers on the Senate Energy and Natural Resources Committee voted 13-10 in favor of a proposal to open a portion of the Arctic National Wildlife Refuge (ANWR) to oil and gas development.

Sen. Joe Manchin (D-WV) crossed party lines to support reconciliation legislation attached to a $4 trillion federal budget bill for fiscal year (FY) 2018. The legislation includes language to open 2,000 acres of the 1.5-million acre coastal plain portion of ANWR, a region also known as the 1002 Area, to energy development. ANWR covers 19 million acres in total.

Democrats, led by ranking member Sen. Maria Cantwell (D-WA), attempted to add eight amendments to the legislation, but they were thwarted by Republicans and the committee's chairman, Sen. Lisa Murkowski (R-AK). One amendment submitted by Sens. Bill Cassidy (R-LA) and Luther Strange (R-AL) was agreed to.

During the debate, Cantwell said she was concerned that the legislation would dramatically change management practices by federal agencies, including the Department of Interior's (DOI) Bureau of Land Management and the Fish and Wildlife Service. She argued that oil and gas development could take primacy over protection of wildlife, including caribou and polar bears. 

"You are confusing the purpose of a [wildlife] refuge by saying the purpose of the refuge is for oil development," Cantwell said. "It makes it nearly impossible for the wildlife consideration to win under this language...

"You're changing the standard of these agencies, and by doing so you're going to change the management. You guys have been very clever -- maybe not purposefully so, maybe you really believe this -- but I'm telling you this is what the intent is going to be. The challenge that we face is that we think that it's a critical habitat that should be protected, and that it is not consistent with oil and gas development."

But Murkowski countered "we're not waiving any of the environmental laws in this [chairman's] mark. All of the applicable laws, whether it be the [National Environmental Policy Act] or the [Endangered Species Act], will apply to the 1002 Area."

The reconciliation calls for repealing the portion of Section 1003 of the Alaska National Interest Lands Conservation Act that bars energy development in the 1002 Area, and directs the DOI secretary to manage an oil and gas leasing program according to the Naval Petroleum Reserves Production Act of 1976.

The proposal further stipulates that DOI conduct the first lease sale within four years after the proposal is enacted, followed by a second lease sale within seven years of enactment. Each lease sale must contain at least 400,000 acres with a high potential for oil and gas assets.

A royalty rate of 16.67% would be imposed for leases from each sale, with 50% of the revenues allocated to the State of Alaska, and the remaining 50% given to the federal government. The Congressional Budget Office estimates the proposal would raise $1.092 billion over a 10-year period.

"A clear majority of the people of the North Slope support responsible development in ANWR," said Rex Rock, CEO of the Arctic Slope Regional Corporation. "They should have the same rights to economic self-determination as people in the rest of the United States. I call on Congress to recognize that Native Alaskans are the best stewards of our lands and open up 1002."

GOMESA, SPR-A Changes

The Cassidy-Strange amendment agreed to by the committee calls for making changes to the Gulf of Mexico Energy Security Act of 2006, also known as GOMESA. It would also affect the Strategic Petroleum Reserve in Alaska (SPR-A).

GOMESA currently has a $500 million annual limit on distributed qualified Outer Continental Shelf revenues from FY2016 through FY2055. Under the amendment, the $500 million limit would remain in place for FY2016-2019 and FY2022-2055, but would be raised to $650 million for FY2020-2021.

The amendment also authorizes the Secretary of the Department of Energy (DOE) to draw down and sell 5 million bbl of crude oil from SPR-A from FY2026-2027, with proceeds to go into the federal treasury. But the amendment also stipulates that the DOE secretary shall not draw down or conduct crude oil sales after the date in which a total of $325 million has been deposited in the treasury.

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