Lingering unease on Capitol Hill over resumed Iranian oil exports has senators eyeing the upcoming floor debate on energy legislation to target the Obama administration’s regulatory agenda and streamline permitting for infrastructure projects.
Senators on the Energy and Natural Resources Committee yesterday repeatedly pressed witnesses at a hearing on the near-term outlook for energy commodities on the ramifications of last year’s nuclear nonproliferation agreement — which took effect this weekend — on global oil markets already saturated from oversupply.
Responding to a question from Energy Chairwoman Lisa Murkowski (R-Alaska) over estimates that Iran’s production could add 1 million barrels a day, U.S. Energy Information Administration chief Adam Sieminski said his agency estimates that Iranian production could rise from the current level of 2.8 million barrels a day to 3.3 million barrels by the end of the year — a figure that could hit 3.7 million barrels by the end of 2017.
However, Sieminski cautioned that the particular types of crude Iran is producing, growth in China’s economy and the interplay of other major Middle Eastern oil producers are among the factors that will affect Tehran’s market reach.
"So I think we’re back to that observation that says that the uncertainty in crude oil prices as we look out over the next year or two is very high," he said.
Sen. John Hoeven (R-N.D.), whose home state’s economy has boomed as a result of the fracking bonanza but is already feeling the effects of oversupply — which dragged the price of West Texas Intermediate to just over $28 a barrel yesterday — asked the witnesses for policy prescriptions to consider in the upcoming floor debate over the panel’s bipartisan energy bill (S. 2012), which could come up this week (E&ENews PM, Jan. 19).
"What type of revisions should we advance to help our industry compete?" Hoeven asked.
Sieminski initially was reluctant to make policy recommendations but lauded the lifting of the oil export ban during last year’s end-of-year omnibus tax deal.
However, he later asked for a "do-over" on Hoeven’s question.
"I think that if you were looking to, say, what can you do to enhance U.S. energy production in the oil area, maybe even in a few of the other areas, that the issues of infrastructure are really important," he said.
From the exchange and others during the hearing, Hoeven later said he was convinced that curbing regulations and expediting infrastructure development were two areas ripe for amendments during the Senate floor debate.
"We’ll have those types of amendments that go toward reducing the regulatory burden and improving the energy infrastructure, because both of those can help our energy industry compete," he told E&E Daily last night.
Specifically, Hoeven said legislation targeting U.S. EPA’s recent coal ash disposal rules, as well as a bipartisan bill he authored with Sen. Joe Donnelly (D-Ind.) that would overhaul the permitting process for energy infrastructure projects within North America, is a prime candidate for amendments to the committee’s bill.
Speaking with reporters after the hearing, Murkowski said she expects a slew of amendments to be filed to the package.
"The energy space invites a lot of different views and perspectives, so we would anticipate that regardless of where we are with oil prices, or where we are with the Iran implementation deal, that we would see a fair number of amendments," she said.
Murkowski noted that there are provisions in the committee bill that address infrastructure permitting, adding that administration policies limiting energy production and transportation are another drag on U.S. oil and gas producers already struggling with low prices.
"I think we clearly know that there are some things that we can do that allow us to not only help our economy and the jobs associated with energy, but to be more competitive globally, and that’s how we access these resources, so if you have policies that are putting them off-limits, you’re hindering your own competitive opportunity there," she said.
However, Murkowski noted that she does not support making changes to the Jones Act, which requires all goods to move within the United States on vessels owned and mostly crewed by Americans. Critics of the 1920s era law charge that it’s protectionist and adds unnecessary transportation costs; supporters call it essential to having a strong domestic shipping sector.
"I’m not a proponent of making changes to the Jones Act, but I know for others, it’s something that they would like to bring up," she said. "We’ll see if that’s an issue when we take up" the energy bill.
Murkowski also said she’s more focused on boosting U.S. producers’ ability to compete over the longer term than in searching for short-term fixes to low oil prices.
"We’re dealing with price right here today," she said. "Clearly there is an oversupply in the market. But I think what American producers can look to is longer-term. We have an opportunity for additional advantage in a broader market. We don’t want to get too caught up in ‘What is the price of oil today?’"
Sen. Maria Cantwell (D-Wash.), the ranking member on Energy, said the Senate could turn to the energy bill later today, depending on whether or not cloture is invoked this afternoon on a House-passed bill (H.R. 4038) that would impose new screening requirements on Iraqi and Syrian refugees.
Asked if she was concerned about the floor debate turning into a free-for-all as past energy discussions have, she noted that President Obama had threatened to veto the House companion to the Senate’s package.
"When we get to the floor, we’re going to have to navigate through a lot," Cantwell told reporters last night. "Do you want a bill that will be signed by the president, or do you want a bill that passed out of the Senate? If they went down that path, you would probably have the same response."
While noting that decisions on the floor process are up to Majority Leader Mitch McConnell (R-Ky.), she said she anticipates some sort of agreement to manage amendments.
"No one ever says, ‘Here’s your floor time,’ and gives you as much time as you need, so I’m sure they would try to set limits to do that here," Cantwell said.