Alaska Gov. Murkowski discusses ANWR prospects, status of natural gas pipeline

Alaska Gov. Frank Murkowski (R) has been the most visible proponent of opening ANWR to drilling for oil. In this edition of OnPoint, he answers a range of questions on this and other matters, including: Can the ANWR coastal plain be opened to exploration without significant environmental disruption? Are the major oil companies interested in exploration there? What's the status of the bids to build a trans-Alaska natural gas pipeline?


Mary O'Driscoll: Welcome to OnPoint. I'm Mary O'Driscoll. High oil and natural gas prices have focused the nation's attention on the resources under the Arctic National Wildlife Refuge and the Alaskan North Slope. Our guest today is Governor Frank Murkowski of Alaska to discuss these issues with us. Also joining us is my colleague Ben Geman of E&E Daily and Greenwire. Governor, thank you so much for joining us today.

Gov. Frank Murkowski: Happy to be with you, Mary.

Mary O'Driscoll: ANWR, is it really going to happen this year?

Gov. Frank Murkowski: I think the prospects are very encouraging. Obviously, there's more and more attention given to the fact that the OPEC nations have come out and put more emphasis on recognition, we'll probably have higher oil prices. As a matter of fact, the minister came out the other day and said the threshold now for the balance of 2005 is a price range of $40-$50 and that focuses more on the national security of our nation, whether we want to continue to put so much identification into the Mideast as opposed to trying to relieve that and send a strong signal. I think that's most important, that we mean business about conservation. We mean business about more production, more access here in the United States where we can clearly do it safely.

Ben Geman: Is the, the Bush administration supports opening up the coastal plain of ANWR of course, but there's a huge amount of focus right now in Social Security and several other issues, are they spending enough political capital to get ANWR open or is it all being sucked up by these other things?

Gov. Frank Murkowski: Oh I think there's recognition, Ben, that we've got to have an energy bill in this country. We've got to have concentration on alternative energies and on the mix. Social Security is important, it's a priority, whether Medicaid is certainly another priority, but so is energy and for this administration they're working on it for a long time. With control of the House and Senate and a couple more senators, I think the prospects are very encouraging at this time. Another thing a lot of people forget, you know, if there's not an abundance of oil within the ANWR area, it's not going to be developed.

Mary O'Driscoll: Well, I'd like to know along those lines, there's a school of thought that a successful vote to open up ANWR will be more a kick in the teeth to the environmental movement than something that will actually support drilling in ANWR. You've got, a lot of the oil majors have not really expressed much interest in drilling up there at this point. Do you agree with that?

Gov. Frank Murkowski: Well, I think some of them want to have it both ways. You know, they want to appear that well, they're neutral on it, but if it's opened I can assure you they will be there participating in bidding for leases in the area because they're very competitive as you know. What a lot of people forget is that the time frame of production in ANWR is much shorter because we got a pipeline over to Badami, which is about halfway there. Now that's not one that could take a great deal of production, but it could initiate production in a relatively short period of time. So we're looking at a lesser time frame, but the most important thing is to send the signal that we're going to develop our own resources and as I indicated, there's no reason to suggest we can't do it safely.

Mary O'Driscoll: You've been fighting this for a long time, is there any indication that, suppose you lose the vote in the Senate this year where everything seems to be kind of, all the attention seems to be concentrated in the Senate. If you lose this year, do you live to fight another day or do you just abandon it?

Gov. Frank Murkowski: Well, no, no, I think, you know, the state has sovereign ownership of our three-mile limit. So that coastal area off ANWR is under the control of the state of Alaska. So we could initiate a drilling exploration program offshore, but we'd much rather proceed within the area on land. It's much easier. It has less engineering challenges, but you know there are other alternatives.

Ben Geman: You know a big player on that, on doing onshore development over the next few weeks, is going to be Senator Judd Gregg, the chairman of the budget committee.

Gov. Frank Murkowski: Um-hmm.

Ben Geman: He has not said whether or not he supports opening up ANWR through the budget. Have you discussed this with Senator Gregg?

Gov. Frank Murkowski: Well, I've not discussed this particular procedure through budget reconciliation, but I'm not going to speak for Judd on this issue. He's made his position, previously, quite clear.

Ben Geman: Position in support of developing the refuge?

Gov. Frank Murkowski: You can ask him if that's his current position. That was his former position.

Ben Geman: OK.

Gov. Frank Murkowski: Having been in the Senate 22 years, positions change from time to time and I don't want to characterize anybody's position, but you should ask him. The whole point is, you know, this is an opportune time from the standpoint of control of the House and the Senate and the recognition of our energy dependency ... a lot of people forget that what's happening here is just the reality that the world is using more oil because of the developing countries. Certainly India, India now is supposed to surpass the population of China in about 30-40 years. That's pretty traumatic in our view. The Chinese are getting off those black bicycles and getting in automobiles. We don't have another method of moving people or moving goods, whether it be ships, airplanes, boats, cars, trucks, you name it. It's too bad we don't, but realism dictates we are doing a better job of conservation. We can do better, but we're still going to use more oil and the question is where do we get it?

Ben Geman: You spoke to the, earlier this week, to the or at the National Governors Association winter meeting and in discussing some of these energy policy issues you mentioned that you're going to do some "tail twisting" on the major oil companies, on their participation in lobbying to open up the refuge. I mean, you say if there's leasing they'll be there, are they doing enough to get it open though?

Gov. Frank Murkowski: Well, you know, that's in the eyes of the beholder. They're in the business of producing oil safely from areas that are most likely to have major reserves of oil. The geologists have simply identified ANWR as the most promising area in North America because of the structures and the geology. We don't know, however, there was one well drilled. I understand you're going to be going up there. That was what they call a tight hole. The results of it have not been made public. The state of Alaska has the logs. We keep that confidential and the participants in that hole were Chevron and British Petroleum. That's the so-called kickback well. Whatever they got out of there was geology that has identified structures and so forth. So other than that, we really don't know and the technology we had then was what we call 2-D seismic, which was much less sophisticated than what we have now in the 3-D.

Ben Geman: You know it's interesting that you bring up the technology question. Sort of another piece of that is how, whether the exploration and production, if ANWR's opened, would be very high impact or very low impact. Most people say it would be pretty low impact. People talk about 2,000 acres disturbed, but, you know, that doesn't take into account the roads or the tanks. I mean can this really be done in a way that protects the refuge?

Gov. Frank Murkowski: Well, first of all, you have to grasp the magnitude and I think you'll have that opportunity when you go up, because this area's big. It's 19 million acres, the size of the state of South Carolina. We set aside, out of those 19 million acres, 8-and-a-half-million acres in wilderness, 9 million acres that are in a refuge, leaving a million and a half acres that only Congress can open. Now that's the argument we're in. Now the House bill said 2,000 acres. Well, 2,000 acres isn't much bigger than a farm. People say, well, there's going to be industrialization. That is a very harsh environment. There's unlikely to be any resident population. The only resident population really, in the area, is a small village of Kaktovik and the Eskimo people there live a subsistence lifestyle. So if there's, the footprint is going to be a transient footprint. Workers will come and go, there'll be a high degree of automation because of the high costs associated with putting a concentration of people in that area and as a consequence to suggest you're going to have an industrialized area is really unrealistic, in my opinion. Evidence of that is some of the development we've had in Prudhoe Bay. You know, Prudhoe Bay is 30-year-old technology. It's still the best oil field in the world. You might not like oil fields, but nevertheless they're the best in the world. We can do a lot better. We did Endicott and the footprint was 56 acres. It came in as, at that time, the 10th largest producing field in North America at 100,000 barrels a day. It's about the seventh largest today. So we've come a long way and we directionally drill now. So we can drill from one hole in many, many areas, so that reduces the footprint. When you go up there be sure and look at the pick ups because you're going to see diapers under the pick ups. The sensitivity about even oil dripping from an oil pan of a pick up is addressed. There is a footprint, but nevertheless there's a great deal of environmental awareness and I think an awful lot of the world could learn from the environmental sensitivity associated with oil development in Alaska.

Mary O'Driscoll: I want to change the subject a little bit --

Gov. Frank Murkowski: Sure.

Mary O'Driscoll: To the natural gas pipeline that was approved by Congress last year. The process is about to start for bidding on capacity on the pipeline project. What is Alaska's interest in getting this project done as quickly as possible?

Gov. Frank Murkowski: Well, obviously, the gas is in Alaska. We would get royalties and severance taxes from the development of that. So we have that motivation, on the other hand, with the increased price of natural gas that project is now economically viable. Previously, when gas was less than two dollars, it wasn't. What we've got is a huge reserve. We found about 37 trillion cubic feet of gas while exploring for oil in the Prudhoe Bay area. We didn't know what to do with it. We injected it back into the well. The other day USGS came out with a forecast of another 120 trillion cubic feet around the area. Then USGS identified some re-evaluation off, 70 miles offshore in the Beaufort Sea of another 14 trillion cubic feet, from one hole. So the indications are there is a huge amount of natural gas. The wealth in North America is becoming identified with the Arctic. Well, there's only two areas with Arctic in it and one is Canada and the other is Alaska. So that's just what Mother Nature did.

Ben Geman: What is the, to get that pipeline built, what is the state of play with your work with the state Legislature on the state's role in the pipeline?

Gov. Frank Murkowski: Well, what we have is we have two applications currently that we're processing. One is from the producers that have and hold the gas leases, Exxon, BP, ConocoPhillips. The other application is from an organization called TransCanada that has a federal pipeline right-of-way permit and they are going to the state of Alaska and asking for a pipeline permit. So we have two somewhat competitive proposals, and we are going through the negotiation on fiscal certainty and other negotiations that we will be submitting to our Legislature this session, a proposal, and they can accept it or reject it, they can't amend it.

Mary O'Driscoll: OK. I wanted to change the subject again now to Congress and the energy bill. You're a former member of the Senate Energy and Natural Resources Committee --

Gov. Frank Murkowski: And chairman.

Mary O'Driscoll: Former chairman, can we --

Gov. Frank Murkowski: Yup, been there a long time.

Mary O'Driscoll: Are they going to get an energy bill done this year do you think?

Gov. Frank Murkowski: There's absolutely no excuse for not getting an energy bill done. I think there's more and more awareness of it, but I've said that before too.

Mary O'Driscoll: Right.

Gov. Frank Murkowski: The time is certainly right. I mean, good heavens, the mix, we need new transmission lines, we need to have the assurance that we're going to have adequate natural gas in this country, we need to concentrate more on renewables and alternatives. You're gonna need them all and the mix is an appropriate responsibility for Congress to dictate and regulate.

Mary O'Driscoll: Well you were around in 1992, the last time Congress passed an energy bill, the Energy Policy Act of 1992 and then you were chairman of the committee during the first two years of the Bush administration. Why is it taking so long to pass an energy bill this time? What's the difference between 1992 and now?

Gov. Frank Murkowski: Well, the difference between then and now is the, we've gone through the calamity associated with Enron and what happened with the natural gas and power aspects associated with the West Coast, California, San Diego. You know, we've gone through that mess. So it's become more and more acute that we need this. The difficulty is trying to bring together all the parties. The utility companies have a significant role. Renewables have a significant role. The nuclear is always an issue of whether or not we're going to turn to that for partial relief. Then pretty soon there's other extended issues that are thrown into the, you lose sight of what your objective is and that's a tight policy for this country on how we're going to balance our energy mix.

Mary O'Driscoll: Well then, why is that so different between 1992 and now? As I recall back in '92 there was still a lot of different elements going into the bill at that time and it was still a struggle, but they were able to get it done in the span of two years. This has been going on four years now and they really, they just seem to be running in place. I mean, is the atmosphere different? Are the politics different? Has it gone from being a regional energy, historically it's been, is it a regional basis or what?

Gov. Frank Murkowski: Well, let's take it piece by piece. If you want to take the ANWR issue, we had ANWR --

Mary O'Driscoll: Right.

Gov. Frank Murkowski: And President Clinton vetoed it. We would be there in production now or we would know that there's nothing there, so it was academic. These are the kind of things that have constantly either delayed or kind of misplaced the objective and most people say yeah, we should have an energy bill, but the devil's in the details. When you get into the committee and you start listening to special interest groups and how they mix somebody wants a mandate on a certain percentage of renewables or alternatives and somebody else says no and you've got, you know, ethanol, which is, but its corn and we subsidize it and how much are we going to subsidize it. It's just one of those issues that everybody's got an interest in. Of course the farmers have a big constituency. We've got a lot of farm states and it's certainly beneficial to agriculture.

Ben Geman: Picking up on the theme of all the different interests at play here, I mean, what is the role of lobbyists? Has it grown so much and are they so embedded in this process that they're actually bringing the whole thing to a crashing halt? Are there too many competing lobbying interests involved?

Gov. Frank Murkowski: Well, as always, you know, in our society the structure is input and the contribution of the lobbyists is significant in expressing the views of their particular constituents and their points of view, on the other hand, they clash with somebody else's. So how you address a compromise on a give-and-take is what the Democratic process is all about. You remember the old saying, you don't want to watch it because it looks like sausage, but once in awhile it tastes all right. You know, this is just one of those issues that we have not been able to resolve, so we simply put it off until the situation has gotten worse. We've had a war with Saddam Hussein. We've gotten evidence that much of terrorism is financed by the oil sales associated with some of our friends in the Mideast that are a little questionable on their ethics. So where do you go?

Mary O'Driscoll: Well, you're up for re-election in 2006. Are you going to run again?

Gov. Frank Murkowski: I haven't made a decision on that, it's too early. We've got a legislative session to get through and that doesn't end until the end of April.

Mary O'Driscoll: Which is better, quickly, Washington or Juneau?

Gov. Frank Murkowski: You can get things done as governor. It takes, as we've discussed, a long time to get things done in Washington as evidenced by the energy bill. What we're doing in Alaska is we're concentrating on building the economy because we are a resource-rich state. Our oil and gas and timber, fish, minerals, tourism, but our economy is rather delicate because we've not developed and, of course, the other states developed a hundred years ago, maybe 200 years ago. So that's my contribution, if you will, to try and build a strong economy so we can have quality education, quality health care and jobs for our young people.

Mary O'Driscoll: Right. Well, we're going to have to end it on that note. I'd like to thank our guest Frank Murkowski, governor of the state of Alaska and my colleague Ben Geman of E&E Daily and Greenwire. I'm Mary O'Driscoll we'll see you next time on another addition of OnPoint.

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