[House Hearing, 113 Congress]
[From the U.S. Government Publishing Office]
H.R. 1964, NATIONAL PETROLEUM RESERVE ALASKA ACCESS ACT; H.R. 1965,
FEDERAL LANDS JOBS AND ENERGY SECURITY ACT; H.R. 1394, PLANNING FOR
AMERICAN ENERGY ACT OF 2013; AND H.R. 555, BLM LIVE INTERNET AUCTIONS
ACT
=======================================================================
LEGISLATIVE HEARING
before the
SUBCOMMITTEE ON ENERGY AND
MINERAL RESOURCES
of the
COMMITTEE ON NATURAL RESOURCES
U.S. HOUSE OF REPRESENTATIVES
ONE HUNDRED THIRTEENTH CONGRESS
FIRST SESSION
__________
Wednesday, May 22, 2013
__________
Serial No. 113-21
__________
Printed for the use of the Committee on Natural Resources
Available via the World Wide Web: http://www.fdsys.gov
or
Committee address: http://naturalresources.house.gov
______
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COMMITTEE ON NATURAL RESOURCES
DOC HASTINGS, WA, Chairman
EDWARD J. MARKEY, MA, Ranking Democratic Member
Don Young, AK Peter A. DeFazio, OR
Louie Gohmert, TX Eni F. H. Faleomavaega, AS
Rob Bishop, UT Frank Pallone, Jr., NJ
Doug Lamborn, CO Grace F. Napolitano, CA
Robert J. Wittman, VA Rush Holt, NJ
Paul C. Broun, GA Raul M. Grijalva, AZ
John Fleming, LA Madeleine Z. Bordallo, GU
Tom McClintock, CA Jim Costa, CA
Glenn Thompson, PA Gregorio Kilili Camacho Sablan,
Cynthia M. Lummis, WY CNMI
Dan Benishek, MI Niki Tsongas, MA
Jeff Duncan, SC Pedro R. Pierluisi, PR
Scott R. Tipton, CO Colleen W. Hanabusa, HI
Paul A. Gosar, AZ Tony Cardenas, CA
Raul R. Labrador, ID Steven A. Horsford, NV
Steve Southerland, II, FL Jared Huffman, CA
Bill Flores, TX Raul Ruiz, CA
Jon Runyan, NJ Carol Shea-Porter, NH
Mark E. Amodei, NV Alan S. Lowenthal, CA
Markwayne Mullin, OK Joe Garcia, FL
Chris Stewart, UT Matt Cartwright, PA
Steve Daines, MT
Kevin Cramer, ND
Doug LaMalfa, CA
Vacancy
Todd Young, Chief of Staff
Lisa Pittman, Chief Legislative Counsel
Jeffrey Duncan, Democratic Staff Director
David Watkins, Democratic Chief Counsel
------
SUBCOMMITTEE ON ENERGY AND MINERAL RESOURCES
DOUG LAMBORN, CO, Chairman
RUSH HOLT, NJ, Ranking Democratic Member
Louie Gohmert, TX Steven A. Horsford, NV
Rob Bishop, UT Matt Cartwright, PA
Robert J. Wittman, VA Jim Costa, CA
Paul C. Broun, GA Niki Tsongas, MA
John Fleming, LA Jared Huffman, CA
Glenn Thompson, PA Alan S. Lowenthal, CA
Cynthia M. Lummis, WY Peter A. DeFazio, OR
Dan Benishek, MI Tony Cardenas, CA
Jeff Duncan, SC Raul M. Grijalva, AZ
Paul A. Gosar, AZ Colleen W. Hanabusa, HI
Bill Flores, TX Joe Garcia, FL
Mark E. Amodei, NV Vacancy
Steve Daines, MT Vacancy
Kevin Cramer, ND Edward J. Markey, MA, ex officio
Doc Hastings, WA, ex officio
------
CONTENTS
----------
Page
Hearing held on Wednesday, May 22, 2013.......................... 1
Statement of Members:
Hastings, Hon. Doc, a Representative in Congress from the
State of Washington........................................ 34
Prepared statement of.................................... 36
Holt, Hon. Rush, a Representative in Congress from the State
of New Jersey.............................................. 4
Prepared statement of.................................... 5
Lamborn, Hon. Doug, a Representative in Congress from the
State of Colorado.......................................... 2
Prepared statement of.................................... 3
Tipton, Hon. Scott R., a Representative in Congress from the
State of Colorado.......................................... 6
Prepared statement on H.R. 1394.......................... 8
Statement of Witnesses:
Britain, William W., President/CEO, EnergyNet.com, Inc....... 55
Prepared statement on H.R. 555........................... 56
Brower, Charlotte E., Mayor, North Slope Borough, Alaska..... 26
Prepared statement on H.R. 1964.......................... 27
Connell, Jamie, Acting Deputy Director, Bureau of Land
Management, U.S. Department of the Interior................ 9
Prepared statement on H.R. 1964, H.R. 1965, H.R. 1394,
and H.R. 555........................................... 11
Ekstrom, Jack R., Vice President, Government and Corporate
Relations, Whiting Petroleum Corporation................... 51
Prepared statement on H.R. 1964, H.R. 1965, H.R. 1394,
and H.R. 555........................................... 52
Glenn, Richard K., Executive Vice-President, Lands and
Natural Resources, Arctic Slope Regional Corporation....... 47
Prepared statement on H.R. 1964.......................... 48
Miller, Deborah S., Teacher, Author, Arctic Explorer, Guide,
Mother, and Founding Board Member, Alaska Wilderness League 61
Prepared statement on H.R. 1964.......................... 62
Spehar, James G., Former Mayor and City Council Member, Grand
Junction, Colorado, Past President, Colorado Municipal
League, Former Mesa County (Colorado) Commissioner......... 68
Prepared statement on H.R. 1965 and H.R. 1394............ 70
Sullivan, Dan, Commissioner, Department of Natural Resources,
State of Alaska............................................ 16
Prepared statement on H.R. 1964.......................... 17
Additional materials submitted for the record:
Bureau of Land Management, U.S. Department of the Interior,
September 13, 2011, Statement for the record,.............. 59
Governor Rolls Out ANWR Exploration Proposal for ANWR 1002
Area, Office of the Governor, State of Alaska.............. 25
Letter Submitted for the Record by The Honorable Doug Lamborn
From The Wilderness Society................................ 78
Letter Submitted for the Record from the Honorable Sean
Parnell, Governor, State of Alaska......................... 24
List of documents retained in the Committee's files.......... 82
LEGISLATIVE HEARING ON H.R. 1964, ``NATIONAL PETROLEUM RESERVE ALASKA
ACCESS ACT''; H.R. 1965, ``FEDERAL LANDS JOBS AND ENERGY SECURITY
ACT''; H.R. 1394, ``PLANNING FOR AMERICAN ENERGY ACT OF 2013''; AND
H.R. 555, ``BLM LIVE INTERNET AUCTIONS ACT''
----------
Wednesday, May 22, 2013
House of Representatives
Subcommittee on Energy and Mineral Resources
Committee on Natural Resources
Washington, D.C.
----------
The Subcommittee met, pursuant to notice, at 10:08 a.m., in
room 1324, Longworth House Office Building, Hon. Doug Lamborn
[Chairman of the Subcommittee] presiding.
Present: Representatives Lamborn, Wittman, Benishek,
Daines, Cramer, Hastings, Holt, Costa, Huffman, and Cardenas.
Also Present: Representative Tipton.
Mr. Lamborn. The Committee will come to order. The Chairman
notes the presence of a quorum, which, under Committee Rule
3(e), is two Members. The Subcommittee on Energy and Mineral
Resources is meeting today to hear testimony on a legislative
hearing on four bills:
H.R. 1964, by Hastings of Washington, the ``National
Petroleum Reserve Alaska Access Act'';
H.R. 1965, introduced by myself, the ``Federal Lands Jobs
and Energy Security Act'';
H.R. 1394, by Representative Tipton of Colorado, ``Planning
for American Energy Act of 2013'';
and H.R. 555, by Johnson of Ohio, ``BLM Live Internet
Auctions Act.''
Under Committee Rule 4(f), opening statements are limited
to the Chairman and Ranking Member. However, I ask unanimous
consent to include any other Members' opening statements in the
hearing record, if submitted to the clerk by close of business
today.
[No response.]
Mr. Lamborn. Hearing no objection, so ordered.
I also ask unanimous consent that Representative Tipton of
Colorado be allowed to participate in today's hearing.
[No response.]
Mr. Lamborn. Hearing no objection?
Dr. Holt. No objection.
Mr. Lamborn. So ordered. I now recognize myself for 5
minutes.
STATEMENT OF THE HON. DOUG LAMBORN, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF COLORADO
Mr. Lamborn. I would like to thank our witnesses for being
here today. Some of you have come a long way and we appreciate
that. Today we are meeting on four bills to expand American
energy production, create American jobs, cut through
bureaucratic red tape, and streamline a regulatory process that
is forcing companies to avoid Federal land for energy
production in search of State and private land more conducive
to energy development.
We will be hearing testimony on these four bills that I
introduced earlier. H.R. 555, the BLM Live Internet Auctions
Act, would bring BLM leasing into the 21st century by amending
the Mineral Leasing Act to allow BLM to conduct lease sales
through the Internet.
H.R. 1964, the National Petroleum Reserve Alaska Access
Act, would open up the NPR-A to oil and natural gas
development, ensure that competitive leasing occurs, and
nullify the Interior Department's integrated activity plan and
Environmental Impact Statement that would close off nearly 50
percent of the reserve, and that virtually denies access to a
conservative estimate of over 2.7 billion barrels of oil.
H.R. 1394, the Planning for American Energy Act of 2013,
would require the Secretary of the Interior to establish an
all-of-the-above 4-year energy production plan to ensure that
the United States uses Federal lands to provide for our energy
needs in the future.
Additionally, we will hear testimony on legislation I have
introduced, H.R. 1965, the Federal Lands Jobs and Energy
Security Act. By focusing on energy permitting and leasing,
this legislation would streamline the onshore permitting
process, provide for onshore leasing certainty, and allow oil
shale development to move forward, unencumbered by changing
regulations and a fluctuating royalty rate.
The Obama Administration has repeatedly claimed it is doing
all they can to facilitate conventional and renewable energy
development. However, their actions show otherwise. The
Administration has repeatedly canceled lease sales, added
additional lease terms and stipulations after a lease has been
issued, and taken months, if not years, to issue APDs. We all
remember one of the first actions of this Administration was to
revoke dozens of leases after they had been fairly awarded and
issued. Further, the Administration has made lease terms for
oil shale development so adverse to development that they have
received a minimal number of bids on the oil shale lease sales
they have held.
While States are issuing APDs within 30 days, or even a
week, the Federal Government takes 270 days to issue an APD.
H.R. 1965 would set firm timelines for this process, and
require lawsuits to be filed in a timely fashion, so energy
projects are not held up indefinitely. It would also direct
resources to field offices so they are able to efficiently
process renewable and conventional energy project permits on
Federal lands. Additionally, this legislation would require the
government to lease at least 25 percent of the acreage
nominated for leasing.
While the Administration claims they are moving forward
with a robust, competitive leasing program, the facts tell us
the opposite. In 2012, in my home State of Colorado, 220,000
acres were identified and proposed for leasing, yet the
Administration chose to lease just about 5,000, or 4 percent of
these lands. In New Mexico, 15,500 out of more than 118,000
areas nominated were released, and in Arizona there has not
been a single lease sale, despite interest in nearly 50,000
acres.
Finally, my legislation would ensure regulatory certainty
to allow oil shale development to progress. In the United
States we are blessed with some of the largest and richest
deposits of oil shale in the entire world. According to the
U.S. Geological Survey, the Western United States may hold more
than 1.5 trillion barrels of oil, 6 times Saudi Arabia's proven
resources. However, this Administration has changed oil shale
lease terms, making them so restrictive that there is little
industry interest in this rich American resources.
The Administration has recently released redrafted
regulations for oil shale development. Yet these restrictive
proposed regulations would continue to lock up American
resources from development, leaving this tremendous potential
resource virtually untouched. Each of the bills we will hear
testimony on will take great steps forward to promote domestic
energy security, economic development, and job creation.
Combined, these bills reduce our dependence on foreign imports,
generate revenue for the American treasury, and allow us to
benefit from our country's amazing resources.
I would like to thank the witnesses for taking the time to
testify for us today, and I look forward to hearing their
testimony.
[The prepared statement of Mr. Lamborn follows:]
Prepared Statement of The Honorable Doug Lamborn, Chairman,
Subcommittee on Energy and Mineral Resources
I'd like to thank our witnesses for being with us today. Today we
are meeting on four bills to expand American energy production, create
American jobs, cut through bureaucratic red tape and streamline a
regulatory process that is forcing companies to avoid Federal land for
energy production in search of State and private land more amenable to
energy development.
We will be hearing witness testimony on four bills. H.R. 555, the
``BLM Live Internet Auctions Act,'' would bring BLM leasing into the
21st century by amending the Mineral Leasing Act to allow BLM to
conduct lease sales through the Internet.
H.R. 1964, the ``National Petroleum Reserve Alaska Access Act''
would open up the NPR-A to oil and natural gas development, ensure
competitive leasing occurs, and nullify the Interior Department's
Integrated Activity Plan and Environmental Impact Statement that would
close off nearly 50 percent of the reserve and virtually denies access
to a conservative estimate of over 2.7 billion barrels of oil.
H.R. 1394, the ``Planning for American Energy Act of 2013'' would
require the Secretary of the Interior to establish an all-of-the above
4-year energy production plan to ensure that the United States uses
Federal lands to provide for our energy needs in the future.
Additionally we will hear testimony on legislation I have
introduced, H.R. 1965, the ``Federal Lands Jobs and Energy Security
Act.'' By focusing on energy permitting and leasing, this legislation
would streamline the onshore permitting process, provide for onshore
leasing certainty, and allow oil shale development to move forward
unencumbered by changing regulations and a fluctuating royalty rate.
The Obama Administration has repeatedly claimed it is doing all
they can to facilitate conventional and renewable energy development.
However their actions show otherwise.
The Administration has repeatedly canceled lease sales, added
additional lease terms and stipulations after a lease has been issued,
and taken months, if not years to issue APDs. We all remember one of
the first actions of this Administration was to revoke dozens of leases
after they had been fairly won and issued. Further, the Administration
has made lease terms for oil shale development so adverse to
development they have received a minimal number of bids on the oil
shale lease sales they have held.
While States are issuing APDs within 30 days, or even a week, the
Federal Government takes 270 days to issue an APD. H.R. 1965 would set
firm timelines for the Government to issue APDs and require lawsuits to
be filed in a timely fashion so energy projects are not held up
indefinitely. It would also direct resources to field offices so they
are able to efficiently process renewable and conventional energy
projects permits on Federal lands.
Additionally, this legislation would require the Government to
lease at least 25 percent of the acreage nominated for leasing. While
the Administration claims they are moving forward with a robust
competitive leasing program, the facts tell us the opposite. In 2012 in
my home State of Colorado, 220,000 acres were identified and proposed
for leasing, yet the Administration chose to lease just over 5,000--or
4 percent of those lands. In New Mexico, 15,500 out of 118,781 acres
nominated were leased, and in Arizona there has not been a single lease
sale, despite interest in nearly 50,000 acres.
Finally, my legislation would ensure regulatory certainty to allow
oil shale development to progress. In the United States we are blessed
with some of the largest, richest deposits of oil shale in the entire
world. According to the U.S. Geological Survey, the Western United
States may hold more than 1.5 trillion barrels of oil--six times Saudi
Arabia's proven resources. However this Administration has changed oil
shale lease terms, making them so restrictive there is little industry
interest in this rich American resource. The Administration has
recently released redrafted regulations for oil shale development, yet
these restrictive proposed regulations would continue to lock up
American resources from development, leaving this tremendous potential
resource virtually untouched.
Each of the bills we will hear testimony on will take great steps
forward to promote domestic energy security, economic development and
job creation. Combined, these bills reduce our dependence on foreign
imports, generate revenue for the American treasury, and allow us to
benefit from our country's resources. I'd like to thank the witnesses
for taking the time to testify for us today and I look forward to
hearing their testimony.
______
Mr. Lamborn. I now recognize the Ranking Member, the
gentleman from New Jersey, Mr. Holt, for his opening statement.
STATEMENT OF THE HON. RUSH HOLT, A REPRESENTATIVE IN CONGRESS
FROM THE STATE OF NEW JERSEY
Dr. Holt. Thank you, Mr. Chairman. The bills we are
considering today have been put forward by the Majority in the
previous Congress, and rejected in that Congress. Now, I have
nothing against persistence. We should continue to try to
legislate for what we think is right.
But these legislations, which are intended to make sure
that the oil and gas companies operate, in the Chairman's
words, ``unencumbered by regulations,'' seem really unnecessary
to see that these companies and interests are unanswerable to
the public and to the regulators operating on behalf of the
public. It is not as though the regulations to ensure that
drilling on public lands is happening safely. It is not as if
those regulations are hurting the oil and gas industry.
In fact, it is a pretty good time to be in the oil and gas
business. The top five oil companies, need I remind the
Committee, made $119 billion in profits last year. We produced
the most oil from Federal lands onshore in a decade last year,
16 percent higher than in the end of the previous
Administration, despite the Majority's claims that this
Administration is somehow hurting things. The industry has
begun drilling more new wells on public lands onshore in the
last 4 years than in the corresponding time in the previous
Administration.
So, I do have to ask why. What is the justification for
doing these things, other than to give the energy interests a
free ride? The Republican bills would elevate speed over
safety, while opening new, huge swaths of new public land. And
the bills would relegate hunting and fishing and recreation and
conservation behind energy production. They do nothing to
ensure that American oil and natural gas benefits the American
consumers, and is not just an export commodity.
Maybe the Majority has been reading too many science
fiction novels. It is sort of like the Land that Time Forgot.
These bills are a relic of a bygone era. It is as if we were
looking at fossilized pieces of legislation that might have
been more relevant at an earlier time. They turn over the
control of leasing on our public lands to the industry, by
requiring leasing to occur on at least 25 percent of whatever
public lands the oil and gas industry nominates each year,
regardless of whether or not drilling would be appropriate. If
you do the math, you will see pretty quickly nearly all public
land could be turned over to the oil industry under such a
requirement.
It would put a barrier to anybody challenging decisions by
essentially imposing a poll tax, or a speech tax. You would
have to put up $5,000 that you wouldn't get back to challenge
an oil or gas leasing decision. This is not the Judiciary
Committee, but it certainly, I think, is worth considering
whether this violates the First Amendment to the Constitution.
Anyway, the provisions are unwise and, I would argue,
unwarranted. Why are we doing this? It is not as if we have to
streamline the process. Sure, we want efficiency. Of course, we
want fairness. But it is not as if the protections that we need
for health and safety and the environment are stifling the
industry.
Now, I should point out we are considering a couple of
other bills today, Mr. Tipton's bill about planning, which, in
concept, is a good idea. I have a lot of problems with the
details of it, but it is certainly worth undertaking the
discussion. And Mr. Johnson's Internet auctions, to me, at
least, makes sense.
So, I think we will have the opportunity for some good
discussion today, and I thank the Chair for setting this up.
[The prepared statement of Dr. Holt follows:]
Prepared Statement of The Honorable Rush Holt, Ranking Member,
Subcommittee on Energy and Mineral Resources
Thank you.
Mr. Chairman, the bills we are considering today have already been
put forward by the Majority in the last Congress and rejected by the
Senate. These bills have already proven to be too controversial to pass
the Senate yet have been reintroduced virtually unchanged.
Once again, these Republican drilling bills would elevate speed
over safety while opening huge new swaths of public land. These bills
would relegate hunting, fishing, recreation and conservation behind
energy production. And these bills would continue to do nothing to
ensure that American oil, fuel and natural gas benefits American
consumers and is not just exported overseas.
This hearing is like a legislative time capsule from a time before
U.S. oil production had reached its highest level in 20 years; from a
time before our dependence on foreign oil had dropped to 36 percent;
from a time before oil production from Federal lands onshore had
reached its highest levels in a decade.
Maybe the Majority has been reading one too many science fiction
novels because here in the Natural Resources Committee it is like ``the
Land that Time Forgot,'' where we have the story of a party stranded on
a desert island lost to the changes of the outside world.
These bills are relics of a bygone area--as relevant as the
telegraph or the horse and buggy. They are fossilized pieces of
legislation that the Majority continues to dust off and move through
this Committee with complete disregard for the increases in America's
oil production that have occurred under President Obama.
These bills would impose a ``shot clock'' on the Interior
Department's review of drilling permits. After 60 days, drilling
permits would be automatically ``deemed approved,'' regardless of
whether safety reviews had been completed. We know that between 1998
and 2011, one-fifth of the drilling violations on public lands were
related to blowout preventers or other well control equipment, yet,
these bills would make drilling less safe.
These bills would turn over control of leasing on our public lands
to the oil industry by requiring leasing to occur on at least 25
percent of whatever public lands the oil and gas industry nominates
every year, regardless of whether or not drilling would be appropriate.
If you do the math, you see that pretty quickly, nearly all public land
could be turned over to the oil industry under such a requirement.
These bills would impose a protest fee ``poll tax'' where anyone
wanting to challenge an oil and gas leasing decision has to put up
$5,000 that they do not get back, regardless of the outcome of the
protest. It would take a person earning the minimum wage 4 months
working full time and foregoing feeding and sheltering himself and his
family in order to pay this protest fee. The First Amendment to the
Constitution provides that the people have the right to petition the
Government for a redress of grievances yet this provision is a
violation of that first amendment right.
These provisions are unwise and unwarranted.
Meanwhile, while we are considering four Republican bills today,
the Majority refused to add even a single Democratic bill to this
hearing. The Majority refused to consider legislation I have introduced
with Ranking Member Markey to ensure that the oil and natural gas
produced from our public lands cannot be exported. The Majority refused
to consider Democratic legislation to get oil companies to start
drilling on the tens of millions of acres of public land they already
have under lease on which they are doing nothing. The Majority refused
to consider legislation to help reduce our deficit by ensuring that big
oil cannot continue to drill for taxpayer-owned resources for free.
Those Democratic proposals would actually increase our energy
security, help consumers and reduce our deficit. That is what we should
be doing today.
______
Mr. Lamborn. Thank you. Also, as this is a legislative
hearing, I ask unanimous consent to allow Representative Tipton
to give an opening statement on his bill, H.R. 1394.
[No response.]
Mr. Lamborn. Hearing no objection, so ordered.
Representative Tipton, you are recognized for 5 minutes.
STATEMENT OF THE HON. SCOTT R. TIPTON, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF COLORADO
Mr. Tipton. Thank you, Mr. Chairman. And thank you for
convening today's hearing on this critical package of onshore
energy reform legislation, including my bill, H.R. 1394.
At a time when our country needs to be able to focus on
domestic energy production and job creation, it is critical
that we have an established national energy plan to be able to
meet our needs. As it stands, the Administration has no
comprehensive plan for meeting the inevitable demand for energy
in both traditional and alternative sources. And, historically,
our Nation has lacked a clear plan for energy development on
public lands.
The Planning for American Energy Act puts a common-sense
plan into place by requiring that our Nation's energy needs are
met through development of traditional and alternative energy
resources, with a true all-of-the-above approach that will
lower the cost of energy, jump-start economic recovery, and get
Americans working. Currently, unpredictable leasing programs,
permitting backlogs, inconsistent policies and regulations, as
well as rampant litigation, greatly inhibit private companies
from producing energy on federally controlled lands to meet the
needs of American families.
This convoluted framework stymies the development of all
energy sources, from oil and gas to wind, solar, and
hydropower. This Administration's policies have rendered energy
production on public lands so costly and burdensome that
companies which once provided valuable jobs in the Third
District of Colorado and across the West are being forced to
seek out State and private lands for development. This can have
a massive impact on employment numbers in districts that are
largely comprised of Federal lands.
Since President Obama took office, total fossil fuel
production has dropped 7 percent. From 2010 to 2011, total
Federal onshore oil and natural gas production has decreased 13
percent and 10 percent, respectively. President Obama
continually claims that production is increasing. It is
critical to note that this is attributed exclusively to
production on State and private lands, where the
Administration's policies do not govern energy policy.
All production on State and private lands has risen by 11
percent, and natural gas production has increased by 40 percent
since 2000. These figures are particularly disconcerting at a
time when rising gas prices are devastating American families
and small businesses. Similar impediments affect wind and solar
energy industries, as well. During the past 4 years, the wind
industry has added over 35 percent of all new generating
capacity in the United States, and U.S. wind power capacity
represents more than 20 percent of the world's installed wind
power.
Nevertheless, due to unreliable Federal policies and over-
regulation, the wind industry has lost 10,000 jobs since 2009,
according to a recent report. Limitations on the zones in which
solar development is permitted have concerned many solar energy
producers and hindered their ability to be able to provide
additional electricity to the grid, lower costs for taxpayers,
and provide clean energy jobs.
The Planning for American Energy Act would set the United
States on a path for energy development that follows the most
logical criteria: the needs of our people. Under the
legislation, the non-partisan Energy Information Administration
provides the projected energy needs of the United States for
the next 30 years to the Secretary of the Interior and the
Secretary of Agriculture, on which they can then base their 4-
year production plans.
The bill requires that all domestic sources--oil, gas,
coal, wind, solar, hydropower, geothermal, oil shale, and
minerals--needed for energy development be included in the
plan. It accomplishes this responsibly, without removing a
single environmental safeguard. Because many local communities
in districts like mine place such a large role in domestic
energy production, H.R. 1394 requires the Secretary of the
Interior and the Secretary of Agriculture to solicit input from
affected States, federally recognized tribes, local
governments, and the public, in developing this 4-year
strategy.
The bottom line is the American people need a reliable
supply of affordable energy. We need to put into place a
sustainable energy plan that responsibly advances the
development of alternative and traditional resources, generates
economic growth, lowers energy costs, and gets Americans
working. My bill puts words into action, and would force the
Administration to be able to meet the American needs for
energy, and to be able to put our people back to work.
Thank you, Mr. Chairman, for allowing me to make a comment
in this hearing.
[The prepared statement of Mr. Tipton follows:]
Prepared Statement of The Honorable Scott R. Tipton, a Representative
in Congress From the State of Colorado
H.R. 1394--PLANNING FOR AMERICAN ENERGY ACT OF 2013
Thank you Mr. Chairman for convening today's hearing on this
critical package of onshore energy reform legislation including my
bill, H.R. 1394.
At a time when our country needs to focus on domestic energy
production and job creation, it is critical that we have an established
national energy plan to meet our needs. As it stands, the
Administration has no comprehensive plan for meeting the inevitable
demand for energy in both traditional and alternative sources and
historically, our Nation has lacked a clear plan for energy development
on public lands.
The Planning for American Energy Act puts a common sense plan into
place by requiring that our Nation's energy needs are met through
development of traditional and alternative energy resources with a true
all-of-the-above approach that will lower the cost of energy, jumpstart
economic recovery, and get Americans working.
Currently, unpredictable leasing programs, permitting backlogs,
inconsistent policies and regulations, as well as rampant litigation
greatly inhibit private companies from producing energy on federally
controlled lands to meet the needs of American families. This
convoluted framework stymies the development of all energy sources,
from oil and gas to wind, solar, and hydropower.
This Administration's policies have rendered energy production on
public lands so costly and burdensome that companies which once
provided valuable jobs in the Third District of Colorado and across the
West are being forced to seek out State and private lands for
development. This can have a massive impact on employment numbers in
districts that are largely comprised of Federal lands.
Since President Obama took office total fossil fuel production has
dropped 7 percent. From 2010 to 2011 total Federal onshore oil and
natural gas production is has decreased 13 percent and 10 percent
respectively. President Obama continually claims that production is
increasing. It is critical to note that this is attributed exclusively
to production on State and private lands where the Administration's
policies do not govern energy policy. Oil production on state and
private lands has risen by 11 percent and natural gas production has
increased by 40 percent since 2000. These figures are particularly
disconcerting at a time when rising gas prices are devastating American
families and small businesses.
Similar impediments affect the wind and solar energy industries as
well. During the past 4 years, the wind industry has added over 35
percent of all new generating capacity in the United States, and U.S.
wind power capacity represents more than 20 percent of the world's
installed wind power.
Nevertheless, due to unreliable Federal policies and
overregulation, the wind industry has lost 10,000 jobs since 2009
according to a recent report. Limitations on the zones in which solar
development is permitted have concerned many in solar energy producers
and hindered their ability to provide additional electricity to the
grid, lower costs for ratepayers, and provide clean energy jobs.
The Planning for American Energy Act would set the United States on
a path for energy development that follows the most logical criteria--
the needs of our people. Under the legislation, the non-partisan Energy
Information Administration provides the projected energy needs of the
United States for the next 30 years to the Secretary of the interior
and the Secretary of Agriculture on which they then base 4 year
production plans.
The bill requires that all domestic sources; oil, natural gas,
coal, wind, solar, hydropower, geothermal, oil shale and minerals
needed for energy development be included in the plan. It accomplishes
this responsibly, without removing a single environmental safeguard.
Because local communities in districts like mine play such a large
role in domestic energy production, H.R. 1394 requires that the
Secretary of the Interior and the Secretary of Agriculture solicit
input from affected States, federally recognized tribes, local
governments, and the public in developing each 4 year strategy.
The bottom line is that the American people need a reliable supply
of affordable energy. We need to put into place a sustainable energy
plan that responsibly advances the development of alternative and
traditional resources, generates economic growth, lowers energy costs,
and gets Americans working. My bill puts words into action, and would
force the Administration to meet America's energy needs.
Thank you, Mr. Chairman.
______
Mr. Lamborn. You are welcome. We will now hear from our
witnesses. I invite them to come forward.
We have Ms. Jamie Connell, BLM Acting Deputy Director of
the U.S. Department of the Interior; Commissioner Dan Sullivan,
Department of Natural Resources for the State of Alaska, and
Ms. Charlotte Brower, Mayor of the North Slope Borough.
Like all of our witnesses, your written testimony will
appear in full in the hearing record, so I ask that you keep
your oral statements to 5 minutes.
Our microphones are not automatic, so you need to turn them
on when you are ready to begin.
I also want to explain how our timing lights work. When you
begin to speak, our clerk will start the timer and a green
light will appear. After 4 minutes a yellow light will appear.
And at that time you should begin to conclude your statement.
After 5 minutes the red light comes on, and you may complete
your sentence. But at that time I must ask that you stop.
Ms. Connell, you may begin. I do have to first say, and I
don't know if this was you or your staff who were derelict, but
the written materials pertaining to your testimony were not
given to the Subcommittee on time. They were late, they were
submitted past the deadline. And, as a result, staff had to
work extra hours in the evening to accommodate that. So we
would ask that you just make sure that not happen in the
future.
Ms. Connell. We will do our best. I appreciate that. Thank
you.
Mr. Lamborn. OK, thank you. You may begin.
STATEMENT OF JAMIE CONNELL, ACTING DEPUTY DIRECTOR, BUREAU OF
LAND MANAGEMENT, U.S. DEPARTMENT OF THE INTERIOR
Ms. Connell. Mr. Chairman, members of the Committee, thank
you for the opportunity to present the views of the Department
of the Interior on four bills pertaining to the development of
renewable and conventional energy on our Nation's public lands.
The Bureau of Land Management, the BLM, administers over 245
million surface acres and approximately 700 million acres of
onshore subsurface mineral estate throughout the Nation.
Together with the Bureau of Indian Affairs, the BLM also
provides permitting and oversight services on approximately 56
million acres of land held in trust by the Federal Government
on behalf of tribes and individual Indian owners. The BLM's
management of public land resources and protection of public
land values results in the extraordinary economic benefits to
local economies and to this Nation. These benefits are not only
economic, but also contribute substantially to America's energy
security.
From the beginning of this Administration, the Department
of the Interior has made it a priority to permit scientifically
based, environmentally sound development of renewable and
conventional energy and mineral resources on the Nation's
public lands. Our goal is to ensure a clean energy future
through environmentally responsible development of conventional
and renewable energy on Federal and Indian lands.
Nearly 38 million acres of Federal mineral estate are under
lease for oil and gas. Since 2008, the BLM has approved more
than 23,000 drilling permits. The BLM is also investing in
environmentally sound renewable energy projects on public
lands, harnessing wind, solar, and geothermal resources that
will provide enough energy and electricity to power nearly 4
million homes, and support an estimated 14,000 construction and
operations jobs.
The BLM supports H.R. 555, which allows the BLM to expand
upon its success with the oil and gas Internet lease auction
pilot project. The BLM would welcome the opportunity to work
with the sponsor and the Committee to address some minor
amendments, including discretion on the timing of lease sales.
Regarding H.R. 1964, the Administration remains firmly
committed to facilitating environmentally responsible
development in the National Petroleum Reserve Alaska, and we
welcome the opportunity to work with the Committee and the
public to continue to develop NPR-A in an environmentally
responsible manner. President Obama directed the Secretary of
the Interior to conduct annual oil and gas lease sales in NPR-
A. The BLM has followed through on this direction, with lease
sales in the NPR-A in December 2011, November 2012, and is
planning another lease sale in November of this year.
The Department supports the goal of facilitating the
development of oil and gas resources in NPR-A, but opposes
provisions of H.R. 1964, including the issuance of a new
integrated activity plan and Environmental Impact Statement
that would undermine the extensive public resource planning
that the BLM completed for NPR-A recently; the timelines
required by the bill that may result in shortcuts to public
involvement; requirement of other laws, including the National
Environmental Policy Act; and the suggestion that the
Department pre-approve rights of ways on millions of acres of
lands that industry may never seek to develop.
The Department opposes H.R. 1965, the Federal Lands Jobs
and Energy Act. The bill would essentially strip the BLM of its
ability to issue APDs based on important reviews and
clearances. The provisions establishing the Federal permit
streamlining projects would be time-consuming and costly. The
bill also would reverse our oil and gas leasing reform policy
that established an orderly, open, and environmentally sound
process for developing oil and gas resources on public lands.
Finally, the bill would overturn the BLM's administration
of a balanced, carefully planned research development and
demonstration oil shale program, and the proposed rule would
ensure a fair return to the American taxpayers and evaluate
necessary safeguards to protect water resources and wildlife
habitat.
Finally, the Department opposes H.R. 1394, the Planning for
American Energy Act. The bill would direct Federal land
managers to administer public lands for the primary purpose of
energy development, rather than balanced multiple-use
management, which includes a public process based onsite-
specific analysis and consideration. The bill's requirement
that the Department take all necessary actions to achieve
energy production goals on Federal lands fails to acknowledge
the comprehensive approach to expand safe and responsible
energy development already in place.
Thank you for the opportunity to present testimony; I would
be happy to answer any questions.
[The prepared statement of Ms. Connell follows:]
Prepare Statement of Jamie Connell, Acting Deputy Director, Bureau of
Land Management, U.S. Department of the Interior
H.R. 1964--NATIONAL PETROLEUM RESERVE ALASKA ACCESS ACT; H.R. 1965--
FEDERAL LANDS JOBS AND ENERGY SECURITY ACT; H.R. 1394--PLANNING FOR
AMERICAN ENERGY ACT OF 2013; AND H.R. 555--BLM LIVE INTERNET AUCTIONS
ACT
Thank you for the opportunity to present the views of the
Department of the Interior (Department) on four bills pertaining to the
development of renewable and conventional energy and other mineral
resources on our Nation's onshore public lands: H.R. 1964, the National
Petroleum Reserve Alaska Access Act; H.R. 1965, the Federal Lands Jobs
and Energy Security Act; H.R. 1394, the Planning for American Energy
Act of 2013; and H.R. 555, the BLM Live Internet Auctions Act.
Background
Since the beginning of the Obama Administration, the Department of
the Interior (``Department'') has made it a priority to permit
scientifically-based, environmentally-sound development of renewable
and conventional energy and mineral resources on the Nation's public
lands. Through the Secretary's New Energy Frontier initiative, the
Department has been at the forefront of the Administration's efforts,
outlined in the Blueprint for a Secure Energy Future to create jobs, to
reduce the Nation's dependence on fossil fuels and oil imports, and to
reduce carbon and other pollution associated with energy production and
use. Facilitating renewable energy development is a major component of
the Department's all-of-the-above energy strategy along with effective
management of conventional energy programs.
The Bureau of Land Management (BLM) administers over 245 million
surface acres--more than any other Federal agency--which are located
primarily in 12 Western States, including Alaska, as well as
approximately 700 million acres of onshore subsurface mineral estate
throughout the Nation. The BLM, together with the Bureau of Indian
Affairs, also provides permitting and oversight services on
approximately 56 million acres of land held in trust by the Federal
Government on behalf of tribes and individual Indian owners.
The BLM's management of public land resources and protection of
public land values results in extraordinary economic benefits to local
communities and to the Nation. Public lands generated an estimated $4.6
billion in revenues in 2012, returning more than $4 for every $1
invested. Beyond this efficient production of non-tax revenue for the
U.S. Treasury, the BLM's management of public lands supports
significant economic activity and hundreds of thousands of jobs for
Americans. One critical economic benefit BLM provides the Nation is its
contribution to America's energy portfolio. We estimate that oil, gas,
coal, and non-metallic mineral activities on the Federal mineral estate
directly and indirectly support nearly 2 percent of jobs in Colorado,
nearly 10 percent of jobs in New Mexico, and over 40 percent of jobs in
Wyoming. The BLM continues its important role in supplying feedstock
and transmission access for the Nation's electrical infrastructure.
Approximately 12 percent of domestic natural gas production, which is
helping drive a resurgence in American industry, is derived from BLM-
managed lands. In addition to responding to increased demand for
natural gas, coal produced from BLM's Federal mineral estate has
provided approximately 22 percent of U.S. electrical production
annually over the last 10 years.
These benefits are not only economic, but also contribute
substantially to America's energy security. Nearly 38 million acres of
Federal mineral estate are under lease for oil and gas; however, only
about 33 percent of this acreage is currently in production.
Approximately 7,000 applications for permits to drill (APDs) have been
approved by the BLM, but were not drilled as of September 30, 2012.
Since 2008, the BLM has approved more than 23,000 APDs. As part of
the BLM's ongoing efforts to ensure efficient processing of oil and gas
permit applications, the BLM is preparing to implement new automated
tracking systems that could reduce the review period for drilling
permits by two-thirds and expedite the sale and processing of Federal
oil and gas leases. The new system for drilling permits will track
applications through the entire review process and quickly flag any
missing or incomplete information--greatly reducing the back-and-forth
between the BLM and industry applicants currently needed to amend paper
applications.
The BLM also is investing in environmentally sound renewable energy
projects, harnessing wind, solar, and geothermal resources on the
public lands. Since 2009, the BLM has approved 41 renewable energy
projects, including 23 utility-scale solar facilities, 8 wind farms,
and 10 geothermal projects, with associated transmission corridors and
other infrastructure to connect to established power grids. If fully
built, these projects have the potential to provide more than 12,000
megawatts of power--enough electricity to power nearly 4 million
homes--and support an estimated 14,000 construction and operations
jobs. For calendar years 2013 and 2014, the BLM has identified 23
renewable energy projects for review, including 14 solar facilities, 6
wind farms and 3 geothermal plants.
The BLM is working with local communities, tribes, State
regulators, industry, and other Federal agencies to ensure a clean
energy future. Our goal is environmentally responsible development of
conventional and renewable energy and other mineral resources on
Federal and Indian lands with a fair return to the American people,
tribes, and individual Indians for the use of their resources.
H.R. 555, ``BLM Live Internet Auctions Act''
H.R. 555 amends the Mineral Leasing Act to authorize the Secretary
of the Interior to conduct onshore oil and gas lease sales through
Internet-based bidding methods, in order to expand the Nation's onshore
leasing program and to ensure the best return to the Federal taxpayer.
The bill also requires the Secretary to conduct an analysis of the
first 10 Internet-based lease sales and report the findings of the
analysis to Congress within 90 days following the 10th Internet-based
lease sale.
Analysis
The BLM supports H.R. 555, which allows the BLM to expand upon its
success with the oil and gas Internet lease auction pilot project. The
BLM would like to work with the Committee to include related language
in the bill to provide the Secretary the discretion to hold lease sales
(via the Internet or oral auction) more or less frequently than
quarterly (as currently required by the Mineral Leasing Act) or within
any State in which lease tracts are available and there is public
interest. Finally, the BLM would like to work with the Committee on
technical and clarifying modifications to the bill.
H.R. 1964, ``National Petroleum Reserve Alaska Access Act''
H.R. 1964, the National Petroleum Reserve Alaska Access Act,
directs the Department to continue a program of competitive oil and gas
leasing in the 23 million-acre National Petroleum Reserve in Alaska
(NPR-A). On May 14, 2011, as part of an effort to increase safe and
responsible domestic oil production, President Obama directed the
Secretary of the Interior to conduct annual oil and gas lease sales in
the NPR-A. The BLM has followed through on this direction with lease
sales in the NPR-A in December 2011, November 2012, and is planning
another lease sale in November of this year. The Department supports
the goal of facilitating the development of oil and gas resources in
the NPR-A in an environmentally responsible manner, but has several
significant concerns with the bill.
Analysis
Many of the activities called for in H.R. 1964 are within the scope
of existing Department authorities and consistent with our priorities
and activities already underway. Under these authorities, 191 tracts
are currently leased by the BLM in the NPR-A with a leased acreage of
over 1.5 million acres. We would like to work with the Committee to
move toward our shared goal of improving the efficiency of the oil and
gas leasing and development process while maintaining safety and
environmental standards in the NPR-A.
The Department opposes bill provisions regarding the issuance of a
new Integrated Activity Plan and Environmental Impact Statement (IAP/
EIS). These provisions would undermine the extensive public resource
planning process recently completed for the NPR-A. In 2010, the BLM
moved to establish consistent management direction for the entire NPR-
A, including the unplanned southern portion of the Reserve, through an
IAP/EIS. The Secretary signed a Record of Decision (ROD) on February
21, 2013, that presents a balanced approach to responsible oil and gas
development while providing protection to valuable surface and
subsistence resources. The IAP/EIS and subsequent decision was the
result of careful resource analysis and extensive public input. The
lands made available for development under the ROD contain 72 percent
of the NPR-A's estimated economically recoverable oil and over half of
the estimated economically recoverable gas. The ROD also requires that
the BLM establish an ``NPR-A Working Group'' that will include
representatives of North Slope tribal entities, Native corporations,
and State and local governments--entities directly affected by
development within the NPR-A. We will be moving forward with this
effort in the very near future.
The bill requires the U.S. Geological Survey (USGS) to complete an
updated comprehensive assessment of technically recoverable
conventional and unconventional fossil fuel resources in the NPR-A. In
2011, the USGS released its assessment of the economic recoverability
of undiscovered, conventional oil and gas resources within the NPR-A
and adjacent State waters. Because the USGS used all available
information in its assessment and no new data or information has become
available since that time, the USGS believes reassessing these
resources now would not yield additional information. The USGS is
evaluating the unconventional petroleum resources in NPR-A, with the
plan to assess these resources in the future. Furthermore, a coalbed
methane assessment for the North Slope, including the NPR-A, was
completed in 2006. The results for other unconventional resources on
the North Slope, including shale gas and tight gas, are expected to be
available in 2 to 3 years.
It is not clear from the language in the bill whether a coal
assessment would be required. The North Slope of Alaska contains coal
resources, but the cost of mining and transporting the coal would be
substantial. The USGS, in cooperation with the Department of Energy,
National Energy Technology Laboratory, published a database compilation
of published and nonconfidential unpublished coal data from the Cook
Inlet and North Slope areas of Alaska. Despite the database, there are
relatively few data with which to conduct a robust coal assessment.
The Department has additional concerns with the bill, including:
The implication that all requested permits be issued,
regardless of a proposed action's potential impacts or the availability
of alternatives;
The timelines required by the bill that may result in
shortcuts to public involvement, comment, and review requirements of
other laws, including the National Environmental Policy Act;
The suggestion that the Department pre-approve rights-of-
way on millions of acres of lands that industry may never seek to
develop; and
The requirement that the Secretary must ensure that other
Federal permitting agencies comply with the deadlines set forth in the
bill [Sec. 4(b)].
If enacted, these requirements would likely divert BLM resources
and result in the delay of further development of NPR-A resources in an
environmentally responsible manner. In addition, the requirement of a
``direct'' transportation route for oil and gas resources does not
allow for considerations such as land ownership, geography, and
protection of surface resources. The current IAP/EIS allows for site-
specific applications for a pipeline through most of the BLM-managed
lands on the North Slope. The BLM's existing regulations already
establish deadlines for appropriate authorizations and require prompt
notification of any delays.
The BLM's leasing program in the NPR-A ensures that safe and
responsible exploration and development of domestic oil and natural gas
resources can be done in a manner that also protects wildlife and
habitat, and honors the subsistence values of rural residents and
Alaska Natives. We welcome the opportunity to work with the Committee,
the oil and gas industry, the Alaska Native community, and the public
to continue to develop the NPR-A in an environmentally responsible
manner. The Administration remains firmly committed to facilitating
environmentally responsible development in this region.
H.R. 1965, ``Federal Lands Jobs and Energy Security Act''
H.R. 1965 includes various provisions intended to expedite energy
development, but often at the expense of sound public land management,
public participation, and environmental review. The Department opposes
the bill for the reasons outlined below.
Title I, Energy Permitting
H.R. 1965 (Title I) makes numerous changes to existing authorities
governing the permitting of Federal energy resources. The bill
generally requires the BLM to process APDs within 60 days (unless NEPA
review is incomplete), and stipulates that a submitted APD is deemed
approved if the Secretary has not made a decision within 60 days. The
bill makes permanent the current $6,500 permit processing fee, but
provides that the BLM can only collect the fee when a decision is
issued on the APD, cannot collect a fee on a resubmitted APD, and
requires that 50 percent of the processing fee be transferred to the
BLM Field Office in which the permit is processed. The bill provides
that, subject to appropriation and up to an overall total of $10
million per year, not less than 25 percent of wind and solar right-of-
way (ROW) authorization fees shall be available to the field office
responsible for the lands where they are collected, not less than 25
percent of the fees shall be available to the BLM for permit approval
activities, and not less than 25 percent shall be available to the
Department of Interior for department-wide permitting activities. The
bill also requires a $5,000 documentation fee for each protest filed on
these permits with 50 percent of these fees remaining with local BLM
Field Offices.
The bill requires the BLM to establish a ``Federal Permit
Streamlining Project'' in every BLM office that processes energy
projects, and explicitly states the BLM may not require a finding of
extraordinary circumstances when using section 390 categorical
exclusions of the Energy Policy Act. Finally, Title I, Subtitle D
includes provisions pertaining to judicial review procedures.
Analysis
The Department opposes Title I of H.R. 1965 as it would essentially
strip from the BLM its ability to issue APDs based on important reviews
and clearances--including cultural surveys and necessary tribal
consultation--and mandates unreasonable timeframes for processing APDs.
The Department strongly supports efforts to encourage wind and solar
energy development and believes funding support for those objectives
can best be achieved through a combination of user fees and regular
discretionary appropriations. In addition, the BLM opposes the $5,000
documentation fee submitted for each protest because it is an
inappropriate economic barrier for the public to seek judicial review
or redress of an agency decision.
The bill's provisions establishing ``Federal Permit Streamlining
Projects'' are impractical, and would likely result in the
establishment of such project offices in over 50 of the BLM's Field
Offices. Coordination of these projects among multiple agencies would
be extremely time consuming and costly, and would hinder the BLM's
ability to conduct its other vital land management responsibilities. In
addition, the BLM views the availability of the extraordinary
circumstances review an important step in assuring that a categorically
excluded action does not have impacts that are unanticipated, and thus
opposes the bill's provisions on this point. Finally, the Department of
the Interior defers to the Department of Justice regarding the
provisions of the bill (Title I, Subtitle D) pertaining to judicial
review procedures.
Title II, Oil & Gas Leasing
H.R. 1965 (Title II) reverses the oil and gas leasing reform policy
initiated by former Secretary Salazar in January 2010 that was
implemented to ensure environmental protection of important natural
resources on BLM lands (BLM Instruction Memorandum 2010-117). The bill
also requires the BLM to offer for lease no fewer than 25 percent of
lease nominations in areas open to leasing each year; and requires that
the BLM actively lease in areas designated as open when Resource
Management Plans are revised; and states that acreages offered for
lease shall not be subject to protest. Finally, the bill allows lease
sales to be categorically excluded from further NEPA review.
Analysis
The Department opposes Title II of H.R. 1965. The leasing reforms
that were implemented in 2010 established an orderly, open, and
environmentally sound process for developing oil and gas resources on
public lands in a manner that has maintained robust leasing and
permitting. The reforms focus on making oil and gas leasing more
predictable, increasing certainty for stakeholders, including industry,
and restoring needed balance with comprehensive upfront analysis added
to the development process. Requiring the BLM to offer no fewer than 25
percent of lease nominations in areas open to leasing each year is an
arbitrary standard that undermines rational and diligent review on the
basis of greatest development potential, as well as other economic,
environmental, and health considerations.
The BLM has concerns with the requirement that it actively lease in
areas designated as open when Resource Management Plans are revised.
Continuing to lease in some open areas in which recreational or
ecological values are at risk could prevent the BLM from protecting
important resource values. It could be counterproductive to efforts to
develop energy resources on Federal lands if the result is greater
near-term resource damage that, in turn, would necessitate more onerous
restrictions on future energy development activities. In addition,
limiting protests of oil and gas leases and providing categorical
exclusions from further NEPA review limits the public's opportunity to
engage in decisions about the lands the BLM manages. Americans who have
valid and important concerns should have an opportunity to participate
in the management of lands that belong to them.
Title III, Oil Shale
H.R. 1965 includes provisions (Title III) regarding oil shale
planning, leasing, and regulation. The bill would deem final the BLM's
2008 oil shale regulations, stipulate that the 2008 Resource Management
Plan amendments satisfy all legal and procedural requirements under any
law, and require the Secretary to implement those actions without any
further administrative action. The bill also would require the
Secretary to hold, within 180 days of enactment, a lease sale for
additional parcels for oil shale research, development, and
demonstration leases, and, no later than January 1, 2016, no less than
five commercial lease sales in areas with the most potential for oil
shale development.
Analysis
The Department opposes the provisions in Title III of H.R. 1965
because they undermine the BLM's careful and transparent development of
oil shale regulations and environmental plans initiated in response to
the current state of technology and a Government Accountability Office
(GAO) report finding that oil shale development could have significant
negative impacts on the quality and quantity of water resources. The
bill also disregards the fact that there are currently no proven
economically viable and environmentally sound ways in the United States
to extract liquid fuel or suitable refinery feedstock from oil shale on
a commercial scale.
Beginning in 2010, the BLM began a new public planning process to
take a fresh look at the land use plan allocation decisions made in
2008. The BLM concluded that, in light of the many fundamental
questions about oil shale that need to be answered, it is vital that
the BLM administer a balanced, carefully planned research, development,
and demonstration (RD&D) program that will help inform the agency's
decision on how to authorize future commercial oil shale development on
public lands. On March 22, 2013, the BLM published a Record of Decision
amending several resource management plans to encourage RD&D of oil
shale on nearly 700,000 acres in Colorado, Utah and Wyoming.
Additionally, the BLM has developed a proposed rule governing oil shale
development with the goals of ensuring a fair return to the American
taxpayer, encouraging responsible development of Federal oil shale
resources, and evaluating necessary safeguards to protect scarce water
resources and important wildlife habitat. In late March 2013, the BLM
published these proposed revisions for public comment. In November
2012, the BLM signed two leases for RD&D oil shale proposals to
encourage industry to create and test technologies aimed at developing
oil shale resources on a commercial scale. H.R. 1965 would disrupt
these public planning and regulatory efforts.
H.R. 1394, ``Planning for American Energy Act of 2013''
H.R. 1394 directs the Secretary of the Interior to develop a 4-year
strategy for the development of onshore Federal energy and minerals
resources--including a strategic production objective of oil and
natural gas; coal; critical minerals; helium, wind, solar, biomass,
hydropower, and geothermal energy; oil shale; and other energy
production technology sources. The bill requires that actions be taken
to achieve certain energy production objectives unless the President
determines it is not in the national security or economic interests of
the United States to do so. The bill further directs the completion of
a programmatic EIS in accordance with the National Environmental Policy
Act (NEPA) which is deemed sufficient to satisfy requirements of
resource management planning and land use planning associated with
implementation of the 4-year strategy.
Analysis
The Department opposes H.R. 1394 because it would direct Federal
land managers to manage lands for the primary purpose of energy
development rather than make thoughtful decisions on balanced multiple-
use management through a public process based on site specific analysis
and consideration. Guided by the Federal Land Policy and Management
Act, the BLM's unique multiple-use management of public lands includes
activities as varied as livestock grazing; outdoor recreation,
including hunting and fishing; the conservation of natural, historical,
cultural, and other important resources--as well as development of both
conventional and renewable energy resources.
H.R. 1394 also imposes additional layers of administrative planning
for energy development on top of those which the BLM is already
undertaking through existing authorities. These authorities already
provide extensive legal and regulatory direction for the development of
oil, gas, and coal from the public lands. In addition, the BLM has
recently made significant progress on programmatic planning for a suite
of renewable and unconventional energy resources, including wind,
solar, geothermal and oil shale.
Finally, the bill's requirement that the Department take all
necessary actions to achieve energy production goals on Federal lands
fails to acknowledge the comprehensive approach to support expansion of
safe and responsible energy development already in place and that the
Department is committed to maintaining. The BLM has made significant
progress in the past several years, reducing protests and appeals by
better planning through its leasing reforms. As stated above, we
continue to offer a healthy number and quality of lease sales, with
good industry response, and an emphasis on permitting has produced a
large inventory of permits and acreage that industry has yet to
develop.
Conclusion
Thank you for the opportunity to present testimony on these four
bills.
______
Mr. Lamborn. All right. I am sure you will have some.
Commissioner Sullivan.
STATEMENT OF DAN SULLIVAN, COMMISSIONER, DEPARTMENT OF NATURAL
RESOURCES, STATE OF ALASKA
Mr. Sullivan. Good morning, Chairman Lamborn, Ranking
Member Holt. Thank you for the opportunity to be here again. It
is an honor to be able to talk about Alaska energy issues with
this Committee. Thank you.
Mr. Chairman, it is truly an exciting time for American's
energy sector. We are seeing an American energy renaissance,
particularly with regard to hydrocarbon production on private
lands, and that is having an enormous impact in terms of jobs,
trade, deficit issues, even potentially foreign policy and
national security issues.
Alaska, which is one of the world's great hydrocarbon
regions, is focused on doing its part to contribute to this
energy renaissance. We just had a very, very successful State
legislative session, where we enacted tax reform, significant
permitting reform, an interior energy plan, opportunities to
commercialize our abundant North Slope gas, and we have also
had recent reforms in the Cook Inlet hydrocarbon basin, near
Anchorage, as a result of those reforms on regulation and tax
issues. That basin is starting to turn around in a very, very
significant way, producing more oil and gas.
But, Mr. Chairman, as you know, over half of Alaska is
Federal lands, controlled by this body and Federal agencies. We
believe it is important that they do their part in promoting
the American energy renaissance in Alaska, and that means
increased access to Federal lands, where estimates of energy
resources are in the tens of billions of barrels of oil and
hundreds of trillions of cubic feet of gas.
But in the past 4 years, Alaska's access--indeed, America's
access--to Federal lands in Alaska has been significantly
restricted, and we fear more lost opportunity coming soon. This
is a significant concern for Alaskans, and should be a concern
for the Congress. I would like to provide two noteworthy
examples.
First, the National Petroleum Reserve of Alaska, which was
set aside by Congress to help secure a supply of oil and gas
for our country. After a planning process that virtually
ignored the State of Alaska's numerous comments, the Department
of the Interior withdrew almost half, 11 million acres, of NPR
lands from oil and gas leasing. Interior's record of decision
also made the ability to construct a pipeline across NPR-A to
Pump Station 1 of the Trans-Alaska Pipeline more uncertain.
Second, with regard to the Arctic National Wildlife Refuge,
we fear a replay of the NPR process and result. The Department
of the Interior is soon to release a Comprehensive Management
Plan for ANWR that, among other things, will likely ignore
Congress's directive to assess the oil and gas resource
potential in the coastal area of ANWR often known as the 1002
Area.
There are three common themes that play here. Both NPR-A
and the 1002 Area in Alaska have enormous resource potential,
very likely some of the largest oil and gas basins in North
America. Because of this, Congress has, in Federal law,
emphasized the importance of assessing these areas for oil and
gas exploration and possibly development.
And, third, despite these congressional directives, the
Federal Government has chosen to selectively disregard
important Federal laws and the concerns of the State of Alaska
and our citizens by significantly restricting and limiting
access to these lands.
So, what is the State of Alaska doing? We have asked the
Federal Government to start over, with regard to an NPR-A
integrated activity plan. And, therefore, the goals of H.R.
1964 and the other bills here are goals that the State
supports.
And with regard to the upcoming ANWR Comprehensive
Management Plan, we have decided to do the Federal Government's
work for them. On Monday, Governor Parnell and I announced the
release of Alaska's 1002 Area Assessment and Exploration
Proposal, which brings the State of Alaska's world-class
expertise, experience, highest environmental standards, best
practices, and new technology, and significant capital, $50
million of the State's money, to conduct a 7-year exploration
program in the 1002 Area.
The goal of this world-class scientific proposal is to
enable the Congress and the American people to definitively
know what abundance of resource wealth lies beneath the 1002
Area. It is a modest proposal. We think it can get bipartisan
support. Representative Holt, I would love to brief you on this
in more detail.
We have presented it to the Department of the Interior, and
we have asked them to include this as part of their
comprehensive ANWR Management Plan that is going to be coming
out soon. And we certainly, of course, would welcome Congress's
support of this proposal because we think it asks a very
important question: Why would you not want to know what the
resource potential is in the 1002 Area, when your mission is to
manage that land? Thank you very much, Mr. Chairman.
[The prepared statement of Mr. Sullivan follows:]
Prepared Statement of Dan Sullivan, Commissioner, Department of Natural
Resources, State of Alaska
H.R. 1964, ``NATIONAL PETROLEUM RESERVE ALASKA ACCESS ACT''
I. Introduction
Chairman Lamborn, Ranking Member Holt, and members of the House
Subcommittee on Energy and Mineral Resources, on behalf of Governor
Sean Parnell, the State of Alaska welcomes this opportunity to testify
as part of this Committee's important work to protect and expand U.S.
onshore energy production on Federal lands.
In particular, I thank you for the opportunity to emphasize to this
Committee and to the rest of your colleagues in the U.S. Congress the
important role that the National Petroleum Reserve--Alaska (NPR-A)
serves in the State of Alaska and its enormous potential for
responsible resource development. But in order to reach this potential,
we must see a shift in Federal decision making. The State of Alaska has
continued to express our serious concerns with recent Federal planning
processes for the NPR-A and the Arctic National Wildlife Refuge (ANWR)
that disregard the State's comments and are likely contrary to the
Alaska National Interest Lands and Conservation Act (ANILCA). We are
ready and willing to partner with the Federal Government to assess oil
and gas potential and responsibly develop these areas for the benefit
of Alaska and the United States.
Biographical Information
Before getting into substantive matters, I would like to briefly
mention my professional background as it pertains to this testimony. I
have been serving as Commissioner of the Alaska Department of Natural
Resources (DNR), a State agency of over 1,100 personnel, since December
2010. DNR manages one of the largest portfolios of oil, gas, minerals,
land, water, timber, and renewable energy resources in the world, and
is staffed by some of the world's leading experts on responsible
exploration and development in the Arctic.
Prior to being appointed as the DNR Commissioner, I have served as
Alaska's Attorney General and the U.S. Assistant Secretary of State for
Economic, Energy, and Business Affairs.
Overview of Today's Testimony
Alaska's North Slope is one of the most prolific and productive
hydrocarbon basins in North America. Its resource base has been the
foundation of the State's economy for 40 years, and continues to offer
opportunities to Alaska and the Nation as a whole.
Recent years have seen a surge in investment in the oil and gas
industry, and increases in unconventional production in the continental
United States have created an energy boom that few would have predicted
10 years ago. The strategic benefits of this surge in domestic energy
production are numerous, ranging from employment opportunities in an
otherwise troubled economy to increased energy security and a
strengthened foreign policy.
However, even in this environment, throughput in the Trans Alaska
Pipeline System (TAPS) has steadily declined since the 1990s despite
the enormous conventional resources that remain on Alaska's North
Slope, and the untold unconventional resources that are beginning to be
explored.
It is time for Alaska to take its place in the oil and gas
renaissance that is occurring in the rest of the United States. Under
Governor Parnell's leadership and the Alaska State Legislature's major
actions during the 2013 legislative session, the State of Alaska is
doing its part to reform and modernize our permitting system, lease
acreage in order to spur exploration and development, and increase our
competitiveness through oil tax reform.
Unfortunately, we continue to have serious concerns about access to
Federal lands for hydrocarbon exploration and development in Alaska.
Federal permitting has been an anchor on responsible resource
development on State lands, and highly prospective Federal lands--such
as the NPR-A and ANWR--have either been effectively locked up with
onerous permitting and regulatory delays and bad planning, or excluded
from exploration and development entirely.
My testimony today will focus on the following:
NPR-A and the ANWR 1002 Area are enormous hydrocarbon
basins that, once properly assessed and responsibly developed, would
help reverse the TAPS throughput decline.
Selection of the B-2 Preferred Alternative in the NPR-A
Final Integrated Activity Plan (IAP) and Environmental Impact Statement
(EIS) does not reflect the State of Alaska's comments and concerns. We
have therefore asked that the current process be stopped and for the
Bureau of Land Management (BLM) to reengage with the State in a
meaningful, productive discussion to develop an alternative for the
IAP.
The Draft Comprehensive Conservation Plan (CCP) for ANWR
is essentially unresponsive to the State of Alaska's concerns and is
biased against an honest assessment of resource development potential
for the ANWR 1002 Area. In fact, it does not include an assessment of
oil and gas potential at all, which we believe is required by law.
Therefore, the State of Alaska has taken this requirement
upon ourselves and submitted a comprehensive ``Oil and Gas Resource
Evaluation and Exploration Proposal for the ANWR 1002 Area'' to
Department of Interior (DOI) Secretary Jewell on Monday, May 20, 2013.
Additionally, in his letter to Secretary Jewell, Governor Parnell
announced that the State is not only lending its expertise, but also
its checkbook to fund up to $50 million toward implementing the 3D
seismic program for the 1002 Area if the Federal Government shows a
positive indication that they would partner with the State on such a
program.
As this testimony will demonstrate, the State of Alaska supports
legislative measures that promote access to Federal lands for
responsible resource development and bring timeliness and efficiency to
the Federal land management and permitting processes. Federal policy
must take a new direction to realize the opportunities and strategic
benefits that responsible resource development plays for the Nation.
The State of Alaska fully supports H.R. 1964, which includes the
following measures:
1. Expeditious leasing program;
2. Pipeline and road corridor permitting and construction;
3. Reset of an Integrated Activity Plan;
4. Holding the Secretary of the Interior to reasonable development
goals;
5. Holding the Department of the Interior to transparent permitting
deadlines; and
6. Updating the Resource Assessment within the NPR-A, which we assume
would include both seismic and drilling activities.
II. The NPR-A and the ANWR 1002 Area Offer Enormous Potential for
Responsible Resource Development
Alaska is one of the Nation's most critical and prolific oil-
producing States. Even though production is only about one-third of
what it was at its peak in 1989, Alaska's North Slope, both on and
offshore, remains a world-class hydrocarbon basin with extraordinary
potential. According to the U.S. Geological Survey (USGS), Alaska
accounts for over 30 percent of the Nation's technically recoverable
oil and gas resources, with the North Slope estimated to hold
approximately 40 billion barrels of technically recoverable
conventional oil and 236 trillion cubic feet of natural gas. These
numbers are likely dwarfed by Alaska's unconventional resources, such
as shale oil and gas, heavy and viscous oil, and gas hydrates.
National Petroleum Reserve--Alaska (NPR-A)
In 2010, the USGS estimated that 896 million barrels of
conventional, undiscovered oil and 53 trillion cubic feet of
conventional, undiscovered non-associated gas exist within NPR-A and
adjacent State waters. Unfortunately the 2010 assessment significantly
reduced previous estimates, but did not include important geologic and
geophysical data sets. The 2010 assessment also did not benefit from
complete review and input from local experts. The State sent several
letters pointing out flaws in the information and analysis relied on to
lower the estimates.
Regardless, these estimates are still significant and developing
these resources would help stimulate Alaska's economy and contribute to
the Nation's energy needs.
On May 14, 2011, President Obama directed the DOI to conduct annual
oil and gas lease sales in the NPR-A, and on December 7, 2011, the BLM
generated winning bids totaling $3,069,638 and covering 17 tracts on
about 141,739 acres in their NPR-A oil and gas lease sale. As noted by
BLM, the sale demonstrated industry interest in areas with high
resource potential adjacent to State of Alaska lease tracts. The 2012
lease sale generated winning bids totaling $898,900 and covering 14
tracts on about 160,088 acres.
Arctic National Wildlife Refuge (ANWR) 1002 Area
The ANWR 1002 Area consists of 1.5 million acres of highly
prospective terrain in the northeastern portion of the North Slope
along the northern coast of ANWR. The region is situated between the
prolific North Slope oil fields to the west and the petroleum-rich
Canadian Mackenzie Delta province to the east. Both areas have proven
reserves of interest to each nation. In the United States, a gas field
with a significant volume of recoverable liquid hydrocarbons is being
developed at Point Thomson just west of the ANWR boundary. According to
the most recent comprehensive assessment, most geologists regard the
1002 Area as the most prospective unexplored onshore area in North
America.
In 1998, the USGS estimated that the entire ANWR assessment area,
including State and Native interests, contains between 5.7 and 16
billion barrels of technically recoverable oil, with a mean (expected
value) of 10.4 billion barrels. Most of this volume of oil, 74 percent,
was ascribed to the federally controlled 1002 Area, with the range of
predicted technically recoverable oil between 4.3 and 11.8 billion
barrels, with a mean of 7.7 billion barrels. For comparison, the
Prudhoe Bay field, the largest oil field in North America, was
originally estimated to hold 9.6 billion barrels that was deemed
technically recoverable by its primary operator, BP. Cumulative
production to date has exceeded 12 billion barrels of oil. The Prudhoe
Bay field was the impetus for the construction of TAPS and sent Alaska
oil production to a peak level of 2.2 million barrels per day in 1988.
Alaska daily production has dropped below 600,000 barrels per day in
2012.
III. The NPR-A Final IAP EIS Disregards the State of Alaska's Concerns
and Should Be Repealed and a New IAP Issued That Encourages
Accessing and Developing Abundant Hydrocarbon Reserves Within
the Reserve
While the State of Alaska generally supports the overall intent of
the NPR-A IAP EIS planning process to provide further opportunities for
oil and gas exploration in the reserve, we have continually expressed
our serious concerns regarding many aspects of the plan, most recently
the selection of the B-2 Preferred Alternative in the Final IAP EIS. As
recent as January 29, 2013, Governor Parnell asked Secretary Salazar to
stop the current planning process and re-engage with the State in a
meaningful productive discussion to develop an alternative for the IAP.
On September 12, 2012, Governor Parnell notified Secretary Salazar
that the State was withdrawing from the planning process as a
cooperating agency under the National Environmental Policy Act of 1969
(NEPA) because of repeated refusals by the BLM to consider the State's
issues and concerns. The surprise announcement of the B-2 Preferred
Alternative without prior notice or discussions with the State or the
North Slope Borough convinced the State a meaningful process was not
going to be provided. While the State is willing to work with BLM
again, the State will not participate in another flawed ``check the
box'' type of process.
As presently selected, the B-2 Preferred Alternative continues to
selectively disregard Congressional direction provided under the Naval
Petroleum Reserves Production Act of 1976 (Production Act), as amended;
the Alaska National Interest Lands Conservation Act (ANILCA); and the
Federal Land Policy and Management Act of 1976, and inappropriately
applies administrative policy to the NPR-A. Congressional intent for
the Production Act clearly indicates that the Secretary's authority to
protect surface values in the Reserve was intended to minimize adverse
impacts on the environment, not to be used as a prohibition on oil and
gas activities. The purpose of the withdrawal that created the NPR-A
was to secure a supply of oil and gas. All subsequent Congressional
direction authorizes the Secretary to manage activities in the NPR-A
consistent with its primary purpose to responsibly explore and develop
oil and gas resources. The B-2 Preferred Alternative is inconsistent
with this mandate.
The foundation for the B-2 Preferred Alternative is in the USGS's
2010 updated assessment of oil and gas resources in the NPR-A. The
survey estimates quantities of technically recoverable but undiscovered
conventional oil and gas in the NPR-A. As stated above, the 2010
assessment significantly reduced previous estimates, but did not
include important geologic and geophysical data sets. The 2010
assessment also did not benefit from complete review and input from
local experts. The State sent several letters pointing out flaws in the
information and analysis relied on to lower the estimates. Since these
estimates are the foundation for the IAP and EIS, it is imperative the
information is accurate.
While encouraged by Secretary Salazar's intent stated in the
December 19, 2012, Memorandum to BLM to ensure that the plan clarifies
that ``. . . nothing in the IAP/EIS is intended to act as a bar to
potential pipelines or otherwise make construction of such pipelines
impracticable,'' there are numerous aspects of the plan that, if left
unchanged, will both hamper construction of pipelines necessary to
transport offshore oil and gas resources to TAPS, including resources
from State offshore leases, and preclude oil and gas exploration and
development in the NPR-A.
The Memorandum also directed BLM to engage in additional outreach
efforts with local communities to look for ways to ensure continuing
dialogue with local communities and tribes on key implementation
issues, such as future pipeline issues, leasing questions, subsistence
issues and related matters. While additional outreach is both welcome
and appropriate, since the B-2 Preferred Alternative did not receive
public review as required under NEPA, the State has strongly urged that
a new public comment period be added.
Other specific issues the State has raised regarding the B-2
Preferred Alternative include: management of the Reserve as a
conservation system unit; wilderness reviews and management consistent
with wilderness characteristics; Wild and Scenic River reviews;
restrictions on potential pipeline development; and general ownership
and development issues.
IV. The ANWR CCP Does Not Include an Assessment of the 1002 Area's
Potential for Oil and Gas Exploration and Development as
Required by Law
Unfortunately, the same flaws in the NPR-A IAP EIS process are
being repeated by the ANWR Draft Comprehensive Conservation Plan (CCP)
and EIS. In some ways, they are premised on the same informational gaps
and concerns.
The State of Alaska participated in several scoping and comment
periods concerning this plan. Our comments and letters encouraged the
DOI to consider the potential for oil and gas exploration and
development in the 1002 Area. Indeed, we believe that such
consideration is required by law. This is an important point that
deserves a detailed explanation.
When I served as Attorney General for the State of Alaska, I
submitted a comment letter to the manager of ANWR on the initial CCP
and EIS Notice of Intent. The following is an excerpt from this letter,
making the case that the Department of Interior's position lacks legal
authority.
The purpose of the Notice was to advise Federal and State agencies
and the public of (1) the Service's ``intention to conduct detailed
planning on this refuge and (2) [to] obtain suggestions and information
on the scope of issues to be considered in the EIS and during the
development of the CCP.'' \1\ The Notice also explained that the
Service will review whether to recommend that Congress place ANWR lands
within the National Wilderness Preservation System,\2\ but did not
consider oil and gas exploration or development.
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\1\ 75 Fed. Reg. 17763, 17764 (April 7, 2010).
\2\ 75 Fed. Reg. at 17763-64.
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The Service has said that it will not consider oil and gas
development before it issues a revised CCP and, apparently, the EIS.\3\
It explained that drilling in ANWR is off-limits and only Congress has
the authority to lift the ban.\4\ No other explanation for limiting the
comments was given. The Service therefore concluded that it is
unnecessary to require the agency to consider the environmental impacts
of a prohibited activity.
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\3\ 75 Fed. Reg. at 17764.
\4\ See 16 U.S.C. Sec. 3142(i) (``Until otherwise provided for in
law enacted after December 2, 1980, all public lands within the coastal
plain are withdrawn from all forms of entry or appropriation under the
mining laws, and from operation of the mineral leasing laws, of the
United States.''); 16 U.S.C. Sec. 3231 (the process for allowing the
President to recommend to Congress to open Federal lands within Alaska
to mineral development does not apply to lands within ANWR).
---------------------------------------------------------------------------
There are at least three significant problems with the Service's
position. First, NEPA provides that Federal agencies must ``study,
develop, and describe appropriate alternatives to recommended courses
of action in any proposal which involves unresolved conflicts
concerning alternative uses of available resources.'' \5\ There is
obviously a conflict over alternative uses for the 1002 Area. Hence,
the Service must consider oil and gas development as an alternative.
---------------------------------------------------------------------------
\5\ 42 U.S.C. Sec. 4332; N. Idaho Cmty. Action Network v. U.S.
Dep't of Transp., 545 F.3d 1147, 1153 (9th Cir. 2008) (``This
`alternatives provision' . . . requires the agency to give full and
meaningful consideration to all reasonable alternatives.''); California
v. Block, 690 F.2d 753 (9th Cir. 1982) (holding that the agency should
have considered the alternative of allocating more than one-third of
the land to the wilderness category).
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Second, ``[t]he mere fact that an alternative requires legislative
implementation does not automatically establish it as beyond the domain
of what is required for discussion, particularly since NEPA was
intended to provide a basis for consideration and choice by the
decision makers in the legislative as well as the executive branch.''
\6\ Thus, the Service's rationale for limiting public comment--i.e.,
because Congress alone has the power to lift the ban on drilling, it
cannot or should not consider oil and gas development as an
alternative--is a rationale that courts have rejected.
---------------------------------------------------------------------------
\6\ Natural Res. Defense Council, Inc. v. Morton, 458 F.2d 827, 837
(D.C. Cir. 1972); see also Save Our Cumberland Mts. v. Kempthorne, 453
F.3d 334, 343-344 (6th Cir. 2006) (observing that statutory limitations
on an agency's decision making authority cannot limit the range of
alternatives an agency must consider). See generally D. Mandelker NEPA
Law and Litigation Sec. Sec. 9:19, 9:24 (2d. ed. 2007) (collecting
cases).
---------------------------------------------------------------------------
Third, where an action is taken pursuant to a specific statute, the
statutory objectives of the project serve as a guide to determine the
reasonableness of an agency's decision to limit the scope of an EIS.\7\
Here, the Service has unreasonably restricted the scope of the public
comment period to exclude discussion of oil and gas development because
ANILCA expressly requires the Service to consider how oil and gas
development will impact wildlife and the environment.
---------------------------------------------------------------------------
\7\ Westlands Water Dist. v. U.S. Dep't of the Interior, 376 F.3d
853, 866 (9th Cir. 2004).
---------------------------------------------------------------------------
More specifically, ANILCA provides that the purpose of Section 1002
``is to provide for a comprehensive and continuing inventory of the
assessment of the fish and wildlife resources . . . an analysis of the
impacts of oil and gas exploration development, and production, and to
authorize exploratory activity within the coastal plain[.]'' \8\ The
statute goes on to provide that the Secretary must also provide
Congress with recommendations ``with respect to whether further
exploration for, and the development and production of, oil and gas
within the coastal plain should be permitted and, if so, what
additional legal authority is necessary to ensure that the adverse
effects of such activities on fish and wildlife, their habitats, and
other resources are avoided or minimized.'' \9\ Similarly, Section 1005
of ANILCA provides that the Secretary ``shall work closely with the
State of Alaska and Native Village and Regional Corporations in
evaluating the impacts of oil and gas exploration, development, and
production . . . on the wildlife resources of these lands[.]''
---------------------------------------------------------------------------
\8\ 16 U.S.C. Sec. 3142(a).
\9\ 16 U.S.C. Sec. 3142(h)(6).
---------------------------------------------------------------------------
Accordingly, because the Department of Interior, and therefore the
Service, is expressly required by statute to evaluate the impacts of
oil and gas exploration, it is a violation of NEPA for the Service to
limit the scope of public comments on this issue.
Indeed, the Service's decision to restrict public comment begs
several questions: How can the Service know if new information exists
related to the environmental effects of oil and gas development if it
refuses to consider public comments on this issue? And how can the
Service say that it is ``looking for meaningful comments that will help
determine the desired future conditions of the Refuge and address the
full range of purposes'' but then go on to limit the scope of public
comment?
Despite these and many other comments, and to our disappointment
and our Nation's detriment, the DOI has indicated it will not address
oil and gas issues in the ANWR planning document.
The ANWR 1002 Area was specifically set aside for the future study
of whether it could be made available for responsible oil and gas
exploration and development. The area holds a very rich supply of oil--
oil that the Nation needs, is technically recoverable, and that the
vast majority of Alaskans want to develop. The draft CCP goes to great
lengths to discuss the ``benefits'' associated with designating the
Refuge lands as wilderness, but offers nothing to explain the trade-
offs and lost opportunities associated with precluding responsible
development of the 1002 Area's rich oil and gas resources. Given the
explicit direction in ANILCA for the 1002 Area, not only is this
contrary to NEPA requirements, it is grossly irresponsible.
V. The State of Alaska Has Developed a Detailed, Scientific Resource
Evaluation and Exploration Proposal for the ANWR 1002 Area and
Will Fund up to $50 Million to Implement the Proposal
For these reasons, Alaska has stepped up to help complete the work
the Federal Government seems unwilling to do. On Monday, May 20, 2013,
Governor Parnell announced that the State of Alaska has prepared an
``Oil and Gas Resource Evaluation and Exploration Proposal for the ANWR
1002 Area.'' This detailed proposal satisfies a component that should
have been included, but has been consistently omitted, from the ongoing
CCP process. The detailed plan proposed three primary things:
1. Completion of a 3D seismic program in ANWR's 1002 Area;
2. Planning and permitting that would entail environmental studies
and Federal, State and local permitting approvals based on the
interpretation of the 3D seismic data to prepare for exploration
drilling; and
3. Completion of a wintertime exploration plan, using ice roads and
ice pads, to define the oil and gas potential in the 1002 Area with
minimum environmental impact.
As the proposal describes, accurately defining the oil and gas
resource potential in the 1002 Area is a critical part of understanding
the value of the 1002 Area to the Nation. It is also a critical factor
in understanding the human environment associated with ANWR and
Alaska's North Slope.
The proposal's reasonable, phased approach focuses on potential
impacts to the environment and how to best mitigate or completely avoid
them. The most important mitigation measure of this entire proposal is
to make it an almost exclusively winter program. The 3D seismic and
exploration drilling activities would only be conducted during the
winter when ice roads and ice pads are required. Alaska is the foremost
expert in the world on ice road and ice pad construction in the Arctic
with very minimal impact.
Combined with the State of Alaska's very high environmental
standards and best practices using new technology--like extended reach
or directional drilling--our proposal can be conducted with very little
to no impact on the surrounding environment. This point is critical:
the debate on ANWR has not kept up with the advances in technology and
best practices, all of which dramatically lessen the surface footprint
and impact of any Arctic work. We see this every day in Alaska.
Not only did the State of Alaska develop this plan, but we are also
providing the resources to implement the plan. Governor Parnell has
pledged to request up to $50 million from the Alaska Legislature to add
to Federal funding that we hope will be made available for this
exploration program. Alaska stands ready to provide its oil and gas
expertise, and now we have offered a major financial commitment to
advance what Congress and the DOI have stated is critical: a full
assessment of the oil and gas potential in the 1002 Area.
Section 1005 of ANILCA provides that the Secretary ``shall work
closely with the State of Alaska and Native Village and Regional
Corporations in evaluating the impacts of oil and gas exploration,
development, and production . . . on the wildlife resources of these
lands[.]'' We are poised to do that. The Federal Government cannot
legitimately evaluate impacts unless it knows the breadth of the oil
and gas resource it stands to recover for Americans' benefit.
President Obama has also recognized the need to use comprehensive
information when making decisions in the Arctic. The White House's
recently released ``National Strategy for the Arctic Region'' stresses
a partnership with Alaska and Alaska Native organizations, and the use
of scientific research to inform Arctic energy decision-making.
We are eager to strengthen our relationship with the Federal
Government, Native leaders, and other Alaska stakeholders. An updated
resource assessment in the 1002 Area is an essential first step. Once
we know what oil and gas resources underlie the 1002 Area--through the
implementation of our proposal--we will be able to have an informed
discussion about ANWR.
In addition, we will have more thoroughly defined the economic
benefits for all Americans: how many jobs ANWR development would
create; the revenues it would generate for the treasury; and the secure
oil supplies it would provide to the Nation. These numbers will confirm
what many Alaskans have long advocated--that ANWR's energy resources
are a major national asset, and development would provide immense
benefits to our country.
Alaska stands ready to support the investment in ANWR--one that
will grow our Nation's economy, improves our energy security, and
brings the U.S. further along the path to energy independence.
VI. The State of Alaska Will Submit an Exploration Plan Based on this
Proposal for the Secretary of Interior's Approval Pursuant to
ANILCA 1002(e)
As noted above, our goal would be for the Department of Interior to
adopt the above detailed Exploration Proposal as part of the Department
of Interior's CCP. For the reasons stated above, including the fact
that this proposal will have limited environmental impact, we believe
it is strongly in the best interest of the country and the State of
Alaska for the Department of the Interior to make this Exploration
Proposal part of the CCP. The leaders of the North Slope Borough and
Arctic Slope Regional Corporation agree with this course of action.
However, because we are not confident that the Department of the
Interior will do this, we also have a plan pursuant to ANILCA to
directly apply to the Secretary of the Department of the Interior for
acceptance of this plan as required under Federal law. ANILCA Section
1002(e) provides:
EXPLORATION PLANS--(1) After the initial guidelines are
prescribed under subsection (d), any person including the U.S.
Geological Survey may submit one or more plans for exploratory
activity (hereinafter in this section referred to as
``exploration plans'') to the Secretary for approval. An
exploration plan must set forth such information as the
Secretary may require in order to determine whether the plan is
consistent with the guidelines, including, but not limited to--
(A) A description and schedule of the exploratory activity proposed
to be undertaken;
(B) A description of the equipment, facilities, and related
manpower that would be used in carrying out the activity;
(C) The area in which the activity would be undertaken; and
(D) A statement of the anticipated effects that the activity may
have on fish and wildlife, their habitats and the environment.
(2) Upon receiving any exploration plan for approval, the
Secretary shall promptly publish notice of the application and
the text of the plan in the Federal Register and newspapers of
general circulation in the State. The Secretary shall
determine, within 120 days after any plan is submitted for
approval, if the plan is consistent with the guidelines
established under subsection (d). If the Secretary determines
that the plan is so consistent, he shall approve the plan:
except that no plan shall be approved during the 2-year period
following the date of enactment of this Act. Before making the
determination, the Secretary shall hold at least one public
hearing in the State for purposes of receiving the comments and
views of the public on the plan. . . .
The State of Alaska will be submitting an Exploration Plan based on
this reasonable resource evaluation and exploration proposal that we
believe meets all of the criteria of ANILCA Section 1002(e). It should
be noted that if such criteria are met, the Secretary of the Interior
is mandated by law to approve such plan.
______
Letter Submitted for the Record From The Honorable Sean Parnell
Governor,
State of Alaska,
Anchorage, AK, May 18, 2013.
The Honorable Sally Jewell, Secretary,
U.S. Department of the Interior,
Washington, DC 20240.
Dear Secretary Jewell,
Congratulations on your nomination and confirmation to lead the
Department of the Interior. Your leadership and decisions will be
significant to the future of the State of Alaska and the United States.
I wish you the best and offer assistance and partnership from my
Administration.
One area under your management is the coastal plain of the Arctic
National Wildlife Refuge (ANWR), as described in Section 1002 of the
Alaska National Interest Lands Act. The 1002 Area and the remainder of
ANWR are the subject of a multi-year planning process led by the U.S.
Fish and Wildlife Service to update the ANWR Comprehensive Conservation
Plan (CCP). My Administration has participated in several scoping and
comment periods in regard to the CCP. Our comments and letters have
encouraged DOI to consider the potential for oil and gas exploration
and development in the 1002 Area. Indeed, we believe that such a
consideration is required by law. To our disappointment, the Department
of the Interior has indicated that they have no intention of
considering this alternative for the 1002 Area.
Therefore, the State of Alaska would like to offer you two items.
The first is the Oil and Gas Resource Evaluation and Exploration
Proposal (the ``Exploration Proposal'')--a detailed proposal that
satisfies a component that should have been included, but has been
consistently omitted, from the ongoing CCP process. The Exploration
Proposal is available at
http://gov.alaska.gov/parnell_media/resources_files/
ANWR_051713a.pdf
http://gov.alaska.gov/parnell_media/resources_files/
ANWR_051713b.pdf
The Alaska Department of Natural Resources, which has some of the
world's foremost experts on arctic oil and gas exploration and
development issues, has dedicated a great deal of effort to assemble
this document. I hope you will include the Exploration Proposal in the
CCP's analysis.
As the Exploration Proposal describes, accurately defining the oil
and gas resource potential is a critical part of understanding the
value of the 1002 Area to the Nation. It is also a critical factor in
understanding the human environment associated with ANWR and Alaska's
North Slope. With recent advancements in technology, responsible oil
and gas exploration and development can be accomplished with very
little impact on the environment.
The second offer is a pledge to request up to $50 million from the
Alaska State Legislature during its 2014 legislative session to help
fund the 3D seismic program for the 1002 Area as described in the
Exploration Proposal. We would of course need a positive indication
that the Federal Government would want to partner with the State of
Alaska on such a seismic program before submitting a budget request to
our Legislature at the end of the year. This would be in addition to
generous exploration credits that the State of Alaska would be able to
provide the private sector in assisting with the Exploration Proposal.
For 26 years, Americans have engaged in a debate about the wildlife
and oil and gas resources on and underneath the 1002 Area.
Unfortunately, ANWR's oil and gas resources have been estimated using
archaic 2D seismic data. State of Alaska land managers have found that
3D seismic data is an indispensable tool to managing our lands. We
believe that it would be very valuable for your land managers to have
this data to inform their planning efforts for the 1002 Area.
I would recommend that the U.S. Geological Survey conduct this 3D
seismic program in conjunction with the Alaska Division of Geological
and Geophysical Surveys (DGGS) in order to provide a much-needed update
to the 1987 USGS resources report to Congress. As you likely know, the
USGS and Alaska's DGGS have a strong, cooperative working relationship
that dates back decades.
I look forward to visiting with you at your earliest convenience
about this and the many other topics that we can work together on to
benefit Alaska and the United States.
Sincerely,
Sean Parnell,
Governor, State of Alaska.
______
State of Alaska
OFFICE OF THE GOVERNOR
FOR IMMEDIATE RELEASE No. 13-083
Governor Rolls Out ANWR Exploration Proposal for ANWR 1002 Area
May 20, 2013, Anchorage, Alaska--Governor Sean Parnell today
announced an exploration proposal for the Arctic National Wildlife
Refuge (ANWR) 1002 Area, which the State has developed and is offering
to help finance.
``Accurately defining the oil and gas resource potential is a
critical part of understanding the value of the 1002 Area to the
Nation,'' Governor Parnell said. ``The Federal Government has the
responsibility to do this under Federal law, but is clearly reluctant
to do so. Therefore, we are stepping forward with our expertise and
financing to provide a detailed resource evaluation and exploration
proposal.''
Governor Parnell outlined the proposal in a letter sent to Interior
Secretary Sally Jewell, and he and Department of Natural Resources
Commissioner Dan Sullivan rolled out the 187-page document during a
press event at the U.S. Chamber of Commerce headquarters in Washington,
D.C.
Also speaking at the Monday event in support of the proposal were
Charlotte Brower, mayor of the North Slope Borough, and Rex Rock,
president and chief executive of the Arctic Slope Regional Corp., a
regional Alaska Native corporation based in Barrow.
In his letter to Secretary Jewell, Governor Parnell offered to
request up to $50 million from the Alaska Legislature to support the
seismic program contained in the proposal. Such a budget request will
be contingent on the Federal Government indicating its interest in
partnering with the State of Alaska on the seismic program.
The proposal, called the ``Oil and Gas Resource Evaluation &
Exploration Proposal for the ANWR 1002 Area,'' was produced by the
Alaska Division of Oil & Gas, and it is being shared with Alaska
stakeholders, the U.S. Department of the Interior and members of
Congress this week.
The report details a 7-year seismic and exploration program to
provide a much more definitive assessment of the magnitude of the oil
and gas resources within the 1002 Area--thought to be one of the most
prolific regions for undiscovered oil in America. This assessment will
provide Congress and the Federal Government a much clearer
understanding of the best way to manage this small portion of ANWR for
the benefit of all Americans.
``We hope that the Department of the Interior and Congress will
partner with the State in adopting and implementing this exploration
proposal,'' Governor Parnell said.
``This is a reasonable proposal based on Alaska's high standards
for responsible resource development and environmental protection,''
Sullivan said. ``Implementation of this proposal will have negligible
impacts on the environment and should be acceptable to a wide range of
stakeholders.''
Governor Parnell's letter to Secretary Jewell and the report are
available at:
http://gov.alaska.gov/parnell_media/resources_files/jewell_052013.pdf
http://gov.alaska.gov/parnell_media/resources_files/ANWR_051713a.pdf
http://gov.alaska.gov/parnell_media/resources_files/ANWR_051713b.pdf
______
Mr. Lamborn. OK, thank you for your testimony.
Mayor Brower.
STATEMENT OF CHARLOTTE E. BROWER, MAYOR, NORTH SLOPE BOROUGH
Ms. Brower. Good morning, Mr. Chairman and members of the
Committee. My name is Charlotte Brower. I am Mayor of the North
Slope Borough. And I want to thank you for the opportunity to
speak before you on H.R. 1964.
The National Petroleum Reserve Alaska Access Act would
amend the Naval Petroleum Production Act of 1976 to direct the
Secretary of the Interior to conduct a competitive leasing
program of oil and gas in the NPR-A, including holding lease
sales at least once every year. The North Slope Borough was
given some limited participation in the development of the NPR-
A management plan. However, the Borough did not support the
majority of the management decision embodied in the alternative
B2 adopted in the final management plan.
No one is more mindful of the need to protect the
environment and preserve subsistence opportunities than the
people of the North Slope. The potential for oil and gas
leasing exploration and development in the NPR-A, therefore,
presents difficult questions of priorities and policy for all
North Slope organizations. Our challenge has always been to
balance the development with the preservation of a healthy
North Slope environment, abundant subsistence resources, and
the vibrant traditional subsistence culture of our people.
With respect to H.R. 1964, I would like to thank the
Chairman and members of the Committee and Chairman Hastings and
Congressman Young for looking at the energy needs of the Nation
and advocating for the balanced management of the NPR-A. The
final management for the NPR-A prohibits oil and gas leasing,
on well over 50 percent of the NPR-A. This includes areas
identified by BLM's own estimates as having a high potential
for oil and gas resources.
We also support efforts to conduct updated resource
assessments within the NPR-A to understand the resources that
are available. This kind of information is critical to making
effective and informed decisions over NPR-A management. While
this hearing focuses on the Federal Government's management of
the NPR-A and specifically H.R. 1964, I would like to comment
on a couple of policy matters that are fundamentally related.
First, along with the Arctic Slope Regional Corporation, we
commend BLM for establishing the new NPR-A working group, and
we are pleased that the BLM has obtained funding for this
important initiative. My administration has focused on the
value of collaboration, communication, and coordination in the
review of management decisions involving the NPR-A. Management
decisions involving the NPR-A can have a cultural and economic
impact, while disproportionately effecting local populations.
We hope that any proposed legislation that impacts the
management of the NPR-A will include language, and acknowledges
the importance of this type of collaboration.
Second, I would also like to comment on the BLM's Fiscal
Year 2014 Budget. Under the President's budget proposal for
BLM, Alaska's share of revenue from oil and gas activity in the
NPR-A would be diverted from the State to the BLM to pay for
the clean-up legacy wells drilled by the Federal Government
between 1944 to 1981. I cannot emphasize enough how offensive
this proposal is to the North Slope Borough. The majority of
the NPR-A aid grant funding goes to four communities: Nuiqsut,
Barrow, Atqasuk, and Wainwright. These same communities used
impact aid funding for things such as recreational activities
for youth and suicide prevention programs.
Over 25 percent of our residents are unemployed, and nearly
50 percent are under-employed. A loss of funds will severely
impact programs funded by workforce and training development
grants, adding to the unemployment problem. It is my hope that
Congress will act to ensure that responsible resource
development in the NPR-A is coupled with a firm mandate that
the State and local communities continue to receive the impact
aid funds that they rely upon.
``Quyanaqpak'' for the opportunity to address you today.
[The prepared statement of Ms. Brower follows:]
Prepared Statement of Charlotte E. Brower, Mayor, North Slope Borough,
Alaska
H.R. 1964
Chairman Hastings, Congressman Young, members of the Committee:
I want to thank you for the opportunity to provide comments for
your hearing on the Federal Government's management of the National
Petroleum Reserve-Alaska (NPR-A) and, specifically, H.R. 1964, the
``National Petroleum Reserve Alaska Access Act'', which would, among
other things, nullify the NPR-A Integrated Activity Plan (IAP) Record
of Decision (ROD) issued by the Secretary of the Interior on February
21, 2013, and amend the Naval Petroleum Reserves Production Act of 1976
to direct the Secretary of the Interior to conduct a program of
competitive leasing of oil and gas in the NPR-A.
As you may know, the North Slope Borough (Borough) participated in
the development, by the Bureau of Land Management (BLM), of the IAP and
Environmental Impact Statement (EIS) for the NPR-A. The Borough did not
support several of the management decisions embodied in Alternative B-
2, the preferred alternative in the final EIS. Alternative B-2 served
as the basis for the ROD adopted by BLM for the management of the NPR-
A.\1\ The Borough does, however, maintain a good relationship with
BLM's Alaska office. We appreciate BLM's efforts to ensure that the
Borough and our communities have a seat at the table when it comes to
managing NPR-A lands, and in particular, we support the recent efforts
of the BLM to establish the NPR-A Working Group to better involve North
Slope communities in NPR-A management decisions.
---------------------------------------------------------------------------
\1\ The Borough recommended implementation of Alternative A, but
with the southern region of NPR-A also opened for oil and gas leasing.
Specifically, the Borough recommended that BLM apply the current
package of stipulations and required operating procedures (ROPs) as
presented in the 2008 Record of Decision for the former Northeast
Planning Area, to the entire NPR-A. The Borough recommended that the
area in the former Northwest Planning Area previously deferred from
leasing until 2014 should be included in future lease sales upon
expiration of the deferral. The Borough recommended that the area north
and east of Teshekpuk Lake previously deferred from leasing until 2018
should be subject to an additional, targeted planning process before a
decision was made to extend the deferral or open the area to leasing
subject to appropriate protective measures. The Borough recommended
that Special Areas should remain as previously defined. The Borough
also recommended that no Wild and Scenic Rivers should be designated.
---------------------------------------------------------------------------
The NPR-A IAP governs the management of the entire 22.6 million-
acre NPR-A, focusing on the potential effects of oil and gas leasing,
exploration, and development within the area. The entire NPR-A lies
within the boundaries of the North Slope Borough, a home rule regional
municipal charter government operating under the laws of the State of
Alaska. The majority of Borough residents are Inupiat Eskimos that live
a subsistence lifestyle and are dependent upon the wild resources of
our traditional lands and waters for our physical health and our
cultural and spiritual well being.
All of the NPR-A has been used by the Inupiat people for centuries,
and continues to be of great importance to the well-being of our
residents today. It contains habitat unique on the North Slope, and
sees exceptional seasonal concentrations of wildlife resources. The
region contains important nesting and staging areas for waterfowl,
shorebirds, and raptors, overwintering and spawning areas for fish, and
calving and insect-relief habitat for caribou. Many of these resource
populations, including vast numbers of waterfowl and the Teshekpuk
Lake, Central Arctic, and Western Arctic Caribou Herds migrate to,
through, and from the NPR-A following relatively predictable patterns.
In terms of the numbers of caribou harvested for subsistence, the
Teshekpuk Lake Herd is today the most important herd on the North
Slope. Scores of traditional subsistence cabins, campsites,
transportation routes, and key harvest areas can be found throughout
the region. Many significant Inupiat cultural and historic sites dot
the landscape.
While always mindful of the critical need to protect the
environment and preserve subsistence opportunities, the North Slope
Borough and our residents also recognize that our ability to continue
to provide even the most basic services to our communities depends
largely upon a revenue stream generated by taxes on oil and gas
facilities located on land and in waters of the State of Alaska.
The potential for oil and gas leasing, exploration, and development
in the NPR-A therefore presents difficult questions of priorities and
policy for all North Slope organizations. Our challenge has always been
to find a balance between the need for industry-fueled revenue and
preservation of a healthy North Slope environment, healthy subsistence
resource populations, and vibrant traditional subsistence culture of
our people.
Throughout the past 40 years, we have vigorously exercised our
authority and influence to see industrial operations sited and
conducted to the greatest extent possible in an environmentally and
culturally sensitive manner. We have not always been successful in
halting or conditioning operations to fully avoid or minimize adverse
impacts. Cumulative impacts have occurred, and are only now being
acknowledged by industry and the responsible Federal and State
agencies. For the most part, however, and to some extent because of the
Borough's insistence on appropriate conditions, onshore oil and gas
operations have been designed and operated without significant long-
term effects on the environment, wildlife populations, or the Inupiat
subsistence culture.
H.R. 1964, the ``National Petroleum Reserve Alaska Access Act''
I would like to take this opportunity to thank Chairman Hastings
and Congressman Young for taking a hard look at the energy needs of our
Nation and for addressing the importance of a well-balanced approach to
the management of the National Petroleum Reserve-Alaska. In particular,
I think it is important for Congress to reaffirm that the purpose of
the NPR-A is to provide oil and gas resources to the United States and
to take steps to ensure that the Reserve is managed in a way that
allows for responsible natural resource development.
The IAP released by the Department of the Interior prohibits oil
and gas leasing in well over 50 percent of the NPR-A. This includes
areas identified by BLM's own estimates as having a high potential for
oil and gas resources. While we are appreciative of Interior's intent
to protect and preserve wildlife resources and the habitats they depend
on, we also feel that it is equally important for the NPR-A to be
managed in a way that promotes responsible oil and gas development and
economic opportunities for local communities.
We also support efforts to conduct updated resource assessments
within the NPR-A to understand the resources that are available. This
kind of information is critical to making effective and informed
decisions over NPR-A management.
NPR-A Working Group
While this hearing focuses on the Federal Government's management
of the NPR-A and, specifically, H.R. 1964, the ``National Petroleum
Reserve Alaska Access Act'', I would be remiss not to comment on a few
additional policy matters that are fundamentally related.
First, along with Arctic Slope Regional Corporation and the Inupiat
Community of the Arctic Slope--for which there are representatives here
today--we commend BLM for establishing the new NPR-A Working Group. And
we are pleased that the BLM has obtained funding for this important
initiative.
My administration has focused on the value of collaboration,
communication, and coordination in the review of management decisions
involving the NPR-A. Management decisions involving the NPR-A can have
cultural and economic impacts which disproportionately affect local
populations. The effects of climate change on the Arctic environment
are rapidly changing known plant and animal distributions, habitats,
and ranges as well as the physical landscape and subsistence hunting
practices and areas.
Because of these impacts, infrequent commenting opportunities
through the National Environmental Policy Act process, and other public
processes, may not provide the most effective mechanism for local
entities to provide meaningful input on NPR-A management decisions. We
hope the NPR-A Working Group will strengthen coordination and
cooperation between BLM, the Borough, and North Slope entities on NPR-A
management issues. And we further hope that any proposed legislation
that impacts the management of the NPR-A will include language that
acknowledges the importance of this type of collaboration.
Legacy Wells
I also want to address the BLM's duty to fulfill its mission of
protecting public land by plugging and remediating more than a hundred
oil wells in northern Alaska.
These wells, known as the ``Legacy Wells,'' were drilled between
1944 and 1982 by the Federal Government in an attempt to locate
commercial quantities of oil and natural gas. The U.S. Navy and U.S.
Geological Survey drilled 136 wells in Northern Alaska over the span of
five decades, which are now abandoned. Only a handful of the 136 wells
have been plugged and cleaned up by State of Alaska standards. This
issue is of concern to the entire State.
The Federal Government wishes to act as steward of the land in
Alaska, often telling our people what they can or cannot do on the
land. Yet here is an example of the same government failing to fulfill
the most basic of responsibilities as a land owner. Residents of the
North Slope want to develop resources, but we want to do so
responsibly.
The State of Alaska's Oil and Gas Conservation Commission (AOGCC)
has commented that all of BLM's legacy wells are or have been out of
compliance with multiple Alaska regulations. If these wells were
operated by an oil company, the AOGCC would force compliance with its
regulations and impose fines for any non-compliance.
BLM's FY 2014 Budget
Under the President's FY 2014 budget proposal for BLM, Alaska's 50-
percent share of revenue from oil and natural gas activity in the NPR-A
would be diverted from the State to the BLM to pay for the cleanup of
legacy wells drilled by the Federal Government between 1944 to 1981 and
to complete land conveyances owed to the State and to Alaska Natives. I
cannot emphasize enough how offensive this proposal is to the North
Slope Borough.
The majority of NPR-A Impact Aid grant funding goes to four
communities located within the NPR-A--Barrow, Nuiqsut, Wainwright and
Atqasuk--which rely heavily on Local Government Operation grants to
sustain their city governments. The four Local Government Operational
grants total approximately $3.1 million annually, subject to NPR-A
Impact Aid funding. These projects support operations and maintenance
costs necessary to operate the local governments.
BLM's proposal to divert NPR-A revenues owed to the State will
result in the elimination of NPR-A Impact Aid payments to the four NPR-
A villages that depend on NPR-A revenues to operate. In 2010, the North
Slope Borough completed a comprehensive Economic Profile and Census
project in our region. The results indicated that 26.5 percent of our
residents are unemployed and 49.4 percent are underemployed. If NPR-A
revenue sharing payments cease, our villages and our already
economically vulnerable residents will be harmed.
BLM has expended $86 million to address 18 legacy wells ($4.77
million per well). Current NPR-A Impact Fund deposits are less than $4
million per year, and there are more than 110 additional wells to
address--that means the ``temporary'' halt in revenue sharing payments
proposed by BLM would end in about 150 years if all revenues are
diverted to the Legacy Well cleanup program and no funding is committed
to State and Native land conveyances.
We cannot understand why BLM would choose to deprive our villages
and our residents of Impact Aid grant funds, which are specifically
authorized by Congress to address the impacts of oil and gas
development in the region. Moreover, NPR-A revenues cannot
realistically support either the Legacy Well cleanup program or the
Alaska Land Conveyance program, as proposed in BLM's budget. We hope
BLM will find another way to fulfill its Federal commitments to Alaska
and to our people.
Quyanaqpak (Thank you very much) for the opportunity to address you
today.
______
Mr. Lamborn. Thank you all for your testimony. I am going
to now recognize myself for the first questions. Members are
limited to 5 minutes for questions. We may have additional
rounds.
Mayor Brower, that is amazing. I did not know, until you
explained it so clearly, that BLM wants to divert the money
from the people of the communities there. I have no doubt that
BLM has a worthwhile objective for that money, but they have
many other ways that they can access funds. They can come to
Congress and submit it in their budget. Is this unprecedented?
Ms. Brower. Mr. Chairman, it is. I have worked for North
Slope Borough for over 40 years, and I have also worked in
various organizations that rely on the NPR Impact Aid Fund. And
we work closely with the four communities that are within the
National Petroleum Reserve-Alaska. And those communities depend
heavily on the impact aid that they receive through the State
from the Federal Government on the NPR-A.
And you have to understand. In order to receive funding,
there has to be some activities within the NPR-A. And whatever
activities that there are results in revenues that we get a
share, through the State. And so, when we understood that the
BLM decided that they would divert any funding that is given to
the State and funneled to the North Slope Borough would be used
to clean the legacy oil wells that had been there by the
Department of Navy at the time they had done the NPR-A from
between 1944 to 1981, and when they released that, BLM took
over, of course they have left some legacy wells that are not
within the standards that they should have.
And so, when the North Slope Borough and State of Alaska
says, ``We want that clean-up because it is environmentally
safe for our residents so that they can hunt on the same
grounds,'' then when we found out that they were going to take
our money away, this presents a position for the North Slope
Borough to be strong on.
Mr. Lamborn. OK, thank you. And I don't doubt that it is a
worthy objective, but they have other ways they can get those
funds.
Commissioner Sullivan, in your testimony you point out that
while the BLM claims nothing in their plan and Environmental
Impact Statement is intended to bar the construction of
pipelines, yet that is exactly what would happen. Can you
specifically elaborate on why that is the case?
Mr. Sullivan. Mr. Chairman, sure. And just on the other
question you had, the State of Alaska fully supports the North
Slope Borough on its position on the NPR-A and the funding and
the legacy well issue. As a matter of fact, we wrote a joint
letter to the Department of the Interior on that issue.
That had been a very big concern in all the different
iterations of the proposal on the NPR-A. And although they did
try to address it in the final record of decision, we still
think that it has significant uncertainty, in terms of where
the route would allow a pipeline. And that is absolutely
critical, because almost any pipeline that goes from NPR-A or,
importantly, if Shell's Outercontinental Shelf development
brings in oil, significant oil, and that comes down and through
the NPR-A, any of that oil is going to have to go into the
Trans-Alaska Pipeline system. And to have uncertainty on where
a pipeline across the NPR-A area can go, just brings investment
risk and uncertainty to increasing oil production from NPR-A or
the OCS into----
Mr. Lamborn. OK. Thank you. Commissioner Connell, why is
BLM allowing this uncertainty, when there needs to be certainty
for investments? We are talking about major investments, given
the important environmental safeguards that have to be complied
with in pretty adverse conditions.
Ms. Connell. Yes, sir. The record of decision for the most
recent BLM announcement on the NPR-A development scenario would
include a requirement for a pipeline that would run from the
Chukchi Sea down to the Trans-Alaska Pipeline. The site-
specific analysis of exactly where that pipeline would go, we
didn't have enough detailed information about every mile of
that proposed line to be able to make a site-specific decision,
but there is absolutely commitment to provide for a pipeline.
Mr. Lamborn. OK, I am really glad to hear that, because
that maybe will alleviate some of the uncertainty. Some people
might be skeptical and say, well, this is a ploy to sort of
draw things out and stonewall and delay and prevent. You are
saying that is not the case.
Ms. Connell. That is not the case. There is a commitment
for a pipeline to go from the Chukchi Sea down to the Trans-
Alaskan Pipeline.
Mr. Lamborn. OK, thank you very much. I appreciate hearing
that on the record.
Representative Holt?
Dr. Holt. Thank you. Thank you. Ms. Connell, can you help
explain or clarify the diversion of funds that Mayor Brower was
talking about? I am not quite sure that I understand.
Ms. Connell. Yes, sir. I will do my best. As you know, I am
visiting from the State of Montana, where I am the State
Director for BLM Montana, North and South Dakota. So I
appreciate your invitation to be here.
My understanding of that situation is that in the
President's budget for 2014 they were looking for a number of
different ways to fund the vast array of BLM's
responsibilities. One of these responsibilities is, in fact,
the clean-up of those legacy wells, wells that have not been
plugged and abandoned appropriately in Alaska.
This year for the Bureau of Land Management I can speak to
specifically, our budget is $90 million less than it was last
year. My organization, Montana, North and South Dakota, is less
than that. It is less than an entire State organization. So $90
million is significant cuts to our Bureau's budget. And so we
are really trying to be creative.
I 100 percent appreciate the concerns of my colleagues here
from Alaska, and we have been working diligently with the
State, and would be more than happy to work with this Committee
to come up with different ideas and different funding
strategies for that plug-in abandonment. It can be extremely
expensive and time-consuming to take care of that situation,
but we really would like to see the clean-up completed.
Dr. Holt. OK. Isn't this at least partly due to the
sequester and the budget cuts that we have seen?
Ms. Connell. Yes, sir. It certainly is a funding
discussion. We really need to find a place to pay for those
plug-in abandonments of those wells.
Dr. Holt. Thanks. Ms. Connell, continuing, according to the
BLM, the percentage of land parcels protested has declined in
each of the last 4 years, following the leasing reforms by the
Department. In 2009 I understand 47 percent of the lease
parcels were protested. In 2012, protests were down to fewer
than 18 percent of the 2,064 parcels offered for sale.
You state in your testimony that, ``It could be
counterproductive to develop energy resources on Federal lands,
if the result is greater near-term resource damage that, in
turn, would necessitate more onerous restrictions on future
energy development activities.'' So, in other words, rather
than planning smartly from the beginning, as the Department is
trying to do, H.R. 1965 might actually mean that we would be
forced to require more long-term restrictions on development.
And it could actually reduce the certainty that the sponsors of
this legislation say they are seeking. Am I correct on that?
Ms. Connell. You have quoted our testimony accurately, yes,
sir. Certainly, the Bureau's determination to provide for
energy development on public lands and in an environmentally
responsible and balanced way is one of the highest and most
important priorities for our Bureau.
And we have seen a decrease in the number of protests. And
I personally think that is because a plan may actually consider
whether or not lands are suitable for oil and gas leasing on
somewhere in the neighborhood of 7 to 10 million acres, which
is a large landscape to look at anything in a very specific
way. When we do our site-specific NEPA analysis or
environmental analysis, when the lease parcels come in, we take
a much closer look at each individual parcel. And I think that
has provided for better decisions, more defensible decisions,
and our ability, even if there are protests, our ability to
defend our decisions in that case.
Dr. Holt. And, as I understand it, H.R. 1965 would really
undermine the progress you are making in this--well, yes or no,
would you agree?
Ms. Connell. It is my understanding, the way that it is
written, that it would provide a problem for us to continue
with the local-level review of lease parcels.
Dr. Holt. Just in the few seconds remaining, I wanted to
ask if the Department has looked at this proposal of a $5,000
protest fee for anybody who wants to challenge a lease or a
permit. Putting aside the constitutional free speech questions
for another time, let me ask you, have you looked at it as a
Department? Do you think this would reduce the number of
protests, which are already at a smaller number than in the
past?
Ms. Connell. I don't know that we looked at it as to
whether or not it would reduce them. Although the concern that
was listed in our testimony referenced to the fact that, as a
Federal agency, we know that we are not perfect, we know that
once in a while we might make a mistake, and it seems as if it
should be reasonable for there to be an opportunity for people
to call us on those mistakes.
Dr. Holt. Thank you.
Mr. Lamborn. Thank you. Representative Benishek?
Dr. Benishek. Thank you, Mr. Chairman. Ms. Connell, you are
not in charge of the Alaska area, from what I understand from
your comments. You actually work in the Western Continental
United States.
Ms. Connell. I do. I am here as the Acting Deputy Director
for the Bureau of Land Management. So for the past several
months I have had responsibilities for all of the United
States, including Alaska. But my permanent job is, along with
Congressman Cramer, is back in Montana and North and South
Dakota.
Dr. Benishek. All right. Well, the question I have, brought
up by Ms. Brower, mitigation of these wells, these wells were
done producing in 1981. Is that right? I mean this is from the
1940s to the 1970s, these wells were in production for the
Naval Reserve. Is that right, Ms. Brower?
Ms. Brower. That is correct.
Dr. Benishek. So why are we doing the mitigation now? I
mean hasn't that been done in the 35 years already? What is the
story there?
Ms. Connell. BLM has been working, since it became the
responsibility of our Bureau, and I am sorry, I don't know the
exact date of that, but when the lands were transferred to the
BLM, we have been working toward clean-up and plug-in
abandonment of these wells, but it has been a bit slow-going
because of the cost and the complexity of the abandonment of
the wells.
Dr. Benishek. So, since 1981, I think, you have been
responsible for that land. And yet only now, 30-some years
later, are you deciding that we need to cutoff the funds to
this area in order to do that, 30 years later? I just don't get
the thinking there.
Ms. Connell. Well, that is currently the proposal in the
President's budget, yes.
Dr. Benishek. All right. OK, thank you. Mr. Sullivan, I
have a question for you. Ms. Connell seems to state in her
opening statement that there was leasing going on up there in
Alaska all the time, and that they are committed to doing
leasing. And yet it seems like the wells aren't getting done.
What is the discrepancy there? I mean I don't understand. Can
you explain that to me?
Mr. Sullivan. Sure, Congressman. And just real quick on the
legacy wells, I am sure this Committee has probably seen the
pictures, but they are leaking all over the place, and there is
oil all over the place. And if this were a private company that
was ignoring this for 30 years, you would probably have
executives in a fair amount of trouble. So the notion that all
the sudden the State and the Borough have to pay for that,
which is really the essence of the budget proposal, is why,
Mayor Brower mentioned why that is such an offensive issue to
us.
But with regard to the leasing, one of the things that we
are most concerned about is in the integrated plan, how that
essentially took half of the National Petroleum Reserve of
Alaska, which, again, was set aside by this body for oil and
gas security-related issues, and in the latest management plan
took half of that off the table for leasing.
So, in terms of future leasing, on a huge area of Federal
land in Alaska, it has just been cut in half.
Dr. Benishek. So that was a regulatory decision by the BLM,
then?
Mr. Sullivan. Correct. And we think that it might bump up
against Federal law with regard to what is required and how
that, the NPR-A, is managed. The organic focus on the NPR-A,
just think about the title, the National Petroleum Reserve of
Alaska, was focused on oil and gas security for the country.
Half of that is now gone.
Dr. Benishek. So, despite the fact that Congress mandated
this use for a petroleum reserve, the BLM, by regulation,
cutoff half of it.
Mr. Sullivan. That is our view, yes.
Dr. Benishek. Tell me more about these legacy wells that
are streaming oil on the surface. This is the responsibility,
then, of the BLM. And it has been going on for 30 years? Is
that what you are saying? I guess I wasn't familiar with that.
Mr. Sullivan. No, this is the responsibility of the Federal
Government. And we would be glad, we have many members of the
State of Alaska Legislature would love to come testify, show
you pictures. Because, again, a legacy well sounds a little
innocuous. When you go look that they are spilling oil all over
the tundra, it is not innocuous. And we believe it is the
Federal Government's responsibility to clean it up.
Dr. Benishek. Well, it sounds like you are right.
Ms. Connell, are you aware of that situation, there is oil
coming out of the ground on the tundra there, in that legacy
well?
Ms. Connell. I am familiar with the situation, and it is
why the Department and the Bureau are adamant that we need to
figure out, working with our partners at the State, a way to
move forward. And funding is definitely an issue, and if this
is not an acceptable means of funding those, we need to look
for another means of doing that.
Dr. Benishek. Thank you, and I think I am out of time.
Mr. Lamborn. OK, thank you. We are going to have a little
interruption here. As is our practice, whenever the Chairman or
Ranking Member of the Full Committee are present, they are
invited to give an opening statement also. So at this time I
would like to now recognize the Chairman of the Full Committee,
Representative Hastings of Washington, for 5 minutes.
STATEMENT OF THE HON. DOC HASTINGS, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF WASHINGTON
Mr. Hastings. Thank you very much, Mr. Chairman, for the
courtesy in going out of turn, but there are several hearings
that are going on on the Hill today.
The Natural Resources Committee has frequently discussed
the Congressional Research Service reports that have shown that
all of the recent increase in U.S. oil and natural gas
production has occurred on State and private lands, and not on
Federal lands. The lack of production on Federal lands is not
for a lack of resources. But, rather, the lack of production is
because of Federal regulations that hinder and block
development. And the four bills before us today that we are
discussing will hopefully help to reverse that trend.
Together, these bills will help us expand oil and natural
gas and renewable energy production on public lands. They will
streamline government red tape, break down bureaucratic
hurdles, and put in place a clear plan for developing our own
energy resources. Even more importantly, these bills will spur
job creation and help strengthen our economy.
This week the AAA reported that motorists can expect
another spike in gas prices this Memorial Day weekend. Prices
have jumped $.14 in the last month and the national average is
now $3.65 a gallon. These high prices hurt families and small
businesses and weigh down our economy. But Americans shouldn't
have to settle for and accept near $4 gasoline prices.
Continuing to increase our domestic supply, as these bills
would do, is the best way to respond to these spikes.
While our country continues to face looming deficits, it's
important to remember that energy production is a revenue
generator. Increasing American energy production is one of the
best things we can do to ensure job creation and economic
growth.
And I want to take a moment to talk specifically on H.R.
1964, the National Petroleum Reserve Alaska Access Act, that I
introduced with my colleague from Alaska, Don Young. Alaska is
a tremendous energy asset to our Nation. But the Obama
Administration appears determined, against the wishes of most
Alaskans, to keep their energy resources off limits.
The NPR-A was specifically designated in 1923 as a
petroleum reserve. Its express purpose was to supply our
country with American energy. That is why it is completely
unacceptable that the Obama Administration this year finalized
a plan to close over half of NPR-A to energy production.
This bill, that I introduced with Mr. Young, would nullify
that plan and require the Interior Department to produce a new
plan for responsible development of these resources. This bill
would require annual leases in the NPR-A and ensure that
necessary roads, bridges, and pipelines needed to transport
energy out of the NPR-A can be approved and completed in a
timely, efficient manner. This is crucial to ensure that the
Trans-Alaska Pipeline, or TAPS, remains full and operational.
While the most recent focus has been on the Keystone XL
Pipeline, and the House will consider a bill this afternoon to
approve it, we cannot forget that TAPS is one of our most
important pieces of energy infrastructure in the Nation.
Reduced production in Alaska has left TAPS at less than half
its capacity, threatening a shut-down that would cost jobs and
significantly weaken our energy security. We can not allow that
to happen, and developing our resources and NPR-A is vital to
ensure that it doesn't.
President Obama cannot continue to talk about his support
for all-of-the-above energy and then continue to pursue
policies that actively block all types of energy production on
our Federal lands. All-of-the-above energy needs to be more
than just a politically popular sound byte. The majority of the
provisions in these bills passed the House in the last Congress
with bipartisan support, and it is time for Congress once again
to move forward with these common-sense, job-creating energy
plans.
And, Mr. Chairman, I thank you for holding this hearing,
and thank you for your consideration of my schedule. Thank you.
[The prepared statement of Mr. Hastings follows:]
Prepared Statement of The Honorable Doc Hastings, Chairman, Committee
on Natural Resources
The Natural Resources Committee has frequently discussed the
Congressional Research Service reports that have shown that all of the
recent increase in U.S. oil and natural gas production has occurred on
State and private lands--not Federal lands. The lack of production is
not for the lack of resources, but rather the lack of production is
because of Federal regulations that hinder and block development. The
four bills before us today will help to reverse that trend.
Together, these bills will help us expand oil, natural gas and
renewable energy production on public lands. They will streamline
government red tape, break down bureaucratic hurdles and put in place a
clear plan for developing our own energy resources. Even more
importantly, these bills will spur job creation and help grow and
strengthen our economy.
This week, AAA reported that motorists can expect another spike in
gasoline prices this Memorial Day weekend. Prices have jumped 14 cents
in the past month and the national average is now $3.65. These high
prices hurt families and small businesses, and weigh down our economy.
But Americans shouldn't have to settle for and accept near $4 a gallon
gasoline prices. Continuing to increase our domestic supply, as these
bills do, is the best way to respond to volatile price spikes.
And while our country continues to face looming deficits, it's
important to remember that energy production is a revenue generator.
Increasing American energy production is one of the best things we can
do to ensure job creation and economic growth.
I want to take a moment to specifically touch on H.R. 1964, the
National Petroleum Reserve Alaska Access Act that I introduced with my
colleague from Alaska Rep. Don Young. Alaska is a tremendous energy
asset for our Nation. But the Obama Administration appears determined,
against the wishes of most Alaskans, to keep their energy resources
off-limits.
The NPR-A was specifically designated in 1923 as a petroleum
reserve. Its expressed purpose was to supply our country with American
energy. That's why it's completely unacceptable that the Obama
Administration this year finalized a plan to close over half of the
NPR-A to energy production. This bill would nullify that plan and
require the Interior Department to produce a new plan for
responsibility developing these resources.
This bill would require annual lease sales in the NPR-A and ensure
that necessary roads, bridges and pipelines needed to transport energy
resources out of the NPR-A can be approved and completed in a timely,
efficient manner. This is crucial to ensure that the Trans Alaskan
Pipeline System (TAPS) remains full and operational.
While most of the recent focus has been on the Keystone XL
pipeline, and the House will consider a bill this afternoon to approve
it, we cannot forget that TAPS is one of the most important pieces of
energy infrastructure in our Nation. Reduced production in Alaska has
left TAPS at less than half of its capacity, threatening a shutdown
that would cost jobs and significantly weaken our energy security. We
cannot allow that happen and developing our resources in the NPR-A is
vital to ensuring that it doesn't.
President Obama cannot continue to talk about his support for all-
of-the-above energy and then continue to pursue policies that actively
block all types of energy production on our Federal lands. `All-of-the-
above energy' needs to be more than just a politically popular sound
bite.
The majority of the provisions in these bills passed the House last
Congress with bipartisan support. It's time for Congress to once again
move forward with these common sense, job-creating energy plans.
______
Mr. Lamborn. You are certainly welcome. We will now have
questions from Representative Tipton.
Mr. Tipton. Thank you, Mr. Chairman, and I would like to
thank our panel for taking the time to be able to be here. I
think I would like to be able to start first, if I may, with
Ms. Connell.
In your testimony you had stated that, under H.R. 1394,
that the primary purpose of the bill is to be able to promote
energy development, rather than thoughtful decisions based on
multiple-use management through public-based process. Can you
point to me in the bill where it says that?
Ms. Connell. I would have to take a look through my
notebook, sir, to point exactly to where that is.
Mr. Tipton. Yes, I would like you to be able to get back to
us, actually, on that. Because I will be able to give you a
head start on this. In Section 2(a) it requires the Secretary
to ``be able to promote energy development and national
security in accordance with the BLM land management mission of
promoting multiple use on Federal lands, as set forth under the
FLPMA policy.'' And I think that is worthy of note.
This is a critical time for the United States. From Alaska
to Colorado to New York to California, all across this land, we
are seeing families right now that are struggling to be able to
pay their bills, to be able to keep the lights on, young
families, senior citizens on fixed incomes.
And when we look at what is going on in the Middle East,
and maybe this can just be a simple, yes-or-no sort of an
answer, when we see what is going on in the Middle East, the
challenges that we are facing being able to put Americans back
to work, is it a responsible time for the United States of
America to be able to put forward an all-of-the-above energy
strategy, to be able to put Americans back to work, to be able
to develop American energy resources, to be able to create
American energy security on American soil? Ms. Connell?
Ms. Connell. Yes.
Mr. Tipton. It is. Sir?
Mr. Sullivan. Yes, sir.
Mr. Tipton. Ms. Brower?
Ms. Brower. Yes, sir.
Mr. Tipton. That is the purpose of H.R. 1394. I would
think, and I will challenge the BLM, the Administration,
actually, to be able to point in the bill where we eliminate
any of the environmental safeguards, any of the requirements
under the FLPMA policy for that all-of-the-above strategy, in
terms of developing that public use of that public land.
It is time that we put the politics aside and we stand up
for the American people and American energy resources and
American jobs for a change, rather than playing political
games, when we can, responsibly, and should, responsibly,
develop these resources on American soil.
If we put forward that all-of-the-above strategy to develop
American energy certainty, and we aren't removing those
environmental requirements, maybe just yes and no, is that
going to be a responsible way to be able to move forward? Ms.
Connell?
Ms. Connell. Do I have to say yes or no?
[Laughter.]
Mr. Tipton. It is pretty straightforward.
Ms. Connell. Just a very quick add-on to that. I think that
the BLM's concern, we support many of the goals of this bill.
The concern is that in writing one environmental impact
statement that would cover a nationwide energy development
scenario that would, in fact, then provide for site-specific
development seems a bit problematic. We would like to see
something that would also allow for the environmental analysis
at the site-specific level. And also recognize that we can
improve efficiencies, and we should be able to do that----
Mr. Tipton. You do note in the bill, however, that we give
a lot of latitude in there to be able to work with the
Secretary of the Interior, the Secretary of Agriculture, to be
able to make those determinations. In fact, this bill
specifically notes that we aren't telling you when and where to
develop these resources. We just do need to develop them. Isn't
that in the interest of our country?
Ms. Connell. It is certainly in the interest of the country
and a mission of the Bureau of Land Management to manage for
multiple use, including oil and gas and other energy resources.
Mr. Tipton. And that all-of-the-above that is specifically
enumerated in the bill.
Ms. Connell. Yes, sir.
Mr. Tipton. Thank you. Sir?
Mr. Sullivan. Congressman Tipton, just one thing from our
experience in Alaska is certainly that you can responsibly
develop the resources in an Arctic environment and protect the
environment. And we think we have a very strong track record,
the highest standards in the world, in terms of doing that. And
that has been our goal, and we want to be able to do that on
Federal land, as well.
Mr. Tipton. Great. Ms. Brower, you probably love where you
live, you like to be able to have clean air, clean water, and
like to be able to turn on the lights. Can we responsibly
develop these resources?
Ms. Brower. Yes, sir, you can.
Mr. Tipton. Great. Thank you. With that, Mr. Chairman, my
time is about expired. I appreciate it.
Mr. Lamborn. Thank you. Representative Cramer.
Mr. Cramer. Thank you, Mr. Chairman and Ranking Member
Holt, and all of the witnesses.
Ms. Connell, I just want to sort of explore a little bit
more Mr. Holt's discussion with you about the documentation fee
in H.R. 1965. Would this be the only opportunity that the
public would have to comment on the rules or on the process, on
the NEPA process, is the only possibility for the public to
comment would be with the $5,000 documentation fee?
Ms. Connell. No, certainly the public can comment at any
time during the environmental analysis. We have open comment
periods, that is correct.
Mr. Cramer. So what would the $5,000 cover, then? Is that
not the formal protest that does, in fact, cost BLM a great
deal to defend?
Ms. Connell. Protests can, in fact, be costly. It is not
clear to me exactly what were the thoughts of the people
drafting the bill as to what the $5,000 fee would be used to
cover.
Mr. Cramer. Let me ask this, then, too, about the statistic
regarding fewer protests and the decline in protests. Would it
not stand to reason that since there are fewer leases, there
would be fewer protests? Would that not be a common conclusion?
Ms. Connell. I think if you counted them in numbers, that
could be a problem. We have been evaluating that based on
percentages. And a number of years ago we were receiving
protests on more than 50 percent of our leases, and now it is
down to somewhere around 18 percent.
Mr. Cramer. All right. With that, I have no further
questions and I would yield back. Thank you.
Mr. Lamborn. Representative Cardenas, do you wish to ask
questions?
Mr. Cardenas. Yes.
Mr. Lamborn. OK.
Mr. Cardenas. Thank you, Mr. Chairman. I do have a
question. When it comes to the permitting that goes through
your Department, do we have permits that have been approved as
of late in the last year, two, three, four, five? Yes, please.
Ms. Connell. And are you asking for across the United
States, or in a specific location?
Mr. Cardenas. Across the United States, just a general
activity.
Ms. Connell. We have. As far as drilling applications, the
number of permits have averaged around 4,000 for the last
number of years. And, in fact, we have permitted approximately
4,000 wells, on average, in recent years. And the number of
wells drilled have been somewhere between 3,000 and 4,000.
Mr. Cardenas. OK. So there is, in fact, a process that is
accessible and it is usable, correct? As far as permitting
goes.
Ms. Connell. That is correct.
Mr. Cardenas. OK. Thank you for the time, Mr. Chairman. I
just wanted to clarify, because sometimes what happens,
Americans read the press or what have you, and it seems it is a
black or white issue, as though at one point in time the permit
process was accessible and usable and permits were granted, and
then all of a sudden, because some people say that perhaps the
process is flawed, or we should make it better, or what have
you, the press tends to report that there is complaints that it
has come down to the point where people can't do business, or
people can't access those resources.
So, I just wanted to get that on the record, that it
hasn't, the situation right now is not that permits aren't
granted, or that activity is not occurring, it is just that in
any situation, in my opinion, there is always room for
improvement, and there is always room for an opportunity for
us. When we say we want to be accessible, and that there be a
process, that process be accessible as a process, and that
there be a light at the end of the tunnel, where people can
actually achieve and then actually obtain a permit. Thank you
very much. I yield back my time, Mr. Chairman.
Mr. Lamborn. Thank you. And let's have a second round of
questions. I know some of you have come 5,000 miles and the
other witness came 5 miles. But it is great that you are all
here, so let's take advantage of this opportunity, and then we
will go on to the second panel.
Commissioner Sullivan, you say that your State withdrew its
participation in the planning process because of reputed
refusals by the BLM to consider Alaska's concerns. Can you
elaborate on how or why they did not fully allow Alaska to take
your concerns into consideration?
Mr. Sullivan. Sure, Mr. Chairman. We had been a cooperating
agency in the review process, and that is actually a legal term
that enables you to supposedly have a significant influence on
the decision. And our concerns throughout the process, and they
are very voluminous, we can certainly submit them for the
record, whether it is letters from the Governor, myself, many
other State of Alaska officials, were, we viewed, not taken
into account at all. And we, in many ways, are kind of the
ultimate stakeholder up there on this issue, because it is so
important to the State of Alaska. And even the number of
meetings we had with BLM during the initial process, as this
process was going forward, was limited to, like, one or two.
So, we saw that the cooperating agency role that we were
supposed to play was very, very limited. And the reason the
Governor wrote a letter to Secretary Salazar withdrawing our
participation is because, being a cooperating agency, you also
have a bit of an imprint on the final decision. And we, saying,
yes, were cooperating many times, we are good to go with that
decision, and we were not good to go with that decision at all.
It was certainly not the alternative of the many alternatives
that were laid out. I think many other entities, the North
Slope Borough, ASRC, who is going to testify later, had similar
views.
So that has been one of the themes, where we comment a lot,
and we seem to get very, very little feedback or indication
that our views are taken into account. And it is an important
issue, because we don't consider ourselves just another
stakeholder in the process. We are the other sovereign in the
process. We are the other constitutionally-endowed entity
involved in helping make this decision. So it has been
frustrating.
Mr. Lamborn. Thank you. Did any other statewide official in
Alaska support the BLM plan?
Mr. Sullivan. From the State of Alaska?
Mr. Lamborn. That you are aware of.
Mr. Sullivan. No, sir.
Mr. Lamborn. OK, thank you. And specifically, Commissioner,
what is it, is it the fact that 50 percent of the NPR-A is
taken off the table? Is that what Alaskans considered a poor
decision on the part of BLM?
Mr. Sullivan. Yes, sir. That is the primary issue here. And
they have been saying that, ``Well, we took 50 percent off the
table, but the vast majority of the known resources in NPR-A
were left on the table.'' We think that is an argument that is
very flimsy. The latest proposal, the latest USGS estimates of
what is in NPR-A, we think, had significant flaws. And, to be
honest, it is an area that has enormous potential that hasn't
really been looked at that much. So----
Mr. Lamborn. And that is why you want to do the seismic
project.
Mr. Sullivan. Well, that is actually in the 1002 Area for
ANWR.
Mr. Lamborn. Oh, that is right, that is 1002.
Mr. Sullivan. Yes, sir. But we think that the latest
assessment that USGS did, and we worked very closely, my agency
in particular, very closely with USGS, we have a great
relationship with them. But we went to them after their latest
assessment which dropped the oil potential in NPR-A by 90
percent, 90 percent, and we went back to them and said,
``Really, 90 percent, how did you get to that?''
And so we had significant issues with the latest resource
assessment, as well, which was part of the reason they claimed
that they could cut the available leasing in half and not
affect the resources available to the country. We think that is
a conclusion that is, as I mentioned, on very thin ice.
Mr. Lamborn. Supported by scientific evidence, or not?
Mr. Sullivan. We think it is supported by an assessment,
the latest assessment, that has significant problems with it.
Mr. Lamborn. OK, thank you. And, Mayor Brower, besides the
diversion of funding that you talked about earlier to several
of us, what other objections do you have to the BLM plan?
Ms. Brower. The concern that the North Slope Borough has is
the decision, record of decision, that was made on the area
that we felt would be better served for a use of leasing and
not be made into a wilderness area, same as has been done to
the ANWR.
I would like to also state for the record that the National
Petroleum Reserve Act that had been created in 1926 and in
1940s the Department of Navy went and put all the stakes of
where the National Petroleum--and in earlier years it was
called PET4. My father-in-law, Harry K. Brower, Sr., was the
man who helped a geologist from the Department of Navy and
staked out all the National Petroleum Act. And if he were alive
today, he would say, ``What did I do to my people?'' Because it
is very disheartening when our people have to listen to our
Federal Government, our State of Alaska, and then when we
created our own borough, that--``What did I do,'' is what he
would say.
Anyway, he is a very true environmentalist. He wants to see
his country, his area that he hunted and trapped for many years
to be pristine. But he knows he had to feed his 9 children, the
same as the way that I am with my 6 children and my 23
grandchildren. We are all living in that area. So we live and
breathe it. So, yes, we support development, as long as it is
responsible development.
Mr. Lamborn. OK.
Ms. Brower. And we concur with the State of Alaska.
However, we remain as a cooperating agency to BLM.
Mr. Lamborn. OK. Thank you very much. Representative Holt?
Dr. Holt. Again, thank you, Mayor Brower, for coming all
this distance to advocate for your citizens.
Let me turn to you, Mr. Sullivan. And I want to make sure
that I am clear and that everyone is clear on the NPR-A
management plan. You keep referring to the management plan
applying to only half the area. But it applies, does it not, to
nearly three-quarters of the resources that are to be made
available for development.
Mr. Sullivan. So, Congressman Holt, with all due respect,
that was the point I was making earlier, that has been the
number that the Department of the Interior laid out. And we----
Dr. Holt. Yes. That is the plan. That is what I am asking.
The plan says three-quarters, actually 72 percent.
Mr. Sullivan. Right. So that is their----
Dr. Holt. The resources would be available for development.
Mr. Sullivan. No, but we disagree with that. We think that
is a premature estimate based on the latest USGS estimates and
again, we have highlighted this. And I do want to emphasize we
have the utmost respect for USGS. We work super cooperatively
with them across the board, probably the best State-Federal
relationship on resources in the country.
Dr. Holt. Well, I understand----
Mr. Sullivan. But we had very significant----
Dr. Holt. So your estimates of the resources are different
than----
Mr. Sullivan. Yes, and to----
Dr. Holt. OK. Well, but----
Mr. Sullivan [continuing]. Get to 82 percent was very----
Dr. Holt. But I think maybe----
Mr. Sullivan [continuing]. Premature for the Federal
Government to say that, very premature.
Dr. Holt. OK.
Mr. Sullivan. There are not enough wells----
Dr. Holt. OK, well, let me----
Mr. Sullivan [continuing]. There has been little 3D seismic
shock there----
Dr. Holt. If I may, please?
Mr. Sullivan. Sure.
Dr. Holt. I think maybe a better measure, then, is--what
are the oil exploration companies doing? And if you look after
2005, oil and gas companies relinquished more than 100 leases
in the reserve. In 2010, 64 leases were released. Currently
there are no pending applications to drill. I think this means
they are voting with their feet. They are saying the resources,
they are choosing not to go for these.
Mr. Sullivan. Well----
Dr. Holt. And doesn't that have more to do with the fact
that there is more gas and less oil?
Mr. Sullivan. So, I think voting with their feet is a big
picture item that relates to regulatory uncertainty. One of the
biggest issues we had to deal with, with----
Dr. Holt. Yes, they are saying the uncertainty of how much
money they will get for the gas, and how they would transport
or pipe the gas out of there. That is the concern----
Mr. Sullivan. It is the uncertainty of----
Dr. Holt [continuing]. That there is not much--I mean they
are not going for the oil.
Mr. Sullivan. Right now, ConocoPhillips is looking to do a
development in the NPR-A that----
Dr. Holt. Have they applied for a lease?
Mr. Sullivan. Oh, they are going to drill it. The big
problem with that, they have drilled it. The big problem with
that was Fish and Wildlife and the EPA vetoed a Corps of
Engineers' permit to build a bridge over the Colville River to
actually access the oil out of NPR-A. And that is the kind of
regulatory uncertainty that has been hurting development----
Dr. Holt. That is on the basis of an issued permit, isn't
it?
Mr. Sullivan. No, that was going to be issued by the Corps
of Engineers. All of us, the borough, everybody in the State of
Alaska----
Dr. Holt. That permit has been issued, has it not?
Mr. Sullivan. We worked for 5 years on that, together----
Dr. Holt. Has that permit been issued?
Mr. Sullivan. It was denied. And for 2 years we all fought
it together----
Dr. Holt. So that permit has not been issued?
Mr. Sullivan. They finally reversed themselves. But after--
--
Dr. Holt. That is my point. That permit has been issued.
Thank you.
Mr. Sullivan. A long time it took, and a lot of
uncertainty.
Dr. Holt. OK. If you could answer a little more succinctly,
because the time is limited.
Mr. Sullivan. Sorry.
Dr. Holt. If we are looking at H.R. 1394, often here in
this Committee, the Majority talks about how the environment is
different in different parts of the country, whether you are
talking about fracking or other mining or extraction. And yet
we have a bill, H.R. 1394, that for oil and gas and for
strategic minerals, and even for coal, would have one
environmental review for all production across the entire
United States, and that review must be completed in 1 year.
Let me ask the three panelists. Do you think this gives
good local specificity?
Ms. Brower. For the North Slope Borough? No.
Dr. Holt. No? Mr. Sullivan----
Ms. Brower. One year is not sufficient.
Dr. Holt [continuing]. In a very few seconds, please.
Mr. Sullivan. So certainly the State would like to be
involved in any kind of environmental reviews with regard to
resources----
Dr. Holt. OK. So something handed down from Washington
probably would not be local----
Mr. Sullivan. We would want input on that.
Ms. Connell. This was actually the area of our core concern
for this bill.
Dr. Holt. OK, thank you. Thank you, Mr. Chairman.
Mr. Lamborn. You are welcome. Representative Tipton.
Mr. Tipton. Mr. Chairman, I will yield my time to you.
Mr. Lamborn. OK, thank you. Commissioner Sullivan, your
plan for seismic exploration--that is, the State of Alaska's
plan that you were describing earlier concerning ANWR?
Mr. Sullivan. Yes, sir.
Mr. Lamborn. Is contingent upon cooperation by the Federal
Government. What is it that you would like from Congress or the
Federal Government?
Mr. Sullivan. Well, Mr. Chairman, right now we are going
through a similar process that we went through on NPR-A with an
ANWR comprehensive management plan. And the State and many
other agencies have been very focused on trying to get an
alternative in that plan that would enable the 1002 Area, that
was the area set aside by Congress in the Federal act, to
assess the oil and gas resource potential. It has been done
previously by the Federal Government, it hasn't been done in 30
years.
We think that you can do it in an environmentally
responsible way, ice roads, ice pads, the highest standards,
with 3D seismic, limited exploration drilling, very limited
impact on the environment. And then you, the Congress, the
American people, would actually know what the resource is in
the 1002 Area. It has been estimated to be above 11 billion
barrels of oil.
And so, we think it is so important that we have put
forward a very specific scientific plan, and the Governor has
said that the State will fund it up to $50 million, which would
be about a third of the 3D seismic program. So we think it is
very modest, hopefully going to enable bipartisan support,
simply exploration, not development. Just to answer the
question, why wouldn't you want to know what the resources are
when BLM and Interior manage those lands, and Congress is
focused on the 1002 Area as an important oil and gas province?
Mr. Lamborn. Thank you. Also on Representative Hastings'
bill, which is one of the four we are looking at today, it
would direct the Administration to go back and get another
option on the final management plan for the NPR-A. What was the
State's preferred option?
Mr. Sullivan. Mr. Chairman, I can get back to you on that,
because it is A, B, C, and D, and I am not recalling exactly
which one it is. But we can get back to you on that. But it was
the one that we were focused on that had the most oil and gas
leasing potential in NPR-A.
Mr. Lamborn. OK, thank you. Director Connell, I want to ask
you about an unrelated matter. Last week the Ocotillo Wind
Project in California suffered a catastrophic accident when one
of its 170-foot blades flew off. This is a few hundred yards
from a busy highway. And hikers and others are in and about
this immediate area. What has BLM done with regards to
reviewing the cause of this failure, where the blade flew off?
Ms. Connell. You are correct that we had an incident in
California, where a wind turbine, a blade from a wind turbine,
became detached. That was on May 16th, when it was reported to
the BLM. The location has been shut down, the entire project,
while the industry, as well as BLM and others, are looking to
determine what has been the cause of that incident. All of the
various towers and blades are being inspected.
Mr. Lamborn. In that project, or elsewhere?
Ms. Connell. Well, at this point in time we are inspecting
that project, but we are looking to learn from that to see if
there could be implications elsewhere.
Mr. Lamborn. So if there is metal fatigue or something like
that, and it seems possibly systemic, you will expand your
investigation?
Ms. Connell. Yes, sir.
Mr. Lamborn. To other wind farms, would it be of towers
made by that same manufacturer, or all wind towers?
Ms. Connell. I wouldn't want to speak to the mechanical
engineer based on that, but I think we will take the
information we learned from this and use it to inform decisions
we are making elsewhere.
Mr. Lamborn. And does BLM contemplate putting additional
safeguards in place to prevent, or at least mitigate the damage
from this kind of catastrophic failure?
Ms. Connell. If our investigations prove that to be the
appropriate action, that is what we could do.
Mr. Lamborn. OK, thank you. Now I would like to recognize
Representative Cardenas.
Mr. Cardenas. Thank you very much. I have a question
regarding the either disagreement or the difference between the
USGS estimates of 896 million barrels of oil versus the 10.6
billion barrels of oil estimated in 2002. That is a tremendous,
tremendous, over tenfold disparity. What seems to be the
difference, in your opinion, of those two estimates?
Mr. Sullivan. So, Congressman, we agree that when that came
out, that was a big shock to us, because there has been a
number of estimates in NPR-A previously that were all in a
similar ballpark, but pretty significant. Huge amounts of gas,
natural gas, always. But also very significant amounts of oil.
So when that number came out, it was kind of shocking because,
as you mentioned, it was a 90 percent drop.
So we had worked with and wrote letters, again, to the
USGS. We have the utmost respect for that agency, but we
thought it failed to consider and looked at a very limited
number of exploration wells. So, as you can imagine, in an area
that large, basing something so dramatically with regard to a
downgrade----
Mr. Cardenas. Well----
Mr. Sullivan [continuing]. Based on a few wells, we
thought, was not a very scientific----
Mr. Cardenas. Because time is limited----
Mr. Sullivan. Sorry.
Mr. Cardenas [continuing]. Could we get to this set of
points, if you have them, and that it was, in your opinion, was
it a technology difference? Was it a scope of the amount of
testing and/or information gathering was maybe a 10-to-1
difference? I mean was----
Mr. Sullivan. It was principally, we thought it was based
on very limited data, not enough seismic, not enough wells.
And, for example, it didn't even touch the issue of
unconventional oil and gas, which we think in Alaska has
enormous potential, the shale oil, shale gas. Didn't even look
at that.
Mr. Cardenas. OK. So the 2002 estimate, what was the
difference between the scope and/or the magnitude of that
testing and that figure that resulted?
Mr. Sullivan. Well, I mean, that had been the basis of a
number of previous work, including some of the work that
industry had done. And even that, to be honest, did not really
look hard at the unconventional potential in Alaska, which now
everybody is starting to look at.
And to give USGS credit, they are starting to go up and do
a broad-based survey of Alaska unconventional oil and gas
resources, which we think is going to show very significant
amounts of additional prospects.
Mr. Cardenas. Now, in that span of 10 years, I mean I am an
engineer myself, and looking at the last 30 years, the last 20
years, the last 10 years, and the last 2 years, in the hope of
advances in technology over the next 6 months, shouldn't tests
or estimates that are given in 2012 potentially have a better
opportunity for accuracy than what happens in 2002?
Mr. Sullivan. You would think so, but we thought that it
actually----
Mr. Cardenas. Are both departments actually using the same
technologies on these estimates?
Mr. Sullivan. What we typically do, both departments, with
regard to what the Department of Natural Resources has the
ability to do and USGS, is look at seismic data, look at well
data, discuss the prospects that have been drilled with
industry. And we thought that, in this case, basing such a
huge, dramatic drop on the oil side didn't take into enough of
that, that there wasn't enough data to justify such a dramatic
drop. That has been our basic issue, in addition, not even
looking at the unconventional potential.
Mr. Cardenas. So my last question, Mr. Chairman, is how do
both of the departments determine how much resources/funds that
they get to actually do that component of their job?
Mr. Sullivan. Well, one of the things, it is a little bit
off the topic, but one of the things that we are trying to do
on the ANWR proposal that we put forward is advance the very
issue that you are talking about, which is to actually shoot 3D
seismic, only 2D seismic has been shot in the 1002 Area, and
that was in the early eighties, so that is 30 years old. And
because we know the Federal Government has limited funds, we
said we would step up and put $50 million toward that program,
which would be about a third of the cost to do that.
And that is why we think it is reasonable, and we certainly
hope the Federal Government takes us up on it, to have a really
good, up-to-date, modern assessment of what is in the 1002
Area. And right now, unfortunately, we are getting a little bit
of silence from the Department of the Interior on whether they
want to partner with us on that. The Governor wrote Secretary
Jewell a letter over the weekend that specifically said the
Department of Geological Survey in Alaska has a great
relationship with the USGS, it would be great if these two
entities could work together with the $50 million to shoot a 3D
seismic program, and it would address with much more certainty
what we have in that important part of Federal lands.
Mr. Cardenas. Mr. Chairman, it would be great to see how
both of the departments would address future exploration and/or
estimates, and whether or not they have internal resources that
they could shift and/or dedicate, or if they would have to come
to us and ask us for those resources.
Mr. Lamborn. Absolutely. Thanks for raising that point.
I want to thank the witnesses all for being here. I know
you came a long way, and, at least in two of your three cases,
and thank all of you for being here and providing the testimony
and the answers to our questions.
For the witnesses, Members may have additional questions.
And if those are submitted to you in writing, we ask that you
would respond to those, as well. Thank you.
Mr. Sullivan. Thank you, Mr. Chairman.
Mr. Lamborn. I would like to now have the second and last
panel come forward. We have Mr. Richard Glenn, Executive Vice
President of Lands and Natural Resources for the Arctic Slope
Regional Corporation; Mr. Jack Ekstrom, Vice President of
Corporate and Government Relations for Whiting Petroleum
Corporation; Mr. William Britain, President and CEO of
EnergyNet.com, Inc.; Ms. Debbie Miller, Founder and Member of
the Board of Directors of the Alaska Wilderness League; and Mr.
Jim Spehar, former Mayor of Grand Junction, Colorado, and whose
son lives in my district and is a constituent.
Like all our witnesses, your written testimony will appear
in full in the hearing record, so I ask that you keep your oral
statements to 5 minutes. Our microphones are not automatic, so
you have to push the button to begin. The timing lights work in
the following way. It is green when you start at 5 minutes.
After 4 minutes, it turns yellow. And then after 5 minutes,
when you need to stop, it turns red.
Mr. Glenn, you may begin.
STATEMENT OF RICHARD K. GLENN, EXECUTIVE VICE PRESIDENT, LANDS
AND NATURAL RESOURCES, ARCTIC SLOPE REGIONAL CORPORATION
Mr. Glenn. Thank you. Thank you, Chairman Lamborn and
Committee members. My name is Richard Glenn. And, like Mayor
Brower, I am a resident of Alaska, Alaska's North Slope. We
live inside the National Petroleum Reserve in Alaska. I am the
Vice President of Lands for Arctic Slope Regional Corporation.
And we depend on this environment, both for the resources it
provides the country in terms of oil and gas, and for what we
call the subsistence resources, the food and the cultural ties
that have sustained us for centuries.
Mr. Chairman, in our region the proportion of land owned by
the Federal Government is remarkable. We think it exists
nowhere else in the country. We are talking about 23 million
acres of NPR-A lands, 19 million acres of lands in the Arctic
National Wildlife Refuge, 7 million acres in the Gates of the
Arctic National Park. These are huge swaths of Federal lands
managed by Congress and the Federal agencies.
Within this area is the National Petroleum Reserve. It is
the center of our region. It is our home, and it contains four
of our communities. It is also a petroleum reserve, though. It
holds the potential of oil and gas resources of national
interest. And safe and responsible oil and gas development is
the only industry in our region that has been around long
enough to foster improvements to the quality of life in our
communities. There is no agriculture, no fishing, no timber.
There is only the oil and gas industry in our region.
Arctic Slope Regional Corporation and the people of the
North Slope have a heightened concern for the environmental
effects of oil and gas exploration and development, because we
live there. Regarding risks related to this industry, no one
has more at stake than we do. It is for these reasons that we
support H.R. 1964, specifically Sections 4 and 5. We appreciate
the Committee's efforts to require the Department of the
Interior to go back to the drawing board with respect to the
recently finalized integrated activity plan for NPR-A.
We met with Interior representatives only after they formed
a record of decision. If you ask me, I would say there was
insufficient meaningful consultation with the native land
owners or the municipalities within NPR-A.
The current NPR-A plan is ambiguous with respect to rights
of way also for pipelines. When a preferred and alternate route
for pipelines are identified, our communities will want to be
at the table to discuss all of the options. Further, we believe
that the subsistence resources, the animals, the fish, the
water fowl, the caribou, they don't recognize lines on a map.
They migrate in and out of the region in huge annual
migrations. And no special habitat protection is going to
protect these resources.
Instead, what is going to happen is that the protection of
these resources exists by the sheer size of the petroleum
reserve, itself. Most of the reserve will remain untouched
because of its huge size and the widely spaced nature of the
oil and gas resources. So it is for these reasons that we
should allow development to occur in the few places where it
exists, especially if it is shown not to have an impact on
wildlife species. So, we have opposed any designations that
would erect additional barriers to responsible oil and gas
development.
In our region, millions of acres are locked up as
wilderness, national parks, and similarly other restrictive
status for other lands. More of these efforts threaten to paint
us into a corner within our own region.
On Monday, the State of Alaska proposed the wintertime
exploration of the Arctic National Wildlife Refuge. We support
the State's proposal. This exploration of the coastal plain
done in wintertime has no lasting, permanent effects on the
land. It is safe, and it occurs over snow cover. Evaluation of
the coastal plain will give Congress and the American people
enough information then to make reasonable decisions about the
public lands and the wildlife refuge.
Thank you for the opportunity to provide input in this
process. And as Congress goes forward to debate this issue, I
ask that you remember the impacts that your decisions will have
on our communities, our culture, and our people. Thank you.
[The prepared statement of Mr. Glenn follows:]
Prepared Statement of Richard K. Glenn, Executive Vice-President, Lands
and Natural Resources, Arctic Slope Regional Corporation
Chairman Hastings, Ranking Member Markey, and distinguished members
of the Subcommittee, thank you for allowing me this opportunity to
provide comments today. My name is Richard Glenn and I am the Executive
Vice President of Lands and Natural Resources for Arctic Slope Regional
Corporation. I live in Barrow, Alaska. My professional background is in
geology and Arctic geologic processes. Like most of my fellow community
members, I also depend on the land and sea for what we call subsistence
resources, the food and cultural web that has sustained us for
centuries.
The Arctic Slope Regional Corporation is one of the 12 land-based
Native regional corporations created by Congress pursuant to the Alaska
Native Claims Settlement Act of 1971.
ASRC owns approximately 5 million acres of land, and represents the
interests of approximately 11,000 Inupiat Eskimo shareholders, that
mostly reside in 8 communities within Alaska's North Slope. The mandate
prescribed by law to ASRC requires ASRC to return benefits back to our
people. The only asset transferred to ASRC through this act was land
entitlement. We continue to explore options on how to use this asset to
return those benefits back to our people. ASRC lands are impacted by
the Federal management decisions in NPR-A. As one of the largest
private landowners within the NPR-A, its decisions affect our
corporation and our people.
The North Slope and State of Alaska economies are dependent upon
finding and developing new oil and gas resources. Communities within
NPR-A are even more dependent. They are at the tip of the spear on the
effects of management decisions on public lands in Alaska.
Our villages are small and separated by great distance in an area
about the size of the State of Montana. No roads connect our villages.
My hometown of Barrow is a coastal community located inside NPR-A, 340
miles north of the Arctic Circle, near the boundaries of both the
Chukchi and Beaufort Seas.
The proportion of Federal land owned by the Federal Government in
one region is remarkable. It does not exist anywhere else in the United
States. NPR-A, 23 million acres, ANWR, 19 million acres, and the Gates
of the Arctic National Park, 7 million acres--these are huge swaths of
land controlled by decisions made in Congress and Federal agencies such
as the Department of the Interior. The National Petroleum Reserve in
Alaska is the center of our home. Larger than some Eastern Seaboard
States, the NPR-A has no roads and only four of our Inupiat
communities. The region hosts huge populations of migratory animals.
Caribou, fish, waterfowl and others; they do not recognize lines on a
map, but move in and out of the area in sweeping migrations.
The NPR-A is also a petroleum reserve; it holds the potential of
oil and gas resources of national interest. Within its boundaries are
also the corridors for the development of important resources in
Alaska's outer continental shelf.
Committee members, in just my lifetime, our communities have gone
through great change, with developments that have improved the quality
of life from formerly very harsh conditions. Today, our ``villages''
are actually small cities with small city needs: reliable power, water
and sewer treatment facilities, health services, fire protection,
airports and schools.
Our people depend on these services. We have not looked to many
Federal or even State-funding sources to build our community
improvements. They were developed thanks to our home-rule municipality,
the North Slope Borough, and a locally-derived property tax base based
on oil and gas exploration. There is essentially no other economy in
our region. Safe and responsible oil and gas development is the only
industry that has remained in our region long enough to foster village
improvements that have improved our quality of life. There is no
agriculture, no fishing, and only a modest tourist presence. In short,
Alaska's North Slope Native people, depend upon continued development
to sustain their communities. So oil and gas development is important
to us, perhaps even more than to our State and Nation.
The volume of oil being produced in Alaska is in deep decline,
producing today at less than one-third the rate of its peak production
of 2 million barrels per day and continues to drop every year. This
decline has caused us to question the future of the communities that we
have worked so hard to improve. We have asked ourselves: where will our
grandchildren go to school, what will power their villages, how will
their communities be sustained? With prospective onshore areas now off-
limits, we may be unable to offset it in the near term. This decline is
not just a lingering tail of decreasing production, but can become a
``brick wall'' when the pipeline reaches its minimum throughput limits
and is unable to move production. Hence, the need for significant new
production.
We understand that the currently-known onshore resources are not
enough to stem the decline in production; they only reduce its
severity. New exploration is needed. Oil, as they say, is where you
find it. We have hydrocarbons-coal, natural gas and oil, and in some
places we have them in abundance. Resource potential exists on both
State- and federally-owned owned lands, as well as private lands owned
by North Slope Alaska Natives, including prospects in the NPR-A. NPR-A
and the Alaskan offshore represent the future; they will help fill the
gap in throughput capacity in coming years.
ASRC and the people of the North Slope have a heightened concern
for the environmental effects of oil and gas exploration and
development. We live there. Regarding environmental risks, no one has
more at stake than we do.
It is for these reasons that we support H.R. 1964. Specifically,
Sections 4 and 5.
We appreciate the Committee's efforts to require the Department of
the Interior to ``go back to the drawing board'' with respect to the
recently finalized NPR-A Integrated Activity Plan. We met with Interior
representatives only after they formed a Record of Decision for the
NPR-A. If you ask me, I would say there was insufficient meaningful
consultation with Native landowners or municipalities.
The current NPR-A Integrated Activity Plan is ambiguous with
respect to rights-of-way. Clarity and certainty is needed, and H.R.
1964, provides both. When preferred and alternate routes for pipelines
are identified, our communities will need a seat at the table to
discuss the options. We want to be part of the process that preserves
the subsistence hunting and fishing rights of our people, while
delivering domestic energy to our region and to the Nation.
Further, we believe it is important to recognize that the
subsistence resources do not recognize lines on a map. The areas of
special habitat protection in general will do nothing to protect those
resources. Caribou, waterfowl and fish move across the petroleum
reserve and far beyond as part of their annual migration. I believe
that much of the NPR-A affected by the recent Record of Decision will
remain untouched, due to its large size and widely-spaced energy
potential, not because of any special environmental protection. It is
for these reasons that we allow development in the places where such
potential exists, especially if it is shown to have little or no
impacts on wildlife species.
We were frustrated with the lack of meaningful consultation during
the IAP/EIS process with tribal and other Native groups. The Record of
Decision now includes a role for the North Slope Borough, as well as
our village and regional corporations who are landowners within the
petroleum reserve. That is a good thing, but the Interior Department
should have incorporated local input before, and not after the Record
of Decision.
ASRC and the North Slope Borough have participated in all four of
the NPR-A IAP/EIS processes since 1999. Through extensive consultation
and collaboration with all of the stakeholders in NPR-A, prior
administrations including those under Interior Secretaries Babbit
Norton accepted and considered local input prior to forming their
management decisions. The result was a more ``balanced plan'' to which
all parties generally agreed.
ASRC believes that responsible oil and gas development on the North
Slope and offshore allows ASRC to meet its congressionally-mandated
obligations to its Alaskan Native shareholders. We continue to believe
that responsible resource development and appropriate management of
resources, including subsistence resources, are not mutually exclusive
goals. Responsible development also provides a safe and secure source
of energy to the Nation, creates important jobs, and helps ensure
future flow through the Trans-Alaska Pipeline System. Public law states
the NPR-A is to be managed ``in a manner consistent with the total
energy needs of the Nation.'' The discovery and development of oil and
gas resources in the Arctic, including in the NPR-A, is needed to meet
the ``total energy needs'' of the country.
We have opposed any designations that would erect additional
barriers to responsible oil and gas exploration in the NPR-A where
there is no demonstrated need. Millions of acres on the North Slope are
already essentially locked up as Wilderness, National Parks or
similarly restrictive status, and more of these efforts threaten to
``paint us into a corner'' within our own region.
The petroleum reserve, set aside by President Warren Harding in
1923, was explored by the U.S. Navy in the 1940s and 1950s using older
methods that polluted some lands and damaged the landscape. The Bureau
of Land Management recently published its management plan for the
cleanup of what are now called legacy wells in NPR-A. We support the
plan, and our residents will benefit from the BLM's goal of remediating
the most hazardous legacy wells first. The cleanup of the legacy wells
is a debt owed to North Slope residents and the American public. It
should be supported by the Federal budget, as is the case with formerly
used defense sites, for example, and not from Federal proceeds that
would otherwise be going to North Slope communities.
We are encouraged that Congress is taking the appropriate steps to
require the DOI to revisit its decision.
Perhaps the Committee is also aware that yesterday the State of
Alaska proposed to Interior Secretary Jewell the wintertime exploration
of the 1002 Area of the Arctic National Wildlife Refuge (ANWR). We
support the State's proposal because it is directly aligned with our
message on ANWR that has been unchanged now for more than 20 years.
Exploration of the Coastal Plain, mandated by law, can be performed in
the wintertime and leave no lasting impacts on the land. Seismic
evaluation of the Coastal Plain will give Congress and the American
people the information needed to make reasonable decisions of the
public lands in the wildlife refuge.
Mr. Chairman and committee members, thank you for the opportunity
to provide input into this process. Our intent is to remain at the
table with both government agencies and industry explorers. Please do
not to prevent us from meeting our responsibility to our grandchildren
and future generations. As Congress goes forward to debate this issue,
I ask you to remember the impacts that your decisions will have on our
communities, our culture and our people.
______
Mr. Lamborn. Thank you for your testimony and for being
here.
Mr. Ekstrom?
STATEMENT OF JACK R. EKSTROM, VICE PRESIDENT, CORPORATE AND
GOVERNMENT RELATIONS, WHITING PETROLEUM CORPORATION
Mr. Ekstrom. Chairman Lamborn and members of the Committee,
good morning. I am Jack Ekstrom, Vice President of Whiting
Petroleum Corporation, a Denver-based, New York Stock Exchange-
traded exploration and production company. Whiting was founded
in 1980, and has endured the ups and downs of the exploration
production business since then. Whiting became a publicly
traded company in 2003 and, through acquisitions, doubled the
size of the firm in 2004, and again in 2005. Among those
acquisitions were properties in North Dakota that provided
Whiting with the toehold that has allowed us to become the
number one oil producer in the State.
How does that translate into jobs? When Whiting went public
in 2003, we had 110 employees. As of May 1, 2013, Whiting
employed 850 individuals. And that represented an increase of
more than 100, just this past year. In Whiting, we now have
more than 180 open positions.
A drilling rig employs approximately 25 individuals, and a
frack crew employs approximately 65 individuals. We have two
full-time frack crews employed. There are approximately 40
vendors involved in the drilling of any well. If each vendor
had only a single employee, that would be another 40 jobs. And
you add it all up and it approaches 700 indirect jobs created
by our activity alone. These people need a place to live, they
need food, daycare, schools, stores, and churches. The impact
of our efforts on the economy, obviously, is far-reaching.
We are fortunate that oil-bearing shale such as the Bakken
in North Dakota and Montana, the Niobrara in Wyoming and
Colorado, and the Eagle Ford in Texas exist in the United
States. Much of the surface and mineral ownership in these
locales is by individuals, with a minor ownership by the
Federal and State governments. Obtaining permits from the State
agencies is a reasonable process. Areas where we are having
difficulty, however, are on Forest Service lands in Stark
County, North Dakota, and the Pawnee Grasslands in Weld County,
Colorado. The average time to receive an approved Federal
drilling permit is 298 days for us. On average, we receive an
approved drilling permit from North Dakota and Colorado
regulators in less than 40 days.
Whiting, like the vast majority of our peers, strives to
prudently manage our assets for our shareholders, for the State
and Federal Government areas where we operate, and for the
mineral interest owners who have allowed us to develop their
resource. We strive to be good stewards of the environment, to
preserve the environmental resource for future generations.
I have provided the Committee a Whiting map of operations
in a portion of Colorado. It provides graphic evidence of how
our operational focus and many other operators is on private
and State-owned lands. On this map, the light green shaded
acreage is federally owned. Many of these tracks are relatively
small, and you can see that if you get up close to this map.
These Federal lands have been nominated multiple times in
recent years, but they have never been offered, though our
conversations with leasing authorities have made clear we and
others, as lessees, would be happy to accept no surface
occupancy stipulations.
Nevertheless, the lands are not offered, and U.S. citizens
are denied the multiple benefits associated with their
development. This is not only the case in Colorado. The Federal
Government owns millions of acres prospected for oil and gas
across the Intermountain West.
The unmistakable conclusion is that the prosperity, the
jobs, the harvest of domestic resources from unconventional oil
and gas plays, enhanced recovery projects, and technology
breakthroughs to come, can only be realized to their potential
by mandating the Department of the Interior devise and
publicize a plan to encourage development, provide leasing
certainty, and streamline oil and gas permitting.
Thank you for the opportunity to present our views, and I
look forward to your questions.
[The prepared statement of Mr. Ekstrom follows:]
Prepared Statement of Jack R. Ekstrom, Vice President, Government and
Corporate Relations, Whiting Petroleum Corporation
TESTIMONY ON H.R. 1964, H.R. 1965, H.R. 1394, H.R 555
Tapping America's Unconventional Oil Resources for Job Creation and
Affordable Domestic Energy: Technology, Policy and Legislative
Pathways
Mr. Chairman Lamborn, and members of the Committee. Good morning. I
am Jack Ekstrom, Vice President of Whiting Petroleum Corporation, a
Denver-based, New York Stock Exchange traded Exploration and Production
Company. Whiting was founded in 1980 and has endured the ups and downs
of the E&P business since then. Whiting became a publicly traded
company in 2003 and through acquisitions doubled the size of the firm
in 2004 and again in 2005. Those acquisitions provided three assets
that today comprise approximately 95 percent of our 345 million barrels
of oil equivalent (BOE) reserves. Those assets are the Postle Field,
located in Texas County, Oklahoma; the North Ward Estes Field located
in Ward and Winkler Counties, Texas; and several properties in the
Williston Basin of North Dakota that provided Whiting with the toe hold
that has allowed us to become the number three oil producer in that
State.
What sets Whiting apart from many of our peers is we are an oil
company. Based on either production or reserves we are approximately 85
percent oil. In the first quarter of 2013 our net production was just
over 89,000 BOE per day. What has enabled Whiting to grow production
from 33,100 BOE per day in 2005 to over 89,000 BOE per day in 2013 is
technology. Drilling horizontal Bakken wells in North Dakota is not a
new concept. In the late 1980s and early 90s several operators were
drilling horizontal wells in the Bakken. However it was taking them XXX
days and they were relying totally on Mother Nature to provide the
fracturing. Sometimes she provided it, sometimes she did not. That
activity was followed by a round of drilling in 2000 through 2005 in
the Elm Coulee Field in Richland County, Montana. In this round of
drilling, horizontal wells were drilled not in the Bakken Shale, but in
a dolomitic section in what was identified the Middle Bakken. These
4,000 to 7,000 foot laterals were fracture stimulated with one big frac
job. This effort was very successful and was responsible for the big
production increase that occurred in Montana during the early part of
this century.
Whiting did not have a material lease position in the Bakken in
Montana, so we tasked our technical staff to look other places in the
Williston Basin and in other basins where we might repeat what had
occurred in the Elm Coulee field. We had learned that we probably did
not want to drill in the shale, we needed a poor grade reservoir rock
to provide the conduit for the oil to get from the shale to the
horizontal wellbore. Staff identified an area on the Eastern side of
the Williston Basin in a very lightly drilled area in Mountrail County,
North Dakota. Whiting leased around 100,000 acres and drilled several
wells utilizing the same technology that had been employed in Montana
and the results were not very encouraging. Other operators were also
attempting to get the Bakken to produce in North Dakota and they were
also having mixed results. In August of 2007 Whiting drilled a well
named the Locken 11-22H. This well was drilled across two sections, 2
square miles, with a lateral length of approximately 10,000 feet. A new
Frac Point technology being developed by Baker Hughes was utilized
where we ran 10 swell packers on the outside of the 4\1/2\" diameter
pipe that was installed in the horizontal portion of the well. When
swell packers come in contact with hydrocarbons, they adsorb the
hydrocarbon, swell, and create a seal between the pipe and the rock
walls of the borehole. This segregates the horizontal wellbore into 10
separate sections. In between each set of swell packers is a sliding
sleeve that is opened by dropping successively larger ceramic balls to
activate the sleeves. This allows the horizontal wellbore to be
hydraulically fracture-stimulated 10 times, rather than just a single
time as earlier technology allowed. This technology was a game changer.
The Locken had an initial production rate over 1,600 BOE per day.
Today, in the Bakken, Whiting drills down 10,000, vertically, close
to 2 miles, turns and drills a 6\1/4\" diameter hole horizontally for
another 2 miles. We run 4\1/2\" pipe in the well. Sliding sleeve
technology has advanced and now allows us to run up to 40 sliding
sleeves and swell packers on the outside of the pipe. The drilling rig
is moved off, production facilities are constructed, frac tanks are
moved on location and filled with up to 50,000 barrels (2.1 million
gallons) of water. A pressure pumping company is moved on location and
the wells are frac'd with up to 2 million pounds of sand in 40+/-
individual frac stages. This entire fracture stimulation treatment is
completed in around 24 hours. The pressure pumping company is moved off
location and the well is placed on production.
Our goal is to have zero gas emissions from the well during
flowback. The associated gas produced with the Bakken oil must be
processed before it can be sold. The gas has a high BTU content in its
native state. Whiting has constructed two gas plants in North Dakota;
one in Mountrail County and a second in Stark County to process this
gas. Liquids are removed from the gas and we sell the residue into the
local market. We are processing as much gas from other operator's wells
as we are from the wells Whiting has drilled. We have built two oil
gathering systems and we are transporting as much of the produced oil
as possible from the basin via pipeline.
If the frac job is performed in Sanish Field, a micro-seismic
survey of the frac is recorded to determine what portion of the
reservoir was frac'd. In March of 2010 Whiting completed the
installation of 298 permanent seismic monitors across the Sanish field.
This installation allows us to record data and map the fracture
stimulations to determine the rock volume contacted with the frac job.
I am going to switch gears and talk a bit about our Enhanced Oil
Recovery projects. We are utilizing CO2 to recover an
additional 15-20 percent of the oil in these reservoirs. At North Ward
Estes, in Texas we are injecting 325 million cubic feet per day of
CO2 managing 790 patterns containing more than 2,000 wells
total. About one-half of the CO2 we inject stays in the
reservoir. The CO2 that is recycled is separated, purified
utilizing a membrane technology and re-injected. Whiting has recently
executed a contract with Summit Energy to utilize the CO2
from their coal gasification plant.
Much of what I have discussed would not have been possible even 5
years ago. Unconventional resource plays and technology have impacted
every facet of our business from consummating the lease to reporting
production. Because of the size of the resource plays we have gone from
leasing portions of townships to leasing counties. To assist with this
effort we have digitized lease records for entire counties. We
routinely drill a 20,000, horizontal well in 15 to 20 days. We utilize
technology to send information being recorded at the bit to the surface
in real time. The engineers and geologists in Denver can access this
information at their desk. Sliding sleeve technology has continued to
advance. Whiting was the first company to pump a 24 and 40 stage frac
utilizing sliding sleeves.
We have a rock lab located in our Denver office where we have two
scanning electron microscopes (SEM) to help us understand how oil is
produced from these unconventional reservoirs. The resolution with
these microscopes is about a nanometer, about the size of a methane
molecule. The Helios Nanolab 650 SEM allows us to create a 3D
visualization of a cube of the reservoir rock. With this 3D
visualization we can examine the size and shape of the pore throats in
the rock. What we have learned is although natural gas will flow
through a shale, i.e. the Barnett, oil molecules are too large to fit
through the pore throats. We need to find a pseudo-reservoir located in
proximity to the shale to allow oil to be produced. Our goal is to
transfer what we have learned in North Dakota to other basins. We are
actively working in the DJ Basin in Colorado and the Delaware Basin in
west Texas. In each of these areas our results are encouraging. We
believe there is potential to utilize what we know in several other
prospects located in other basins in the lower 48 States.
How does this translate into jobs? When Whiting went public in 2003
we had 110 employees. As of May 1, 2013 Whiting employed 850
individuals. In Whiting we now have more than 180 open positions. Today
we have 24 drilling rigs in operation. A drilling rig employs
approximately 25 individuals. A frac crew employs approximately 65
individuals and we have two full time frac crews employed. There are
approximately 40 vendors involved in the drilling of a well. If each
vendor had one employee, that would be another 40 jobs. Add it all up
and it approaches 600 indirect jobs created by our activity. These
people need a place to live, they need food, and schools and Walmarts.
The impact of our efforts on the economy is far reaching.
A topic getting a fair share of attention these days is the price
of gasoline at the pump. Oil companies get lumped together and get
blamed for the price of gas. In this regard, Whiting is similar to the
farmer, we are price takers. We try to protect our cash flow utilizing
hedges and the commodity markets but we have little influence on the
overall price. To impose legislation that would make it more expensive
to produce oil would make no sense. Along those lines, the Keystone XL
pipeline was (or is) scheduled to transport around 200,000 barrels per
day of North Dakota production to the refining markets. This would be
most beneficial and help alleviate the high price differentials that
have been experienced in North Dakota. This would improve the net backs
and increase the royalties paid to the Federal Government, the State of
North Dakota and the mineral interest owner.
We are fortunate that oil-bearing shales, such as the Bakken in
North Dakota and Montana, the Niobrara in Wyoming and Colorado and the
Eagle Ford in Texas exist in the United States. Much of the surface and
mineral ownership in these locales is by individuals with a minor
ownership by the Federal and State governments. Obtaining permits from
the State agencies is a reasonable process. Areas where we are having
difficulty are on Forest Service lands in Stark County, North Dakota
and in the Pawnee Grasslands in Weld County, Colorado. The average time
to receive an approved Federal drilling permit is 298 days. On average
we receive an approved drilling permit from North Dakota and Colorado
regulators in less than 40 days.
Whiting, like the vast majority of our peers, strives to be a good
steward of our assets for our shareholders, for the State and
governmental areas where we operate, and for the mineral interest
owners who have allowed us to develop their resource. We strive to be
good stewards of the environment to preserve the environmental resource
for future generations.
I am providing a Whiting map of operations in a portion of Colorado
to the Committee. It provides graphic evidence of how our operational
focus, and many other operators, is on private and State-owned lands.
On this map the green shaded acreage is federally owned. Many of these
tracts are relatively small and are surrounded by State and private
acreage that has been leased. These Federal lands have been nominated
multiple times in recent years, but they have never been offered,
though our conversations with leasing authorities have made clear we as
lessees would be happy to accept ``no surface occupancy'' stipulations.
Nevertheless, the lands are not offered and U.S. citizens are denied
the multiple benefits associated with their development.
This is not only the case in North Dakota. The Federal Government
owns millions of acres prospective for oil and gas across the Inter-
Mountain West. The unmistakable conclusion is that the prosperity, the
jobs, the harvest of domestic resources--from unconventional oil and
gas plays, enhanced recovery projects and technology breakthroughs to
come--can only be realized to their potential by mandating the
Department of the Interior devise and publicize a plan to: encourage
development, provide leasing certainty and streamline oil and gas
permitting.
Thank you for the opportunity to present our views.
[GRAPHIC] [TIFF OMITTED] T1285.001
.eps__
Mr. Lamborn. You are certainly welcome.
Mr. Britain?
STATEMENT OF WILLIAM W. BRITAIN, PRESIDENT AND CEO,
ENERGYNET.COM, INC.
Mr. Britain. Chairman Lamborn, Representatives, staff
members, we very much appreciate the opportunity to get to be
here today. I want to recognize the bill's sponsor,
Representative Johnson of Ohio.
The BLM Live Internet Auctions Act, H.R. 555, provides the
opportunity to dramatically improve the Bureau of Land
Management sale of on-shore oil and gas leases. As
Representative Johnson has stated in the past, the Leasing
Reform Act of 1987 was ``unintentionally'' restrictive, in that
it bound the BLM to only be able to sell oil and gas leases in
an Internet-auction-only format, which is not surprising, of
course, because there was no Internet in 1987.
I am Cofounder and President of EnergyNet, a company which,
over the last 14 years, has conducted the sale of more than
39,000 leases and oil and gas properties, and a continuous live
Internet auction format. H.R. 555 will amend that restrictive
language, ``oral auction only,'' in the Mineral Leasing Act,
and authorize the Secretary of the Interior to ``conduct
onshore oil and gas lease sales through Internet-based, live
lease sales.'' This allows the BLM to utilize the incredibly
powerful technological reach of an Internet oil and gas
property auction marketplace. It will increase participation
and competition, which results in greater revenue to the BLM.
Under the current oral-only auction system, bidders must
travel to 12 different auction venues. I submit to you this
seems unnecessary and inefficient in today's environment. With
the Internet as an auction platform, a bidder could participate
from any web browser in any of these auctions. If you have
access to a computer, you have a seat at a BLM auction.
Increased competition among bidders translates to more BLM
revenue.
Picture this room, if you would, as one of these 12 live
auction venues. What you will see is 20 or 30 people holding up
a paddle or a piece of paper, bidding on BLM leases. Now,
contrast that, if you will, to what we do in the private sector
with an online auction format. There are 17,000 bidders in that
room, coast to coast, bidding on leases and properties. There
just simply is no comparison.
Internet bidders can evaluate leases and place bids from
anywhere without travel expense or time away from the office.
That is customer service by the BLM. And it is how EnergyNet
has done business for nearly 14 years. We believe the results
confirm the process. We have sold properties all across the
United States, generating more than $1 billion in property
sales, and we have done it all on the Internet.
This bipartisan, historic H.R. 555 opens the door to that
same opportunity for the BLM. The oil and gas industry has
already embraced the Internet as a critical tool in their
investment arsenal, and the BLM already effectively uses the
Internet. We have successfully divested properties on the
Internet for Chevron, Exxon, Shell, and 3,000 other private and
public companies. We have signed 5-year contracts with the
State of North Dakota and Utah to sell their State leases, and
that is directly analogous, selling State leases on State
minerals, just like selling Federal leases on Federal minerals.
In 2011, EnergyNet signed a 5-year contract to conduct
Internet auctions of oil and gas assets for the Federal Deposit
Insurance Corporation. In 2009, EnergyNet sold BLM leases using
the first-ever Internet auction venue. We were fortunate enough
to have been selected to do that job for the BLM. And that
information is provided in our separate material that we have
handed in. OGLIAP, O-G-L-I-A-P, OGLIAP is the acronym, the Oil
and Gas Lease Internet Auction Pilot.
In conclusion, H.R. 555 will bring the 1987 unintentionally
restrictive Mineral Leasing Act into the 21st century by
increasing participation and competition for the BLM's lease
parcels, to ensure the best return for the Federal taxpayer.
And, of course, that is the key. Passage of this bill will
benefit the BLM, the oil and gas industry, and, most of all,
the taxpayers of this great Nation. This bill does not increase
permitting of wells, it simply increases the value of what the
BLM gets for their leases.
On behalf of the EnergyNet team, we thank you for this
opportunity to share our experiences, and we encourage your
sponsorship and passage of H.R. 555. Thank you for your kind
attention.
[The prepared statement of Mr. Britain follows:]
Prepared Statement of William W. Britain, CEO, EnergyNet.com, Inc.
TESTIMONY ON THE BLM LIVE INTERNET AUCTIONS ACT--H.R. 555
The BLM is currently hindered by outdated legislative language.
During this presentation we will explore how you can fix this problem.
As members of Congress, you have an opportunity to dramatically improve
the BLM's revenue-generating oil and gas leasing program.
EnergyNet is a company that has spent nearly 14 years conducting
oil and gas auctions on a fully Internet-based, continuous oil and gas
marketplace, and we appreciate the opportunity to share our
professional experience with you.
Let's start with the biggest question: Why does the BLM need the
freedom to utilize the Internet for their lease program?
There are many reasons why an Internet auction is superior to a
traditional, live, outcry auction. The BLM Live Internet Auctions Act
that you are considering would allow the BLM to harness the power of a
vast Internet-based oil and gas auction marketplace, which presents a
host of new opportunities to the BLM.
In this presentation, we would like to highlight three of the
benefits of passing the BLM Live Internet Auctions Act:
The opportunity to modernize the BLM leasing program;
The increased participation and competition an Internet
platform fosters; and
The increased revenue the BLM can realize as a result of
that competition, and as a result of the cost savings an Internet
platform can provide.
To modernize the BLM's Leasing Program, we must first realize that
the current legislation is simply outdated, and ``accidentally
specific.'' The Internet, and certainly an Internet auction platform,
was unheard of in 1920, but at the time, lease sales could be conducted
by ``competitive bidding.''
Unfortunately, the unintentionally-limited wording of the Leasing
Reform Act of 1987 bound the BLM to an oral auction format, which has
become outdated in the 26 years since.
The BLM Live Internet Auctions Act fixes this--allowing the
Secretary of the Interior the option to ``conduct onshore oil and gas
lease sales through Internet-based live lease sales,'' modernizing the
Mineral Leasing Act.
Under the current, oral-auction-only system, bidders who wish to
participate in lease sales from multiple State offices have to deal
with different physical locations to travel to, different hotels to
stay in, different auction venues, and even different auctioneers.
With the Internet as an option for the BLM, a bidder could
participate from any web browser, from any location, using the same
tools and bidding interface for every sale. Bidders can even
participate in multiple lease sales that are being held simultaneously.
If you have a web browser, you already have a seat at the auction.
While participants will appreciate a standardized, uniform auction
experience, BLM State offices should also expect a system that lets
them customize their individual sales wherever necessary, and one that
plugs into their existing workflow.
Rather than retrofit each State office's sale process to fit an
Internet model, a well-designed Internet auction serves the State
office, and will provide each office with an easy way to:
Transmit sale group and parcel information to the auction
Web site, and to potential bidders;
Display each parcel's due diligence information in a
uniform format;
Update that parcel information instantly when new
information becomes available or a parcel has to be pulled from the
auction, and then immediately contact every participant who viewed the
now-outdated information;
Perform the actual auction itself; and then
Receive transactional data and other post-sale reporting
after the sale in a format that best suits the State office.
BLM offices with unique bidder qualification requirements, parcel
stipulations or timing restrictions can have these terms built directly
into the sale, and even automated in many cases.
This ultimately reduces costs and workload for the BLM, while
letting individual State offices retain the unique characteristics of
their sales.
Even one large room full of potential Buyers pales in comparison to
an entire Nation full of potential buyers. There is no doubt: An
Internet-based auction reaches more people than a traditional auction
ever could.
For example, EnergyNet has more-than-17,000 active, sophisticated,
registered, accredited oil and gas investors, representing every State
in the United States. Every EnergyNet Buyer with a bid allowance has
had their identification validated through direct communication with
that buyer's banker, in order to circumvent fraudulent bidding activity
EnergyNet buyers can evaluate assets and place bids from anywhere,
without travel hassles or expenses. It's how we've done business for
nearly 14 years, and we believe the results confirm the process: Our
Internet marketplace has sold more than 39,000 properties all across
the United States since we began in 1999--over $1 billion in total
sales, and we've done it all through a web browser.
This is the power of an Internet marketplace, and this is exactly
what the BLM Live Internet Auctions Act opens the door to.
Guhan Subramanian serves both as a professor of Law & Business at
Harvard Law School and as a professor of Business Law at Harvard
Business School--the only person in Harvard's history to hold tenured
appointments at both universities.
Professor Subramanian's research focuses on negotiations, auctions,
and ``deal process design.'' His work has been featured in the Harvard
Business Review, the Harvard Law Review, the Wall Street Journal, and
the New York Times. He is also the author of Negotiauctions, a book
that explores the connections between negotiations and auctions.
In 2010, EnergyNet contacted Professor Subramanian and requested
that he examine 5 years of our raw, historical auction data, so that we
could truly understand how our Internet marketplace compared to
traditional, live oil and gas auctions.
Among his conclusions, Professor Subramanian noted the following
about using the Internet as a marketplace:
The online auction format attracts bidders who would be
unable or unwilling to attend on-site auctions, and . . .
The online-only process preserves a level playing field
among all bidders.
Overall, he said, ``It's simple: Greater buyer exposure leads to
more competition. More competition leads to higher returns for
sellers.''
The oil and gas industry understands this, and has embraced the
Internet as a critical part of their divestment activities.
EnergyNet's Internet platform has successfully divested properties
for:
Chevron, Exxon, Shell and other major oil companies
Chesapeake, and other large independents
Universities and bank trust departments
Government institutions, such as the FDIC and the States
of North Dakota and Utah
. . . and even for the BLM, when we were proud to develop
and host their Oil and Gas Lease Internet Auction Pilot program in
2009--their first opportunity to test the viability of an Internet
auction
One seller put our Internet auction to the test in a significant
way.
In 2008, EnCana split a large divestiture package, into two equal-
sized component packages. EnergyNet received one of the packages. The
other package was given to one of our competitors who hosts a
traditional outcry auction with a ``hybrid'' Internet component.
Each package was given a reserve price valuation of approximately
$16.5 million dollars. To ensure that oil and gas prices were the same,
both auctions were held during the same week.
Our competitor's traditional auction sold their package for $18.5
million.
EnergyNet's Internet auction sold its package for $24.5 million--
over 32 percent more than the traditional auction.
Another of EnergyNet's sellers, Chevron Incorporated, named the
16th largest public company in the world by Forbes Global 2000, has had
tremendous success divesting oil and gas assets on an Internet-only
platform.
From June 2003 through April 2011, Chevron utilized our Internet
auction platform to divest over 2,000 lots from 27 States with a
combined anticipated reserve price of $87.7 million. Their total actual
sales were more than $134 million, a 53 percent premium over their
combined anticipated reserve, and far above their expectations.
In conclusion: Through modernization, you allow the BLM to increase
the participation and competition for every lease sale, and increase
their revenue through higher parcel values and lower internal costs.
This can happen for the BLM through the BLM Live Internet Auctions
Act. This piece of legislation opens the door, by giving the Secretary
of the Interior the authorization to establish an Internet leasing
program.
This common sense piece of legislation can truly change the future
of the BLM's leasing program.
That concludes our presentation. On behalf of the entire team at
EnergyNet, we thank you for the opportunity to share our professional
experience with you.
Thank you very much!
______
SUBMITTED FOR THE RECORD
On September 13, 2011, the following testimony was submitted to the
House Natural Resources Subcommittee on Energy and Mineral Resources on
behalf of the Bureau of Land Management in support of H.R. 2752.
The current bill, H.R. 555, continues the effort that H.R. 2752
began.
Notable quotes:
``The Bureau of Land Management (BLM) supports the goal of
diversifying and expanding the Nation's onshore leasing program to
ensure the best return to the Federal taxpayer and supports H.R. 2752.
The BLM would like to work with the committee on technical and
clarifying modifications to the bill and on an amendment pertaining to
the location and frequency of lease sales.''
Regarding the BLM's Oil and Gas Lease Internet Auction Pilot
(OGLIAP) of 2009: ``The Web site functioned extremely well and the sale
was successfully completed. An evaluation of the Internet auction found
that leasing online would have immediate cost savings and benefits,
such as potentially increased competition. The Internet pilot test had
nearly twice as many bidders compared to the average number that attend
the BLM Colorado's oral lease sales.''
``The BLM supports H.R. 2752, which allows the BLM to expand upon
its success with the oil and gas Internet lease auction pilot
project.''
Statement for the Record, Bureau of Land Management, U.S. Department of
the Interior, September 13, 2011
BEFORE THE HOUSE NATURAL RESOURCES SUBCOMMITTEE ON ENERGY AND MINERAL
RESOURCES ON H.R. 2752, THE BLM LIVE INTERNET AUCTIONS ACT
Thank you for the opportunity to present this Statement for the
Record on H.R. 2752, the BLM Live Internet Auctions Act, which
authorizes the Secretary of the Interior to conduct onshore oil and gas
lease sales through Internet-based live lease auctions. The Bureau of
Land Management (BLM) supports the goal of diversifying and expanding
the Nation's onshore leasing program to ensure the best return to the
Federal taxpayer and supports H.R. 2752. The BLM would like to work
with the Committee on technical and clarifying modifications to the
bill and on an amendment pertaining to the location and frequency of
lease sales.
Background
The Mineral Leasing Act of 1920 establishes the statutory framework
to promote the exploration and development of oil and natural gas from
the Federal onshore mineral estate. Secretary Salazar has emphasized
that as we move toward the new energy frontier, the development of
conventional energy resources from BLM-managed public lands will
continue to play a critical role in meeting the Nation's energy needs.
Facilitating the safe, responsible, and efficient development of these
domestic oil and gas resources is part of the Administration's broad
energy strategy--outlined in the President's Blueprint for a Secure
Energy Future--that will protect consumers and help reduce our
dependence on foreign oil.
The BLM is working diligently to fulfill its part in securing
America's energy future. The BLM currently manages more than 40 million
acres of onshore oil and gas leases. In FY 2010, onshore oil production
from public lands increased by 5 million barrels from the previous
fiscal year as more than 114 million barrels of oil were produced from
the BLM-managed mineral estate--the most since FY 1997. Meanwhile, the
nearly 3 trillion cubic feet of natural gas produced from public lands
made 2010 the second-most productive year of natural gas production on
record. In 2010, conventional energy development from public lands
produced 14.1 percent of the Nation's natural gas, and 5.7 percent of
its domestically-produced oil.
Current and future lease sales are benefitting from much-needed
reforms that the BLM put in place in May 2010. The BLM reforms
established a more orderly, open, and environmentally sound process for
developing oil and gas resources on public lands. They focus on making
oil and gas leasing more predictable and increasing certainty for
stakeholders. With these reforms, the number of protests of parcels
offered in lease auctions has declined dramatically. During 2011, only
12 percent of nearly 900 parcels offered for lease have been protested
compared with over 40 percent of parcels offered being protested during
the 2 years before the reforms were implemented. Twelve lease sales
this year have been conducted without any parcels being protested. In
addition, revenues from lease sales have increased from approximately
$165 million dollars in FY 2009 to nearly $235 million dollars to date
in FY 2011.
Onshore Competitive Oil & Gas Lease Sale Process
In accordance with the Mineral Leasing Act, the BLM competitively
offers eligible lands which are available for lease by oral auction on
a quarterly basis. As part of the competitive leasing process, the BLM
accepts informal expressions of interest (EOI) and noncompetitive
presale offers from industry or other interested parties. The BLM
collects the requested parcels into draft sale lists and adjudicates
them for availability, verifying mineral ownership, and ensuring there
are no pre-existing oil and gas leases on the requested lands. The
parcels are then evaluated through the BLM multiple-use planning
process required by the Federal Land Policy and Management Act.
Once parcels are evaluated and found to be in conformance with BLM
Resource Management Plans (RMP) and the BLM has documented site-
specific National Environmental Policy Act compliance, the parcels are
made available and placed on the next Notice of Competitive Oil and Gas
Lease Sale by the BLM State Office with jurisdiction over the lands.
Competitive lease sales are held at least quarterly by each of the BLM
State Offices where there are eligible lands.
Parties interested in bidding on parcels must attend the oil and
gas competitive lease sale auction to obtain a competitive lease or
make formal arrangements for someone to represent them at the auction.
No sealed or mailed bids are accepted.
BLM's Oil & Gas Internet Lease Auction Pilot
Congress directed the Secretary of the Interior through the Fiscal
Year 2008 Consolidated Appropriations Act (Public Law 110-161) to
establish an oil and gas leasing Internet pilot program, under which
the Secretary could conduct lease sales through methods other than oral
auctions. To carry out the pilot program, the Secretary was permitted
to use up to $250,000 from the BLM's oil and gas Permit Processing
Improvement Fund. The BLM developed a pilot oil and gas lease Internet
auction as an alternative to the quarterly oil and gas oral auctions
required by the Mineral Leasing Act. The intent of the pilot was to
test the feasibility of conducting a web-based lease sale auction, and
evaluate the potential savings and benefits for the Federal Government
and lease sale participants.
On July 8, 2009, the BLM's Colorado State Office offered the first
Federal oil and gas lease parcels for sale on the Internet. All parcel
evaluation, registration, and bidding were performed online. Bidding
opened on September 9, 2009, for 7 days and closed over a 2-day period
on September 16 and 17, 2009. The Web site functioned extremely well
and the sale was successfully completed. An evaluation of the Internet
auction found that leasing online would have immediate cost savings and
benefits, such as potentially increased competition. The Internet pilot
test had nearly twice as many bidders compared to the average number
that attend the BLM Colorado's oral lease sales.
H.R. 2752
H.R. 2752 amends the Mineral Leasing Act to authorize the Secretary
of the Interior to conduct onshore oil and gas lease sales through
Internet-based live lease sales, in order to expand the Nation's
onshore leasing program and to ensure the best return to the Federal
taxpayer. The bill also requires the Secretary to conduct an analysis
of the first 10 Internet based live lease sales and report the findings
of the analysis to Congress within 90 days following the 10th Internet-
based live lease sale.
The BLM supports H.R. 2752, which allows the BLM to expand upon its
success with the oil and gas Internet lease auction pilot project. The
BLM would like to work with the Committee to include related language
in the bill to provide the Secretary the discretion to hold lease sales
(via the Internet or oral auction) more or less frequently than
quarterly (as currently required by the Mineral Leasing Act) or within
any State in which lease tracts are available and there is public
interest. Finally, the BLM would like to work with the Committee on
technical and clarifying modifications to the bill.
Conclusion
Thank you again for the opportunity to present this Statement for
the Record on H.R. 2752.
______
Mr. Lamborn. And you are certainly welcome.
Ms. Miller, you may begin.
STATEMENT OF DEBORAH S. MILLER, FOUNDER AND MEMBER OF BOARD OF
DIRECTORS, ALASKA WILDERNESS LEAGUE
Ms. Miller. Good morning, Chairman and staff. Thank you for
the opportunity to provide testimony to the Subcommittee on
Energy and Mineral Resources on H.R. 1964, the National
Petroleum Reserve Alaska Access Act. My name is Debbie S.
Miller. I serve as a founder and a board member for the Alaska
Wilderness League. I have lived in Alaska since 1975, as a
teacher, author, mother of two grown daughters.
Over the past four decades, I have explored the Arctic on
numerous trips in the Arctic National Wildlife Refuge, Gates of
the Arctic National Park, and the National Petroleum Reserve
Alaska, that I will refer to as the Reserve. These explorations
and studies of the environment and wildlife have involved
several thousand miles of travel by canoe, by raft, and on
foot. My experiences in the Arctic have been the foundation and
inspiration for many books and articles that I have authored
for adults and children.
Most recently I explored the Reserve on three expeditions,
traveling by canoe and on foot for more than 600 miles. Along
four of the Reserve's beautiful rivers: the Nigu, the Etiviluk,
the Colville and the Utukok. I worked with a team of
photographers, scientists, a sound recording artist, and other
writers, including biologist Jeff Fair, Rosemary Ahtuangaruak
of Barrow, and distinguished anthropologist and long-time
Alaskan, Dr. Richard Nelson. We worked together to create the
first photo essay book about the Reserve, published by Braided
River last July 2012.
I am submitting a copy of this book for the House Resources
Library, and I hope that each member of the Committee and
staffers will have the opportunity to review this book. It was
a labor of love to describe the beauty, the rich diversity of
wildlife and environments, and a cultural history that spans
more than 13,000 years, including some of the oldest
archeological sites in North America. It is a vast land, so
immense that you can't measure its bigness. It is a land of
forever sky, with an endless sweep of rolling tundra, long
ridges, immense grasslands and wetlands, and the countless
rivers that curl through the valleys and foothills across the
North Slope for hundreds of miles to the Beaufort and Chukchi
Seas.
It is a land of greats, including two of America's largest
caribou herds, huge concentrations of grizzly bears, the
biggest deposit of dinosaur bones in the Arctic, our largest
intact grasslands, and the most expansive Arctic wetlands
complex in the world, where hundreds of species of birds nest,
molt, and stage their migrations from five different
continents. This is a world-class region, in terms of Arctic
habitats and wildlife. It is the birthplace for millions of
animals, and the ancient land where humans first migrated to
North America from Asia, crossing the Bering Land Bridge.
The Reserve, though old, is rich with life. We traveled for
weeks through some of the wildest country remaining on the
planet and rarely saw another human or airplane. The Reserve
represents the Nation's largest unit of public land, an area
about the size of Indiana, where local and Inupiaq residents
still hunt and fish, practicing a subsistence lifestyle that
reflects thousands of years of living and surviving near the
top of the world.
I commend the Department of the Interior for their first
plan, their efforts creating a very balanced, integrated
activity plan for the Reserve. The Bureau of Land Management
followed a rigorous and very public process, seeking out and
receiving substantial input from local people, Alaskans in
general and the citizens of the United States. During the
drafting process, BLM received over 400,000 comments, a vast
majority in support of a balanced management approach that
included the protection of key special areas in the Reserve.
The BLM listened and crafted a well-thought-out plan for
the future of the Reserve and America's Arctic. In the end, it
created a plan that opens 11.8 million acres, roughly half of
the Reserve, to oil and gas leasing, including some of the most
promising high-potential lands for exploration. At the same
time, BLM set aside half of the Reserve to protect the highest
conservation and subsistence values of five designated special
areas.
I do not support H.R. 1964 because it negates the excellent
work and sound management choices that are represented in the
current plan. This proposed legislation circumvents public
process by nullifying a very strong visionary and balanced plan
that has broad public support. This legislation would also
authorize a redundant assessment of hydrocarbon resources
within NPR-A after the USGS just recently completed such an
analysis. This amounts to wasteful spending.
Thank you for letting me testify, and I would be happy to
answer any of your questions.
[The prepared statement of Ms. Miller follows:]
Prepared Statement of Deborah S. Miller, Teacher, Author, Arctic
Explorer, Guide, Mother, and Founding Board Member, Alaska Wilderness
League
HR 1964--THE NATIONAL PETROLEUM RESERVE ALASKA ACCESS ACT
Thank you for the opportunity to provide testimony to the
Subcommittee on Energy and Mineral Resources on H.R. 1964--``The
National Petroleum Reserve Alaska Access Act''. My name is Deborah S.
Miller.
I've lived in Alaska since 1975, working as a teacher, author, and
mother of two grown daughters. Over the past four decades, I've
extensively explored the Arctic on numerous trips in the Arctic
National Wildlife Refuge, Gates of the Arctic National Park, and the
National Petroleum Reserve-Alaska. These explorations and studies of
the environment and wildlife have involved several thousand miles of
travel by canoe, raft, and on foot. My experiences in the Arctic have
been the foundation and inspiration for many books and articles that
I've authored for adults and children.
Most recently, I explored the National Petroleum Reserve-Alaska
(``Reserve'') on three expeditions, traveling by canoe and on foot for
more than 600 miles, along four of the Reserve's beautiful rivers: the
Nigu, Etiviluk, Colville and the Utukok. I worked with a team of
photographers, scientists, a sound recording artist, and other writers,
including biologist Jeff Fair, and Rosemary Ahtuangaruak of Barrow, and
distinguished anthropologist and long-time Alaskan, Dr. Richard Nelson.
We worked together to create the first photo-essay book about the
Reserve, published by Braided River in July of 2012.
I helped found the Alaska Wilderness League in 1993 to ensure that
policy-makers in D.C. and elsewhere had accurate information on which
to make public land management decisions. The League has an extensive
environmental justice program through which it brings Alaska Natives
and other Arctic residents to D.C. to ensure that their voices are
heard.
Today's hearing is partially focused on the topic of my most recent
book--the National Petroleum Reserve-Alaska, which is the largest
single land management unit in the United States. After WWI, the
Reserve was set aside by President Harding in 1923 as Naval Petroleum
Reserve #4 for emergency defense purposes. The Navy was in the process
of converting from coal to oil for its fuel supply. In 1976, Congress
enacted the Naval Petroleum Reserves Production Act (NPRPA) and
transferred management of the Reserve to the Department of the
Interior. Under this act, Congress recognized the need to conserve the
extraordinary natural resource values of the Reserve and explicitly
authorized the Secretary of the Interior to establish ``special areas''
that contained ``significant subsistence, recreational, fish and
wildlife historical or scenic value'' and to provide ``maximum
protection'' to areas with exceptional surface values.\1\
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\1\ 42 U.S.C. Sec. 6504.
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At over 23 million acres, the Reserve is roughly the size of
Indiana. It is a vast landscape that remains largely undeveloped. This
large landscape can allow for a balanced approach between oil and gas
development and the protection of the Reserve's unique values, just as
Congress has called for in the NPRPA. These values include subsistence
resources that are critical to meeting the needs of Alaska Natives, and
other local residents.
The requirement that this balance be struck is firmly established
in the letter and spirit of NPRPA and the 1980 Interior Department
Appropriations Act that amended NPRPA and provided for leasing within
the Reserve. NPRPA requires the Secretary of Interior to assume
responsibility for protection of ``significant subsistence,
recreational, fish and wildlife, or historical or scenic value.''\2\ In
the law, NPRPA specifically recognizes the importance of the Utukok
River, Teshekpuk Lake area, and other areas found to have significant
natural or historic values, by requiring any oil and gas activities in
these areas to assure ``maximum protection'' of those values.\3\
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\2\ 42 U.S.C. Sec. 6503 (``With respect to any activities related
to the protection of environmental, fish and wildlife, and historical
or scenic values, the Secretary of the Interior shall assume all
responsibilities . . . [and] may promulgate such rules and regulations
as he deems necessary and appropriate for the protection of such values
within the reserve.'').
\3\ 42 U.S.C. Sec. 6504(a) (If exploration occurs within the Utukok
River, the Teshekpuk Lake areas, and other areas containing any
significant subsistence, recreational, fish and wildlife, or historical
or scenic value (as designated by the Secretary), it must be conducted
``in a manner which will assure the maximum protection of such surface
values.''); see also H.R. Rep. 94-81(I), 94th Cong., 2nd Sess. 1976,
1975 WL 12380 (acknowledging the value of the western side of the
reserve as a calving ground of the Arctic caribou herd; the
northeastern coastal plain area as the best waterfowl nesting area on
the North Slope, and lands in and adjacent to the Brooks Range as being
highly scenic).
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In the 1980 Interior Department Appropriations Act that amended the
NPRPA and opened the Reserve to leasing, Congress reiterated the
importance of Special Areas \4\ and directed the Secretary to provide
for ``conditions, restrictions, and prohibitions'' to mitigate
``reasonably foreseeable and significant adverse effects'' on surface
values.\5\ Regulations governing the Reserve provide for the Bureau of
Land Management (``BLM'') to ``limit, restrict, or prohibit use of and
access to lands within the Reserve, including ``Special Areas'' and to
take action to ``protect fish and wildlife breeding, nesting, spawning,
lambing of calving activity, major migrations of fish and wildlife, and
other environmental, scenic, or historic values.''\6\ To summarize,
Congress has long-recognized and directed that the Reserve's remarkable
environmental and social values be identified and protected.
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\4\ See Pub. L. 96-514, 94 Stat 2957 (1980) (``any exploration or
production undertaken pursuant to this section shall be in accordance
with section 104(b) of the [Petroleum Reserve Act] of 1976'' which
provided for protection of Special Areas).
\5\ 42 U.S.C. Sec. 6506a(b), Mitigation of adverse effects
(``Activities undertaken pursuant to this Act shall include or provide
for such conditions, restrictions, and prohibitions as the Secretary
deems necessary or appropriate to mitigate reasonably foreseeable and
significantly adverse effects on the surface resources of the National
Petroleum Reserve in Alaska.'')
\6\ 43 CFR Sec. 2361.1(e)(1).
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H.R. 1964 would directly contradict this long history of the
congressionally recognized need to provide for balanced management of
the Reserve to ensure protection of significant surface resources.
Exceptional Biological Resources in the Reserve
The Reserve contains a remarkable diversity of pristine and
globally significant wild lands and biological resources that remain
largely intact. The Reserve provides essential and critical habitat for
a broad array of species and includes areas that support subsistence
activities for more than 40 Alaska Native communities spread across
northern and western Alaska.
The Reserve's wetland complex of ponds, lakes, rivers, streams, and
lagoons provide nesting, feeding, molting and staging habitat for
migratory bird populations of national and international significance.
Marine mammals, including the polar bear, walrus, beluga whale, and
several species of ice seal, use the Reserve's shorelines, lagoons, and
barrier islands. The Reserve provides the calving grounds, insect
relief areas, and migration corridors for the Teshekpuk Lake Caribou
Herd and the Western Arctic Caribou Herd, which are vital subsistence
resources for North Slope and Western arctic communities. Important
populations of predators including grizzly bear, wolf, wolverine, and
arctic fox are found throughout the Reserve. Other values include:
designated Important Bird Areas of international significance, ancient
archeological and paleontological sites; and extraordinary wilderness
and wild river values that are found throughout this remarkable
landscape.
During my three expeditions to the Reserve I observed nesting birds
that had migrated from six different continents, such as the Northern
Wheatear from Africa, or the American Golden Plover from Patagonia. I
witnessed the migration of the Western Arctic Herd, where hundreds of
cows with week-old calves swam across the river in front of our tent.
It was amazing and humbling to discover ancient archeological sites,
some dating back more than 10,000 years, and I was stunned to discover
and hold an ankle bone of a duck-billed dinosaur that lived on the
North Slope 75 million years ago! The Reserve has a rich history, and
an incredible diversity of wildlife and habitats. The wilderness
frontier that we traveled through was like no other in terms of its
vastness and wildness.
National Petroleum Reserve-Alaska Integrated Activity Plan
In July of 2010 the BLM published a Notice of Intent to prepare an
Integrated Activity Plan and associated Environmental Impact Statement
for the National Petroleum Reserve-Alaska.\7\ The notice kicked off
more than 2\1/2\ years of scoping meetings, public hearings, and draft
plans, concluding with the National Petroleum Reserve Integrated
Activity Plan Record of Decision (``2013 ROD'') on February 21, 2013.
This was the final action of an extensive process that resulted in the
first ever area-wide plan for the Reserve.
---------------------------------------------------------------------------
\7\ Notice of intent to prepare an Integrated Activity Plan
Environmental Impact Statement for the National Petroleum Reserve
Alaska was released on July 28 2010. See: https://www.blm.gov/epl-
front-office/projects/nepa/5251/14500/15450/
default.jsp?projectName=DOI-BLM-AK-0000-2010-0001-EIS.
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I was one of many Alaskans who testified at the scoping meeting in
Fairbanks, and submitted written testimony in support of Management
Alternative B of the draft integrated activity plan.
The National Petroleum Reserve-Alaska Final Integrated Activity
Plan (``IAP'') represents a well thought out and balanced approach
toward management of the Reserve. The IAP opened up roughly half of the
Reserve's acreage (encompassing 72 percent of Interior's estimate of
the recoverable oil in the Reserve) to oil and gas leasing while
protecting the other half as five Special Areas critical to wildlife
and subsistence use. Further, the IAP also expressly does not foreclose
the placement of a pipeline across the Reserve. Through this balanced
approach the Department of Interior has found a reasonable balance for
industry, conservation groups, Alaska Natives, sportsmen,
recreationists, scientists, and other groups.
During the drafting process, the BLM received over 400,000
comments, a vast majority in support of the protection of key Special
Areas in the Reserve. These individuals included Alaskans, sportsmen,
scientists, Alaskan Tribes and many others from around the country that
care about the values within this world-class American treasure. The
Department of the Interior (DOI) responded to this overwhelming
support, by putting forward a final IAP that allows for access to oil
and gas resources on 11.8 million acres, while safeguarding other
areas--the most critical wildlife habitat--as unavailable for oil and
gas leasing.
The IAP is in keeping with the long history of Congressional
support for a balanced approach to management of the Reserve.
Special Areas
Going back to 1976, and as reflected in the IAP, the BLM has
appropriately implemented the congressional mandate to provide
``maximum protection'' for significant surface values and thus honor
the area for more than just its potential oil and gas resources. The
Reserve currently contains five designated Special Areas recognized by
the BLM. These include: Teshekpuk Lake, the Utukok River Uplands,
Kasegaluk Lagoon, the Colville River and Peard Bay.
Teshekpuk Lake Special Area
Teshekpuk Lake is the largest freshwater lake on the North Slope
and the third largest lake in Alaska. The lake and its associated
Special Area support a unique and globally significant assemblage of
biological and subsistence resources. The Teshekpuk Lake Special Area
includes the most important goose molting habitat in the Arctic and
provides vital habitat for tens of thousands of geese that gather
annually in the area, including Brant, Greater white-fronted geese,
Snow geese, and Canada geese. In the fall, the waterfowl that rely on
the wetlands in this area migrate back south utilizing all four North
American flyways and several international flyways.
The area around Teshekpuk Lake also includes the concentrated
calving and insect relief areas for the Teshekpuk Lake Caribou Herd,
which provides a critical subsistence harvest resource for North Slope
communities, especially Barrow and Nuiqsut, a community that I have
visited on two occasions. I wrote an in-depth article for the Amicus
Journal about the effects of oil development on the lives of people in
Nuiqsut. I was touched and troubled by some of the health and
subsistence struggles that villagers face because of increased
development around their community.\8\
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\8\ Ground zero. (oil industry effects on eskimos) June 22, 2001.
Amicus Journal. Miller, Deborah S. See: http://www.accessmylibrary.com/
article-1G1-76586494/ground-zero-oil-industry.html.
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The Western Arctic Caribou Herd Working Group, an organization
comprised of subsistence users from small communities across northern
and western Alaska, has identified and recommended that the lands
surrounding Teshekpuk Lake should not be leased or developed for oil
and gas.\9\
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\9\ Letter of R. Ashenfelter, Chair of the Western Arctic Caribou
Herd Working Group to the Bureau of Land Management Planning Team re:
the Integrated Activity Plan-Draft Environmental Impact Statement for
the National Petroleum Reserve-Alaska, dated June 1, 2012.
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Utukok River Uplands Special Area
The Utukok River Uplands Special Area was originally established in
1977 and currently spans approximately 7.1 million acres containing
much of the Western Arctic Herd's calving and insect-relief habitat.
The herd numbered approximately 75,000 when the Special Area was
established, and now at approximately 340,000, is Alaska's largest
caribou herd and one of the three largest in North America. The IAP
expanded the Utukok River Uplands Special Area by approximately 3.1
million acres to more fully encompass prime calving and insect-relief
habitat for the herd within the Reserve.\10\ The expansion of the
Utukok River Uplands Special Area within the IAP is consistent with the
recommendations from the Western Arctic Caribou Herd Working Group.\11\
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\10\ NPRA/IAP FEIS vol 1 p. 22.
\11\ Letter of R. Ashenfelter, Chair of the Western Arctic Caribou
Herd Working Group to the Bureau of Land Management Planning Team re:
the Integrated Activity Plan-Draft Environmental Impact Statement for
the National Petroleum Reserve-Alaska, dated June 1, 2012.
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In addition to the important caribou habitat, this special area has
the highest concentration of grizzly bears in the Arctic, and healthy
populations of wolverines and wolves, as well as many species of
migratory songbirds, shorebirds, raptors and waterfowl, including the
bar-tailed godwit, a shorebird that makes the longest known non-stop
migration across the Pacific Ocean from Alaska to New Zealand!
The Utukok River Uplands Special Area includes the northern edge of
the Brooks Range Mountains and foothills, as well as the expansive
tundra grasslands that roll north toward the sea. This region holds
outstanding wilderness values and many ancient archeological sites,
some dating back more than 10,000 years ago. The Inupiaq word Utukok
means ``something old.'' Indeed, this is the area where the first North
Americans lived who crossed the Bering Land Bridge from Asia. During my
2011 trip down the Utukok River, we discovered chert flakes from an
archaeological site where human hands had crafted tools and weapons
long ago. We felt incredibly humbled by this experience and I have
tremendous respect for the Inupiaq people who continue to live in this
region following their subsistence traditions.
Colville River Special Area
As originally established, the Colville River Special Area
encompassed 2.3 million acres and provided some of the most significant
Arctic habitats for raptors.\12\ The majority of the lower river area
supports the highest densities of raptors, passerines and moose on
Alaska's Arctic Slope. The Northeast NPR-A Record of Decision expanded
the Colville River Special Area by 2.44 million acres to incorporate
two miles on either side of two major tributaries of the Colville
River--the Kikiakrorak and Kogosukruk rivers. The IAP expanded the
purposes for which the Colville River Special Area was established to
protect all raptors, rather than the original intent of protection for
arctic peregrine falcons.\13\
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\12\ Kessel and Cade 1956 and 1958, Cade 1960, White and Cade 1971.
\13\ NPRA/IAP FEIS vol. 1 p. 22.
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Along the Colville River and the Etivluk River we spotted nesting
raptors on the bluffs that flank these rivers every day. It was a
thrill to see rough-legged hawks, gyrfalcons and arctic peregrine
falcons on a regular basis.
Kasegaluk Lagoon Special Area
Kasegaluk Lagoon Special Area, as established in 2004 during the
George W. Bush administration, encompasses approximately 97,000 acres
and includes the lagoon, its barrier islands and an area 1 mile inland
from the shore of the lagoon. It was designated for its high values for
marine mammals, wilderness character, and notable primitive recreation
opportunities, and is a rich ecosystem on the Arctic Slope with marine
tidal flats, a unique feature in the Arctic.\14\
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\14\ NPRA/IAP FEIS vol 1. p. 365.
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Peard Bay Special Area
The IAP established the Peard Bay Special Area. The Peard Bay
Special Area encompass 1.6 million acres to protect haul-out areas and
nearshore waters for marine mammals and habitat for waterbird and
shorebird breeding, molting, staging, and migration.\15\
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\15\ NPRA/IAP FEIS vol. 1 p. 22.
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These Special Area designations incorporate the principles of
conservation biology, focusing on ecosystem and watershed integrity and
protection, buffer zones around critical wildlife habitats, and
protected corridors for movement of animals between diverse uplands and
coastal areas or between seasonal areas of use. The designations are
also based on the best available information regarding habitat and
adaptation needs of wildlife and ecosystems that face dramatic shifts
as the result of climate change. The designations also reflect the
benefits for retaining wilderness values by leaving large ecosystems
intact for wildlife and subsistence users.\16\ The current Special Area
designations within the IAP are consistent with the intent of congress
as provided for under the NPRPA.
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\16\ Gale A. Norton, Secretary of the Interior, January 22, 2004,
Northwest NPR-A IAP/Final EIS, Vol. 1, page II-8; and, Record of
Decision, p. 20. The wilderness values of the NPR-A were well detailed
in the National Petroleum Reserve in Alaska Task Force, 1978, National
Petroleum Reserve in Alaska, Values and Resources Analysis, Wilderness
Resources, U.S. Department of the Interior, National Petroleum Reserve
in Alaska, 105(c) Land Use Study, Study Report 2, section 4.
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For the reasons noted above, Congress specifically recognized the
Teshekpuk Lake and Utukok Uplands areas as warranting ``maximum
protection'' when it enacted the National Petroleum Reserve Production
Act in 1976.\17\ Under NPRPA, Congress clearly established that while
energy development was an important reason for initial establishment of
the reserve in 1923, it is now a purpose that must be balanced with
``conditions, restrictions, and prohibitions'' to ensure protection of
the Reserve's extraordinary ecological values and subsistence
resources. Past presidential administrations, both Republican and
Democrat, have embraced the need for protection of these Special
Areas.\18\ The IAP continues this bi-partisan support for balanced
management through an expanded Teshekpuk Lake and Utukok Uplands
Special Area and the creation of the Peard Bay Special Area. The
following is a summary of the Special Area designations within the
Reserve:
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\17\ See Pub. L. 94-258, 90 Stat 304 (1976) ("Any exploration
within the Utukok River, the Teshekpuk Lake areas, and other areas
designated by the Secretary of the Interior containing any significant
subsistence, recreational, fish and wildlife, or historical or scenic
value, shall be conducted in a manner which will assure the maximum
protection of such surface values to the extent consistent with the
requirements of this Act for the exploration of the reserve.")
\18\ Past presidential administrations as philosophically disparate
as those of former President Jimmy Carter and former President George
W. Bush have embraced the need for protection of these areas. The
Carter administration established the Teshekpuk Lake, Utukok Uplands
and Colville River Special Areas in 1977. The George W. Bush
administration created Kasegaluk Lagoon Special Area within the 2004
Record of Decision for the Northwest NPR-A plan.
In the 1976 NPRPA, congress recognized that Teshekpuk
Lake and Utukok Uplands areas as warranting ``maximum protection''.
In 1977, Secretary of Interior Cecil Andrus designated
three Special Areas within the Reserve--the Teshekpuk Lake, the
Colville River and the Utukok River Uplands Special Areas.
Consistent with the 1998 Northeast Planning unit Record
of the Decision, the Teshekpuk Lake and Colville River Special Areas
were expanded.
Consistent with the 2004 Record of Decision for the
Northwest NPR-A planning unit, the George W. Bush administration
created the approximately 97,000 acre Kasegaluk Lagoon Special Area.
The IAP expanded the Teshekpuk Lake and Utukok River
Uplands Special Areas and established the Peard Bay Special Area.
Oil and Gas Leasing & Exploration in the Reserve
Consistent with the Congressional requirement within NPRPA to
``conduct an expeditious program of competitive leasing of oil and gas
in the Reserve'' \19\ the BLM has conducted numerous oil and gas lease
sales within the Reserve. The IAP opens potential oil and gas leasing
for approximately 11.8 million acres within the Reserve, including 72
percent of the total recoverable oil reserves.
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\19\ 42 U.S.C. Sec. 6506a.
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Following President Obama's directive in May of 2011 \20\ that
annual oil and gas lease sales be conducted in the Reserve, BLM offered
3 million acres in December of 2011. That sale generated 17 winning
bids covering more than 120,000 acres. Another lease sale on November
7, 2012, offered 4.5 million acres and received 14 winning bids on
160,088 total acres. There are now 191 authorized oil and gas leases in
the Reserve, encompassing roughly 1.5 million acres.\21\ The following
is a historic summary of the leasing program that has taken place in
the Reserve:
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\20\ During his May 14, 2011 Weekly Address, President Obama
announced new plans to increase domestic oil production. He directed
the Department of Interior to conduct annual lease sales in the
National Petroleum Reserve-Alaska. See: http://www.whitehouse.gov/the-
press-office/2011/05/13/weekly-address-president-obama-announces-new-
plans-increase-responsible-.
\21\ As of April 4 2013, there are 191 active lease tracts in the
NPR-A. See: http://www.blm.gov/pgdata/etc/medialib/blm/ak/aktest/
energy/npra_maps.Par.76062.File.dat/2012 NPR-A Oil & Gas Leases Rpt 02-
20-2013.pdf.
There have been 12 lease offerings in the Reserve since
1982.
Over half of those lease sales were in the past decade
and the vast majority of the 13.4 million acres within the Northeast
and Northwest Planning areas have been offered for lease multiple
times.
There have been six lease sales in the Northeast Planning
Area alone (1999, 2004, 2008, 2010, 2011 and 2012).
The most recent Reserve lease sale offering was conducted
by the Obama Administration on November 7, 2012 and was the fifth lease
sale in 6 years.
Consequently there has been ample opportunity for oil and gas
exploration in the Reserve.
Industry Interest in the Reserve
As a result of the 12 lease sales that have taken place since 1982
and the 5 that have taken place in the last 6 years, over 7 million
acres have been leased across large portions of the Reserve. In
conjunction with these sales, extensive surveys have been conducted,
and dozens of exploration wells have been drilled.
However, in the past several years, the trend has been for industry
to relinquish leases as opposed to the purchase additional tracts
within the Reserve. The November 7, 2012 lease sale generated very
little interest from industry. Of the 398 tracts compromising roughly
4.5 million acres, only a total of 14 were purchased by 2 companies
totaling a little over 160,000 acres.\22\
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\22\ November 7, 2012 NPR-A lease sale bid recap. See: http://
www.blm.gov/pgdata/etc/medialib/blm/ak/aktest/energy/2012K_NPR-
A_Lease_Sale_Docs.Par.53369.File.pdf/2012_NPR-
9A_Lease_Sale_Bid_Recap.pdf.
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Standards for Future Development Within the Reserve
The IAP opens up 11.8 million acres of the Reserve as available for
oil and gas leasing. As the BLM continues to move forward with lease
sales in the Reserve, we believe that it is critical for the agency to
ensure that future infrastructure is located and constructed in the
least invasive manner possible to ensure the Reserve's recognized
values are protected.
In particular, BLM should act to ensure that decisions about the
location and construction of roads and other oil and gas related
infrastructure are made pursuant to strong standards. Permanent roads
in particular, are a concern, as they can result in a multitude of
negative impacts, including destruction of habitat, disturbance of fish
and wildlife, displacement of subsistence resources, and increased
competition for those resources. Roadless development is now an
accepted and viable option, used in many parts of the world including
the sensitive tundra wetlands of the Arctic.
During the planning process there was discussion and speculation
regarding the potential construction of a western Arctic pipeline to
extend across the Reserve to help facilitate oil and gas production in
the Outer Continental Shelf. At the same time, the IAP EIS did not
analyze impacts of pipeline scenarios. Any future proposal to locate
and construct such a pipeline across the Reserve must, therefore, go
through a separate permitting process, including an analysis under the
National Environmental Policy Act.
H.R. 1964--The National Petroleum Reserve Alaska Access Act
There are several elements to the draft legislative proposal under
review by the Subcommittee on Energy and Mineral Resources (H.R. 1964)
``The National Petroleum Reserve Alaska Access Act''). These include
provisions that would:
Effectuate a fundamental change to existing policy in the
NPRPA that would undermine the requirement for balance that Congress
has appropriately established in law for management of the Reserve, the
Nation's single largest land management unit;
Require the Secretary of Interior put forward a new IAP,
thus nullifying the IAP that was the result of multi-year planning
process where BLM evaluated the values and uses of the reserve thus
forcing DOI to duplicate their efforts and waste considerable
resources;
Establish arbitrary fixed timelines for permit decisions
and other authorizations regardless of their complexity;
Require the Department of the Interior to undertake a
redundant study of oil and gas resources within the NPRA after having
just recently completed such an analysis.
For all of the reasons discussed above, the provisions of this
legislation are neither necessary nor beneficial. I urge the House
Subcommittee on Energy and Mineral Resources to defer further action on
the proposal.
Conclusion
The Reserve, our Nation's largest unit of public lands, is an
extraordinary landscape that contains an exceptional array of
internationally significant surface values. The recently completed IAP
appropriately balances oil and gas leasing consistent with the long-
standing Congressional recognition that the Reserve contains more than
just oil and gas. Congress has properly required that oil and gas
development in the Reserve should proceed in a manner that balances
energy development with other public interests, specifically the
protection and conservation of the Reserve's Special Areas and
exceptional biological resources. The IAP reflects this intent.
As future development is considered there are important issues of
national and local interest regarding where and how any such
development is undertaken. Given the immense size of the Reserve,
balance can be achieved between development and protection of the
Reserve's Special Areas, which contain extraordinary surface values.
The DOI is to be commended for adopting a very fair and balanced
approach to resource development and protection of the Special Areas in
the Reserve through the approved IAP in concert with the law.
______
Mr. Lamborn. You are very welcome. Thanks for being here.
Mr. Spehar.
STATEMENT OF JAMES G. SPEHAR, FORMER MAYOR, GRAND JUNCTION,
COLORADO
Mr. Spehar. Thank you, Mr. Chairman. It is a pleasure to be
here in front of my son's Congressman and my own Congressman,
and I thank you for the invitation. I am pleased to be here
also, because energy jobs are important in my personal,
professional, and public lives. Coal mining brought my great-
grandfathers to western Colorado six generations ago. I have
owned small businesses in both boom and bust cycles in my home
town of Grand Junction, Colorado. I also helped govern my
community as a county commissioner, city councilman, and mayor
in both good times and bad.
I have worked hard to create good jobs, as a former member
of the Colorado Economic Development Commission, and the past
board member of our local economic development organization.
And I have worked with other communities as a former President
of the Colorado Municipal League and a past board member of
Associated Governments of Northwest Colorado, an epicenter of
energy development in the West.
What have I learned that is important to today's discussion
of H.R. 1965 and H.R. 1394? First, take care of jobs you
already have. Next, quality of life ultimately trumps
everything else in job recruitment. Third, you can't sustain or
develop jobs where markets don't support them. And, finally,
never put all of your eggs in one basket.
H.R. 1965 and H.R. 1394 create issues in each of those
areas. They seem to prioritize energy development over other
uses of our public lands, upending the multiple-use philosophy.
That threatens jobs in agriculture, tourism, and outdoor
recreation, hunting and fishing, and other existing multi-
million-dollar economic drivers that also rely on our Federal
lands.
We appreciate every good job where I come from, but have
learned the hard way about the dangers of putting most of our
eggs in the energy basket. We have experienced four significant
boom and bust cycles in my lifetime, and I have personally
witnessed three of those cycles. As a result, communities in
Mesa County are focused on diversifying our economy.
For western Colorado, conservation has been a critical
economic tool and, in Federal policy, must be placed on equal
ground with energy development to have long-term sustainable
economic growth. One of our significant international
manufacturers was introduced to Grand Junction when the owners
came to recreate. That reinforces to me that quality of life
and access to public lands are important economic tools.
Members of my own family are among ranchers holding public
land grazing leases. Water originating on public land irrigates
feed crops and sweet corn, wine grapes and fruit trees, and
supports significant tourism. Those important job generators
rely on public lands and should not be relegated below energy
development in the management of those lands.
H.R. 1965 and H.R. 1394 would substitute Federal Government
mandates for marketplace realities. The major constraints on
production on public lands result from low prices for dry
natural gas. The Director of the Energy Information
Administration put it this way recently. He said, ``Liquids-
rich oil shale resources, where we are seeing rapid increases
in production, are found largely outside of Federal lands.''
We cannot legislate geology. We cannot force companies to
shift their focus from the booming fields of the Bakken in
North Dakota, or from mostly private lands in the Eastern
United States to less profitable Federal lands in the West.
Both H.R. 1965 and H.R. 1394 also presume too few drilling
permits on Federal lands and too little public land available
for leasing. But the U.S. Bureau of Land Management reports
that the industry has more than 7,000 permits on public lands
that are currently not utilized, also more than 26 million
offshore acres and more than 20 million onshore acres that are
currently leased but idle.
Unfortunately, the legislation under consideration today
would roll back the progress already being felt from 2010
leasing reforms which have reduced protests and created more
efficient processes.
H.R. 1965 forces speculative commercial oil shale leasing
in the absence of confirmed research demonstrating successful
technologies. Mandates and quotas do not offer taxpayers either
the best market-based financial return for the use of their
public lands, nor the best assurances that necessary
protections for water, air, wildlife, and communities are in
place. That is why three successive State administrations in
Colorado, both Republican and Democrat, have supported
requiring completion of RD&D projects prior to commercial
leasing.
Our current Governor put it this way when the recent
Department of the Interior decision was announced. ``We need to
be thorough and have a full understanding of potential impacts
to the environment and our community,'' Governor Hickenlooper
said, ``before we take steps toward large-scale commercial
leasing of oil shale.''
Western Colorado learned hard lessons about the dangers of
government intervention when, despite a $1.2 billion loan
guarantee by the Reagan Administration, the last oil shale boom
went bust on Black Sunday in May of 1982. Some local
communities only recently paid off bond debt from
infrastructure for sewer and water built to support that boom.
My purpose is not to argue against a robust and successful
oil and energy industry; we all want good jobs, energy
independence, and a more certain future. But it is important to
remember the lessons of the past. We can do better. Thank you
for your time and consideration. I look forward to your
questions.
[The prepared statement of Mr. Spehar follows:]
Prepared Statement of James G. Spehar, Former Mayor and City Council
Member, Grand Junction, Colorado, Past President, Colorado Municipal
League, Former Mesa County (Colorado) Commissioner
H.R. 1965--FEDERAL LANDS, JOBS AND ENERGY SECURITY ACT AND H.R. 1394--
PLANNING FOR AMERICAN ENERGY ACT OF 2013
This written submission and my oral comments before the U.S. House
of Representatives Subcommittee on Energy and Mineral Resources on the
above referenced legislation are informed by many different
perspectives.
Energy extraction, coal mining, brought my great grandfathers from
Eastern Europe to western Colorado, six generations ago. I have
operated small businesses in both boom and bust energy industry cycles
in my hometown of Grand Junction, CO, and have helped govern my
community, which serves as the headquarters for much of the energy
development in northwest Colorado, in both good economic times and bad
as a county commissioner and city councilman and mayor. I have learned
from other Colorado communities as a board member and past president of
the Colorado Municipal League as well as on the board of directors of
Associated Governments of northwest Colorado.
My work as a former member of the Colorado Economic Development
Commission and helping direct local economic development efforts as a
past board member of the Mesa County Economic Development Commission
(now the Grand Junction Economic Partnership) reinforced the importance
of both job creation and retention.
For nearly two decades, I have done consulting work on growth,
energy, economic development, and workforce issues with local
governments, their regional associations, State agencies, multi-
national energy companies and others. I assisted one of my early
clients, Shell, with community outreach in early stages of their oil
shale effort prior to the company becoming one of the original holders
of multiple research and development leases on Federal lands.
It is because of that varied background that I understand and
identify with the efforts of Representative Tipton and Representative
Lamborn in their focus on jobs, energy security and the need to plan
aggressively for energy development. But my experiences also prompt me
to urge caution as the subcommittee considers the approaches to these
important issues as contained in H.R. 1965 and H.R. 1394.
In general, these bills appear to prioritize energy development
over other uses of our public lands, upending the multiple use
philosophy and potentially threatening other important local jobs in
agriculture, tourism and outdoor recreation, hunting and fishing and
other multi-million dollar economic drivers that also rely on Federal
lands. The risk is that we ultimately end up swapping an existing job
in historic and less cyclical industries for a new one in an industry
known for uncertainty, thus creating a less stable long term local
economy.
In western Colorado, the ever-increasing presence of recreation
based jobs bolsters the economy. Just as importantly, small businesses,
large companies and skilled workers call western Colorado home because
of the quality of life provided by access to nearby public lands.
Arbitrary leasing quotas would limit multiple uses in favor of the boom
and bust nature of extractive industries.
It is also true that public land policies of the current
administration have not favored protection over development. President
Obama and President George W. Bush have overseen more acres leased for
development than have been conserved and the 112th Congress just last
year became the first Congress since World War II not to pass a single
piece of land conservation legislation.
Since record keeping began by the BLM, more than 95 million acres
have been leased for oil and gas development while only 25 million
acres have been protected. Balance for the many diverse users that
underpin the West's economies must be considered in bills such as those
being considered today.
H.R. 1965 and H.R. 1394 also seem to substitute Federal Government
requirements for marketplace realities. Right now, the only major
constraints on oil and gas production on Federal lands are the result
of low commodity prices and the fact that, as Energy Information
Administration Director Adam Sieminski testified before the Energy and
Commerce Committee last year, rapidly liquids-rich shale where we
resources where we are seeing rapid increases in production are found
largely outside of Federal lands.
Like it or not, we cannot legislate geology, nor can we force
companies to shift their focus to less productive and less profitable
Federal lands.
Specific to H.R. 1394, requiring the Department of the Interior to
develop a ``domestic strategic production objective'' for onshore
energy production and then ``take all necessary actions'' to meet that
objective could, in a time when supplies are increasing or demand is
static, force continuing or perhaps even increasing production leaving
local communities vulnerable to chocks from market collapses in those
economies, giving a false sense of direction to the future development
of those resources and resulting in additional exports that might
ultimately threaten rather than assure domestic energy security.
Certainly subcommittee members are aware that, despite efforts to
increase domestic energy production and decrease reliance on imported
energy supplies, one of our Nation's fastest growing exports is
finished fuel products. U.S. exports of all finished fuels have more
than doubled since 2006, averaging 107 million gallons per day for the
first 8 months of 2012 and removing from the domestic market gasoline
and diesel that might otherwise result in lower pump prices and reduced
dependence on foreign imports. According to the Energy Department, the
United States is a now a net exporter of fuel for the first time since
1949,
Just last Friday, May 17, acknowledging a glut of natural gas as a
result of increased domestic production, the Department of Energy gave
permission for a terminal in Freeport, Texas, that was originally built
to handle imports of liquid natural gas to instead ship LNG to Japan.
Fourteen other domestic terminals are reportedly seeking export
permits. If all are approved, their total capacity would be 28.7
billion cubic feet per day according to a Barclays's report.
That means the United States could export more than 40 percent of
the 70.1 billion cubic feet per day the Energy Information
Administration estimates will be produced by domestic gas wells in
2014.
All of which begs the question of whether it is wise to attempt to
force increased energy production on Federal lands when much of that
product will flow overseas, creating short term economic gain but
reducing domestic supplies, increasing consumer costs at home and
diminishing prospects for U.S. energy independence.
Western Colorado learned the hard way about the dangers of
government intervention without having the market solidly on your side
when billion dollar loan guarantees and promises of a booming work
force came crashing down on ``Black Sunday'' in May 1982, leaving
communities liable for local infrastructure costs, some of which have
only recently been paid off.
Both H.R. 1965 and H.R. 1394 also appear to presume too few
necessary drilling permits on Federal lands and too little public land
available to be leased for energy development. The U.S. Bureau of Land
Management reports that the industry has accumulated more than 7,000
permits on public lands that are currently not being utilized and more
than 26 million offshore acres and more than 20 million onshore acres
that are currently leased but idle.
A Recent Congressional Research Service Report which gained media
attention explained the Federal permitting question as follows: ``Some
critics of this lengthy timeframe highlight the relatively speedy
process for permit processing on private lands. State agencies permit
drilling activity on private lands within their State, with some
approving permits within 10 business days of submission. But
oftentimes, some surface management issues are negotiated between the
oil producer and the individual land/mineral owner. A private versus
Federal permitting regime does not lend itself to an ``apples to
apples'' comparison.''
That same report questions the need for Federal policies like the
bills under consideration today stating, ``There is however, continued
interest among some in Congress to open more Federal lands for oil and
gas development and increase the speed of the permitting process. But
having more lands accessible may not translate into higher levels of
production on Federal lands, as industry seeks out the most promising
prospects and highest returns.''
The legislation under consideration today, I would assume, is meant
to make the system more efficient. Yet the practical implications of
many of the provisions proposed would have the opposite effect. In
western Colorado, a number of recent leasing proposals have drawn
controversy not from environmentalists but by interests ranging from
farmers and ranchers to municipal water providers, Republican county
commissioners and even archeological concerns. Proposals put forth by
the Colorado BLM Director have even included leasing a local town dam,
and in areas where new forms of organic farming exist, sparked by the
demand for organic produce that the market has called for in recent
years, that didn't exist 30 years ago when the original Resource
Management Plan was written.
Colorado has been woefully behind other States, even Utah and
Wyoming, in instituting many of the leasing reforms developed in 2010.
These reforms have been driving down protests and making for a more
efficient and shorter process for industry elsewhere in the country,
but because Colorado hasn't moved forward with tools such as Master
Leasing Plans, the process has remained troubled and inefficient for
all parties involved. Unfortunately, the legislation under
consideration today would roll back the progress already being felt by
the 2010 leasing reforms.
According to the BLM ``The percentage of BLM leases protested
declined again in fiscal year 2012, which ended Sept. 30, continuing a
trend that began in 2009. Protests were lodged on fewer than 18 percent
of the 2,064 parcels offered for sale during FY 2012, the lowest
percentage since FY 2003, when the filing of protests began to
accelerate. Protests, which can cause delays, court battles and
increase development costs, reached a high of more than 47 percent in
2009. In response to this gridlock, in May 2010, Interior Secretary Ken
Salazar undertook reforms to the leasing program that have resulted in
fewer protests.''
It is also worth asking if forced leasing, either by requiring
specific percentages of land to be leased for drilling or by
speculatively leasing Federal land for oil shale development in the
absence of confirmed research demonstrating successful technologies,
offers taxpayers either the best market-based financial return for use
of their public lands or the best assurance necessary protections are
in place.
While efficiency ought to be the goal of all of us who have been
involved in government at every level and a reasonable expectation on
the part of those we serve, getting things done as quickly at the
lowest cost should not come at the expense of public safety,
environmental responsibility or by shifting the burden to existing
local taxpayers for infrastructure and services required by industry.
For many years, the avowed goal for research, development and
demonstration projects in the oil shale industry, as repeatedly stated
by industry leaders, has been to create technologies and processes that
are environmentally responsible, socially acceptable and economically
sustainable. There has also been an expressed desire for certainty
that, if successful in meeting those stated goals, they will be allowed
to proceed with profitable production.
Let me suggest that environmental responsibility, social
acceptability, economic sustainability and certainty regarding
infrastructure and service expectations are just as important for the
communities that host energy industries. In some important respects,
H.R. 1965 would hinder achievement of those goals.
Merely increasing the speed does not assure the journey will be
successful. Fast-tracking commercial leasing for oil shale development
is problematic for several reasons.
It ignores the fact that most major companies involved in the
research, development and demonstration projects continue to say a
commercial production is 7-10 years in the future, something they've
been saying ever since I first began my own oil shale work more than 15
years ago.
It ignores the fact that technical issues, not lack of availability
of land or burdensome regulations, have caused more than a year's worth
of delay in firing up the heaters for the AMSO/Total research,
development and demonstration project in northwest Colorado.
It does not recognized that in Utah, where companies such as Red
Leaf and Enefit intend to use modern versions of older mining and
retorting technologies, those companies are several years away from
production despite having access to State, Federal and private lands
sufficient to sustain their planned operations for many decades.
That is also true in Colorado, where newer in situ processes are
being tested. Anticipated conversion of acreages available to Colorado
RD&D lessees who might eventually demonstrate successful technologies
will also allow profitable long term operations while creating market
based cost structures for additional leasing, providing more realistic
returns to taxpayers for minerals extracted from public lands.
H.R. 1965 fails to acknowledge that easier opportunities using
existing technologies such as hydraulic fracturing have brought new
shale oil and shale gas, products entirely different from oil shale,
into the market, impacting market supplies and prices and therefore
making the economics of heating rock to produce liquid that must then
be refined into usable oil even more difficult.
Speculatively leasing large tracts of land for commercial oil shale
development while at the same time short-circuiting the review process
and limiting public participation in it presumes supposed benefits
before viable technologies assure success while ignoring the necessity
of dealing proactively with impacts.
On the ground, the reality is that local communities must provide
services and infrastructure to support oil shale development, impacts
which peak during the construction and start up phases long before
revenues from production royalties and property taxes on new facilities
kick in. That leaves existing local taxpayers and their governments on
the hook absent some mechanism for up-front assistance.
Though the last oil shale boom-bust cycle demonstrated the need for
that sort of help, there is no mechanism in H.R. 1965 to provide for
advance payments against future royalties, lease bonus payments, or
other methods of assisting local governments in hosting a significant
start up industry in the 3-5 years before that industry begins to pay
its own way.
Nor is there any mechanism to do as community leaders from
northwest Colorado have been requesting since 2009 and commission a
study of the potential cumulative impacts of imposing a commercial oil
shale industry on top of existing energy and energy-supporting
industries that include natural gas exploration, development and
processing as well as pipeline construction, coal mining and power
generation. Absent such a pro-active study, it appears that
consideration of these impacts will be relegated to a shortened and
much-restricted analysis under H.R. 1965 with reduced opportunity for
public participation.
It is also unfortunate that H.R. 1965 would revert the oil shale
regulatory scheme back to the rules of the Bush Administration,
subverting a years-long review now in the final stages of resolution.
The BLM's own 2008 Programmatic Environmental Impact Statement (PEIS)
acknowledges the lack of then-current information available regarding
many issues. Subsequent analysis has brought an improved understanding
in many areas and is reflected in the updated PEIS and proposed rules
and regulations.
Of particular concern is the royalty structure contained in the
2005 Energy Policy Act, cutting initial oil shale royalty rates by more
than half. Half of royalty payments are returned to States and local
governments where the activity occurs. Reducing those rates diminishes
the financial ability of local communities to support infrastructure
and services a new industry finds necessary to create and sustain jobs.
At a minimum, royalty rates for oil shale should equal the 12.5
percent charged for other minerals on Federal lands. Even then, the
partial distribution of those assessments on production back to State
and local governments will come 3-5 years after they have faced
increased infrastructure and service costs associated with the heaviest
impacts, which occur during the construction and start-up phases.
Anything less than 12.5 percent exacerbates that problem, unreasonably
burdens current taxpayers and could have a potential negative impact on
existing sustaining industries.
We are all in favor of good jobs, energy independence and a more
promising future. But it is important to remember the lessons of the
past, when haste and Federal pressures fostered the oil shale boom that
ended with the economically disastrous ``Black Sunday'' bust in May of
1982.
That is why the administrations of three Colorado governors, both
Democrat and Republican, have argued at home and here in Washington as
the 2005 Energy Policy Act and the 2008-2009 oil shale leasing rules
were being promulgated, for a deliberate research and development-based
process of determining the ultimate viability of oil shale development.
That strategy is not apparent in H.R. 1965.
The purpose of my oral and written testimony is not to argue
against a robust and successful energy industry, but only to make
certain that inevitable impacts and community needs are given equal
consideration as we move forward. I thank you for inviting me and for
your time and consideration.
______
Mr. Lamborn. OK, I want to thank all of you for being here,
and for your testimony.
And for Ms. Miller and Mr. Spehar, I like the fact that you
mentioned balance. That is what we are here for, to try to
strike the right balance. I think, if we are careful, we can do
it all. We can recreate, we can preserve, but we can use
resources to supply energy to help our economy if we are
careful and smart in how we do it. So, I also think this
pendulum has swung too far toward no production and slowing
production down. That is why my bill and some of the other
bills are before us today.
But let me turn to you, Mr. Glenn. And you have come a long
ways also, I appreciate that. And you, Ms. Miller, have come a
long ways, 5,000 miles, that is a long set of airplane flights.
Mr. Glenn, you said that in drafting the final IAP there
was insufficient meaningful consultation by the BLM with native
land owners and municipalities after the record of decision had
been authored. Can you elaborate on why this was insufficient,
in your opinion?
Mr. Glenn. Sure, thank you. There are millions of acres of
land owned by the village corporations and the regional
corporation. We don't have Indian reservations in Alaska.
Instead, Congress has established these corporations, and each
of us who are Native Alaskans are members, or shareholders of
the corporations. They are land owners within the NPR-A.
And then there are cities, city councils, tribal councils,
and then our municipality, the real lion of residents, quality
of life services, is the North Slope Borough. And you heard
from the mayor earlier. None of these groups were sufficiently
consulted with the BLM before the record of decision was
created.
Now, to their credit, since the record of decision they
have promoted the idea of a working group in NPR-A that
includes all of those groups that I just mentioned. It is just
a shame that rubric was not created before the record of
decision was made. So we think they were selective in who they
talked to, and they didn't talk to native land owners or
municipalities.
Mr. Lamborn. OK, thank you. Mr. Ekstrom, I am going to ask
you a question I have asked many other witnesses in similar
hearings in the past. You describe how to get a permit on
Federal service lands takes almost 300 days, 298 days, and yet
it is a lot better dealing with States, with State land or
States with private land. Can you explain why there is such a
difference?
Mr. Ekstrom. Mr. Chairman, I can. The State regulators are
much closer to their constituents than Federal regulators, and
they understand and advocate for the economic value that
accrues to the State when the permit is issued, and when the
development occurs. Frequently, with the overlay of Federal
permit in addition to a State permit being required, you have
stipulations and you have kind of a one-size-fits-all mentality
that requires an incredible amount of satisfying bureaucracy
that typically does not apply to a specific area within perhaps
North Dakota or Colorado.
The specific area I referred to on my map is the Pawnee
Grasslands, which is largely developed and has a lot of
producing property on it. And we are talking about a permit
that might be for 40 acres that is inside of a drilling unit.
Why that takes so long, I am not aware. But we suspect that
part of it has to do with the culture within the organization
that we have applied for the permit to.
Mr. Lamborn. Also, as a follow-up, if the Federal process
were streamlined, as the legislation would lead to, would there
be more interest in exploring and developing energy on Federal
lands, which I believe would lead to more income to the
Treasury and a boost to the economy?
Mr. Ekstrom. Mr. Chairman, there is no question about that.
Our mandate internally at the organization which employs me is
that we will avoid Federal acreage as much as possible, due to
these unseemly delays that do not employ capital effectively.
Our capital, our expenditures, seek their most efficient use.
And so, the Federal acreage is not an efficient use, so it is
naturally drawn to State and private acreage instead.
Mr. Lamborn. OK, thank you. Representative Holt?
Dr. Holt. Thanks. Mr. Spehar?
Mr. Spehar. Yes.
Dr. Holt. First, Mr. Lamborn previously introduced a bill
similar to H.R. 1965 that ensured that the percentage of fees
collected for wind and solar energy right-of-way authorizations
would be used ``to facilitate the processing of wind energy and
solar energy permit applications on BLM lands.'' In other
words, the money collected would be used for renewable energy
permitting.
In the current version, H.R. 1965, as introduced, Section
112 says that the revenues would be used by Interior
specifically--it no longer says that the revenues would be used
specifically for this permitting. What do you think about that
change?
Mr. Spehar. Well, obviously, Congressman Holt, there needs
to be sufficient funding to assure that these permits and
applications are processed in a timely manner. All of us,
whatever level of government, want to see efficiency and all of
that.
My concern about royalty rates and all of that in the
legislation is that they anticipate reducing royalty rates to
encourage production. The problem with that is that half of
those royalties are supposed to flow back to State and local
governments, to allow them to deal with the impacts of the
production. And discounting those royalty rates takes money out
of the hands of the local governments and the State
governments. It is intended to help feed the beast, if you
will. The----
Dr. Holt. But for the royalties that go back to the BLM,
you don't particularly advocate that they be used, then, for
renewables?
Mr. Spehar. I really haven't looked deeply into that issue.
Dr. Holt. OK, thanks. Ms. Miller, you note in your
testimony that more than three decades ago Congress required
that the Secretary assume responsibility for protecting
significant subsistence, recreational, fish, wildlife, or
historical or scenic values. Now, of course, what Congress does
Congress can undo. And I suppose we could absolve the Secretary
from that responsibility to protect significant recreational
fish, wildlife, and historical values.
But recognizing that still stands, do you think that H.R.
1964 would undermine that decades-old requirement to balance
energy development with environmental protection, historic
preservation, recreational, and other use----
Ms. Miller. I do. I think it----
Dr. Holt [continuing]. In the NPR-A?
Ms. Miller. I do think it undermines it from the standpoint
that the Department of the Interior just spent 2\1/2\ years,
through a public process involving 400,000 comments--I attended
the scoping hearings in Alaska, I provided written testimony
for the public hearings on the proposed alternatives. When I
went to the scoping hearing there were 50 people in the room
that all offered comments about this plan. They worked very
hard at this, as far as getting input from Alaskans.
I also would add, too, that there are 40 villages in
Northern Alaska and Interior Alaska that depend on the Western
Arctic caribou herd, and this is a herd that numbers about
350,000. It has a range that is the size of Montana. We are
talking a huge area. So there are many villages that depend on
this herd for a subsistence harvest resource. And those
villages, representatives from many of those villages made up
what was called the Western Arctic Caribou Herd Working Group,
and they made recommendations to the BLM. They also passed 30
different resolutions reflecting 90 communities that supported
the recommendations in the integrated activity plan, supporting
the protection of the Utikok special area for the caribou, for
the nursery grounds, supporting Teshekpuk Lake, which is also
important for the Teshekpuk caribou herd for----
Dr. Holt. And specifically with this language, do you think
it undermines the Secretary's responsibility----
Ms. Miller. Well, it----
Dr. Holt [continuing]. That we gave----
Ms. Miller [continuing]. Clearly undermines it. It----
Dr. Holt. Secretary----
Ms. Miller [continuing]. Throws out a good, balanced, 50/50
plan, which provides 11.8 million acres open for oil and gas
leasing, or 72 percent of the oil resources would be available
to industry to extract, 11 million acres would be protected.
And these are the most sensitive, biologically important lands,
these special areas in the Reserve. One of them, the Kasegaluk
Lagoon, actually was established under George W. Bush, under
his Administration.
The other four, extremely important habitat for caribou,
for birds that come from six different continents if you go
throughout the Reserve, grizzly bears--we are talking a rich
land. And the archeological values, there is no place like the
Reserve in terms of ancient history of indigenous people, the
very first people that----
Dr. Holt. Thank you for coming all this way and presenting
your good testimony.
Ms. Miller. Thank you very much.
Mr. Lamborn. OK. Representative Tipton?
Mr. Tipton. Thank you, Mr. Chairman, and I would like to
particularly welcome two Coloradoans. And one in particular out
of our district, Mr. Spehar. Thanks for being here.
I did want to be able to clarify one point. In page two of
your testimony in reference to H.R. 1965 and 1934, you state
that the legislation seems to prioritize energy development
over other missions under the BLM. Can you point in the bill,
H.R. 1394, where it prioritizes?
Mr. Spehar. Without digging into the piece of legislation
here, I think in my mind, Congressman Tipton, the tone of it
seems to elevate energy development above some of these other
important economic drivers that we have. I am certain that is
not your intent, and I----
Mr. Tipton. It is not. The good news of legislation is if
you don't prioritize it, it is not there. And if we do look--
and I had pointed out to Ms. Connell, and it is just really for
informational purposes, in Section 2(a)1 of the bill we
specifically note that this is going to be a balanced approach,
we do not circumvent any of the FLPMA process or the balanced
approach for the BLM. It is simply to be able to responsibly
develop these resources and to be able to get people back to
work in our area. And coming out of Grand Junction, one of the
highest unemployment rates in our district and in our State, I
know you understand the importance of that.
So, Mr. Ekstrom, I would like to be able to talk to you,
because you had talked really about jobs and responsible
development of these resources. We have colleges right now that
are graduating students that are now able to look for work.
Just how important is accessing and responsibly developing
these resources? How important is this to job creation?
Mr. Ekstrom. Mr. Chairman, I believe it is fundamental to
job creation. We have had this experience in North Dakota and
dramatically demonstrated, we have a National Energy Center of
Excellence established at Bismark State College. We have had a
Department of Petroleum Engineering established at the
University of North Dakota. The first graduates are coming out
of there. They were recruited 2 years previous, when they were
enrolled in this program. They were encouraged to bring their
fellows with them. The University of North Dakota now has
approximately 40 enrollees in petroleum engineering, where the
program did not exist 5 years ago. So it is fundamental.
In addition, what we are seeing is certificated employees
coming out of the Bismark State College, 2-year certificates,
associate degrees that are technically adept and technically
trained to do the jobs that we have in the field. They are
hired immediately. We have an unemployment rate that is
effectively zero unemployment in North Dakota. The official
number is somewhere around 2 percent. By promoting and
advocating this development within the country in a reasonable
and responsible way, we are able to put to work anyone who
wishes to work. With the ability to pass a drug test and
possession of a valid driver's license, you can get a job in
oil and gas.
Mr. Tipton. So, do you think that a comprehensive,
responsible, all-of-the-above energy plan that is laid out in
H.R. 1394, is that going to be able to help put people back to
work when we need jobs in this country?
Mr. Ekstrom. Mr. Chairman, without question it will
dramatically improve the job outlook in this country.
Mr. Tipton. These are good-paying jobs. I think that oil
and gas industry, the average mean wage is $92,000. You think a
few college graduates might like that?
Mr. Ekstrom. The professional wage is approximately that.
Those are graduates from the Colorado School of Mines. The
average wage for all workers in oil and gas in the
Intermountain West is approximately $65,000.
Mr. Tipton. Good jobs.
Mr. Ekstrom. Yes.
Mr. Tipton. One thing I think we are all concerned about
when we fill up at the gas pump, when we are trying to pay our
bills at home, is the idea of what the cost is of the fuels
that we are paying for. Is it a false assumption to assume that
if we are creating this energy on American soil, even though we
are part of the global economy, that we wouldn't see prices
actually drop in this country?
Mr. Ekstrom. Representative Tipton, there is no question
about that. A dramatic increase in supply generally leads to a
dramatic decline in price.
Mr. Tipton. Thank you, and I yield back.
Mr. Lamborn. OK. I want to thank the witnesses for being
here and for giving your testimony. Members of the Committee
may have additional questions for the record, and I would ask
that you respond to these in writing.
Before we adjourn, I want to ask you----
Dr. Holt. Before you adjourn, may I ask for a colloquy with
the gentleman from Colorado?
Mr. Lamborn. Can you both do that after we adjourn, just to
each other?
Dr. Holt. I thought it would be good to have it on the
record.
Mr. Lamborn. I have got some deadlines here. Sorry about
that.
Mr. Tipton. But I would be happy to visit with you any
time.
Mr. Lamborn. I would ask unanimous consent that we also
enter into the hearing record a letter from the Wilderness
Society dated today, May 22.
If there is no objection?
[The lettter submitted for the record by Mr. Lamborn
follows:]
Letter Submitted for the Record by The Honorable Doug Lamborn From The
Wilderness Society
May 22, 2013.
The Honorable Doug Lamborn, Chairman,
Subcommittee on Energy & Minerals,
Committee on Natural Resources,
U.S. House of Representatives,
Washington, DC 20515.
The Honorable Rush Holt, Ranking Member
Subcommittee on Energy & Minerals,
Committee on Natural Resources,
U.S. House of Representatives,
Washington, DC 20515.
Dear Chairman Lamborn and Ranking Member Holt:
The Wilderness Society respectfully requests that this letter
regarding: H.R. 1964, the ``National Petroleum Reserve Alaska Access
Act''; H.R. 1965, the ``Federal Lands Jobs and Energy Security Act'';
and, H.R. 1394, the ``Planning for American Energy Act of 2013'' be
included in the May 22, 2013, Subcommittee on Energy and Minerals
hearing record regarding these three bills.
Introduction
As with almost identical proposals considered by this Subcommittee
last year, these three bills are ``solutions in search of a problem.''
They are based upon at least three false premises: first, that current
Federal policies are unnecessarily hindering oil and gas development on
onshore Federal lands; secondly, that passage of these bills will
create significant numbers of jobs; and third, passage will somehow
lower the price of gas and oil to consumers. None of these premises are
true.
Today, the domestic oil and gas industry is thriving. The industry
controls Federal leases on over 37 million acres of Federal public
lands; they have operations on over 12 million acres of Federal onshore
leases; two-thirds of all onshore acres leased remain inactive despite
the increase in overall production; there are over 96,000 producing oil
and natural gas wells on our public lands; thousands of Federal
drilling permits are approved each year; and though the industry has
acquired thousands of Federal drilling permits over the past several
years, they are sitting on nearly 7,000 approved Federal drilling
permits that, for reasons known only to itself, it is not using. And,
while domestic natural gas prices are at historic lows, the persistent
high price of gasoline is determined by world oil market dynamics, not
by how much Federal land is made available for leasing, or by how many
Federal drilling permits are issued in each year.
Though none of these bills will result in lower energy prices for
consumers, if passed they would increase the risk of harm to other
natural resource values from oil and gas operations on Federal lands,
reduce the opportunities for the public to participate in oil and gas
management decisions, and make oil and gas extraction activities the de
facto highest priority use of Federal public lands. They would repeal
the recent reforms in the Bureau of Land Management's (BLM) oil and gas
leasing and development policies. These reforms were adopted to create
more certainty about where leasing and development is appropriate on
the public lands, and were badly needed to restore a semblance of
balance between the BLM's dual responsibilities to facilitate the
careful development of our publicly-owned oil and gas resources, and to
protect the multitude other natural resource and environmental values
that these lands harbor.
Additionally, one of the bills--H.R. 1965--minimizes, eliminates
and penalizes public participation in leasing and drilling decisions on
our public lands, thereby undermining the legitimacy of a decision-
making process that gives the owners of these lands--the public--the
right to participate in decisions about how our public lands are
managed. If passed, these bills would turn us back to the days when
energy policy was dominated solely by oil and gas development instead
of an approach which recognizes that multiple use requirements needed
to accommodate balance and resolve competing energy, conservation, and
recreational values of our public lands.
There is simply no reason for Congress to place its thumb on the
scale to advantage one user of our public lands--the oil and gas
industry--over all others, as these bills would do. Our specific
comment's on the three bills follows.
H.R. 1964
We oppose passage of H.R. 1964 for the reasons set forth below.
Sec. 5 of the bill would nullify the existing record of decision,
integrated activity plan (IAP), and environmental impact statement
(EIS) and give the Secretary of the Interior 6 months to come up with a
new IAP/EIS that promotes ``maximum development of oil and gas
resources.'' The new IAP/EIS would be required to select one of the
alternatives analyzed but not selected in the 2012 EIS, any of which
would result in an additional loss of 20-33 percent of high-value
caribou calving habitat. In other words, the bill seeks to legislate
the EIS's outcome.
The 2012 plan was based on sound scientific research that analyzed
wildlife distribution and uses of the important habitat within the
NPRA, as well as subsistence use by numerous Native communities. The
plan's protective measures were informed by over 400,000 comments from
scientists, conservation groups, and Native communities. The plan
balances conservation and development interests, and allows for oil and
gas leasing on 11.8 million acres containing 72 percent of NPR-A's
economically recoverable oil.
Sec. 3 would unnecessarily require the Secretary to hold at least
one lease sale annually (from 2013 to 2023) in areas of NPRA most
likely to produce commercial quantities of oil and natural gas. This is
an unnecessary provision as President Obama directed the Department of
the Interior in 2011 to hold annual lease sales within the NPRA.
Sec. 4(a) of the bill would require Federal agencies to
``facilitate and ensure permits'' for all surface development
activities, including for the construction of pipelines and roads. Sec.
4(c) would require the Secretary of the Interior to submit to Congress
a plan providing for rights-of-way for ``pipeline, road, and any other
surface infrastructure that may be necessary'' to ensure that ``all
leasable tracts in the Reserve are within 25 miles of an approved road
and pipeline right-of-way.''
The bill presumes that roads are required for NPRA development
including alongside transmission pipelines. There are no roads
alongside several long-distance transmission pipelines on the North
Slope, nor are roads used to access every North Slope oil and gas
prospect.
Sec. 4(b) would require permits for roads and pipelines associated
with a project to be issued within 60 days of approving a permit to
drill, and within 6 months of the application for the permit to drill.
Sec. 7(2)(B) appears to require all permits to be issued within 60 days
of the submission of an application. Based on the language of Sec. 7,
it is not clear whether the Secretary would have authority to deny a
permit application. Regardless, 60 days is not enough time to assess
the permanent impacts on the landscape and wildlife populations
associated with a proposed road and obtain public comments under the
NEPA.
Sec. 6 would require the Secretary of the Interior to issue new
regulations within 6 months to ``establish clear requirements to ensure
that the Department of the Interior is supporting development of oil
and gas leases in the National Petroleum Reserve-Alaska.'' This
language is vague, and it is not clear how it would be interpreted. The
Department of the Interior already has regulations providing
specifically for oil and gas leases in NPRA (See 43 CFR Pt. 3130. See
also 43 CFR 2360, Subpart 2361 (Management and Protection of the
National Petroleum Reserve in Alaska) . Since the bill only amends
Section 107(a) of the Naval Petroleum Reserves Production Act (NPRPA)
of 1976 (42 U.S.C. 6506a(a)), the regulations would still need to
adhere to language elsewhere in NPRPA calling for protection of the
environment.\1\
---------------------------------------------------------------------------
\1\ E.g., 42 U.S.C. 6504(a) (``Any exploration within the Utukok
River, the Teshekpuk Lake areas, and other areas designated by the
Secretary of the Interior containing any significant subsistence,
recreational, fish and wildlife, or historical or scenic value, shall
be conducted in a manner which will assure the maximum protection of
such surface values to the extent consistent with the requirements of
this act for the exploration of the reserve.''); 42 U.S.C. 6506a(b)
(``Activities undertaken pursuant to this act shall include or provide
for such conditions, restrictions, and prohibitions as the Secretary
deems necessary or appropriate to mitigate reasonably foreseeable and
significantly adverse effects on the surface resources of the National
Petroleum Reserve in Alaska.'').
---------------------------------------------------------------------------
Sec. 8 would require the U.S. Geological Survey, in cooperation
with the State of Alaska and the American Association of Petroleum
Geologists, to complete within 2 years ``a comprehensive assessment of
all technically recoverable fossil fuel resources'' within NPRA,
``including all conventional and unconventional oil and natural gas.''
In 2002, the U.S. Geological Survey estimated mean volumes of 9.3
billion barrels of oil (BBO) and 55.7 trillion cubic feet (TCFG). In
2010, USGS reduced this estimate to 896 million barrels of oil (MMBO)
and about 53 trillion cubic feet TCFG. The 90 percent reduction of
estimated oil reserves was due in part to ``recent NPRA exploration
drilling which found gas rather than oil.'' \2\ With limited new
drilling in recent years, a new assessment is unlikely to show greatly
different results than what was found in 2010.
---------------------------------------------------------------------------
\2\ USGS Economic Analysis Updated for the National Petroleum
Reserve in Alaska (NPRA) (May 4, 2011), available at http://
www.usgs.gov/newsroom/article.asp?ID=2784.
---------------------------------------------------------------------------
In summary, the new NPRA integrated activity plan provides an
exemplary balance between oil and gas development on the NPRA with the
protection of wildlife and wild land values. It is a ``win-win''
solution for both the oil and gas industry and protection of the
environment. We see no reason for Congress to move forward with H.R.
1964, which would unnecessarily undermine the balanced approached to
oil and gas development in the NPRA established by the new integrated
activity plan.
H.R. 1965
Sec. 111 of H.R. 1965 unnecessarily constrains the BLM's ability to
appropriately review the contents of Applications for Permits to Drill
(APDs) beyond the statutory timeframes already established under Sec.
366 of the Energy Policy Act of 2005 (EPCA). Worse, the provisions
provides for the automatic approval of an APD after 60 days, if the
agency has not made a decision on it by then. The rationale for this
provision is based on the false premise that quicker action on APDs by
the BLM will result in more drilling projects getting underway faster
than under the BLM's present practices. That assumption ignores the
fact that the oil and gas industry has obtained from the BLM nearly
7,000 more drilling permits than it is using.
Sec. 121 is apparently intended to discourage citizens from
exercising their right to administratively appeal oil and gas leasing
and permitting decisions by requiring citizens to pay a $5,000
``documentation fee'' for all protests of leases, rights of way, or
APDs. Of course, most citizens who may be affected by oil and gas
leasing and permitting decisions on the public lands do not have the
financial resources of the oil and gas industry to represent their
interests in such matters, so the $5,000 fee is effectively a penalty
assessment for citizens seeking to merely exercise their right to
appeal.
In furtherance of the notion that energy development, and in this
case oil and gas development, should be the predominate use of our
Federal public lands, Sec. 202 of H.R. 1965 requires that the BLM offer
for lease at least 25 percent of all lands nominated by the oil and gas
industry each year, prohibits the issuance of leases on these lands
from being protested, and prohibits the applicability of NEPA to
leasing decisions on these lands. It also requires the BLM to make
available all lands that are currently ``open'' to leasing under
existing land use plans within 18 months of enactment. It requires the
BLM to offer leases in areas undergoing land use plan revisions,
thereby severely inhibiting the agency's discretion to protect the host
of other resource values that the agency is responsible for addressing
under the Federal Land Policy and Management Act. And Section 205
overturns Instruction Memorandum 2010-117, which re-established the
policy that oil and gas development is one of many multiple-uses of the
public lands that the BLM is responsible for managing under the Federal
Land Policy and Management Act.
Subtitle D of the bill advances the idea that energy development is
the highest priority use for onshore Federal public lands in a number
of unfortunate and unnecessary ways. It severely undermines judicial
review opportunities pertaining to energy projects on Federal lands by
limiting venue, the filing period for court actions, the standard of
review, injunctive relief, and by eliminating attorney fees under the
Equal Access to Justice Act. For example, Sec. 142 states that, ``In
any judicial review of a covered civil action, administrative findings
and conclusions relating to the challenged Federal action or decision
shall be presumed to be correct, . . .'' This remarkable, prejudicial,
and probably unconstitutional language directs the court's review of
cases challenging energy development decisions regardless of the
overall merits of a plaintiff's complaint. Section 146 goes on to
improperly narrow the scope of injunctive relief available to the
courts, including arbitrarily limiting such relief to 60 days, with
limited opportunities for relief periods to be briefly extended.
Finally, Section 147 prohibits the award of attorney's fees under the
Equal Access to Justice Act for plaintiffs who successfully challenge
energy project decisions.
In summary, Title II of H.R. 1965 allows the oil and gas industry
to make management decisions for the public lands owned by all
Americans, rather than have those decisions made by the Federal agency
charged with the responsibility of being stewards of these lands for
all of us. It encourages the industry to speculate and ``lock up''
lands with marginal or non-existent development potential, which then
hamstrings the BLM's ability to protect other values of the public
lands. Moreover, the bill bars citizens--the owners of these lands--as
well as other interested parties, like State and local governments,
from administratively protesting leasing decisions if leases were
improvidently issued. And drilling permit applications on those lands
are automatically eligible for ``categorical exclusion'' from review
under the National Environmental Policy Act under the auspices of Sec.
390 of the Energy Policy Act of 2005, with no additional environmental
review or opportunities for public input.
Title III essentially codifies the Bush Administration's oil shale
leasing policy, a policy that would have unnecessarily made millions of
acres of Federal lands containing oil shale deposits available for
disposal to oil shale speculators. As we have noted before, millions of
acres of oil shale resources are already under the control of private
entities (see, National Strategic Unconventional Resource Model, U.S.
Department of Energy Office of Petroleum Reserves, April 2006, p. 6.),
including oil shale deposits on public lands, representing hundreds of
billions of barrels of oil equivalent. Yet, no successful commercial
oil shale development has ever occurred on these lands. So there is no
factual basis to the presumption that the only thing holding back a
commercial oil shale industry is the lack of a commercial Federal
leasing program.
H.R. 1394
Finally, with respect to H.R. 1394, although the general idea that
the Federal Government should strategically plan for energy development
on the public lands is a laudable one, the bill unfortunately
prioritizes fossil fuel development over renewable energy development,
and--as with H.R. 1965--essentially elevates energy development as the
highest priority use of our public lands.
Both H.R. 1965 and H.R. 1394 undermine Congress' basic statutory
directive to the BLM for how our public lands should be managed. That
direction is found in Section 102(a)(8) of the Federal Land Policy and
Management Act, sometimes known as ``FLPMA's Golden Rule'':
It is the policy of the United States that the public lands be
managed in a manner that will protect the quality of scientific,
scenic, historical, ecological, environmental, air and atmospheric,
water resource, and archeological values; that, where appropriate, will
preserve and protect certain public lands in their natural condition;
that will provide food and habitat for fish and wildlife and domestic
animals; and that will provide for outdoor recreation and human
occupancy and use.
Since H.R. 1965 and H.R. 1394, if enacted, would make energy
development the highest ``single use'' of our Nation's public lands, we
strongly oppose these bills.
Sincerely,
David Alberswerth,
Senior Policy Advisor.
______
Mr. Lamborn. And if there is no further business to come
before the Committee, the Committee stands adjourned.
[Whereupon, at 12:19 p.m., the Subcommittee was adjourned.]
[Additional Material Submitted for the Record)
The following material submitted for the record has been retained
the the Committee's official files.
By William W. Britain:
--EnergyNet backgroung brochure
--EnergyNet, MARKETPLACE QUARTERLY, 1st QUARTER, 2013
--EnergyNet, MARKETPLACE QUARTERLY, 2nd QUARTER, 2013
--EnergyNet, The BLM Live Internet Auction Act: The dicsussion of
the benefits this legislation could bring to the Bureau of
Land Management, http://www.energynet.com/blm--internet--
auction.pl
--EnergyNet, The Continuous Oil & Gas Property Marketplace, Harvard
Professor Market Analysis
--ENERGYNET.COM, INC., Committee Report, Oil and Gas Lease Internet
Auction Pilot (OGLIAP), Kevin McDonald, 10/12/2009
--ENERGYNET.COM, INC., Post-Sale Statistical Analysis Oil and Gas
Lease Internet Auction Pilot (OGLIAP), Kevin L. McDonald,
9/21/2009
--ENERGYNET.COM, INC., Updated Research and Industry Feedback Oil
and Gas Lease Internet Auction Pilot (OGLIAP), 3/3/2010
--The following Web site URL leads to a 10-minute video
presentation regarding the benefits of the BLM Live
Internet Auctions Act: http://www.energynet.com/
blm_internet_auction.pl
BY: Deborah S. Miller:
--ON ARCTIC GROUND, Tracking Time Through Alaska's National
Petroleum Reserve