House bill would accelerate drilling in National Petroleum Reserve

Republicans aiming to accelerate domestic oil and gas drilling today advanced legislation that would force the government to sell leases in Alaska’s National Petroleum Reserve and speed up permitting of roads, pipelines and other essential infrastructure in that remote area.

The measure was approved 28-14 by the House Natural Resources Committee, which sets the legislation up for full House consideration later this month.

Rep. Doc Hastings, R-Wash., the panel chairman and bill sponsor, said the bill was necessary to prevent the Obama administration from keeping some of Alaska’s “tremendous energy resources . . . under lock and key.” He said the measure would cut through “bureaucratic red tape” that has delayed drilling in the reserve for years.

But bureaucracy isn’t the problem, insisted Rep. Ed Markey, who stressed instead, the economics of natural gas and market forces have combined to discourage oil and gas companies from developing the region.

Recent calculations about the potential amount of oil in the 23-million-acre reserve have dipped, even as geologists say the area actually could be home to far more natural gas than once believed. But with natural gas costs now hovering around $4 per thousand cubic feet, companies would have a difficult time recouping the costs of developing that resource, including building the necessary pipelines and other infrastructure to access it.

The Obama administration just announced it would begin conducting annual lease sales inside the reserve, beginning with one at the end of this year. But Hastings’ bill would go further by also:

  • requiring government agencies to issue infrastructure permits tied to oil and gas development in the reserve no more than 60 days after essential drilling permits are issued by the Interior Department.
  • forcing the Interior Department to prepare a right-of-way plan that details how existing and future leases would be within 25 miles of an approved road or pipeline.
  • mandating an updated assessment of the oil and natural gas resources in the reserve, because some have criticized the current estimates as too low.

The U.S. Geological Survey estimated last year that there are roughly 900 million barrels of oil in the NPR-A, which was established as a petroleum reserve in 1923 and first opened for drilling in 1998. Earlier calculations were much higher, with estimates of 2.7 billion barrels of oil and 114.36 trillion cubic feet of natural gas in the reserve.

Rep. Doug Lamborn, R-Colo., emphasized the importance of Alaskan oil to refiners in the Northwest.

“If refiners cannot rely on a steady stream of crude product from Alaska, they will be forced to rely on shipments of foreign oil from overseas to make the products that help consumers get to work and get to school,” he said.

Rep. Don Young, R-Alaska, said it only makes sense for the nation to be aggressively exploring the reserve, since it is specially designated for energy development.

“This is an area that already has been drilled — not to the point it should be,” Young said. “All we’re asking is to expedite the process.”

But Rep. John Garamendi, D-Calif., noted that the NPR-A is a remote area where it is “very hard to drill.”

And Rep. Raul Grijalva, D-Ariz., insisted it would be “wasteful and counterproductive” to force the Bureau of Land Management to “create a map of roads and pipelines to nowhere,” since that would be required under the bill even before regulators know where potential development might be.

The committee rejected an amendment by Rep. Ben Lujan, D-N.M., that would have insisted that all oil and gas produced in the reserve must stay inside the U.S. and could not be exported.

Opponents said that could unfairly shackle companies from exporting natural gas that could command a higher price outside the country.

Although 1.6 million acres — spanning 191 tracts — are now leased in the reserve, relatively little drilling has gone on there. Companies have increasingly given up their leases to drill, with 64 leases relinquished in fiscal 2010 and at least 60 already handed back to the government this year.