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Murkowski praises final passage of Senate energy bill


June 28, 2005

Sen. Lisa Murkowski today praised final passage of a comprehensive Senate energy bill, H.R. 6, saying the provisions will help the nation both gain more domestic energy and develop renewable energy and alternative fuels, while advancing energy efficiency and helping the environment.

She added that the bill includes a host of provisions of specific importance to Alaska that will help Alaska produce more energy and lower-cost electricity in the state.

"I think what we have is a rational energy policy that is comprehensive and balanced," Sen. Murkowski said. "We have focused on conservation as well as production and we have placed emphasis on renewable and alternative energy.

"Given that we are facing record high oil prices, it is good news for the nation that the Senate after 10 years of trying has finally approved an energy bill that has an excellent chance of becoming law this summer. This bill offers provisions to help us develop our oil, natural gas and coal resources and should help us tap our huge gas hydrate reserves. It offers to advance a lot of exciting possibilities for Alaska's future."

Murkowski said the bill, besides increasing U.S. oil production by about 22 billion barrels - should also increase natural gas supplies by making it easier for the nation to import gas and increase U.S. supplies of gas, by furthering efforts to build an Alaska natural gas pipeline to deliver Alaska gas to market.

The bill's ethanol provision should increase employment by 230,000, its wind provisions should produce 100,000 new jobs, its solar incentives 40,000 jobs; its geothermal incentives about 1,000 direct jobs, its fuel cell incentives up to 75,000 direct jobs, its nuclear provisions about 18,000 jobs and its coal provisions up to 40,000 construction jobs and 12,000 permanent positions.

Teamed with the jobs likely from construction of an Alaska gas line and the opening of the Arctic coastal plain to oil development to be considered later this year, the entire energy bill could produce more than 2 million new jobs nationwide.

Murkowski said that the environmental provisions of the bill "should not be overlooked as well."

  • The bill requires a reduction of 1 million barrels of oil a day by 2015.
  • The bill, and its tax provisions, should encourage industry to capture through coal gasification plants and also lock up ­ sequester -- 10 billion metric tons of carbon dioxide underground through enhanced oil recovery efforts. · The Renewable Energy Portfolio Standard that requires that 10% of electricity by 2020 come from renewable sources (except in Alaska and Hawaii) should reduce coal-generated power by 9% and natural gas usage in power by 5%, saving $22.6 billion in those fuels and cutting carbon dioxide emissions by 249 million metric tons (7.5%) by 2025.
  • The bill provides incentives and tax credits for renewable energy sources: wind, solar, biomass and geothermal and should create $6 billion of new investment in renewables.
  • The bill also provides $3 billion to perfect hydrogen-fueled vehicles and to set up a fuel distribution system by next decade to dramatically cut future greenhouse gas emissions.

In amending the bill on the Senate floor, Murkowski joined Sen. Ted Stevens last Friday in winning Senate approval of a series of tax amendments, one specifically allowing ocean wave, tidal, current and thermal energy production to benefit from a production tax credit currently in place for other renewable energy sources like wind, solar, geothermal and biomass.

The tax package also contains two provisions of particular assistance to Alaska: a hike in the tax credit (to 20 percent from 15 percent) to encourage enhanced oil recovery by using carbon dioxide injection - a process that should help increase the recovery of both heavy oil deposits on the state's North Slope and a process that may help to recover more oil from aging oil fields on the Kenai Peninsula; and a provision that will help the state's oil refineries by providing a tax credit to offset the cost of capital improvements needed to meet new ultra-clean diesel fuel requirements in the future.

The tax title continues the renewable energy tax credit that provides aid for wind projects in Alaska and tax assistance for the development of clean coal/coal gasification projects under consideration in the state.

Murkowski during the week also won support for an amendment to guarantee that Alaska Native corporations can receive renewable energy development incentives for production of renewable energy projects, such as wind or geothermal power, from Native corporation lands.

Other Items of importance to Alaska remained in the final bill as previously reported, including:

  • Rural Energy Assistance: The bill authorizes $550 million over the next decade for improvements to the state's energy infrastructure. Under the bill some $55 million yearly is authorized to the Denali Commission to be used to fund a host of projects including energy generation and development (through fuel cells, hydroelectric, solar, wind, wave, tidal and other alternative energy sources), transmission networks, interties, fuel tank replacement and cleanup, fuel transportation networks and related facilities and coal energy generation and alternative coal fuel projects.
  • Power Cost Equalization: The funding to the Denali Commission is also intended to provide up to $5 million a year for a decade to endow the Alaska Power Cost Equalization program. Currently the fund contains $185 million, whose interest is used to subsidize the first 500 kilowatts of electric usage by rural residents. The funding is intended to increase the size of the endowment so the fund can spin off more earnings to fully fund the program that this year is cutting the cost of power by between 20 and 30 cents per kilowatt hour in 175 rural communities.
  • National Petroleum Reserve Oil-Gas Leasing Changes: This provision allows oil leases to be extended for 10 years to give lease holders more time to develop oil inside the 23.3-million acre petroleum reserve, which is forecast to hold up to 10.6 billion barrels of oil and 73 trillion cubic feet of natural gas. It also allows for more expeditious lease sales, gives authority for reduced lease royalties if needed to stimulate production, allows for unit agreements to speed oil or gas field development and allows the Secretary to waive administration of oil and gas leases when the subsurface estate is held by Arctic Slope Regional Corporation. It also creates the North Slope Science Initiative to fund better scientific research into the effects of oil and gas leasing in northern Alaska authorizing future funding for the effort.
  • Alaska Offshore Royalty Suspension: This provision allows the Secretary of the Interior to suspend federal royalty requirements in Outer Continental Shelf lease planning areas in Alaska where the aid is needed to encourage oil and gas production. The authority is the same that the Secretary enjoys in other areas nationwide and is intended to help increase Alaska OCS production ­ a significant potential benefit to the state since the revised bill provides $250 million of guaranteed funding to producing states based on production over the next four years. Alaska would be guaranteed a minimum of $2.5 million from the funding.
  • Gas Hydrate Research and Development Assistance: The measure, authored by Murkowski, Stevens and Sen. Daniel Akaka of Hawaii, is designed to continue research and expand efforts to develop a commercial process for producing natural gas from methane hydrates ­ gas locked in ice and permafrost. The nation is estimated to contain a fourth of the world's total reserves of methane hydrates ­ about 200,000 trillion cubic feet - with Alaska holding about 15 percent of the nation's resource, 600 trillion cubic feet on-shore and 32,000 trillion cubic feet offshore.
  • Cook Inlet Carbon Dioxide Oil Enhancement Program: Murkowski won an amendment that will permit the Department of Energy to determine the feasibility of using carbon dioxide to increase oil return from the maturing Cook Inlet oil field. The U.S. Department of Energy last month issued a report that indicated the nation could recover up to 43 billion additional barrels of oil from aging oil fields, if carbon dioxide were pumped into the fields to force more oil to the surface. The report indicated that up to 12 billion of the barrels could come from Alaska, about 670 million barrels, potentially being available from the aging Cook Inlet reservoirs near Kenai. This provision is intended to work together with the tax credit.
  • Indian Energy Assistance: The bill provides grant assistance and up to $2 billion of loan guarantees to help Natives nationally and tribes and Alaska Native corporations develop energy resources on their lands. The bill gives priority for federal funding to projects that will utilize new technology, such as coal gasification, carbon capture and sequestration and renewable energy-based electricity generation.
  • Healy Clean Coal Loan: The bill provides the Secretary of Energy the authority to make a market-rate loan of up to $80 million to fund improvements to get the Healy clean coal power plant up and running. The nearly $300 million clean-coal technology power plant has not operated since its testing period because of concern over the reliability of the plant. The loan has dropped to $80 million from the previous $125 million proposal in the House bill because of new engineering reviews that have reduced the estimates for the extent of work needed to get the plant operating. The loan would allow the plant's eventual owner to make whatever equipment upgrades are necessary to get the plant operating. It is currently owned by the Alaska Industrial Development and Export Authority.
  • Renewable Energy Provisions: The bill provides assistance to renewable energy projects, a production incentive and a federal purchase requirement, teamed with the continuation of the production tax credit for wind, solar, biomass and geothermal energy. It also adds, at the Senator's request, ocean energy including wave, tidal, current and thermal ocean energy electricity projects to get the assistance. The measure fences off 40 percent of potential aid for ocean energy and other new forms of renewable energy. The biomass provision also gives a preference for grants to development of power from biomass obtained from disease-infested timber, which could be of particular importance to the Kenai Peninsula where roughly 5 million acres of spruce have been killed by the spruce bark beetle in the past decade.
  • Coal Production Assistance: The bill includes $200 million per year in aid for projects to utilize the nation's coal resources, with the aid especially intended (80 percent) to help construction of clean coal gasification combined cycle plants. Alaska, with an estimated 160 billion short tons, leads the nation in known reserves of low-rank, low-sulfur coal.
  • Alaska Natural Gas Pipeline Provision: Building on last year's success in winning loan guarantees and two tax deductions for pipeline segments and a North Slope gas conditioning plant, the bill includes a provision requiring the Department of Energy to write a progress report every six months on how work is proceeding on an Alaska gas line ­ a provision designed to help maintain momentum for the project.
  • Israeli-U.S. Energy Cooperation: The measure also includes a provision that extends an agreement between Israel and the United States to cooperate on energy research and development activities.
  • Alaska hydropower bill: The measure, sought by the State of Alaska, includes a clarification to 2000 legislation that allowed the State's Regulatory Commission of Alaska (RCA) to take over from the Federal Energy Regulatory Commission the licensing of small hydroelectric projects in Alaska that produce less than 5 megawatts of power. The new clarification makes it clear that the state has the same authority as FERC in reviewing agency recommendations concerning the impacts of hydro projects.
  • Alaska Science Provisions: While the Senate bill does not contain earmarked appropriations, projects that were included in the House energy bill and will be considered during conference include funding - up to $3 million a year for six years -- for an Arctic Engineering Research Center at the University of Alaska Fairbanks and a $61 million authorization for a Barrow Geophysical Research Facility to provide a home for climate research in the Far North.


Source of News:

Office of U.S. Senator Lisa Murkowski


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