Congressional Quarterly - Diplomacy Greases Wheels For Alaska Oil Production

News Article

Date: Jan. 28, 2012
Issues: Energy

By Geof Koss

Last February, Lisa Murkowski made the short trip from Capitol Hill to the White House for an appointment with President Obama. Fresh off a hard-fought re-election victory, the Alaska Republican had requested the meeting to highlight a conundrum facing her state: Although Alaska's North Slope boasts some of the largest oil and gas reserves on Earth, production has been declining for years.

For an hour -- and using maps she had brought along as visual aids -- Murkowski outlined the obstacles that companies face in navigating the bewilderingly complex regulatory process that governs drilling on Alaska's vast tracts of federal lands, which make up about 60 percent of the state's land mass and hold much of its energy resources.

Without new production, she warned, the 800-mile Trans-Alaska pipeline that brings North Slope oil to the southern port of Valdez could deteriorate to the point where it would no longer function. That would trigger legal requirements to dismantle it, effectively cutting off U.S. access to its oil reserves while depriving Alaska of its economic lifeblood.

"We talked at that time about the possibility of having an easier process to negotiate issues when so much of the land in your state is held by the federal government," Murkowski says.

Her appeal bore fruit. Within three months, Obama announced that the federal government would conduct annual lease sales in the National Petroleum Reserve-Alaska, or NPRA, a broad swath of Arctic land set aside specifically for drilling. And after months of pressure from Murkowski, the administration later cleared the way for the construction of a long-delayed bridge needed to allow drilling to begin in the reserve.

In December, Obama signed a spending bill containing Murkowski-brokered language that shifts control over Alaska offshore permits from the EPA to the Interior Department. That brought objections from environmentalists, who see Interior as the more industry-friendly regulator.

Although these actions may be modest and incremental compared with larger legislative goals long sought by Alaskan politicians -- such as opening the Arctic National Wildlife Refuge to drilling -- Murkowski's success in nudging the administration on energy policy stands out in a Congress paralyzed by partisanship.

Her track record is especially remarkable, given her brush with political death just over a year ago. After a shocking loss to tea party favorite Joe Miller in the Alaska GOP primary, Murkowski launched a long-shot write-in re-election candidacy. She quit her post as the GOP Conference vice chairwoman, and party leaders deserted her to back their nominee.

Against all odds, Murkowski beat Miller, becoming the first senator in more than a half-century to win a write-in campaign. She not only retained her status as the ranking Republican on the Energy and Natural Resources Committee but also added the job of top GOP appropriator on the subcommittee that funds environmental and energy agencies. This gives her more influence than she ever enjoyed.

Murkowski sidesteps questions about whether beating the party-backed nominee and leaving the GOP leadership liberated her to press her own agenda. But Gerald McBeath, a University of Alaska-Fairbanks political science professor, says her come-from-behind victory "put Senate Republicans in her debt."

"To have broken through as an independent" boosted her standing in the party hierarchy, he says, observing that her position in GOP leadership "didn't help her much" with the state's independent-minded electorate, which ultimately is concerned with Alaska issues.

"She is a smart legislator, and she is looking for opportunities that benefit Alaska," he says.

Unlikely Power Player

Murkowski was an unlikely power player when she joined the Senate in 2002. She arrived amid controversy, after her father, Frank H. Murkowski, named her to fill the seat he had vacated upon his election as governor. She was overshadowed by the powerful and cantankerous personalities in the state's delegation: Ted Stevens, a longtime chairman of the Senate Appropriations Committee, and Don Young, then the chairman of the House Transportation and Infrastructure Committee.

But Murkowski was untainted by the Alaska political scandals that took down Stevens and threatened Young. Her 2010 re-election was a victory over an Alaska political rival, Sarah Palin, who had defeated Murkowski's father to become governor and had backed Miller's Senate bid.

Having overcome opposition from the tea party and Republican establishment, Murkowski returned to Washington beholden only to her constituents. She says she will do whatever it takes to make sure that her state is not left behind -- even if it means bringing obscure permit disputes to the attention of the world's most powerful man.

"I'm recognizing that in an administration that doesn't necessarily see eye to eye on some of the issues that are important to my state, I'm going to have to perhaps be a little more creative with my approach," she says. "And if that means a more direct outreach, that's what you have to do to get your message across."

Oil and gas production on Alaska's North Slope accounts for about 40 percent of Alaska's economy and most of the state government's revenue, while supporting more than 100,000 jobs. Including offshore oil fields, the area holds up to 36 billion barrels of oil and 137 trillion cubic feet of gas, according to a 2009 Energy Department report. But output has been declining since 1988 -- when it peaked at 2 million barrels per day -- to about 608,000 barrels per day in fiscal 2011.

As Alaskan production declines, output in the lower 48 is on the upswing, fueled by advances in oil and gas drilling methods. As a result, North Dakota is within striking distance of overtaking Alaskan oil production, while the booming natural gas development in the continental United States has prompted Alaska to consider liquefying its own natural gas reserves for export.

With oil trading at almost $100 per barrel, increasing its output is Alaska's primary focus. Lagging production may have severe consequences for the Trans-Alaska Pipeline System, known as TAPS. Built to move warm oil, in recent years it has been operating at one-third capacity, which lowers the temperature inside the pipeline and can cause internal deterioration. Murkowski noted estimates that continued low flow could render the pipeline too expensive and dangerous to operate as early as 2017.

"I'm not overstating matters when I suggest that our greatest challenge today is to prevent the decommissioning of TAPS," Murkowski warned the Alaska Legislature last year. "TAPS is not just a pipeline; it's our lifeline."

"Ruffle a Few Feathers'

While North Dakota's oil shale fields are found largely on private and state lands, North Slope reserves are located on public land, and tapping them requires federal approval. Murkowski told Alaska lawmakers she would have to "throw some elbows and ruffle a few feathers" to win that backing. "I'm good with that," she added.

She followed through last year by trying to add language to a drilling safety bill that would let coastal states share royalties from drilling in federal waters. The attempt strained relations with Energy and Natural Resources Chairman Jeff Bingaman, a New Mexico Democrat, and stalled work on the bill.

Murkowski isn't bashful about criticizing Obama administration policies, but she is more likely to work behind the scenes to win concessions. She has built on strong ties developed with Interior Secretary Ken Salazar when he represented the oil- and gas-producing state of Colorado in the Senate.

That relationship led to Interior Deputy Secretary David Hayes being tasked to work through some of the obstacles facing Alaska and helped break the administrative logjam that blocked ConocoPhillips from building a bridge over the Colville River in the NPRA. An EPA board this month also cleared the way for Shell to start exploration in Arctic waters this summer, when the board backed long-delayed clean air permits that Murkowski had brought to Obama's attention.

Enactment of the spending law shifting offshore permitting from the EPA to Interior allows Murkowski to take credit for progress toward opening Alaska's outer continental shelf. She laid the groundwork in August for that success by taking Salazar and Interior-Environment Appropriations Chairman Jack Reed, a Rhode Island Democrat, on a tour of her state. "It gave me a better context and more facts," Reed says.

Murkowski even had cautious praise for the president's emphasis on energy policy in a State of the Union speech that rhetorically embraced the GOP's "all of the above" strategy. "I did rise to my feet when he said this nation needs a comprehensive energy plan," she says. "It's something I have supported since day one."

With the House set this week to take up another longtime goal of Alaska politicians -- opening the Arctic National Wildlife Refuge to drilling -- environmentalists are urging firmer White House resolve on Alaska development. "They are under tons of pressure from the industry, and I believe they are being as strong as they feel they can be," says Alaska Wilderness League Executive Director Cindy Shogan. "We feel like they should be stronger."

Shogan said her group has worked with Murkowski on some issues and fought her on others. She conceded that the senator has the ear of the Obama administration. "I think she's just a very effective legislator."


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