Senators Introduce Bill to Increase Domestic Oil and Natural Gas Production; Coal-Derived Fuel Mandate
US Senator Pete Domenici (R-NM), ranking member of the Senate Energy and Natural Resources Committee, introduced the American Energy Production Act of 2008 (S.2958) to increase domestic production of oil and natural gas and to fund the development of oil shale and coal-to-liquids technology. Eighteen other senators co-sponsored. Included in the bill is language for a coal-derived fuels mandate.
The bill would open up the Arctic National Wildlife Refuge (ANWR) as well as the Atlantic and Pacific regions of the Outer Continental Shelf for exploration and production; and lift the one-year moratorium on developing oil shale in Colorado, Wyoming and Utah.
Specific provisions of the bill include:
Outer Continental Shelf. The bill allows petitions for leasing activities in the Atlantic and Pacific regions of the Outer Continental Shelf. The bill allows the Governors of coastal states to submit a petition for a lifting of the moratorium within their state boundaries. The bill creates a revenue sharing agreement for participating states in which 37.5% of revenues will go to new producing states, 12.5% to the Land and Water Conservation Fund, and 50% to the Federal Treasury.
ANWR. The bill establishes a competitive oil and gas leasing program for the Arctic National Wildlife Refuge Coastal Plain under the Mineral Leasing Act. It provides for a 50/50 share of ANWR revenues between the Federal Government and the State of Alaska. Directs that $35 million of the State share be deposited annually into a “Coastal Plain Local Government Impact Aid Assistance Fund” for Alaska communities.
Permitting. Repeals the $4,000 fee for new applications for permits to drill that was established in last year’s Omnibus Appropriations Bill.
Refineries. Grants the EPA authority to accept consolidated applications for permits required to construct and operate refineries, and authorizes financial assistance to states and Indian tribes for the hiring of personnel to process permits. Establishes a 360-day deadline for the approval or disapproval of consolidated permit applications for new refineries and a 120-day deadline for applications to expand existing refineries.
Strategic Petroleum Reserve. Suspends filling the Strategic Petroleum Reserve for 180 days.
Renewable Fuel and Advanced Energy Technology. Amends the Energy Independence and Security Act of 2007 to strike the definition of renewable biomass and replace it with the Senate-passed definition.
Establishes a program of direct loans and grants to accelerate the production of advanced batteries in the United States.
Establishes a research program to determine infrastructure needs for the transport of renewable fuel blends, and directs the Secretary of Energy to consider the compatibility of existing infrastructure with intermediate blends of renewable and petroleum based fuels.
Studies the environmental and efficiency attributes of diesel-fueled vehicles.
Coal-Derived Fuels. Mandates that 6 billion gallons of coal-derived fuels be produced by 2022, starting at 750 million gallons in 2015 and ramping up by that same amount annually. Requires that CTL fuels produced result in lifecycle greenhouse gas emissions not greater than those associated with gasoline and provides waiver authority based on economic or environmental harm.
Oil shale. Repeals the one year moratorium on funds to complete final regulations for the commercial leasing of oil shale established in last year’s Omnibus.
Increases the current allowable contract duration of five years to 25 years for procurement of synthetic fuels by the Department of Defense.
Repeals Section 526 of the Energy Independence and Security Act of 2007, which prohibits federal agencies from procuring alternative fuels with lifecycle greenhouse gas emissions greater than those associated with conventional fuels that they replace.
Domenici and thirteen other Senators have asked the US Energy Information Administration (EIA) to analyze the impact the legislation will have on America’s reliance on foreign oil and energy prices as compared to forecasts the agency made in its Annual Energy Outlook 2008.
The EIA has assessed the impact of drilling in ANWR before. In March of 2004, the Energy Information Administration, at the request of Representative Richard W. Pombo, then Chairman of the US House Committee on Resources, published a report using government figures and analyzing the projected effect of drilling in ANWR. The report lays out three scenarios: one for low-oil resources, one the mean case, the other for high oil resources.
Some of the report’s findings:
The mean-case estimate is that there are 10.4 billion technically recoverable barrels of oil in ANWR, divided into many discrete fields. This estimate includes oil resources in Native lands and State waters out to a 3-mile boundary within the coastal plain area. The mean estimated size of oil resources in the Federal portion of the ANWR coastal plain is 7.7 billion barrels.
It will take approximately 10 years to bring the first field on-line (comparable to other Arctic drilling).
Assuming sequential development of the fields, rank ordered by size, ANWR production would peak, in the mean case scenario, in 2024 at 870,000 barrels of oil per day.
Assuming that every barrel of ANWR oil is consumed domestically, it would reduce imports on a barrel-for-barrel basis.
Co-sponsors of S.2958 include Senators Allard (R-CO); Barrasso (R-WY); Bennett (R-UT); Bond (R-MO); Bunning (R-KY); Chambliss (R-GA); Cornyn (R-TX); Enzi (R-WY); Hutchinson (R-TX); Inhofe (R-OK); Isakson (R-GA); McConnell (R-KY); Murkowski (R-AK); Sessions (R-AL); Stevens (R-AK); Thune (R-SD); Voinovich (R-OH); and Wicker (R-MS).
American Energy Production Act of 2008 (S.2958)