Homer Alaska - Business

Story last updated at 8:25 PM on Wednesday, March 2, 2011

Murkowski sees chance for Alaska to play critical role on world stage

By Andrew Jensen
Morris News Service - Alaska

As the uprisings continue in the Middle East and North Africa — from Bahrain to Benghazi, Libya — U.S. Sen. Lisa Murkowski sees a chance for Alaska to play a role.

Oil prices approached $110 per barrel on the turmoil in Libya, and consumers who already have been watching gas prices rise figure to see more pain at the pump. Once again, America's dependence on foreign sources for oil is coming into stark relief.

And once again, Alaska's congressional delegation will take up the fight to open up the Arctic National Wildlife Refuge, or ANWR, and to rein in the Environmental Protection Agency as it continues to throw up roadblocks to developing the state's resources from the Colville Delta to the Chukchi Sea.

"What is unfolding now in the Middle East is going to be dictating a series of events as it relates to energy policy that will impact us as an energy producing state," Murkowski said in a visit to the Alaska Journal of Commerce office while home over the recess.

"It's tough when things are clearly out of your control," she said, "and it's fair to say we are not in control of anything that's going on in Libya, in Bahrain, in Yemen, in Egypt or any other place as it may unfold."

Murkowski said the spreading unrest in the oil capitals of the world is "shaking all of us up."

Even before the governments of Tunisia and Egypt fell in the last month, Murkowski was predicting gas prices would pass $4 per gallon by Memorial Day. The national average price as of Feb. 21 was $3.19 per gallon, up more than 53 cents from a year ago.

During 2008, as the financial crisis began to unfold, gas prices crossed the $4 threshold and oil approached $150 per barrel, public outrage over prices forced the Democrat-led Congress to allow the 20-year-old moratorium on offshore drilling — signed by President George H. W. Bush — to expire in the weeks before the election.

Public anger over fuel prices could choke off the fragile economic recovery and concern over supply security could create a climate that may push Congress to act on domestic energy production, Murkowski said.

"When they see what they're paying at the pump and they don't like that," she said, "they're speculating as to why, and what is my government doing to help deal with this issue? What is happening internationally will precipitate a level of public concern and anxiety that will motivate the Congress."

Early in his term, President Barack Obama dismayed environmental groups when he approved some limited expansion of offshore drilling, including in the Arctic. As Shell mobilized to drill exploratory wells in the Beaufort and Chukchi seas last summer, the Deepwater Horizon explosion and subsequent Gulf of Mexico oil spill led the government to put permits for Shell's plan on hold.

The appeal process for Shell's air permit — among the last it needed of 34 permits already secured to drill a single exploratory well in the Beaufort — has dragged on so long the company was forced to scrap efforts to explore in 2011.

Alaska's U.S. Rep. Don Young successfully attached an amendment to the EPA budget in the House spending resolution Feb. 17 that would prohibit any further review of air permits already approved in the Arctic.

The provision would revert Shell's permit back to its approved status — potentially allowing for a 2012 season — but it has to survive the conference committee when merged with the Senate spending bill and ultimately President Barack Obama's veto pen.

Murkowski said a "phenomenal level of arrogance" has taken hold at the EPA and she has pressed Obama in person on the issue as it relates to Shell's five-year struggle to explore leases for which it paid more than $2.2 billion.

"If we want to truly try to commit to a process that allows us to develop our resources offshore in Alaska, you have to have a process that works,'" Murkowski told Obama. "The EPA process simply does not work."

The attitude at the Interior Department is not much better, Murkowski said. It was recently held in contempt of court by Judge Martin Feldman in Louisiana and ordered to pay attorneys' fees for oil companies that successfully sued to overturn the Gulf drilling moratorium — only to see the government re-issue a nearly identical order.

"When I saw the second decision against Interior on this, I thought, 'OK, this is great,'" Murkowski said. "The Interior Department's attitude on this is: 'That Judge Feldman, he's no good anyway.' They are totally dismissive of the whole thing. It's fascinating."

Murkowski said Young's amendment is one way to aid Shell's exploration efforts. Another is removing the EPA's jurisdiction from Arctic air permits and giving it to the Bureau of Ocean Energy Management (formerly Minerals Management Service), which regulates permits in the Gulf of Mexico.

Murkowski said air permit approvals in the Gulf take an average of 43 days compared to the five years Shell has been waiting.

"I don't know if it's the (EPA) appeal board," she said. " I don't think so. It still took five years to get to the board. There is a real problem with it."

Alaska ranks dead last in business-friendly conditions, and Murkowski said the state cannot afford Shell losing heart in the face of a regulatory morass.

"Thank goodness it's a company like Shell that has staying power and has been able to hold tight and work all throughout this," she said. "I am firmly convinced that if Shell should be discouraged by the process the federal government has put in front of them, if they can't make it happen, I'm not sure anybody can."

Fellow Alaska U.S. Sen. Mark Begich said Congress needs to exercise its oversight authority over the EPA.

"The Energy Committee should have a hearing that drags the EPA in and really just kind of hammers them into the ground about what their priorities are," Begich said. "That hasn't been done."

Begich said he and his fellow moderate Democrat senators must exert the power of the purse on the EPA.

"You force them to focus on what their core mission is, and the rest, we should say we can't do," he said. "We start getting at the process where the EPA wants to regulate everything. One, that's not their role, and two, they don't have the resources to do it. The moderates, the way they're going to approach it, will look at hardline budget issues."

Murkowski said the current conversation in D.C. over the budget deficit and national debt is unlike any she's seen in eight years. Appropriations Committee Chairman Daniel Inouye, D-Hawaii, is not taking earmark requests for the next two years.

So while Murkowski won't be submitting funding requests from their constituents this year or next, she will be fighting any funding formula changes that may negatively impact Alaska. She also stated strongly there would be "no apologies" in fighting for the state's unique needs.

Andrew Jensen can be reached at