Republicans Slip Alaska Refuge Oil Drilling into Tax Bill

WASHINGTON (CN) – The Senate on Thursday moved closer to opening the Arctic National Wildlife Refuge to oil drilling, as it rushed its massive tax cut toward passage.

Legislation sponsored by Sen. Lisa Murkowski, R-Alaska, was tacked onto the bill last week after a contentious Senate Committee on Energy and Natural Resources meeting ended with the scuttling of nearly all proposed Democratic amendments.

Garnering votes to clear that first hurdle was imperative: Republicans demanded it to offset their tax cuts.

Republicans claim opening the 19.3 million-acre refuge in northeast Alaska to drilling will draw a total of $2 billion in royalties over 10 years, with half of the money going directly to Alaska. Murkowski called her bill a boon to Alaska’s economy and a step toward national energy security.

But those profits are speculative, said Kara Moriarty, president of the Alaska Oil and Gas Association.

“We can never guarantee what a lease sale will be. Lease sales in Alaska vary greatly,” she said in an interview Thursday. “The last time we had a major offshore lease sale in 2008 it generated $2.6 billion. It’s not unheard of to get a billion from a lease sale but, again, nothing is guaranteed.”

Alaska’s Prudhoe Bay, just west of the ANWR, was tapped for exploration in 1969 and its first lease sale yielded $90 million, or $600 million in 2017 dollars.

Profits from leases for exploratory drilling are inherently uncertain. Arctic oil lease records indicate profits would fall far under the $1 billion projected revenue, according to Bloomberg. It’s more likely lease sales will generate just a fifth of that total in 10 years, or $145 million.

Data used to support the Republicans’ projection is from 2005 and are based on decades-old U.S. Geological Survey records. The agency predicted the 1.5 million acres of coastal plains flagged for exploration inside the refuge may hold between 4 billion and 12 billion barrels of oil, rivaling the roughly 25 billion barrels discovered 40 years ago at Prudhoe Bay.

“The latest estimates are dated but only because no one has had the ability to update that estimation,” Moriarty said. “And they’re conservative. The average prospect could be 10 billion barrels of oil, which isn’t insignificant.

“When Prudhoe was discovered, we estimated 8 billion barrels. Today, Prudhoe has produced 12 billion barrels and counting. There shouldn’t be any doubt the coastal plain will be a giant, but nothing is certain. This is a business of risk, but we think it’s likely to be one of the most prosperous onshore areas in the nation.”

Environmentalists and many Democrats are ardently opposed to opening the ANWR to oil drilling, for environmental reasons, and to keep the oil where it is, against the sure need for it one day, when technology may have made its extraction safer and more efficient.

Adam Kolton, executive director of the Alaskan Wilderness League, said Thursday Murkowski’s bill was about “patent greed” and failed to represent the public interest.

“Alaska is seen as one of America’s greatest treasures. … The refuge is worth far more if protected for future generations than squandered for short-term speculative fixes on oil that won’t come online a decade from now, won’t show peak production until 20 years after that and then will be gone in a generation,” he said.

In a survey by the League of Conservation Voters last week, 61 percent of voters polled in eight Republican-held districts opposed drilling in the refuge. Only 29 percent supported it. Most respondents said their opinions of their elected officials would deteriorate if they voted in favor of drilling.

League of Conservation Voters director Alex Taurel said Thursday the reason Republicans wedged the bill into the tax package was because they knew it would not have the votes to pass on its own.

“It doesn’t even make economic sense,” Taurel said. “The idea of making oil and gas development one of the purposes of a wildlife refuge strikes us as pretty Orwellian.”

A Democratic aide interviewed on Capitol Hill Thursday, who did not wish to be named, agreed.

“In a way, it was clever but it may have ended up being too cute by a half,” the aide said. “She knew that it’s not going to fly past the Byrd Rule if the bill also repeals environmental regulations, which in effect, it absolutely does. What she did actually was sort of Orwellian.”

The Byrd Rule allows senators to block legislation during budget reconciliation if it could drastically increase the federal deficit for more than a decade.

Murkowski’s markups on Nov. 15 changed the core purpose of the refuge when it transferred stewardship from the U.S. Fish and Wildlife Service to the Interior Department’s Bureau of Land Management. That change would force the federal government to establish new laws at high cost, which could increase the deficit.

On Thursday afternoon, Murkowski told The Associated Press her provision was tweaked to comply with the Byrd Rule and would appear in the tax bill’s final form.

Senate Majority Leader Mitch McConnell of Kentucky has not allowed any hearings or debate on the tax bill.

Kolton, of the Alaskan Wilderness League, called opening the refuge “fool’s gold.”

“This has become fool’s gold in Alaska,” he said. “[Alaska has a] huge budget deficit and a massive permanent fund that distributes dividends to every citizen of the state. There’s a desire for a fix that involves no pain. There’s been so much hype in Alaska for so long about this promised oil bonanza that people will put all the facts aside, the doubts.

“They’ve pinned a lot of hope that somehow it will bring new revenue and new jobs when in reality no one knows. The evidence suggests speculative revenues are widely exaggerated. Lease sales [nearby] have been projected to produce 40 times more revenue than what we’ve seen in recent sales. It’s like going to Vegas and betting it all on red when you’re in debt. You’re just hoping it works out.”

Kolton added: “We know we’re exporting more than a billion barrels of oil a day to China and other countries. How ridiculous to drill the wildest place left in America in order to export this oil to China?”

Moriarty disagrees.

“When you include ANWR and other offshore resources, we have a third of the nation’s reserves in our backyard. There’s a national energy picture that ANWR can contribute to,” she said. “A third of all jobs here can be traced back to the oil and gas industry.

“There’s nobody that even comes close to the level of contribution to state revenue because we pay royalties, production tax, income tax and property tax. If there was to be drilling down the road, you wouldn’t see the same level of royalty because it’s on federal land, but the industry would still have to [pay the royalties].

“The jobs that this potential size field would generate, really for two to three generations, in a field potentially the size of Prudhoe? Today you can find three generations of workers on the slopes. The grandparents are set to retire and their grandson or granddaughter is just getting started but Prudhoe Bay has provided three generations of employment. There’s no reason to believe the coastal plain couldn’t too.”

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