RDC’s 24th Annual Conference Presentations
Senator Lisa Murkowski Handout: Comprehensive Energy Bill Fact Sheet
Senator Murkowski Video Presentation at the Conference
The following is a summary of the Alaska provisions of interest in the Comprehensive Energy Bill, (H.R. 6) pending in the U.S. Senate after conference approval and House approval.
Gas line:
The bill includes three financial incentives that should permit companies to guarantee the financial markets of a sufficient return to permit financing of the proposed $20 billion pipeline.
* Loan Guarantee: The bill includes a loan guarantee to cover 80 percent of the cost of a gas line – up to $18 billion -- should the project not be completed for any reason. The guarantee protects financers against risks should gas prices fall drastically, helping to reduce interest rates and financing costs for the pipeline.
* Accelerated depreciation: This will allow the pipeline builders to depreciate sections of the pipeline built in Alaska for tax purposes over seven years, instead of the 15 years allowed under current federal law, for any pipeline 42-inches or larger in diameter, helping cut financing costs by hundreds of millions of dollars.
* Enhanced Recovery Tax Credit: This will allow pipeline and gas owners to gain a tax credit for the cost of the needed natural gas conditioning plant that will be built on the North Slope to prepare the gas for shipment. It should save producers about $400 million.
For the Alaska gas line it also includes a series of administrative and procedural changes that should clear the way for final design and permitting of the pipeline. Those provisions (Sections 371-386) include:
• A ban on a northern route for the line -- specifically preventing a pipeline from running across submerged lands in the Beaufort Sea potentially harming the environment.
• A streamlined permitting and expedited court review process to speed construction and limit unnecessary judicial or regulatory delays.
• Provisions that allow Alaska to control in-state use of gas to facilitate use for heating or construction of petrochemical plants in state.
• Provisions to guarantee that current and future gas producers in Alaska will be able to compete to get their gas through the pipeline to market.
• A provision that authorizes $20 million for worker job training and promotes Alaska-hire provisions in-state and construction of a labor training facility in Fairbanks.
* A provision to encourage the manufacture of steel to be used in the pipeline in the United States and to encourage development of a project labor agreement to govern construction of the 2,500-line pipeline.
* And it includes a provision by Senator Murkowski that puts Congress on record as supporting the concept that Alaska Native Regional Corporations, companies owned and operated by Alaskans, and individual Alaskans should have the opportunity to own shares of the Alaska gas line in a way the promotes economic development in the state. The provision offers the historic opportunity of getting project sponsors to “negotiate in good faith” with any willing Alaskans who want to be involved in the project.
Rural Energy Assistance:
The bill in order to promote rural energy development in Alaska includes a minimum of $50 million a year for the next 20 years to go to the Denali Commission to fund energy generation and development in Alaska, including fuel cells, hydroelectric, solar, wind, wave and tidal energy, alternative energy sources, energy transmission lines such as interties, fuel tank replacement or fuel transportation network development. That is the biggest economic and energy development tool in rural Alaska that the state has received since Statehood on a guaranteed basis. The money will come from the federal government’s share of oil development in the National Petroleum Reserve, Alaska (NPR-A). (Section 1401) This could help fund power improvements statewide. If NPRA does produce oil and pump revenues into the state, Alaska will be close to receiving the 90/10 split promised to us at Statehood, at least until 2024.
• Additional Rural energy aid: The bill includes a Murkowski proposal that will provide up to a $35 million grant ($5 million per year for seven years) to Alaska to help fund its Rural Power Cost Equalization (PCE) program that subsidies the high cost of electricity in rural Alaska. The aid will contribute to the state endowment to fund the PCE program, helping industry to develop in rural areas that face high electricity costs. (Section 1401)
Coastal Zone Issues:
Coastal Zone Impact Assistance:
The bill includes provisions to provide assistance to all coastal states from Outer Continental Shelf oil and gas lease revenues. Under the provision, Alaska will receive about $5 million a year at present – more if OCS oil is produced in Alaska waters in the future – half going to the state and half to local governments affected by offshore development.
Coastal Zone Royalty Relief: Under a proposal by the Senator, The Secretary of the Interior for the first time is given the authority to suspend federal royalty requirements for OCS oil leasing in “planning areas offshore of Alaska,” just as the Secretary currently can in deep water areas in the Gulf of Mexico. (Section 316)
NPR-A Leasing Provisions:
NPR-A Access: Among a series of provisions designed to speed oil leasing in the National Petroleum Reserve-Alaska are provisions expanding the authority of the Secretary of the Interior to conduct “expeditious” lease sales, increasing industry access to the oil reserve, provisions that allow holders of expired leases in NPR-A to renew those leases at a cost of $100 per to improve chances that the leases will eventually be developed. The section also gives the Secretary more authority to reduce lease royalty requirements when appropriate and provisions that require more participation in the leasing process by the State of Alaska and Alaska Regional Native Corporations. (Section 317)
• Healy clean coal loan: The bill authorizes the Department of Energy to make a loan of up to $125 million to retrofit the Healy clean coal plant with new equipment so it can produce power economically without causing air pollution problems. The loan should make the plant economic, provide vitally needed power to the Fairbanks area at reasonable cost and aid the Usibelli coal mine and its workers.
Rural/Native Energy Assistance:
The bill makes grants and loans available to Alaska Native corporations for the construction of power projects statewide. It provides $200 million for grants for energy development on rural lands and $2 billion to guarantee loans for energy developments on Native lands – Alaska Native corporations being eligible for the money, as are village councils. The bill includes a preference for Alaska Native or village corporations to gain the loans for businesses that sell electricity, energy products and byproducts to federal agencies at prevailing market prices. (Sections 502-503)
Arctic Engineering Initiative:
This is a proposal by Senator Murkowski to fund an Arctic Engineering Center at the University of Alaska Fairbanks to lead in the development of engineering procedures to help Alaska deal with global climate change, should it be occurring. The facility is intended to lead in research and engineering on a host of issues such as new techniques to handle melting of permafrost, development of roads, bridges, residential, commercial and industrial structures. The bill authorizes funding of $3 million a year through 2009 to fund the research. (Section 968)
Barrow Geophysical Research Facility:
This authorized $61 million for the planning, construction and operation of a science research facility in Barrow to study global climate changes in the Arctic. (Section 969)
Ethanol Provision: The bill includes a proposal by Senator Murkowski to exempt Alaska and Hawaii from requiring the use of ethanol to be added to fuels to meet air quality requirements. The proposal was included since it is exceptionally expensive to import ethanol to Alaska for it to be combined in Alaska-made fuels. (Section 1501)
Israel Energy Security: And the bill includes an amendment by Senator Murkowski that authorizes the President to supply or secure oil for Israel in the event of a fuel boycott of the country. The provision was proposed this spring to help promote Middle East peace. (Section 331)
Renewable and Energy Efficiency Provisions:
The bill also includes a host of energy efficiency and renewable energy provisions that could help Alaska in the future. They:
· Authorize $3.4 billion for Low Income Housing (Energy) Assistance (LIHEAP) through 2006, an increase of $1.4 billion through FY 06 (Section 121)
· Authorize $1.2 billion for low-income weatherization programs.
· Authorize $60 million in grants for energy efficiency projects in low-income rural communities over the next three years.
· Reauthorize funding for wind, geothermal and biomass energy projects – Alaska having several promising geothermal sites that may benefit from the bill.
· Authorize $550 million in grants for biomass programs to turn forest materials from high-risk fire or diseased areas, such as the Kenai Peninsula, into renewable biomass energy. That will provide grants of up to $500,000 to communities of less than 50,000 in population to improve the commercial value of forest biomass for electric energy, useful heat, transportation fuels and other commercial applications.
· And the bill streamlines the relicensing of hydroelectric facilities and authorizes up to $100 million to encourage hydropower – Alaska sporting a number of pending small hydroelectric projects.
