Senate Democrats continue to move forward with a comprehensive
energy bill that meets our energy and security needs. Rather than
drill in the Arctic National Wildlife Refuge, we should pursue more
immediate and environmentally-sound energy supply options that
would create hundreds of thousands of new jobs. Democrats
support the following initiatives to increase our energy supply:
Drill in the National Petroleum Reserve Alaska
(NPRA);
Drill in the western and central portions of the
Gulf of Mexico; and
Construct the Arctic natural gas pipeline to
transport additional supplies of natural gas to the
lower 48 states.
Better options available. The oil industry should explore and
develop western and central portions of the Gulf of Mexico and the
NPRA before there is any suggestion of opening the Arctic National
Wildlife Refuge. The Department of the Interior (DOI) says there are
32 million acres in the western and central portions of the Gulf of
Mexico under lease but not developed. In addition, the oil industry is
extremely optimistic about the prospects of finding additional oil
reserves in the NPRA. In May, the three largest oil discoveries in the
last ten years were made in the NPRA.
Construct the Arctic natural gas pipeline. There is more than 32
trillion cubic feet of natural gas immediately available in existing oil
fields on the Alaska North Slope. Currently, natural gas is produced
with the oil but re-injected back into the ground because there is no
pipeline to bring it to the lower 48 states. The cost is estimated to be
approximately $10 billion. Building a pipeline would create thousands of new jobs,
provide a huge opportunity for the steel industry, and ensure that the U.S. would not
become as dependent on imported liquified natural gas (LNG) from the Organization of
Petroleum Exporting Countries (OPEC).
The producers have urged Congress to pass legislation to streamline the process for an
Arctic natural gas pipeline. While the Bush Administration has said there is no need to
do anything to help make that project go forward, the producers have pointed out the
need for some adjustments to tax depreciation schedules and some measure of risk
sharing (not government subsidies).
Oil companies investing abroad. Major oil companies are planning to re-open two
existing LNG terminals and build an additional seven new terminals with the potential to
bring total U.S. LNG import capacity to more than 6 billion cubic feet per day by 2010 -
the same amount of natural gas that would be transported through the Arctic natural
gas pipeline.
In June, a group of seven major oil companies, including Exxon/Mobil Corporation and
British Petroleum, signed on to a $30 billion project to build a series of water, electricity
and petrochemical plants in Saudi Arabia, the world's most productive oil state.
Drilling in the Arctic refuge would not provide long-term energy security. Based
on the 1998 U.S. Geological Survey estimate, the Arctic refuge would provide less than
six months of oil or 3.2 - 5.2 billion barrels of oil. Drilling in the Arctic refuge would
produce 200,000 barrels per day a decade from now and meet only one percent of our
daily oil demand.
In today's global energy market, the U.S. holds less than 3 percent of the world's oil
reserves; OPEC has 76 percent of the world's oil reserves. Given the U.S. share of the
global market, no amount of available oil from the Arctic refuge would significantly
impact current global oil prices, or current U.S. oil or gasoline prices.
Vehicle fuel efficiency improvements can deliver more oil, more quickly than the
Arctic refuge. The transportation sector consumes 67 percent of all oil in the U.S.
Fuel efficiency improvements will bring the U.S. far closer to reducing its dependence
on foreign oil than drilling in the Arctic National Wildlife Refuge. Some believe this goal
can be achieved through an increase in CAFÉ Standards. The current standard -
established in 1989 - is 27.5 miles per gallon for passenger cars and 20.7 miles per
gallon for light trucks, SUVs and minivans.
Others believe improved fuel economy can be achieved through incentives for
alternative technology vehicles (such as hybrids). The Energy Information
Administration (EIA) projects the demand for gasoline for cars, light trucks and sport
utility vehicles will increase by 1.8 million barrels per day (mbd) by 2010. The National
Academy of Sciences recently stated that increases in fuel efficiency could be paid for
in future fuel savings.
Natural gas supplies. Dependence on imported natural gas is less than one percent
today, but is projected to increase to 12 percent by 2010. If the Arctic natural gas
pipeline is not built, the U.S. will become even more reliant on imported liquified natural
gas.
In 2000, natural gas demand was 62 billion cubic feet per day (bcf/d); by 2010, demand
is projected to be 77 bcf/d. Natural gas supplies continue to expand with at least seven
new terminals having been proposed to increase U.S. imports on liquified natural gas to
6 bcf/d by 2010. In addition, three existing LNG terminals that have been inactive or
importing very little LNG will be fully operational by 2003, potentially increasing LNG
imports by 3 bcf/d. The Arctic natural gas pipeline would provide at least 4 bcf/d of
natural gas before the end of the decade.
Natural gas from an OPEC-like cartel. Iran is trying to start an OPEC-like cartel for
natural gas exporting countries. In June 2001, eleven of the world's major natural gas
exporting nations gathered in Iran for the inaugural meeting of the Gas Exporting
Countries Forum (GECF). The purpose of the GECF, whose members control about
two-thirds of the world's natural gas reserves, is to coordinate their policies, in much
the same way as OPEC has done over the past four decades, to control supply levels
and manipulate prices.
