Bill to Increase Domestic Oil and Natural Gas Production; Coal-Derived Fuel Mandate

www.greencarcongress.com ^ | 04 May 2008 | Staff

[Red Badger]

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:

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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:

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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).

Resources

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American Energy Production Act of 2008 (S.2958)

[SAJ]

Careful with that notion, mate.

Remember Jimmuh Peanut and his infamous 'Synfuels' debacle? The goobermint won't do anything more competent than that this time around -- and that programme was a staggering example of boondoggle incompetence.

Depending on which process is used, coal-to-liquids results in requiring either less refining capacity for its output, or practically none.

If we would do the coal liquefaction and kerogen-from-shale game seriously, we could easily bring the price of a 'barrel' of crude (there is no such thing, of course) to the 50s, possibly lower, in 10 years' time, likely somewhat before (mkts tend strongly to anticipate, after all).

But that would be sensible, so we're not going to do that. It's the economic analogue of Floyd Ferris' ''law speech'' to Henry Reardon in Atlas Shrugged.

[andy58-in-nh]

The bill is a great idea, but sadly it will never make it out of committee, much less to a floor vote. Harry Reid will not allow the Republicans to make a campaign issue of energy independence, since the Democrats want to own that issue for themselves. Of course, their solution would be taxes, control, regulation, and Federal spending on "green" technologies regardless of their viability. The Republicans, for their part, aren't willing to risk their Senate seats over it at a time they need to explain $3.50/gallon gas to a skeptical public informed by a hostile news media.

[Trust but Verify]

I agree. Thetiming is perfect. If they block this now, people will take notice.

[Brilliant]

This is just more Congressional idiocy. This is the same idiocy that got us into the problem with escalating food prices, ie. the government subsidizing alternative energy. If they are now going to subsidize gasified coal, that is just going to drive up the cost of coal, and the cost of your electric bill, not to mention the cost of everything else that uses coal. On top of that, it will cause a faster depletion of our coal reserves, and make the energy crisis worse. Let the market decide where we get our energy—not politicians and bureaucrats who have no clue.

[SAJ]

Crude, and energies generally, are priced in a discrete-point curve, with one point plotted per month of future delivery. This is called ''the strip'' in the awl bidness.

Different developments have different effects on the price of crude (or natgas, or #2 oil, or...) in different parts of the strip. An announcement that the US is going to implement or facilitate kerogen-from-shale in a major way will have little effect (other than the 'stun' value) on the price of crude for Dec '08 delivery, but will have a huge effect on the price of crude for Dec '14 delivery.

The further-out contracts are typically referred to as the ''back end'' of the strip. Or the ''wayouts'' -- actually, there are a number of terms for these contracts.

[Sgt_Schultze]

Yes, the ability of those pumping liquid oil to respond would hamper a fledgeling shale-oil industry. Maybe if we were to divert the wasted money subsidizing turning food into fuel, and instead invest those US funds into the startup costs for kerogen production, we could help defray those sunk investments for industry producers. Eventually, improved technologies will allow for reduced costs for conversion.

[SAJ]

GMTA, m'friend. You're exactly right, of course, ... assuming the jackasses in DC will allow a very efficient oil industry to produce kerogens to the degree of which they're capable (which, btw, is enormous).

Fat effing chance of the Regress letting that happen, at least without a gun held to their collective heads.

[SAJ]

How long d’ya think the Regress and the envirodildoes will keep reciting that famous stall job in the cartoon? Will anyone ever blow the whistle, for REAL, on this lunatic argument?

[kellynla]

BTTT

[CPT Clay]

This is what we need!!!

[avacado]

Thanks for the explanation!

[thackney]

It has worked for them for decades, why would they change their tune today?

[browardchad]

Correct me if I’m wrong, but they offered it several times...each time it was filibustered by libs and RINOs (same thing).

You're correct. Drilling off the Florida coast, for instance, was opposed by Republican Governor Jeb Bush, and defeated through the work of Republican Senator Mel Martinez working with Dem Bill Nelson -- at least twice during that period, IIRC.

Drilling in ANWR was also proposed and defeated at least once, and Republican presidential candidate John McCain, still a member of the Senate, stated in an interview last week that he opposes it.

[nomodem]

I remember the "Gored at the pump" ads back in 2000. I don't think they were terribly effective.

- and gas was how much in 2000?

[Red Badger]

This is what we need!!!

Which is exactly why we won't get it!!!............

[SAJ]

It seems to me to be a question of whether A) the US economy and/or B) the US consumer is near to or has reached a ''tipping point''. If not, the bozos can keep the stall job going.

If so, however, I should strongly recommend to the bozos that they get out of the way of the freight train. The uproar over the Kennedy-McCain amnesty bill last year would look puny by comparison.

Unfortunately, I've no way to judge which condition is the case today. (shrug)

You ought to re-post that other ''capital dome'' cartoon of yours, where the Regress badger the eeeevil oil companies to ''do something!'' < /hint >

;^)

[kellynla]

You ought to re-post that other ''capital dome'' cartoon of yours, where the Regress badger the eeeevil oil companies to ''do something!''

[johnny7]

That should be brought out in the campaign........

McCain voted YES... on banning drilling in the Arctic National Wildlife Refuge.

[bert]

.....the US consumer is near to or has reached a ‘’tipping point’’.......

Precisely correct. When big rigs are circling the Capitol Building and running up and down the Mall in protest, me thinks the tipping point is near.

I think truck drivers trump envirowackos.

[Beagle8U]

“Agree. I do think this may be a great campaign issue for all Republican candidates. It will show that Republicans are trying to lower gas prices and Dems are preventing it.”

Except for one minor problem....McCrazy will oppose it!