Just over eight months have passed since President Bush signed the Energy Policy Act of 2005 into law. This broad legislation took Congress years to complete and numerous deals to get it through both the House and the Senate and eventually to the president’s desk. Yet many on Capitol Hill say that the bill is far from comprehensive.
Although the bill includes several provisions to boost domestic production of energy, including the expansion of alternative energy and development of oil shales and gas hydrates, the bill excludes several key provisions, specifically the development of oil and natural gas resources on Alaska’s controversial North Slope. Each of these efforts carries with it political and technological challenges that will affect how quickly they become a reality, if they do at all.
The recently released budget request for the Department of the Interior, which is responsible for the lands that produce close to one-third of the nation’s current domestic energy supply, includes $43.2 million for its Energy Initiative. The initiative not only addresses North Slope issues, but also puts into action many of the provisions called for in the new law. More than half of the proposed amount would support the Bureau of Land Management’s (BLM) leasing programs for onshore oil and natural gas and the Minerals Management Service’s Outer Continental Shelf leasing program and its royalty-in-kind program.
The request also includes $1.5 million for the U.S. Geological Survey (USGS) to assess domestic oil shale deposits — sedimentary rocks that release oil or natural gas when heated — and for BLM to demonstrate a leasing program for these deposits. The largest U.S. oil shale deposit is the Green River Formation in Colorado, Utah and Wyoming, and more than 70 percent of it is owned and managed by the federal government.
Assessments of the Green River Formation estimate that it may contain the equivalent of 1.2 trillion to 1.8 trillion barrels of oil, but not all of it is currently recoverable. These unconventional gas resources have been tapped in the past: Union Oil Company, now part of Unocal, operated a facility from 1980 to 1991 that produced 4.5 million barrels of oil over the life of the project.
Supporters of developing these shales say that even a small portion still represents a domestic resource that is larger than the oil reserves in Saudi Arabia. High oil prices may keep development of these unconventional resources a viable option for private industry to develop. BLM has already begun to prepare an environmental impact statement for oil shale leasing, aiming for the first lease sale to occur by the end of 2008.
Oil shales, however, are not the only way to increase domestic energy production; there are also the estimated 5.7 billion barrels of recoverable oil in the Arctic National Wildlife Refuge (ANWR) on Alaska’s North Slope. The Interior budget request assumes that Congress will enact legislation this year to open ANWR to oil and natural gas exploration and development.
Interior estimates that the first lease sale could bring up to $7 billion in bonus revenues for the U.S. Treasury, which would be split with Alaska. Even if Congress does not pass legislation to open ANWR, Interior would provide BLM $12.4 million in new money to prepare for the onslaught of energy development activities in the North Slope.
BLM has completed the environmental assessment and management plan for the National Petroleum Reserve-Alaska (NPRA) — the first steps before a lease sale can be held — but is just beginning these steps for ANWR. Interior assumes that the preparations will be completed within the next two years to clear the way for the first ANWR lease sale in 2008. Any lease sale, however, requires that Congress pass that key legislation opening ANWR to energy exploration and development.
Getting Congress to pass this legislation will be a hard-fought battle with no guarantees. Historically, the Senate has been unfriendly to opening ANWR, compared with the House, which has acted to limit the area affected by energy production but has passed legislation several times along party lines to open ANWR.
This division between the two chambers indicates that there is little chance that it would be passed as a stand-alone bill that goes through the entire legislative process. Instead, a provision to open ANWR will likely take the form of a legislative rider to an unrelated bill — similar to last year’s failed attempt to attach a rider to an appropriations bill that was dropped at the last minute so that Congress could complete its work and break for the holiday recess (see Geotimes, February 2006).
Adding to the complications of passage is the growing number of moderate Republicans in the House who oppose the inclusion of an ANWR provision in any of the budget bills. The question remains, however, whether Congress will attempt to attach an ANWR rider to anything, given that it is an election year. The elections are a solid deadline, so any ANWR rider that slowed progress would again be dropped for Congress to meet its target closure date. Realistically, opening ANWR will have to wait again.
In addition to including a provision to open ANWR in its budget request, the Department of the Interior includes $2 million for USGS, BLM and the Minerals Management Service to support research and assessments for developing gas hydrates from the Gulf of Mexico and the North Slope of Alaska as a viable energy source (see Geotimes, November 2004). Gas hydrates are abundant in the Arctic and could also be abundant under the seafloor, with some estimates putting hydrate gas at volumes greater than all known global oil and natural gas resources combined.
While these resources are immense, questions remain about how to use and recover them. So developing gas hydrates as a key domestic energy source remains a long-term plan, compared to near-term return on oil shales and the estimated recoverable oil in ANWR. But with politics in the mix, who knows? Maybe the hydrates will come to market before oil flows from ANWR after all.
Links:
"Drilling on the North Slope rejected," Geotimes, February
2006
"Gas Hydrates as a Future Energy Resource," Geotimes, November
2004
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