The Congressional Record is a unique source of public documentation. It started in 1873, documenting nearly all the major and minor policies being discussed and debated.
“USE IT OR LOSE IT” mentioning the Department of Interior was published in the Senate section on pages S2119-S2122 on April 5, 2011.
The publication is reproduced in full below:
USE IT OR LOSE IT
Ms. MURKOWSKI. Mr. President, I would like to take a few minutes this afternoon to perhaps switch the discussion from what my colleagues were referring to earlier in terms of the budget and speak a little bit about the issue of energy--obviously, a topic of great concern.
The President has addressed it as recently as last week in a major address at Georgetown. There have been a lot of discussions about what it is we need to do to respond to the higher prices families are paying at the pump and just how we deal with the issue of energy in general. There has been much discussion about this concept of ``use it or lose it.'' I want to speak to that proposal a little bit this afternoon.
It is a rather strange proposal that claims to address the rising cost of oil and gas for America's working families. The premise of this is, even with oil at more than $100 a barrel, and even though lease terms are already limited by law to 5 to 10 years, energy companies somehow are hording Federal lands and refusing to produce the resources that are beneath them.
``Use it or lose it'' has been presented by this administration and others as a way to increase our Nation's energy production. But even a cursory review will show this is fundamentally flawed in its premise. This proposal will not increase American production. It will not increase jobs or create jobs. It will not raise government revenues or bolster our security. Instead, I believe it is a diversion from our more critical need to produce more of our own resources and to streamline our burdensome regulatory processes.
Now, the idea behind ``use it or lose it'' is to simply punish companies for not drilling on lands they have leased, so they either drill or they give back the acreage to the government which can then resell it to someone else. But, interestingly, this proposal has drawn some support from a number of Senators and from the President himself who, until recently, have claimed: Well, we can't drill our way out of this. We can't drill our way to lower gas prices. America's oil--and we have been repeatedly told this--has minimal impact on global prices and takes too long to bring online.
So I do not know, maybe this is a change of heart. If that is so, I am glad to see it. I do hope--I do hope--their proposal is a signal that, indeed, they would like to see drilling on every leased Federal acre onshore, offshore. That is certainly the premise of the proposal, even though it is perhaps a pretty major departure from the previous positions.
Now, the advocates of ``use it or lose it'' have pointed out correctly that there are millions of acres leased in this country that are not currently producing oil and gas, but they have misidentified the reason why. Chances are maybe there is just no oil present on that land. Perhaps exploration is ongoing or, in many cases, the Federal Government has simply blocked the drilling. To add a new penalty to this process and to add a new layer to existing bureaucracy will only backfire.
From the outset, I think it is important to understand what is involved in oil and gas production. This is an incredibly capital-
intensive, labor-intensive business, and from a technological perspective, the process is extraordinarily complex. I think we saw, after the Deepwater Horizon, cameras trained a mile below the surface of the ocean, and it was described by many as, this is akin to how we deal with putting a man on the Moon. This is complicated stuff, and there is no ``X marks the spot'' as to where that oil is actually going to be found.
It can take years, not to mention tremendous amounts of money, to finally locate these commercial deposits. When there is resource present, it takes some teams of some pretty highly skilled and trained engineers to figure out how we are going to bring it to market. There are the entire legal departments that have to wade through the multitude of permits, the analysis, the plans that are required by our Federal Government. This process takes a considerable amount of patience and for lots of good reasons, but the government is certainly not in a hurry to provide leaseholders the approval they need to move forward.
Last week, the Interior Department had an opportunity to explain what goes on within the exploration process and show why not all Federal leases immediately produce oil and gas. Instead, the Interior Department issued a report that attempts to portray many Federal leases as idle or unused. What could have been a very helpful and instructive process was instead hopelessly politicized, and that is unfortunate.
The findings of the Interior Department's report I believe defy common sense, general business principles, and what we know to be true about the Federal regulatory process. The definition of ``inactive'' purposely excludes many important development activities, and there is no acknowledgment that oftentimes it is the government itself that is causing the delays in drilling.
I guess one of the more telling examples of what is wrong with the Interior Department's new report is its depiction of what is happening in Alaska right now. Companies have been trying for years--trying for years--to bring their Federal leases in this State of Alaska into production. These efforts have been blocked. They have been delayed by the Federal Government, especially this administration, and they have been blocked at every turn. Despite this, the Interior Department's report claims that just 1 percent--1 percent--of Alaska's leases are producing and puts the blame on industry. But when I talk to folks back home, when I talk to those who are trying every single day, getting up and trying their hardest to advance so we can get to levels of production, they only find that there is yet one more hurdle, one more roadblock that is thrown up and thrown up by the government. It causes incredible frustration. It is hard to pick what would be described as the best example of companies trying to produce from their leases--
which, I might add, they purchased at the invitation of the Federal Government--yet they are being forbidden by the administration from pursuing their exploratory operations. It is happening in the National Petroleum Reserve Alaska. Think about the name. This is the National Petroleum Reserve Alaska. That is pretty ironic. We can't get started there, and one of the biggest reasons we can't is we are being blocked--the producers are being blocked--from getting a permit to build a bridge over a river to get started.
As regrettable and as ironic as that example is, there is an even higher profile example that we see up North, and that is what Shell is attempting to do. They have set a record--and a record that is certainly not enviable but a record nonetheless--for both dollars invested and frustration experienced in return. This is a situation where a company has spent a little over $4 billion--this is billion with a B--they spent $4 billion to buy Federal acreage in Alaska's Outer Continental Shelf nearly 7 years ago. Since that time, Shell has done nothing but slog through an incredibly long and incredibly arduous permitting process. Air permits that take 6 weeks to acquire in the Gulf of Mexico have now been delayed for over 5 years.
I ask my colleagues to put that in context. A company, at the invitation of the Federal Government, purchased leases over 7 years ago, has put more than $4 billion into trying to get to exploration, has spent 5 years waiting on permits, where in other parts of the country permits can be turned around in 6 weeks, and they have yet the opportunity to even start. So can anyone honestly suggest we ought to punish Shell or any company that is going through this for the Federal Government's failure to allow even exploratory drilling to proceed? Is it fair that we demand Shell pay the price because the government has failed to issue a permit that even the EPA and even the Administrator of the EPA has acknowledged poses no human health risk? This is where we are sitting right now.
I was incredulous. I had an opportunity to ask the Secretary of the Interior, who is a friend of mine--most certainly a friend who I acknowledge has a very difficult job, a very challenging job--but he could not assure me that the so-called ``use it or lose it'' fee would not apply to the millions of acres of leased land in Alaska, both onshore and offshore, where the Federal Government has sold the leases but is not allowing drilling activity. It is similar to a commercial real estate company offering to rent some office space to you. We go ahead. You pay the rent. I never give you the key, so you can't access your commercial office space. Then I am going to go ahead and assess a fine. We are going to penalize you when you failed to open your doors for business. That is kind of what is happening up North. It is not a
``use it or lose it'' policy, it is ``heads we win, tails you lose.'' My colleagues have to imagine: What would such a policy say about the way our government conducts its businesses and manages its resources?
``Use it or lose it'' is drawn from a desire to do the right thing, which is to increase our domestic production, but I also believe it reveals a fundamental lack of understanding about how energy resources are developed and how they are brought to market. It risks very real consequences for our energy production here in America. Because instead of encouraging producers to find energy faster, it would actually discourage them from discovering it in the first place. Instead of creating jobs, it would likely end jobs. Instead of raising new revenues for the Federal Government, it would likely diminish taxpayers' returns from leasing and production.
It seems as though every time oil prices are on the rise, we come together and we debate how we are going to respond to them and every time someone points out we should be producing far more of our own--
frankly, very tremendous resource base--someone steps forward with the potential scapegoat, perhaps to distract attention from our need to be leasing more new lands. It is like clockwork around here. Instead of making the hard choices about what we can do to better insulate ourselves from higher crude prices and geopolitical instability, we see proposals to impose windfall profit taxes, to pour unprecedented sums of money in unproven alternative technologies, to rein in speculators, to sue OPEC, to raise taxes and fees on production, and now to force companies to act faster or to face greater penalties.
Until we see some evidence that companies are refusing to develop their leases, I have to call it like I see it. ``Use it or lose it'' is a ploy to claim that we support increased domestic production, without doing anything to ensure that domestic production is the actual result of our Federal energy policies.
There has been a lot of discussion, when we are talking about energy, about Brazil and their potential--how that nation is set to significantly ramp up its oil production, and we commend the Brazilians. They have been able to make a number of very important discoveries, estimated at about 50 billion barrels of oil equivalent. According to the Wall Street Journal, Brazil's oil production rose by 876 percent over the past 20 years--876 percent over the past 20 years. They are now planning to double their current production in less than 10 years. So there are pretty remarkable things going on there. Even while Brazil is developing their current resource base, they are actively looking for more. They are working aggressively. They are pursuing that objective while expanding their production and their use of alternative energy sources. They are kind of pursuing the ``all of the above'' we talk about so often.
In the United States, we have technically recoverable oil resources estimated at 157 billion barrels, more than three times--more than three times--what Brazil has recently found. I don't understand. I don't understand why we refuse to set the same ambitious goals for increasing our production that Brazil has, even as we continue to pursue alternative energies that will diversify our supplies equally. When it comes to energy, we should strive to be our own best customer, not Brazil's.
As Federal policymakers, we need to think carefully about what we demand of any industry, including oil and gas. When we tax something, the fact is, we get less of it. I don't think we want to make ourselves even more dependent on foreign oil right now. We don't want to discourage domestic production, especially under the guise of promoting it, and we have no reason to add yet another layer to an already daunting regulatory system.
I strongly urge us in the Senate, in the Congress, to recognize ``use it or lose it'' for what it is. It is an attempt to extract more money from the companies, not to extract more energy from the ground. It is not the right approach for America, and it will not move our energy policy in the right direction.
I do take comfort in one fact, and that is this: At least the debate is now about how to produce more oil and not whether to produce more oil. My work on the Energy Committee and certainly what goes on in the State of Alaska has taught me much about how and how not to achieve greater oil production if we want more domestic production--and I think we all recognize the President's verbal commitment to this and the change of heart amongst some of my colleagues--it is time to eliminate the needless redtape and allow access to America's huge resources that are still off-limits.
I thank the Presiding Officer for the time and the opportunity to speak this afternoon on yet another aspect of our country's much needed energy policy and how we can continue to find ways that will move us toward a future where we do engage in energy sources that are clean and renewable while also harvesting our bountiful supply in this country as we find ways to produce more domestically.
Mr. NELSON of Florida. Mr. President, will the Senator yield for a question?
Ms. MURKOWSKI. Yes.
Mr. NELSON of Florida. Mr. President, first of all, I wish to say to the Senator from Alaska that she knows of my respect for her and my personal friendship with her and my personal opinion that she is one of the finest Senators we have.
I do want to ask the Senator a question, and it is a circumstance that I happen to be here next in line to speak about a different subject than the Senator spoke about. This Senator is one of those sponsors of the ``use it or lose it'' legislation. I certainly will defer to the Senator from Alaska with regard to Alaska and the drilling offshore there.
My question is about the drilling of the Gulf of Mexico, which this Senator has some familiarity with, and that there are 37 million acres in the Gulf of Mexico under lease, where the oil is. But of the 37 million acres, there are only 7 million that are drilled. Thirty million acres are not drilled, and it has been that way for years and years. The Senator makes a compelling argument with regard to Alaska, but how can that argument apply to the 30 million acres in the Gulf of Mexico that are not drilled but, as the Senator has said, ought to be drilled?
Ms. MURKOWSKI. Mr. President, I appreciate the question of my colleague from Florida, as we recognize that coming from different parts of the country, where we have access in close proximity to the oil and gas resource, but we recognize that there are differences between where we are in our geography and perhaps the approach.
In the Gulf of Mexico, I think your climate allows for exploration and production probably 365 days out of the year, which is a little bit different than in our arctic environment. We respect that. To the Senator's question, which is a very legitimate and fair question--this is why we had hoped so much that with this report from the Department of the Interior, it would have allowed for a breakdown so we could understand what is happening with these many thousands of leases that are out there and existing. What is the true status? To put it in idle or unuse is not very clear, quite honestly. What does that mean? Are we in the exploratory phase and so we are not in production? And what category is that? Is this an older lease about which perhaps they have determined there simply is not the--for instance, if you are drilling in some deep waters, it is extraordinarily costly. As I mentioned, these are complex, and the technologies are quite considerable. If you have done some exploration but you find very limited or perhaps nothing--as I mentioned, we don't have that magic X that leads us right down to what we call in the north the ``elephant find.''
So I think it is important to understand what it is that we have and the status of these leases. This information is critical to us, because if they are in the exploratory phase, and it is taking longer because, quite honestly, we have higher standards with the environmental permits, which are taking more time, and I think we realize after the Deepwater Horizon situation and a great deal of scrutiny on MMS, quite honestly, we didn't have sufficient numbers issuing permits within that agency to keep up. So we need to understand where the issue is, where the problem is. There may, in fact--and I will concede on the floor that there may be some leases that are in existence where the producers have said: You know what, we only have so much ability to move forward with the financing of all of this, so we are going to explore and produce in wells 1, 2, and 3, but on 4 and 5 we are not prepared to advance on them as quickly. We think they may have potential, but we don't know that. How can we help to facilitate that? Do we need more people within MMS to help expedite the permits? What does it mean to be an idle lease?
I will digress for a moment, if I may, because I think it is important for people to recognize that when we are talking about exploration in the Arctic, a 5-year or 10-year time period is simply not sufficient, because we cannot explore 365 days a year. Most times, the season is limited to about 60 days during the coldest, darkest, most difficult time of the year. But that is when the ground is frozen, when the permits are issued for exploration. So it takes multiple seasons to even get through the exploration phase.
I think it is important to recognize that not all leases are equal. Not every lease that a producer purchases from the government actually has anything worth developing. We need to know and understand a little bit more. We hoped to have learned that from the Department of the Interior report. Unfortunately, it didn't give the detail we had hoped for. I appreciate my colleague's question.
Mr. NELSON of Florida. Mr. President, as the Senator from Alaska is leaving the floor, I will say to her that I appreciate her point of view and what she has expressed. There is certainly an opportunity for working something out.
As I stated in my question to her at the outset, this Senator doesn't know a lot about the leases in Alaska, but I certainly do know a lot about the leases in the Gulf of Mexico. For 30 million acres in the Gulf of Mexico to go undrilled for years and years, where out of a total of 37 million acres are leased but only 7 million acres are actually drilled and produced, it seems to me there is a wonderful opportunity for a lot more production, not just in 7 million acres but 30 million acres additionally. And if the company that holds that lease, and has held the lease for years, is not going to drill it and produce, then let somebody else do it. That was the theory behind this Senator's sponsorship of that legislation.
As the Senator from Alaska has pointed out some differences in her State, it seems to me that this is, as the Good Book says, a place where people of good intentions can come and reason together.
Mr. President, I want to speak on another subject. I will tell my colleague that I am not going to be speaking very long. This will be short. I want to bring this to the attention of the Senate.
This is the Wall Street Journal from last weekend. Here is an article with the headline ``Transocean Cites Safety in Bonuses.''
This is worth this Senator reading for the Record and calling to the attention of the Senate:
Transocean Ltd. had its ``best year in safety performance'' despite the explosion of its Deepwater Horizon rig that left 11 dead and oil gushing into the Gulf of Mexico, the world's largest offshore-rig company said in a securities filing on Friday.
Accordingly, Transocean's executives received two-thirds of their target safety bonus. Safety accounts for 25 percent of the equation that determines the yearly cash bonuses, along with financial factors including new rig contracts.
It is hard for me to believe that. Even if it were to meet some mathematical formula of awarding bonuses to executives at oil companies, why in the world that company would not have been sensitive enough to the families of 11 people who lost their lives as a result of what the President's task force investigating the Deepwater Horizon oil explosion and spill--the task force cochaired by our former colleague from Florida, Bob Graham--which said that the main responsibility for that explosion was the fact that the blowout preventer did not work as it was designed to. Who was the owner and operator of that? Transocean. We know there are lawsuits that are going on between BP, which had the lease, and Transocean, its subcontractor, which had the equipment that was supposed to work to prevent the spill that malfunctioned. Those lawsuits are going to be going on for some period of time, sorting it out. But the investigation, done by a highly respected investigative task force, came to that conclusion. And here that very same company, whose blowout preventer deep on the floor of the ocean malfunctioned, causing the explosion--11 lives were lost, and untold billions of dollars of damage was done to the economies of the Gulf States, and who knows how many billions of dollars of damage to the marine life and the ecology of the Gulf of Mexico, and safety is cited by this company as a reason for giving bonuses to its executives.
That defies common sense. It defies reason. I am sufficiently agitated about this--even with the company coming out and issuing some kind of retraction--that this Senator intends to ask the Secretary of the Interior, Secretary Salazar, what authority he has to regulate not only the leases of oil and gas tracts, such as BP, which held the lease, but also what authority he has to regulate the rig owners, such as Transocean and other subcontractors, which actually had the responsibility for the safety of the drilling operation, and that safety did not work.
I am going to ask our Committee on the Environment, chaired by Senator Boxer--I have already talked to her and her staff director--to hold hearings on the questionable response, the cleanup, the environmental and financial practices not only of Transocean but its contractor, BP. What in the world is going on?
Why do I bring BP into this? Well, it is not only that they held the lease. It was interesting. Last week, the head of the Washington office of BP came in to give me an update. We had a very good, amiable chat, and I asked a simple series of questions. One of the questions I asked was: With all of our people down there, many of them losing their businesses, losing their homes to foreclosure, because they don't have income as a result of the tourism trade that was affected by the BP bill, what was all this about?
The first full payment was a $10 million payment paid in full from the Gulf Coast Claims Facility to a BP partner. The head of BP in Washington said he did not know. It has been in the newspaper over and over. I have asked the question over and over. I have written to the Department of the Interior, as well as to BP, and I have written to the Gulf Coast Claims Facility and have received no answer to the question, why was the first payment paid in full in damages done to a business partner of BP? The representative of BP could not answer the question.
I think the Senate Committee on Environment and Public Works ought to get into that issue. I am going to also ask the Finance Committee in the Senate to hold hearings on the financial practices of BP and Transocean and other corporations such as those--a corporation such as Transocean that I think is domiciled in Switzerland and that holds a lot of its assets and earnings abroad, earnings that come as a result of doing business in the United States but of which those earnings are held abroad and taxes are not paid for the privilege of doing that business and earning profits in its business that is conducted in the United States.
We owe this to our taxpayers. This Senator certainly owes it to his constituents who have suffered mightily as a result of this BP oilspill, along with the malfunctions that went along in the procedures and in the equipment of that tremendous disaster that so many have suffered so long.
Mr. President, I yield the floor.
The PRESIDING OFFICER. The Senator from South Dakota.
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