Balanced Energy Development - June 9, 2005

Legislation recently cleared by the U.S. Senate Energy Committee provides a balanced blueprint to both increase domestic production of energy from nonrenewable and renewable sources and to promote efficiency, conservation and the new energy technologies that will light our future.

The bipartisan bill could lead to production of an additional 53 billion barrels of domestic oil, trillions of cubic feet of natural gas and pioneer the technology to produce gas from methane hydrates, which could fuel all our energy needs for a thousand years. The bill provides incentives to utilize our huge coal reserves, funding technology to recapture the carbon that fossil fuels release.

The bill also includes incentives to perfect the next generation of nuclear power and promotes a $3 billion effort to not just perfect hydrogen vehicles, but solve the daunting fuel distribution problems they will entail. The bill will improve the efficiency of appliances - everything from refrigerators to dehumidifiers -- reduce energy consumption in federal buildings, increase funding for building weatherization, and require federal vehicle fleets to use alternative fuels.

The unprecedented conservation and efficiency measures will save 1.1 trillion cubic feet of natural gas by 2020 - the equivalent of what New York State consumes yearly. It should reduce peak electric demand by 50,000 megawatts - the equivalent of 170 new power plants. And the bill mandates that this nation save 1 million barrels of oil a day by 2015 - the equivalent of increasing the gas mileage of cars to 39 miles per gallon and for trucks to 30. The savings are likely to come from better tires, use of more ethanol and by helping Americans afford more fuel-efficient cars.

The bill aids not only wind and solar energy, but biomass that may help us turn the Kenai Peninsula's spruce bark beetle kill into electricity; geothermal and ocean, tidal and wave energy that could be a lifesaver for dozens of our communities.

But it is especially helpful to develop Alaska's full potential as the nation's energy storehouse for the benefit of our economy, our workers, and our state treasury. It also will help bring Alaska into the 21st Century, utilizing new technology to produce cheaper electricity statewide and energy resources from Native lands. The bill includes:

• Rural Energy Assistance: Authorizes $550 million over the next decade for rural energy improvements. The money will allow the Denali Commission to fund everything from new power generation and transmission lines to innovative fuel cells and wind, tidal and biomass energy. It will help the state continue to fix fuel storage tanks. Some of the money, $5 million a year, is intended to continue the state's Power Cost Equalization program to help subsidize rural power until improvements arrive.
• National Petroleum Reserve Alaska Leasing Changes: The bill should speed the discovery of up to 10.6 billion barrels of oil and 85 trillion cubic feet of gas by allowing more expeditious leasing and reduced royalties. The bill also allows royalty suspensions and improves federal offshore oil revenue sharing.
• Gas Hydrate Research/Development Assistance: The bill improves research to help Alaska tap its 600 trillion cubic feet of gas hydrates on shore and the 32,000 tcf offshore - funding actual exploratory drilling in permafrost.
• Cook Inlet Carbon Dioxide Oil Enhancement Program: It authorizes a pilot project to see if injecting carbon dioxide can help extend the life of the Cook Inlet oil field. The Energy Department last month reported Alaska might recover an additional 12 billion barrels of oil - 670 million from Cook Inlet, possibly at Swanson River - through a carbon dioxide program.
• Indian Energy Assistance: The bill authorizes grant assistance and up to $2 billion of loan guarantees to help Natives develop energy from their lands.
• Healy Clean Coal Loan: The bill allows a loan of up to $80 million to help get the Healy power plant operational.
• Coal Production Assistance: The bill also includes $200 million per year of federal aid for projects to utilize the nation's coal resources, mostly to fund future combined cycle coal gasification projects or coal fuel projects. Several in Southcentral are on the drawing boards to utilize the high-moisture coal at Healy and at the Beluga fields near Anchorage.
• Other Alaska provisions: The bill also includes aid for small hydroelectric projects - help that might cut power bills in several parts of the state - a required study to help construction of an Alaska natural gas pipeline proceed, and funding of new engineering and climate research facilities in Alaska.

Overall, the bill provides a rational blueprint for energy production and brightens the future for energy conservation in the future.