Al Franken Gets Schooled On How Federal Oil Leasing Works During A Hearing

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Michael Bastasch DCNF Managing Editor
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Senators had to explain to Democratic Sen. Al Franken of Minnesota the economics underlying federal oil and gas leasing during a hearing on opening up more areas in Alaska to drilling.

Franken opposes a Republican bill to open a small portion of the Arctic National Wildlife Refuge (ANWR) to oil and gas exploration, arguing it could impact the porcupine caribou native to the region.

Franken also went on a long rant about why it didn’t make economic sense to him to open more Alaskan lands to drilling when millions of acres were left untapped by oil companies. Franken sits on the Senate Committee on Energy and Natural Resources.

“This is a very contentious issue and since there’s another million acres that are already leased — oil companies don’t lease land, at least I don’t think they do, it doesn’t make any sense to me,” Franken said in the hearing.

“I don’t know the oil business, but why would you lease anything where you didn’t think there was oil?” Franken said. ” It doesn’t make any business sense.”

Well, the situation did make sense to other Senators who sat on the committee that’s supposed to oversee such programs.

“They get contracts, and the contract might be for 10 years. You gotta show you have the reserves to produce or you won’t get a long term contract,” West Virginia Sen. Joe Manchin, a Democrat, explained to Franken.

“So, if you do deplete what you have you gotta be able to go somewhere else to complete the contract or you lose it,” Manchin said.

“So, economically, it’s basically for the leases and to fulfill the contract. If you can’t do that, show that you have the reserves, can’t get the contracts,” he said.

Alaska Republican Sen. Lisa Murkowski, the committee chair, chimed in as well, noting “if the oil companies knew exactly where the oil was that would life easier, but the fact of the matter is they purchase leases and there’s no certainty that there is productive reserves that are underneath.”

Murkowski also noted that many drilling leases sit unused for years because of lengthy permitting times.

“They don’t produce immediately, leases do not produce immediately. Alaska is a pretty telling case of that,” Murkowski said. “It takes 10 years plus, unfortunately, sometimes even longer than that because of the permitting, the NEPA, all of the review, it all takes time.”

Murkowski is spearheading the effort to open up ANWR’s “1002 area” to drilling. She recently introduced legislation as part of the budget reconciliation process to raise about $1.1 billion from the region.

Franken introduced an amendment to have the Interior Department make sure all current drilling leases were used up before offering new ones.

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