Murkowski urges action to boost Alaska oil production

JUNEAU — The state faces the prospect of the 800-mile trans-Alaska pipeline shutting down within the next decade if steps aren’t taken to boost oil production, U.S. Sen. Lisa Murkowski told lawmakers Thursday.

In a sobering message to a joint session of the Legislature, Murkowski said Alaska cannot afford to take its future for granted. While the state currently enjoys billions of dollars in savings, it faces forecasts of declining oil production — a huge worry given that oil is Alaska’s economic lifeblood.

She urged lawmakers to act on Gov. Sean Parnell’s plan to slash oil production taxes as a way to increase investment and said she would fight efforts by the federal government to block new development.

“When I get back to work in the Senate next week, I’m going to call more forcefully than ever before, using every option available, for this administration to work with us to preserve TAPS,” she said. “That’s probably going to require throwing some elbows, perhaps ruffling a few feathers. But I’m good with that.”

TAPS is short-hand for the pipeline system, which carries more than 10 percent of the nation’s domestic oil production. In December, the line carried an average throughput of 640,000 barrels a day, according to its operator, Alyeska Pipeline Service Co. That average fell to around 475,000 barrels a day last month, following a temporary shutdown stemming from a pump station leak.

Murkowski said that operating the line at increasingly lower flow rates will eventually be impossible from an economic and engineering standpoint. She cited figures indicating that as early as 2017 it could be too expensive or too hazardous to keep operating the line.

If that happens, “we are over,” in terms of the state’s ability to move its oil to market, she told reporters later.

She said tough decisions need to be made at the state and federal levels.

She called on lawmakers to act on Parnell’s tax-cut plan while stopping short of explicitly endorsing the specifics. The plan could cost the state up to $2 billion a year in revenue, though Parnell believes it has the potential for huge dividends down the road, in terms of increased production and investment and new jobs. Some lawmakers — notably House Democrats — are leery, seeing it as little more than a corporate giveaway.

Murkowski said, as Parnell has, that the state must take the long-term view. Without the pipeline, she said, there will be nothing to argue about.

She said the unrest in the Middle East — and potential for disruptions in the oil supply — has put the issue of opening the Arctic National Wildlife Refuge to development back on the table.

Murkowski said she expects the U.S. House will pass legislation to open the refuge this spring and that said she’ll do everything she can to push the idea in the Senate — a statement that drew applause from state lawmakers.

There’s strong political support from Republicans and Democrats in Alaska for opening the refuge to development.

Murkowski also urged lawmakers to keep an open mind on gas projects.

While she said a major gas line, capable of carrying gas from the North Slope to market, remains the top choice, she said the state should keep consider options such as a gas-to-liquids facility or a plan calling for the state to help finance a line to Fairbanks. She said she wasn’t endorsing either — just saying she believes they deserve to be vetted.

The state has committed up to $500 million to help TransCanada Corp. advance a major gas line. Both TransCanada and a competing project remain in negotiations with potential shippers. Some House lawmakers, eager to see progress, have proposed ditching the pipeline plan under which TransCanada holds an exclusive license with the state if absent proof that it’s economic.

Parnell has urged patience with seeing the process through.