CERAWeek 2023 by S&P Global: Murkowski and Manchin clarify stands on Willow, permitting and other challenges
Houston—In the minds of some attendees, S&P Global Vice Chairman Dan Yergin held back the best of the CERAWeek agenda’s speakers until Friday morning, when Senators Lisa Murkowski (R-Alaska) and Joe Manchin (D-W.Va.) made a joint appearance. If that was, indeed, the design, then it worked, as Murkowski and Manchin delivered a riveting set of commentary, analysis and political opinions.
Yergin set the tone, when he started the session by saying, “Maybe Senator Murkowski, I might just start with one word—Willow. Why don't you explain why Willow is important and how timely it is? And Murkowski was happy to oblige, explaining the importance of a project that just on Monday morning, March 13, has been approved by the Biden administration after much dithering around.
Alaska’s latest project. “Willow is really going to be key to Alaska's economic success going forward. And I can describe Willow in one word. Willow is about security. It is energy security. And if you don't know what Willow is and you're here at CERAWeek, maybe you are at the wrong conference.
“Willow, is a project that Conoco has been working on in the National Petroleum Reserve, Alaska,” continued the senator. “Leases that they acquired back in the late ‘90s, and permitting has been the past five years, full time. It has gone through multiple administrations, beginning with Obama, now into the Biden administration. And we're at the point where it's all about a re- approval of the permit projects.”
Murkowski said that the project is at a place where, again, there is an opportunity for 180,000 to 200,000 bopd, which is meaningful production to the country. It will be significant to filling up Alaska's pipeline.
“It will be incredibly significant for Alaska's economy,” added Murkowski. “The jobs that will come--it's all supported by 100% of the unions in Alaska and the national unions, and is supported by Alaska Native peoples who live there. It's energy security. It's economic security, but it's national security…Conoco has committed billions to this project. The revenues to the country will be billions coming to us. But more to the point is, again, this whole issue of security, which you had focused on throughout the week. So, we made the case, the Alaska delegation presented to the President and his team, just last week (March 2). As we said, we didn't leave anything out there….It will be positive for Conoco. We need an economically viable project to proceed, and we need it now. We just absolutely need it.
Pipeline project hold-up. Yergin then turned to another project, the Mount Valley Pipeline, and used that as a lead-in to the larger question about permitting in the U.S. “Senator Manchin, when you were here last year,” enquired Yergin, “you talked about the Mountain Valley pipeline being 93% completed. The costs have gone from $3 billion to $6 billion. Has there been any change?”
“Well, I think we're going to get it done,” predicted Manchin. We have to get that done; the country needs it. It's a shame that we can't move faster, you know. Mount Valley Pipeline is a mountain valley pipeline, which is coming out of the Marcellus shale, most of it in West Virginia. Everyone thinks that I picked it as my own pet project. But I picked the project basically, because I was writing the IRA (energy section), to make sure that we could put more product in the market. The more product you put in the market, whether it's oil or gas, which is what we're going to use. And basically, the better pricing we should have, it should be stabilized at reduced prices. That was the reason we called it inflation reduction.”
And with that said, Manchin noted that Mount Valley is 90% completed and can put 2 Bcfgd when it's completed within six months. “We had nothing else in the country that could put that much more, that quickly, into the marketplace,” explained Manchin. “That's why we pushed so hard, and we still are.”
West Virginia’s senior senator said that discussion of the permitting process was part of the whole IRA. “To make sure that you all understand, the IRA was done for one purpose and one purpose only,” he elaborated. “It was done for energy security for our nation. This country runs on horsepower. Horsepower comes from fossil (fuels) and something we're going to use for quite some time. We can use it better and cleaner than any place in the world. And we have a commitment to do that. The difference between my friends on the other side of the aisle or my friends on my side of the aisle is way down on the other side. They basically think that the only way to have a clean environment is to eliminate anything they don't like, if they think fossil fuel comes out of the ground or basically is harming the environment.”
Manchin said that is approach has been that he wants to decarbonize, rationally and reasonably. “I want to do it, using fossil [fuels] that are cleaner than any place in the world,” he explained. “When you replace some of the dirtier fuels produced around the world with what we have in America, we're able to be secure. We need 13-plus MMbopd. We need 35 Tcf [of gas] and 13-plus MMbopd, for us to continue. I think we can get to 15 [MMbopd]. I think we can stay at 35 Tcf of gas or more. I think there's so much that we can do, replacing the products that people are dependent upon in other places. Putin weaponized energy. We have to come to that understanding what Putin did—put us on that pathway. How do you become energy- independent? You cannot be the superpower of the world, if you have to depend on other places and nations that don't have your same values for basically the resources you won't do for yourself.”
The greater permitting problem. Asked by Yergin what is holding up completion of the project, Manchin was succinct. “Well, it's permitting. I mean, the bottom line is the United States of
America is the most overregulated, over-adjudicated process in the developed world; it just can't continue,” declared the senator. “We wrote that bill, which got caught up in politics, and my friend Lisa [Murkowski] tried to help. She did everything she could. She carried more than her load. But the political load sometimes is great.
“This is a permitting bill that we had in [the hopper] last year, and we voted on,” continued Manchin. We had 47 votes. We got 40 Democrats to vote for something they didn't like, but they voted for it. We got seven Republicans and we needed 13 more. We needed 20. I think there's a pathway for it. I wanted to start in the House. It should come over. I'd like to have it by itself. A separate bill not wrapped into a major energy bill that reforms everything again. So, we're looking at how do we navigate? And Lisa [Murkowski] and I will get to work and try to do everything we can to make sure it's a rational, reasonable bill. It's going to be better than what we have. It's not going to be perfect. And you cannot let perfect be the enemy of the good. You've got to be able to accelerate what these agencies can do. It takes them forever.”
As Yergin then mentioned, permitting seems to play a role in just about everything involving the federal government. “Yes, everything. We're here in the energy space, but really, more broadly, to our economy, you've got to go through permitting for just about everything,” agreed Murkowski. “But what we have put in place in the past several years, beginning with our Energy Act, which contained our American Minerals Security Act, then the infrastructure bill, and the CHIPS and Science Act, and now IRA, there is so much that is now possible. There is so much that is on the table in terms of opportunities and grants and programs and tax credits. And if we can't facilitate these projects moving forward because everything gets delayed in a permitting bottleneck, all of the extraordinary legislation that we have put out there, all the promise that is there, lays fallow. It cannot proceed.”
And so, this is the roadblock,” continued Murkowski. “It is a roadblock that we can control, that we can direct, that we can move out of the way. But we're going to lose all of the good that we have put in play, if we can’t address the permitting piece. And this is where I think there is some opportunity for bipartisanship, because as Joe [Manchin] has mentioned, he moved through a bill that didn't get as many votes as we would like, but he is putting it politely when he says there was some politics at play. In fairness, there were some Republicans who were like, oh, we want to poke a finger in Joe's eye because we didn't like what he did on the IRA. I am just saying that's what happened.”
Road to permitting reform. Yergin proceeded to ask the two senators if they think they can get some version of permitting reform done this year. “I think things have really changed,” responded Murkowski. It used to be, the Republicans were all gung-ho on permitting and permitting reform, and there was not as much enthusiasm on the other side of the aisle. And now, what we have seen is all those who are working toward this energy transition—how we incorporate more renewables into our system—are realizing that it's not just an oil or gas project that needs to be permitted on a reliable and more certain basis. It is. It's the offshore wind, it's the solar, it is every renewable project out there. And they're literally coming in saying, ‘have you seen this permitting process that we have in this country? It's not working.
What do we need to do? Why is it taking so long?’ And we say, well, you know, welcome to our world. We've talked about this for a decade now.’ So, I think there is some consensus there that we've got to address it. Now, what we can't do is just say, well, we'll just do permitting reform in one small space. We're going to do fine with that space and say, well, if it's clean energy, we'll come and talk to you later. We've got to make sure that permitting reform is real.”
Machinations in Congress. Manchin then pointed out the numerical realities of today’s Congress. “You have to remember in Congress how things work,” instructed the West Virginia senator. “So, if your political party, whether Democrat or Republican, wants power, 218 [members] in the House gives you all the power you need, because you can set the agenda and you're in the majority. It’s 51 in the Senate, if you want power, but if you want to get something done, you need 60 in the Senate. Always remember--60 is the catalyst. That's what we’ve got to have. And there's a reason for that. That's why you never want to get rid of the filibuster. If you do, you lose democracy. We are the most democracy-laden country in the world because they're looking at us… If you let us go our way separate ways, you're basically supporting bad behavior—they'll go completely to the left and completely to the right. No one's fighting for the sensible, reasonable, responsible middle. That's how while you are sitting there, you don't make decisions from the extreme. You make decisions that make sense. You want return on investment. You want capitalism. You want democracy. We've got to fight for that, and we're letting it go….you can go ahead and roll it all into a big messaging bill, an energy bill, that won't go anywhere. You're not getting any votes.”
A clear explanation. Prompted by Yergin to explain what a messaging bill is and does, Murkowski gave a very clear explanation. “A messaging bill is designed to do nothing more than say, my side is right,” she stated. “Your side is wrong. All right. A messaging bill is not designed to solve any problems. And I can tell you, you can pick your issue, whether it's election reforms or women's reproductive health care or energy or immigration. Great examples. What we're going to do is we're going to send a message with a bill that we have built. We, when I say we, the parties, leadership specifically, have built a bill that is designed to put the other side in a box to say to you, ‘you don't support women as much as I support women, you don't support children and refugees as much as I do.’ There is no desire to solve a problem other than to make a political statement that supposedly is going to advantage you in some kind of election. I don't have time for that kind of stuff, and I don't think Joe Manchin does either.
