OAG360 Exclusive: Interview with Senate Energy and Natural Resources Committee’s Robert Dillon

During her keynote speech this week at CERA Week, Senator Lisa Murkowski (Alaska) announced that she will be introducing legislation this year to repeal the U.S. crude oil export ban, and also changing the way the Senate Energy and Natural Resources Committee (ENRC) looks at legislation. Murkowski is chair of the ENRC. Tuesday, Oil & Gas 360 spoke with Robert Dillon, Communications Director for ENRC for more details.

Streamlining the process

Sen. Murkowski said that the ENRC will begin work on a broad energy bill that “will break with tradition.” Rather than break legislation into various industries like oil, gas renewables, pipelines and so on, this new approach will focus four more broad issues: efficiency, supply, infrastructure, and reforms to promote government accountability.

When asked why the ENRC was making this move to a broader view of energy legislation, Dillon said the goal was efficiency. “There are thousands of bills to go back over and remove duplicity from,” said Dillon. “Using four titles will make things easier, more streamlined.”

The fourth title, in particular, is designed to maintain government accountability. “Many of our federal policies are still alarmingly deficient and outdated – in genuine need of modernization and reform,” said Murkowski. “The federal government now routinely fails to permit energy projects, mines and infrastructure in a timely manner.”

Putting focus on maintaining government accountability will allow for some housekeeping says Dillon.

Dillon said that the ENRC would be working on the legislation over the next few weeks. After that, the committee will begin gathering comments with the hopes of bringing it before the Senate for hearings in May to decide what will be in the final version.

Lifting the export ban

One of the provisions being considered as part of the wider energy bill the ENRC is working on now is lifting the U.S. crude export ban. Murkowski has been a very vocal proponent to lifting the export ban, but said it is too early to say if it will be included in this legislation.

“Will oil exports be in our broader bill? It’s too early to know,” said the senator. “But it is time to lift America’s ban on domestic oil exports, which is why I am actively turning to legislation on that topic this year.”

When asked about the likelihood of a repeal of the export ban being attached to the broader energy bill, Dillon said that the committee is maintaining flexibility in the matter. The ENRC has not decided if it will use this bill to pass that legislation, or if there might be a better legislative vehicle to carry it through Congress, but it is time for the ban to be lifted, said Dillon.

“The problem we have now is that producers have to shut in production as prices remain low. Once prices come back up they’ll start producing again, but this process creates a lot of volatility in the market,” said Dillon. “By lifting the ban, we remove that volatility and we remove uncertainty.”

The greatest fear people have in markets, says Dillon, is that uncertainty. By removing the ban, U.S. crude will compete with international crudes in an open market, giving producers somewhere to sell their excess crude. This will promote continued development and help avoid the pricing and production problems that cause price volatility.

Europe is begging for U.S. energy exports

“Europe is begging us to export to them,” said Dillon. “By removing this ban, we increase price stability and we gain a lot of economic power.” This economic power would give us a greater ability to deal with rouge states, says Dillon.

“The reason we are seeing opposition to this despite its benefits is because there are people who are against greater oil and gas production in general.” Giving producers new markets would likely encourage them to continue growing production.

Lifting the ban would benefit refiners as well, says the ENRC communications director. “We are set up in this country to process heavy crude. If we were able to sell our light sweet crude at a fair market price, we would be seeing benefits there as well as continued benefits from adding value to finished, refined products made from heavy crude.”

When asked whether or not lifting the export ban would raise gasoline prices, Dillon pointed out that several studies suggest that this is not the case. Referencing research done by the Energy Information Administration (EIA), Dr. Kenneth Medlock of Rice University notes “Brent crude oil price is a more important determinant of U.S. gasoline price across regions than the WTI crude oil price.”

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