Drillers Seen Gaining From Oil-State Senators Atop Committee

Senator Mary Landrieu met with Canada’s Foreign Minister Baird about the urgency to build the Keystone XL Pipeline, image via Facebook

Feb. 11 (Bloomberg) — They’re senior senators from two of the nation’s top oil-producing states, longtime friends who are about to begin a partnership that has environmentalists uneasy and industry lobbyists counting on a shift in energy policy.

Democratic Senator Mary Landrieu of Louisiana will take the gavel at the Senate Energy and Natural Resources Committee as early as today, joining Senator Lisa Murkowski of Alaska who is already the panel’s top Republican. The combination could boost industry priorities like expanded exports of oil sought by producers such as Exxon Mobil Corp., and of natural gas sought by Dominion Resources Inc. and Cheniere Energy Inc., as well as TransCanada Corp.’s proposed Keystone XL pipeline.

“Over time, these two are going to be a pretty powerful force for energy producers and for pipelines,” said Michael McKenna, a Midlothian, Virginia, lobbyist whose clients include Treaty Energy Corp., a Houston-based oil and natural gas producer.

The committee leadership change stems from last week’s Senate confirmation of Finance Committee Chairman Max Baucus of Montana to be U.S. ambassador to China. The Energy panel’s current chairman, Democrat Ron Wyden of Oregon, will replace Baucus on the tax-writing panel. Senate Democrats who control the chamber approved the two chairmanship changes today, and the full Senate could complete the action as early as today.

Industry’s Agenda

Congress and the Obama administration are being pressed by the energy industry to expand oil and gas exploration on federal lands, ease a ban on exports amid a boom in production and issue a permit to build Keystone.

The Landrieu-Murkowski affiliation comes with limits. With Democrats in control of the Senate and its floor agenda, party leaders will probably be wary of moving big measures that would anger their environmental allies in an election year. Republicans are seeking to pick up six seats needed to take control of the chamber.

Still, analysts say the two lawmakers could jump-start discussion on some issues that could come to fruition after 2014. Landrieu is on the ballot this fall in one of the chamber’s closest races, so Senate Majority Leader Harry Reid may want to let her move at least some legislation this year that aids home-state energy interests, said analysts such Paul Bledsoe, a senior fellow at German Marshall Fund, and a former climate adviser to President Bill Clinton.

“It’s very much in the Democrats’ interests to keep the seat, and to support a top southern Democrat,” Bledsoe said.

Committee Shifts

The alliance of Landrieu, 58, and Murkowski, 56, has been on frequent display in recent weeks. The two women sat together at President Barack Obama’s State of the Union address last month, with Landrieu tweeting that she was “looking forward to sitting next to another champion for domestic energy production.”

They also both appeared at a rally last week to call on the Obama administration to authorize the $5.4 billion Canada-U.S. Keystone pipeline. At a Jan. 30 hearing of the Energy panel that examined the impact of ending the 1970s-era ban on crude oil exports, their differences with Wyden on an issue that is a top oil-industry priority were apparent.

Murkowski, who has urged Obama to end the ban, defended the idea and said it’s time to at least start a debate on an emerging priority for the American Petroleum Institute and others in the industry.

Wyden said the U.S. must first weigh the costs to consumers before ending the ban, and said the debate could be extensive.

Export Ban

Landrieu appeared open to the concept, noting the U.S. Energy Information Administration estimates that crude oil production this year will average 8.5 million barrels a day, near the record 9.6 million barrels a day in 1970. She also said that exploration and production companies in her home state could benefit from more production, even as she welcomed committee witnesses who want to maintain the ban.

The two women share much in common, beyond the fact that they both come from big oil states — Alaska is the nation’s fourth-largest oil producing state, while Louisiana is No. 7.

Both are part of prominent political families. Landrieu is the daughter of Moon Landrieu, the mayor on New Orleans for eight years and secretary of the U.S. Department of Housing and Urban Development under President Jimmy Carter. Her brother, Mitch Landrieu, was once Louisiana’s lieutenant governor and is now mayor of New Orleans.

Industry Donations

Murkowski is the daughter of Senator Frank Murkowski, who appointed her in 2002 to replace him in the Senate after his election as Alaska governor. He also was chairman of the Energy committee.

Both women are veterans of close races. Landrieu has never won election with more than 52 percent of the vote. Murkowski won her first race in 2004 with just 49 percent and in 2010 won with 39 percent as a write-in candidate after losing her Republican primary to a Tea Party challenger, Joe Miller.

Both have relied heavily on oil- and gas-industry donations in their election bids.

Energy-industry donors have given Landrieu $456,300 so far this election cycle, ranking second among all industries to her campaign, according to data from the nonpartisan Center for Responsive Politics in Washington. In her 2010 election, Murkowski got $291,535 from energy-industry donors, making it her No. 3 source of industry contributions.

Close Knit

“Mary Landrieu has a complete appreciation of where jobs come from, namely, successful companies, as does Lisa Murkowski,” said John Hofmeister, chief executive office and founder of Citizens for Affordable Energy and president of Shell Oil Co., the U.S. unit of Royal Dutch Shell Plc, from 2005 to 2008. “They also understand where tax revenue comes from. Again, successful companies and individuals who are working.”

Each has visited the other’s home state. Murkowski in 2012 visited Louisiana and toured offshore oil rigs. That same year, Landrieu went to Kodiak, Alaska, where at Murkowski’s request the Louisiana lawmaker led an appropriations committee field hearing on the Coast Guard presence in Alaska.

“We are really very close friends,” Landrieu said in an interview. “I’ve supported her in her elections, she’s been supportive of me. She’s just a wonderful person. I worked very close with her father, so there are family ties that go back quite aways.”

Murkowski declined to comment for this story.

Alaska Drilling

Their common ground on policy extends into many areas on energy, primarily the concept of more production through drilling or other means. Both support oil drilling in Alaska’s Arctic National Wildlife Refuge.

Also, the two in 2013 introduced a law to expand a 2006 Landrieu measure that gave Louisiana and three other Gulf Coast states 37.5 percent of offshore production revenues. The new measure removes a $500 million cap on revenue-sharing and accelerating payments to coastal states. It also shares revenues with states that produce any form of energy, on land or offshore.

Once Landrieu takes the gavel, she’ll have added clout to try to jump-start that debate, and also more power over agencies that she can jawbone to get things she wants, McKenna said. In particular, he said, that could extend to efforts to get expanded overseas sales of liquefied natural gas.

Of 23 LNG export applications filed with the Energy Department, at least eight are for facilities in Louisiana or near its coast.

Limited Action

Byron Dorgan, a lobbyist and former Democratic senator from North Dakota, said it’s doubtful that the two lawmakers will see much action on controversial measures on the Senate floor this year. It’s over the longer term, if Democrats keep control of the chamber and Landrieu stays put, that the relationship may bear real fruit, he said.

“There’s not a lot of evidence that this is going to be a big year for energy legislation,” Dorgan said. “But I would expect that Mary and Lisa leading that committee will hold a lot of hearings and try to advance a lot of things.”

Environmental groups say they’re alarmed at the prospect of a Landrieu-Murkowski alliance. Landrieu’s lifetime voting score with the League of Conservation Voters released today is 51 percent, the second-lowest for any Democratic senator. Wyden’s score is 90 percent.

“We are concerned that given their past records that they will pursue an agenda of more drilling when we should be reducing our use of dirty an dangerous fossil fuels ad moving to a clean-energy future instead,” said Tiernan Sittenfeld, senior vice president of the League of Conservation Voters.

– Laura Litvan, Copyright 2014 Bloomberg.