Energy Rules: Why America is Foreign Oil Dependent


PRUDHOE BAY, Alaska - The Trans-Alaskan Pipeline System is one of the largest in the world, stretching more than 800 miles.

When the system began, it delivered 25 percent of the nation's domestic crude supply. But today, the flow is in danger.

Alaska is the home of crude oil reserves that experts say could provide a large percentage of America's energy for decades.

Most Alaskans agree that the only way to reduce U.S. dependence on foreign energy in the near future is to boost Alaskan oil production.

The trends, however, don't look good.

Contradicting Permits

"When the pipeline started out in the 70s we moved about 700,000 barrels in the first year and it quickly ramped up to 2.1 million barrels a day," explained Michelle Egan, corporate communications director at Alyeska Pipeline. "That number has been dropping."

Prudhoe Bay is North America's largest oil field and the beginning of the Trans-Alaska Pipeline.

Output has been dropping for years and oil workers say it's not because there isn't enough oil -- the problem is with permits.

"Seems the regulatory agencies lately have, in the last several years, stifled exploratory drillings through permitting process," said Roger Wilson, North Slope operations manager for MagTec Alaska.

"Different agencies have different requirements and it seems when you're compliant with some permits you're out of compliance with other permitting agencies," he continued.

"The contradictory permitting between federal and state agencies seems to be the problem," he said.

Nothing can happen without dozens, if not hundreds of permits and the bureaucracies overseeing the process make the IRS look streamlined.

Exploration at a Standstill

Far-reaching environmental regulations and taxes put on oil companies mean new exploration has come to a standstill.

"In the last couple years, our business has really dropped down due to what has been happening up here," Magtec shop foreman Jim White added.

"No new wells are being drilled. Nobody is doing any production up here. Everything is completely on stand still," he said.

"They are all losing there jobs. You can tell the population from last year to this year, it has went down a tremendous amount of people," he said.

Oil companies are reluctant to comment because any criticism of the process could make business even more difficult.

EPA Holdup?

But the Alaska Support Industry Alliance, a non-profit advocacy group that rallies on behalf of Alaska's 35,000 workers, was happy to explain the issue further.

"There are a lot of challenges that are facing Alaska oil production today. The largest challenges are the permitting challenges that come from the federal government and the state government," general manager Rebecca Logan explained.

"We have a lot of barriers that have been put up by the federal government and by the state government," she added.

None of the large federally controlled projects are moving forward at this time. So, where is the holdup?

Logan pointed to the Environmental Protection Agency.

"They are an agency that is full of people who are not elected officials, who have all kinds of authority, and who have stopped progress on resource development here the last five years in incredible ways by denying permits or rescinding permits," she said.

"The EPA has blocked the companies that are trying to start these resource development projects every step of the way," she said. "They are out of control."

Chilling Production

If these issues aren't solved soon, the ramifications could be drastic.

The pipeline was designed to be a warm oil pipeline, but as the crude oil drops in the pipe it has a longer resident time and gets colder as it moves from Prudhoe Bay to Valdez 800 miles.

With that cold comes problems with water drop out, ice build up, wax and increasing potential for corrosion.

At pipeline headquarters in Anchorage, engineers are attempting to keep the oil flowing at lower levels.

If the pipeline is forced to shut down, by law, it must be removed and the land restored to its pristine state.

If that happens, America will have lost its most reliable means of transporting domestic crude.

"Alaska is absolutely the answer to our domestic energy needs," Logan said. "Our most pressing need as a nation is to reduce our dependence on foreign oil and the best way to do that is to fill the Alaska pipeline."

--Originally aired October 12, 2011.

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