Providing coverage of Alaska and northern Canada's oil and gas industry
January 2007

Vol. 12, No. 3 Week of January 21, 2007

MEET ALASKA 2007: ANWR drilling hopes dim in new Congress

Weak numbers, lack of imagination will hamper Democrats in efforts to pass legislation for or against Arctic drilling legislation

Rose Ragsdale

For Petroleum News

Forces amassing to push legislation through Congress that would open the coastal plain of the Arctic National Wildlife Refuge to oil and gas drilling likely will encounter the same roadblocks in the new Congress as they have for the past decade.

That’s the consensus of knowledgeable sources on and off Capitol Hill.

Though a pro-ANWR White House will have the last say on any legislation that comes out of Congress during the next two years, chances of any drilling measure winning approval in either the U.S. House of Representatives or the U.S. Senate are practically nil under current circumstances, they say.

“I’m not overly optimistic that the Democrats see the wisdom of developing our domestic sources of energy, not only ANWR but our offshore areas or those in the Rocky Mountains,” said U.S. Rep. Don Young, R-Alaska. “I think that’s unfortunate because they keep talking about being energy independent. You cannot be energy independent when we’re still burning fossil fuels, which we are. So it’s going to be a rough sled.”

That’s the bad news.

The good news, however, is that prognosticators envision little downside for ANWR drilling’s near-term prospects, even though Democrats control both houses of the 110th Congress.

“I don’t know how different the situation is,” said longtime pro-ANWR lobbyist Roger Herrera. “There’s a difference in attitude obviously, but a difference in performance is very difficult to see. I don’t think the slim majorities that the Democrats have in both chambers and the lack of control they have in the White House is going to allow them to do anything with regard to energy or certainly, ANWR.”

No matter what the Democrats would like to do, Herrera said he doesn’t think they will be any more capable of passing legislation to lock up the Arctic coastal plain as wilderness with 50 percent of the Senate in opposition to what they are trying to do, than the Republicans were able to gain approval for ANWR drilling when the situation was reversed.

Senate virtually impassable

While either measure might gain passage in the House, legislation to open or close ANWR to drilling requires 60 votes in the Senate.

“ANWR has passed the House about 10 times now, but it’s always passed with about 30 votes from moderate Democrats, the so-called Blue Dogs,” Herrera said. “So I suspect an anti-ANWR vote in the House, which only requires a majority, would be quite a hard thing to achieve by House Speaker Nancy Pelosi, D-Calif., and she probably won’t even attempt it.”

Young agreed. “I don’t think they have the votes to do that, No. 1, and the president would definitely veto it,” he said.

But what if circumstances changed given world oil reserves being in relatively short supply, high oil prices and an unstable geopolitical situation in the Middle East and Asia where most of the world’s oil is produced?

“Unfortunately energy was not discussed during the past election debate and politicians, plus the public, refuse to connect oil with the Iraq situation. They even omit oil in their debate about Iran and possibly preventing its nuclear program,” Herrera said. “That is unbelievably silly. Iran controls the Strait of Hormuz, plus 3.2 million barrels per day of oil production from its own soil. Any country that can do that controls our short-term destiny, whether we like it or not.”

The Strait of Hormuz is the entrance to the Persian Gulf from the Indian Ocean. It has been a strategic focus in world affairs for thousands of years. In the past few decades, some 25 percent of the world’s oil production has passed through it.

No peak oil worries

Congress also shows little or no concern about the peaking of world conventional oil nor do the major oil companies, according to Herrera.

“The oil supply picture recently has become so skewed by unconventional oil supplies that have come onto the market that nobody is watching or caring about the volumes of conventional oil the world has been producing — even in the current high-priced environment,” he said. “My point is that to expect rational debate from the new U.S. Congress on our oil supply and energy situation is wishing for miracles. No one is willing to face up to reality and debate facts.”

One Senate Democrat, at least, is willing to take on the issue.

Sen. Mary Landrieu, a Democrat from Louisiana, has supported pro-ANWR drilling legislation in recent years, after opposing such measures during her first few years in Congress.

New Congress difficult to predict

Landrieu said she recognizes the importance of more domestic oil and gas production.

“I support energy exploration that can increase our reserves with minimal environmental impact,” she said. “While expanded drilling in the Gulf of Mexico is widely supported (in Congress), there is not the same consensus among lawmakers for drilling in the Arctic National Wildlife Refuge yet.

“It is difficult to predict the priorities of the next Congress; however, if there is an opportunity to do so, as I have in the past, I will support opening a portion of the refuge with the proper environmental safeguards,” she added.

Young says he believes the Democrats have dug themselves into too deep of a hole regarding energy to get out of it.

“Now if they come up with some imaginative ideas, there’s a possibility. It would take a lot of imagination to see what could occur,” he said. “It’s just that I don’t think they’ll be aggressive in trying to open the coastal plain to drilling because they know that it’s one of the ‘Holy Grails’ with the Democrats — not all the Democrats, but some of the Democrats. I just don’t see them changing that position, although I don’t see how they can come out with an energy program without recognizing the importance of developing fossil fuels.

“I mean, you can smoke all the pot in the world that you want, but you are not going to produce any energy,” he chuckled.

Middle East still a wild card

Still, if external events spark an energy crisis, anything could happen, acknowledged Herrera.

“In a way the sad thing of this situation is the merits of the issue are no longer being considered in Congress. This is especially sad because of the dangers inherent in the Middle East situation with the Iraq War,” he said.

“Regardless of how it started, the war has now evolved into an oil concern, and that’s what ANWR is all about. It’s about domestic supplies of oil. But the issue is not being debated in those terms, and probably won’t be until there is a clear understanding that an oil shortage is a fact of life and will have to be dealt with.

“That occurring in the next two years is highly unlikely, unless it occurs for political reasons. If there is some sort of upset of the status quo in the Middle East and several million barrels per day of oil gets taken out of the world supply, then I suspect the politicians will have to look at the issue on its merits rather than on whether it affects their election in the next election cycle,” he said.

“Though no one can predict the future, messing around with Iran is dangerous,” Herrera said. “If you shut off 3 million-plus barrels per day of oil, you will radically upset the world’s political balance with regard to oil supply. All bets are off. Iran can hurt the oil supply in a way that few other countries have the ability to do. To me, that doesn’t seem to be a very productive action to contemplate.”

Arctic Power may keep low profile

As for Arctic Power, the Alaska grassroots organization that has tirelessly promoted ANWR energy development since the early 1990s, new leadership in Congress means more work.

“Arctic Power’s been around for the past 13 years, and if you look at the record, you will see that record generally has been quite favorable,” Herrera said. “They’ve helped to pass ANWR legislation through both chambers of Congress on multiple occasions. And they’ve certainly helped to popularize the issue and make ANWR sort of a dictionary word across America. That’s no small positive feat.

“For them to suddenly throw all that away just because of a change of regime in Washington, D.C., and walk away from the issue, doesn’t make much sense to me. I think they will stick around,” he said.

Still, as a not-for-profit organization, Arctic Power must watch how much money it spends, Herrera said.

“During these down times, spending a lot of money is hard to justify, so I think they will go into a simmer mode, rather than a full boil.”

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