President’s FY 2005 budget proposal assumes ANWR lease sale revenues

Larry Persily

Petroleum News Government Affairs Editor

Few seemed very surprised that President George W. Bush included projected revenue from potential Arctic National Wildlife Refuge oil and gas lease sales in his proposed budget to Congress, though even supporters acknowledged approval to drill in ANWR is not likely this year.

“It’s almost a sort of pro forma action these days,” said Roger Herrera, coordinator in Washington, D.C., for Alaska-based Arctic Power, the mostly state-funded group pushing to win congressional approval to open ANWR to exploration and production.

“It’s better than not being there,” he said of the president’s Fiscal 2005 budget, submitted Feb. 2. This is the fourth year of Bush’s presidency and the fourth time he has included ANWR lease sale revenues in his proposed budget. Senate opponents have managed to block repeated legislative attempts over the years to lift the federal ban on drilling in the refuge’s coastal plain east of Prudhoe Bay.

And this being a presidential election year, Herrera sees the same political problems in winning an ANWR vote in the Senate, especially since it would take 60 votes in the 100-member chamber to block a filibuster — unless supporters can stick ANWR in a budget bill that is exempt from the filibuster maneuver.

Budget does not open area to drilling

Bush’s budget assumes the Department of Interior would collect $2.4 billion from its first ANWR lease sales, which under federal law would be shared 50 percent with the state of Alaska and 50 percent for the federal government.

The ANWR revenue, which first appears in the president’s budget for Fiscal 2006, represents about one-twentieth of 1 percent of Bush’s proposed $2.4 trillion spending plan for Fiscal 2005, which the administration estimates will run at a $363 billion deficit. Bush proposed that the $1.2 billion federal half of ANWR leasing fees should go toward increased funding for the Energy Department’s renewable technology research programs, with the money to be spread over seven years.

The Bush administration wants to lease between 400,000 acres and 600,000 acres in the refuge’s coastal plain in 2005. The Interior Department estimates ANWR could hold several billion barrels of recoverable oil, with an estimated production of 5 billion barrels if prices hold around $22 per barrel. The Alaska Department of Revenue estimates it would take seven years after congressional approval for production to start.

The Alaska Legislature has appropriated $12.6 million over the past decade for the state’s lobbying efforts to push Congress to open the wildlife refuge to oil companies.