ANWR, Offshore Are Hot Political Topics Again
If you briefly closed your eyes during a House hearing on
domestic energy policy last week, you would have thought you had
been transported back in time to the early 1990s. The cast of
characters --- former Energy Secretary James D. Watkins and former
Congressman Phil Sharp --- were the same, and the issues they
addressed - opening up the Arctic National Wildlife Refuge (ANWR)
to drilling and lifting the offshore moratoria --- rang a very
Fast forward to 2000, and ANWR and drilling off the coasts of
Florida and California are suddenly "in vogue again," said Rep.
Ralph M. Hall of Texas, the ranking minority member of the House
Energy and Power Subcommittee.
It's been eight years since the National Energy Policy Act of
1992 was passed, but still the "east and west offshore oil and gas
[drilling] moratoria continue. The Arctic National Wildlife Refuge
remains closed," remarked Watkins, now president of the Consortium
for Oceanographic and Research Education, during a subcommittee
oversight hearing last Wednesday that was called to assess the
domestic oil and gas supply/price situation.
"We went through this [ANWR issue] in agonizing depth 10 years
ago.....We felt very comfortable that we could do" exploration and
production in the Alaskan region in an "environmentally sound"
manner, he said.
".....I don't agree with [Rep. Frank] Pallone that we would
destroy one of the great areas of the world" if drilling were
allowed in ANWR. "I have been up to Prudhoe Bay.....It can be done.
We have the modern technology to do it. The oil and gas companies
up there have been responsible. And we ought to get on with it,"
Watkins said. "The gas that's available up there can be brought
back down again through Alaska, and we can either sell it or use it
He cautioned the House lawmakers on how they should approach
ANWR. "If we go after the Arctic National Wildlife Refuge by
itself, we will lose today politically. But if we put it in the
context of what else we're doing.....we can win it."
Rep. Pallone of New Jersey opposes opening up ANWR. "The
majority leadership's idea of an energy policy [is drilling in]
ANWR," a move which he said "will do nothing to increase [our]
The House hasn't proposed an ANWR-related measure yet, but the
Senate recently introduced an omnibus energy bill that, among other
things, proposes to open up the Arctic Coastal Plain, a 1.5
million-acre section of ANWR, to oil and gas drilling.
Watkins also is a big supporter of removing the bans on drilling
off the coasts of Florida and California. "...[W]ithout new
offshore exploration on either coast, we [have begun] dusting off
liquid natural gas depots again. Ten years from now I predict we
will be decrying the fact that we are being held hostage by energy
security problems to foreign imports of LNG."
Sharp, who is now associated with the Harvard Electricity Policy
Group at Harvard University, agreed that it was time for the
offshore bans to go. "I wish [they weren't] so.....I think
Indeed, Daniel Yergin, chairman of the Cambridge Energy Research
Association (CERA), believes the United States "will need to
connect [to] new frontier of gas development, including .....the
Arctic" if it intends to meet a 30 Tcf market in the 2015-2020 time
He estimated in "round numbers" that the U.S. will need to
invest one half trillion dollars in the upstream natural gas
business to get the "kind of supply that we need in 10 years." He
noted that 50% more gas reserves will be required in this decade
than in the previous decade.
The nation "is making a very big bet on the adequacy of future
gas supplies without realizing it," Yergin said. "Fifty percent of
our electricity today is generated with natural gas. In terms of
proposed new capacity, that number goes up to 96%."
So far, "we've seen a slow supply response partly because of the
oil and gas price collapse in the last couple of years. Greater
investment is needed," he noted, adding that he expects gas supply
to begin to pick up later this year. CERA believes "there is
[enough] gas supply potential to meet the challenge of increased
demand from power generation at a price that would not discourage
But Yergin, as well as most of those who testified, cautioned
"it is very important to avoid short-term intervention, government
intervention in the market that would discourage investment.
Moreover.....we need to consider how to facilitate natural gas
development in such a way that [it would] support environmental
Sharp also urged lawmakers not to impose price controls on oil
or natural gas, even though the "unsettling price swings" of this
year raised questions about solely relying on the marketplace.
"...[E]verytime we're turned to that, we've made very, very big
Rep. Rick Boucher (D-VA) called for lawmakers to renew the
Section 29 tax credit, which expires in late 2002, not only for
oil, but for gas produced from unconventional sources. He urged
that the credit be renewed prior to its expiration. If Congress
fails to take this action, he warned that a lot of wells will be
Early renewal of the Section 29 tax credit "makes a lot of sense
politically" because Congress will be letting producers know ahead
of time that it doesn't intend to let them down, Watkins noted. "In
the same token, it isn't the answer to everything," he said, adding
the credit mostly helps "mom and pop" producers, not the majors.