"Limited Industry Lobbying Role Raises Questions on ANWR Oil Supplies"

Here is an interesting article on ANWR politics from InsideEPA.com. The summary is that the oil companies aren't sure that ANWR drilling will pay off so they're not hard-charging congress. The state of Alaska is to be a big winner with drilling since it will be sharing royalties with the feds. And, those in the political fight don't really care about ANWR either, it is all about obtaining a big symbolic victory. 

Thanks to an ENV-ECON reader for providing the article.

LIMITED INDUSTRY LOBBYING ROLE RAISES QUESTIONS ON ANWR OIL SUPPLIES

Date: August 19, 2005

Despite record-high oil prices, the major energy companies widely viewed as the biggest winners if drilling in the Arctic National Wildlife Refuge (ANWR) is approved are taking a back seat in lobbying Congress to open the area to exploration because of questions about how much fuel is economically recoverable there, according to industry and congressional sources.

“There might not be enough oil in there to make a difference,” says one senior official with a major oil company that is active in Alaska. “If it gets defeated, it gets defeated.”

Nevertheless, proponents of drilling say they expect congressional support for legislation opening the area to exploration to grow as crude oil prices hover above $65 a barrel because the advocates believe they can succeed with arguments that future supplies from ANWR and other domestic sources can alleviate high gasoline prices.

While the industry remains in solid support of opening ANWR to oil drilling, sources on and off Capitol Hill say a wide range of questions may be contributing to the sector’s apparent silence as Congress is likely to take up the issue soon after Labor Day. In addition to qualms over economically recoverable oil, industry may also be considering a range of concerns, such as a bruised public image from drilling in the refuge, possible litigation against an exploration project there and potentially higher profit margins from oil drilling in other parts of the world, observers say.

With major industry players mainly out of the picture, the effort to pass legislation authorizing exploration is being led by Arctic Power, a group funded largely by the state of Alaska that has pushed the issue for years.

“The push is mostly coming from the state of Alaska,” says an aide to Sen. Lisa Murkowski (R-AK), who strongly supports opening ANWR to oil drilling. “I’m not aware of much lobbying coming from industry groups.”

Alaska officials say the area is one of the most promising for oil in North America, and only a small portion of the region would be affected by environmentally sensitive operations.

Some observers say the strategy of allowing Alaska to take the lead may be beneficial for proponents since the state has one of the most powerful delegations in Congress, with veterans Sen. Ted Stevens (R) and Rep. Don Young (R), who they believe can get the legislation passed.

The state could stand to gain from opening the wilderness area to oil drilling, with congressional budget estimates of $2.5 billion over the next five years that would pour into state coffers from shared royalties with the federal government.

To help pass the bill, the state government has provided $1.2 million to Arctic Power to lobby Congress on the issue this year. An official with Arctic Power says the group is a “broad-based citizens group from the state of Alaska.” The source says the $1.2 million is a fraction of what environmentalists are spending on their campaign to block ANWR legislation, an assertion that activists dispute.

Arctic Power does receive private donations, most significantly from ExxonMobil, but ConocoPhillips and BP dropped their financial support for the effort in recent years. The three represent the most active major oil companies in Alaska.

An Alaska state official disputes notions that the push is about revenue for Alaska, saying such criticism is a “rhetorical tactic to try to change the focus” of the debate. The source says oil companies’
involvement in pushing the issue is “largely determined by what is going on with them.”

The Alaska official says the lower 48 states could benefit greatly from the oil produced in the region, saying, “It is the most promising unexplored petroleum province in North America.”

The Alaska official says oil companies will be heavily involved with an ANWR exploration effort if Congress approves an upcoming budget bill that would likely authorize drilling in the area.

Bush administration officials and many of its congressional Republican allies are also strong supporters, with some proponents saying they view the effort as a way to hand environmentalists a major loss on one of the bedrock issues of the environmental movement.

Environmentalists say questions about the scope of the refuge’s oil supplies underscore their claims that only a small minority from Alaska is behind the push, despite widespread public opposition to the idea of damaging a pristine wilderness area.

The debate over ANWR drilling is heating up as Congress is likely to consider the issue as part of budget reconciliation legislation that lawmakers will debate when they return from their August recess. The legislation is intended to adjust existing law to match appropriated spending levels. House and Senate authorizing committees have a Sept. 16 deadline to report their bills to their budget panels, which will then tie together the legislation that would be voted on by each chamber.

The legislation would implement a non-binding budget resolution Congress passed earlier this year that directs the House Resources Committee and Senate Energy & Natural Resources Committee to find cost savings of $2.4 billion from 2006-2010.

Many believe that provision is a directive to include an ANWR provision in reconciliation legislation, especially because the chairmen of the panels, Rep. Richard Pombo (R-CA) and Sen. Pete Domenici (R-NM), have been strong advocates for opening the region to exploration. The Congressional Budget Office estimates $5 billion would be split between the federal government and Alaska during this period.

Critics say this process amounts to a back-door way of opening the refuge, particularly since lawmakers dropped the language from recently approved energy legislation in order to prevent the bill from being held up by a Senate filibuster, which requires 60 votes to overcome. Budget reconciliation legislation, on the other hand, is not subject to Senate filibusters.

But environmentalists got a boost earlier this month after 24 House Republicans expressed “strong” opposition to including ANWR provisions in the budget bill. Fourteen of the lawmakers voted for the non-binding budget resolution that passed the House earlier this year.

Environmentalists believe they may have the votes to block the budget bill, particularly since the non-binding budget resolution passed the House by a three-vote margin earlier this year (Inside EPA, Aug. 5, p1).

“We believe that the reconciliation process is an inappropriate venue to be debating this important environmental issue,” says the Aug. 4 letter addressed to Pombo. “[W]e would have serious concerns about any budget bill that contains provisions authorizing development of” ANWR. The letter is available on InsideEPA.com.

Environmentalists say the letter shows there is widespread opposition to drilling in ANWR, with only a minority from Alaska pushing the issue.

A Pombo aide says no final decisions have been made about including the provision in the budget bill, but the aide and other proponents say there is strong support in the House, which has passed legislation authorizing ANWR drilling four times in recent years only to see it stall in the Senate.

The official with Arctic Power says the letter does not necessarily translate into votes against the bill and other issues are bigger roadblocks for the budget bill, such as proposed cuts to the Medicaid program.

The official says proponents will target lawmakers they believe can swing to their side and ensure they have the votes to pass the bill with ANWR provisions.

A spokeswoman for the American Petroleum Institute, the trade association for the oil sector, would not comment on whether the group is involved in such a lobbying push, other than to say the group supports exploration in the area.

But several others note that the sector has been relatively quiet as debate is about to heat up. “That’s been the case for years, but it has gotten very little notice,” says a source with the Competitive Enterprise Institute, a libertarian think tank. “The oil companies seem to be unenthusiastic about engaging in this fight.” -- Manu Raju