Posted on 03/01/2005 8:56:32 AM PST by thackney
WASHINGTON--Gov. Frank Murkowski had one "hardball" question for the U.S. oil industry's leading public representative on Monday afternoon in Washington, D.C. Last week, a New York Times headline reported that "Big Oil turns cool toward drilling in arctic refuge," and the story below it quoted two company spokesmen explaining why they weren't entering the debate over drilling in the Arctic National Wildlife Refuge.
"I think I'll throw you a hardball," said Murkowski, addressing Red Caveney, president of the American Petroleum Institute, who had just finished a presentation to the National Governors Association's Natural Resources Committee.
Caveney said in his presentation that the industry supports access to public lands and greater domestic oil production, noted Murkowski, chairman of the committee.
"But on the ANWR issue, two of the major companies have withdrawn their active support publicly, and one hasn't," Murkowski said. "Would you care to comment since ANWR is always a topic that comes up in the energy bill?"
Caveney said he didn't have any details about why two major companies active on the North Slope--BP and ConocoPhillips--decided to drop out of Arctic Power, the pro-drilling lobbying group, while the third--Exxon Mobil--has stayed in.
However, Caveney said, "the leadership of the industry association is 100 percent committed" to opening ANWR.
"There's just too much potential for crude oil and natural gas up there to leave that thing alone," Caveney said. "We now know that we can probably produce, in an environmentally sound way, oil and natural gas on the North Slope better than anyplace else in the world. I don't know of anywhere they hold us to higher standards."
Murkowski then turned to Daniel Yergin, chairman of Cambridge Research Associates and author of a Pulitzer Prize-winning history of the oil industry. Yergin also had given a presentation to the panel. "I have no knowledge of why these two companies ...," Yergin began.
"They have a little environmental sensitivity, that's my point of view," Murkowski said. "But I don't know, I'm not objective on the subject."
"Right," said Yergin. "Are you expecting them to change?"
"Well, there's tales," Murkowski said, then added, after pausing, "... to be twisted."
"Well, you know the politics better than any of us as to what's involved," Yergin said.
A variety of oil industry watchers have recently been questioning whether the industry is even interested in the 1.5-million-acre coastal plain. Among the most regular are environmental groups, which hope the industry's alleged lack of enthusiasm will dampen support in Congress for allowing drills into the area.
The U.S. Geological Survey estimated in 1998 that ANWR has a 95 percent chance of containing at least 5.7 billion barrels of technically recoverable oil. It has a 5 percent chance of containing as much as 16 billion barrels.
At oil prices of $13 per barrel or below, none of the oil would be economical to develop, the agency estimated. But at $30 per barrel, between 3 billion and 10.4 billion barrels could be worth pumping out under industry standards for return on investment, it said. In comparison, Prudhoe Bay and other North Slope fields had produced about 14 billion barrels of oil from 1977 through the end of 2002. Caveney, speaking with reporters after the governors association meeting, said the industry as a whole is still very interested.
"Individual companies within the industry are going to make ultimately their own individual decisions as to what they're going to do, whether that's going to be a 'legacy' area for them," he said. "That's their choice, not ours, but my leadership is in support of, collectively, doing this."
The New York Times quoted an anonymous administration source in last week's article who said oil companies wouldn't go into ANWR even "if the government gave them the leases for free." If a lease sale is held, Caveney said, "I think you will find no lack of people willing to participate." Jerry Hood, Washington director of Arctic Power, said the same thing last month, scoffing at the idea that oil companies operating on the North Slope would walk away from a sale. The state, however, has offered leases in the three-mile-wide strip of water just offshore of ANWR with no takers the past two years. Caveney said that lack of interest may be due to anticipation of congressional action on ANWR. Companies could be saying "maybe I'm better off waiting," Caveney said.
Congress first set aside the ANWR coastal plain in 1960 as part of a wildlife "range." Twenty years later, it renamed it a refuge, expanded its boundaries to 19.6 million acres and called for a study of the coastal plain's wilderness value and petroleum potential. Debate about whether to allow drilling has continued now for another 25 years.
Washington, D.C., reporter Sam Bishop can be reached at (202) 662-8721 or sbishop@newsminer.com .
Transportation issues abound in ANWR, too.
My understanding is that the natural lift in ANWR is low to non-existent, so electric charges for ESP (submersible pumps) will be very high.
Personnally, I'm all for exploiting other contries' oil first before China and India get on the band wagon and there is a REAL demand crunch.
on increase = only increase
Labor and eco regs are always the stumbling blocks to domestic production. Tough to do much about the labor cost, but as for the regs, the industry should stop trying to appease the green whackos and should, themselves, take a cue from Murkowski and play some friggin' hardball. At least that's how I see it.
Given the infrastructure you mention, plus figure in injecting CO2 to keep pressure up (if they don't re-inject the gas, as they currently do in Prud. Bay, I think, due to lack of pipeline) I am guessing oil needs to stay above $34 a barrel to make a profit in ANWR.
Probably true, but I would not be surprised to find oil dropping to $38-40 fairly quickly once Iraq resolves, which is enough to make some people too nervous to invest.
A lot easier to go to New Mexico and drill comparable wells (in temparate climate) and pump it out at $28/barrell. Still not Saudi $8, but a lot more profit.
I regards to the true cost at the refinery, how does tanking oil 13,000 miles from the Gulf compare to bringing down it from Alaska?
Well, something like 70% of the nations' refineries are on the Texas gulf coast ---- literally on the Houston Ship Channel, 10% more are inland, generally smack in the Middle of the Permian Basin.
Probably could have been built somewhere else logically, but it pays to be first, sometimes.
Sorry, I just figured out you meant PERSIAN gulf, not Gulf of Mexico.
I am not sure. Cost of production in Saudi, et al, has been very low, because of natural lift --- something akin to $5 a barrel, I think.
Transporting by tanker --- I don't know. I do know, however, that most of the cost ---- tankers and ports --- is already spent. So there is some inertia there, even if building a pipeline might have been a better choice in hindsight.
What is interesting to me is the poor quality of ME crude. Texas crude is basically a mix of Kerosine and Gasoline. I could run a diesel off of what I get out of the ground. ME crude is black vasoline. I could pave a road with the stuff.
Thanks for the reply, as this thread is very informational.
It just seems to me that the opponents of domestic drilling on environmental terms have no problem with the risk of tanking crude 13,000 miles past the coastlines of thirty or so countries. I guess it's NIMBYism in the extreme.
I'm sorry but this is not true. It seems like it when you drive 225 East from Houston, but there are a lot more in the country than that. As an example, the figures from Dec 2004 (latest date I found complete data) is:
USA total refinery sales of gasoline:
Total USA 234,997,300 gallons
Total Texas 34,546,900 gallons
I'm guessing that figure would be very, very hard to support. I work on projects for the North Slope.
whoops, make that Nov 2004, not Dec 2004
When I worked in Yemen, the crude we produced was ultra-light. Almost no paraffins or asphaltines.
Cheney and Alaska Gov. to discuss oil, natgas projects
Tuesday, March 1, 2005 8:55:28 PM
http://www.afxpress.com
WASHINGTON (AFX) -- Alaska Governor Frank Murkowski said Tuesday he is slated to meet with Vice President Cheney on Wednesday to discuss two major oil and natural gas projects. At the top of the discussion agenda is opening Alaska's Arctic National Wildlife Refuge to oil and natural gas exploration, a policy long favored by the administration but requiring congressional approval. Congressional Republicans are considering two strategies to pass legislation permitting exploration -- one would include the provision in an energy bill and the other would use the budget resolution to avoid a 60-vote requirement. Murkowski,a Republican, said he also plans to discuss where things stand with a proposal to build a natural gas pipeline stretching from Alaska's north slope through Canada to the lower 48-states
This story was supplied by MarketWatch. For further information see www.marketwatch.com
http://futures.fxstreet.com/Futures/news/AFX/singleNew.asp?menu=latestnews&pv_noticia=1109710527-d8260f08-49214
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