ANWR LEASING QUESTIONS LOON

The U.S. oil and gas industry faces an interesting choice over leasing of the Arctic National Wildlife Refuge Coastal Plain. It can press for leasing now under the assumption that the political climate will never be better. Or it can assume that the climate might improve and delay the tussle until then.

Whatever choice it makes, the industry must base its case on the issue's only politically compelling aspect-economics. Much more is at stake than the question of who might seek and win ANWR leases. ANWR is a bellwether issue for the upstream oil and gas industry.

LONG SHOT

Until now, congressional committee assignments made ANWR leasing a political long shot. Opponents chairing crucial committees could block leasing legislation singlehandedly.

That all changed last month, when Republicans took control of both houses of Congress. The question is no longer whether an ANWR leasing bill can reach the House and Senate floors. It can. The question now is whether the legislation can pass both houses with enough votes to override the veto likely from President Clinton. The answer is far from certain.

Leasing supporters can wait and hope that Republicans retain control of Congress in the next election and win the presidency as well. No longer facing a veto, ANWR leasing legislation then would not have to garner two-thirds support in both houses. Winning simple majorities might be difficult enough.

In the choice between these alternatives, politics isn't the only consideration. Denied access to ANWR, major companies needing world-class exploratory prospects have committed money and manpower to opportunities outside the U.S. and may be stretched too thin to focus on ANWR now. And frustrations linger over ANWR leasing's previous best chance for passage. It was 1989, the year of the Exxon Valdez oil spill, and the bill stalled in the Senate.

Moreover, a new rush at ANWR leasing might be risky. A leasing bill could become a rallying issue for environmental extremists now in political retreat. Successful opposition might revive efforts to designate ANWR as wilderness and preclude leasing forever.

That's partly why the battle must be waged in economic terms. There are jobs, personal incomes, and government revenues at stake. The U.S. should not forgo those economic benefits in order to elude the minimal environmental effects of even full-scale development. U.S. politics lately has accommodated such balancing of economic and environmental values. Industry should frame its arguments to that context because it is the only context that works.

Furthermore, all of industry should argue the issue. The last time ANWR leasing received serious attention, independent producers largely withheld support, saying ANWR was of interest only to the large companies able to operate there. They thus helped opponents reduce the issue to a conflict between environmental and corporate, rather than economic, concerns.

PROSPERITY, DEVELOPMENT LINK

In fact, ANWR tests official attitudes crucial to producers of all size. It asks the government to acknowledge a link between national prosperity and resource development and to countenance minor adjustments in the landscape so that development can proceed. Not much separates antagonism toward ANWR leasing in particular from antagonism toward leasing, exploration, and development in general.

This is a battle not just for leases in Alaska but for overdue political recognition that upstream oil and gas activity serves U.S. economic interests. Sooner or later, the industry needs to win it.