Sam Fletcher
OGJ Online
HOUSTON, May 17 -- The Bush administration's proposed energy policy hit all the right chords among oil and natural gas executives, who appreciate the long term approach of that plan.
"I like the fact that they recognize there's no quick fix. It will take a comprehensive and long-term plan," said Roger Plank, executive vice-president and CFO of Apache Corp., Houston.
Unlike past policies, the new proposal is more supply oriented, said Plank, who is also president of the Texas Independent Producers & Royalty Owners Association.
"The US has not had an effective, comprehensive energy policy in decades, and the supply imbalances we're seeing today are largely a result of that," said Robert J. Allison Jr., chairman and CEO of Anadarko Petroleum Corp., Houston, one of the largest independent international oil and gas exploration and production companies. Last year, Anadarko had the most active drilling program in North America.
President George W. Bush "has got a good plan, but he can't do it overnight," said Michel T. Halbouty, the rock-ribbed Republican oilman who headed the energy transition team when President Ronald Reagan and Vice-Pres. George H. Bush first took office in 1981. Now 92, Halbouty still runs Michel T. Halbouty Energy Co., Houston, and is still drilling wildcat exploration wells.
To produce the amount of additional energy that the US market will require over the next few years, Halbouty said, "Everything has to come together just right. We're going to have to get more rigs, workers, pipelines. It takes time."
Allison said, "We're way behind the demand curve, and it's going to be hard to catch up. It's going to take time, and the long-term approach of the administration's plan is very appropriate."
The administration's proposed energy policy strikes the right balance of increased supply and conservation, said Archie W. Dunham, chairman and CEO of Conoco Inc., Houston.
"Clearly, we need to increase domestic supplies of natural gas and oil, remove barriers to improving the nation's energy infrastructure, and make logical use of abundant coal and renewable resources," Dunham said. "Rethinking our attitudes toward nuclear power also makes sense."
However, he said, "Increased supplies must be accompanied by sensible conservation efforts if we are to solve the problem long-term."
Allison said, "To encourage new production, we need the government to reverse administrative and legislative policies that have put hundreds of millions of acres of resource-rich public lands and waters off limits to drilling, either through moratoria or through measures such as President Clinton's 'roadless' designation."
Halbouty, one of the first independents to drill in Alaska, endorsed the proposal to open for exploration the Arctic National Wildlife Refuge, the most promising US onshore prospect for large oil reserves.
The proposed exploration sector on ANWR's coastal plain represents just 8% of the refuge's total area, said Allison.
"The new Alpine field that we developed with Phillips (Petroleum Co.) on the North Slope of Alaska, just 60 miles west of ANWR, demonstrates that oil can be developed safely and responsibly in sensitive Arctic environments with very little impact on the environment and no damage," he said. "At the Alpine field, new technology has allowed us to develop the 40,000-acre field from two gravel pads totaling 100 acres."
Allison also supports the proposed lease sale 181 for the eastern Gulf of Mexico in December, "and a regular schedule of sales after that." He called for additional new leasing programs for the East Coast, West Coast, and waters offshore Alaska.
"We also need to eliminate delays on areas that are open for leasing," said Allison. "We are not trying to take shortcuts on environmental protection. But the approval system has gotten out of hand, and it can take anywhere from 2-5 years in some areas to get all the permits we need to drill. This process should be streamlined. New regulations should include rigorous cost-benefit analysis."
Dunham said he is "especially encouraged that the policy recommends a review of unilateral sanctions with an emphasis on US energy security. Unilateral sanctions are not effective and penalize US companies striving to increase global supplies of oil and natural gas, which ultimately impact the price and availability of energy in the US."
The policy proposal calls for the US Department of Energy to invest $2 billion during the next 10 years in research of clean coal technology. It also suggests expansion of nuclear energy.
"More nuclear power plants will have to be built. One ton of uranium can produce as much energy as 17,000 tons of coal," Halbouty said. "The president can't get enough additional energy quickly without nuclear plants. But it takes at least 2 1/2 years to build any kind of plant for generating electricity. It may already be too late."
"We think the real energy crisis occurred during the 1990s, when energy prices fell so low that oil and gas producers weren't earning their cost of capital," Allison said. "We had to slash our drilling budgets to stay afloat, and as a result, today we're living on oil and natural gas discoveries made in the 1970s and 1980s."
Contact Sam Fletcher at [email protected]