ANWR ISSUE DERAILS SENATE ENERGY BILL

Debate over drilling on the Arctic National Wildlife Refuge Coastal Plain in Alaska has derailed omnibus energy legislation in the U.S. Senate.

When the Senate tried to consider its energy committee's omnibus bill, which would permit ANWR drilling, opponents began a filibuster.

That prompted a cloture vote to end the filibuster Nov. 1, but cloture required a 60 vote majority and was 10 votes shy at 50-44 in favor of filibuster shutoff.

The energy bill then was withdrawn from the floor. Although it could be reconsidered later, a number of senators predicted the ANWR leasing chapter would have to be deleted, at a minimum.

Bennett Johnston (D-La.), energy committee chairman, said he will cooperate in attempts to revise the bill to make it acceptable to a Senate majority.

Senators fighting the bill said the ANWR issue united them, but several also objected to the bill because they said it did too little for energy conservation or did not go far enough to stiffen automakers' Corporate Average Fuel Economy (CAFE) standards for new cars.

The bill is the most far reaching energy legislation of the past 12 years. It includes many provisions reforming natural gas pipeline regulation, improving conservation, promoting production of electricity, boosting coal technologies, and reforming the nuclear industry (OGJ, June 17, p. 15).

Meanwhile, the House energy and power subcommittee completed work on a package of energy reform measures, but they do not include ANWR drilling.

SUCCESSFUL STRATEGY

Senators on both sides of the issue had predicted the vote over leasing ANWR, east of Prudhoe Bay field, would be very close.

Because opponents were unsure they could get the 51 vote majority needed to delete ANWR leasing from the bill, they decided to block the entire bill with a filibuster. Under that approach, they needed only 41 votes to defeat cloture and could recruit senators neutral on ANWR but opposed to CAFE.

"That was part of the strategy," Sen. Max Baucus (D-Mont.) confirmed after the vote.

Johnston conceded, "The environmental groups, I must say, wrote the textbook on how to defeat a bill such as this, and my admiration goes to them for the political skill they exhibited-not only environmental groups, but also automobile companies, some utilities, and what we call the 'just say no's.' They pulled together a tremendous phalanx, which was very effective. "

Sen. Ted Stevens (R-Alaska) complained the bill had been stopped by "a minority of do-nothings and know-nothings who want to stop even the debate over what we should have in a national energy policy. I believe there is still a majority in this Senate that will favor the opening of ANWR for oil exploration before we are through."

Sen. Frank Murkowski (R-Alaska) blamed the defeat on a jurisdictional dispute between the energy and environment committees, noting that environment committee senators led the filibuster movement.

Baucus said he and other opponents were willing to negotiate on a revised energy bill if it omitted ANWR and CAFE. "Our country has to have a national energy policy. We need one desperately," he said.

Sen. Joe Lieberman (D-Penn.) said, "This is a turning point for the Alaskan wilderness, the environment, and energy policy. We have drawn a line in the tundra and said to the big oil companies we are not going to allow you to drill in one of the last great wildernesses."

Sen. Malcolm Wallop (R-Wyo.), a principal sponsor of the energy bill, hinted he may offer the entire measure, including ANWR, as an amendment to an unrelated bill on the floor. Senate rules allow that.

REACTIONS

Energy Sec. James Watkins said rejection of the bill may cost the nation 300,000 jobs and add billions of dollars to its trade deficit.

He said the bill, similar to the National Energy Strategy the administration proposed last January, "has conservation, it has efficiency, it has R&D, and yes, it contains production:

"Every member of the U.S. Senate knows full well that this nation is not going to satisfy its thirst for energy on just conservation, just as each of them knows that no single oil or gas field or coal mine or nuclear power plant will. We need conservation an d production, because we know that one without the other just will not do the job."

The American Petroleum Institute balled the vote "a tragedy, because it is a serious setback to the future energy security and economic well being of every American.

"We continue to see exploration and development of the ANWR Coastal Plain as the key to increased domestic oil production. It is a project that could provide billions of barrels of oil, reduce growing dependence on insecure imports, and increase investments in our economy.

"That investment would translate into billions of dollars in benefits to the nation including 735,000 jobs, revenues for the federal and state governments, and significant reductions in the U.S. oil import bill.

"Make no mistake about it, this action occurred because of the extremism of environmental organizations and their allies in the Senate who refuse to acknowledge the need for more domestic energy production and to accept an energy policy that balances energy needs, environmental goals, and economic growth."

Mike Baly, American Gas Association president, complained that the Senate did not consider the merits of the bill. "Americans are deeply concerned about imported oil and the security of our energy supplies and need their elected representatives to respond to that concern," he said.

Ken Derr, Chevron Corp. chairman and chief executive officer, agreed: "Voters across the country should ask their senators why they won't even allow discussion of many critically needed improvements in the nation's energy policies.

"We feel the Johnston-Wallop energy bill represents a balanced package. It's important for the country to develop a sound approach to solving energy problems focusing not only on one area, such as conservation, but on all fronts-increasing domestic oil and gas development, increasing conservation, and stepping up our development of alternative fuels."

The Sierra Club called the vote "the stake in the heart of the president's energy strategy." It said, "This bill is so bad it cannot be improved. We must start from scratch" with more emphasis on CAFE and renewable fuels.

The National Audubon Society said, "The Senate has demonstrated it is not willing to adopt a 1950s energy strategy based solely on increasing production. The challenge now is to adopt strategies for the 1990s and beyond that focus on energy efficiency and renewable resources."

HOUSE BILL

Meantime, the House energy and power subcommittee completed work on its omnibus bill, but it contains neither ANWR nor CAFE provisions. The measure is expected to go before the full energy and commerce committee early next year.

Rep. Phil Sharp (D-Ind.), subcommittee chairman, said his group decided to await a National Academy of Sciences report on CAFE, due in December, before taking up that issue.

The subcommittee lacked jurisdiction over ANWR leasing, which is split between the interior and merchant marine committees.

Sharp said the House bill would have a greater effect by far than opening ANWR and anything done on CAFE.

He explained the House legislation goes further in requiring energy efficiency standards for electrical appliances and sets national energy efficient building codes for consideration by the states.

Sharp said ANWR and CAFE "are not the be-all and end-all of energy policy. If the Senate dumps both of them, it should not end energy legislation in this Congress."

The subcommittee staff said the House energy package would reduce U.S. energy use the equivalent of 2 million b/d by 2000 and another 3.3 million by 2010.

WHAT IT DOES

The House measure requires states to update building codes and directs the Department of Energy to develop a voluntary home energy rating system. It contains extensive provisions requiring federal facilities to increase their energy efficiencies.

It sets new appliance efficiency standards for lighting, electric motors, showerheads, and commercial heating and cooling equipment. DOE would work with appliance manufacturers to promote production of ultrahigh efficiency appliances.

The bill requires the Federal Energy Regulatory Commission to issue and review its orders faster, streamlines replacement pipelines and priority projects, and permits small producers to collectively sell gas.

It requires 10% of federal fleet vehicles purchases to be alternative fuel cars in 1993, increasing to 50% in 1998. Private fleets of 10 or more vehicles would have to buy 20% alternative fueled vehicles in 2002, increasing to 70% in 2005 if DOE found that necessary.

The bill provides a commercial demonstration program for electric vehicles and has incentives and programs to encourage alternative fuels and alternative fueled vehicle use. It has sections promoting electricity generation, disposal of high level radioactive waste, and uranium enrichment, along with production of coal, renewable energy, and coalbed methane.

It requires refiners and oil importers to place 1% of their oil in the Strategic Petroleum Reserve or pay the cash equivalent. They retain title to the oil and receive the proceeds if the oil were ever sold. That would permit a 150,000 b/d fill rate toward a goal of a 1 billion bbl SPR.

OIL PIPELINES

The House bill also contains provisions reforming regulation of crude oil and products pipelines.

Those changes resulted from negotiations between shipper groups and pipelines, under the sponsorship of Rep. Mike Synar (D-Okla.).

They do not decontrol oil pipelines, the original goal of that industry, but require reforms in FERC's oil pipeline program.

Synar said FERC's regulation "is plagued by inefficiency and uncertainty, problems which have grown worse in the decade since we began this debate. In fact, it is bad enough that pipelines and shippers all seem to agree that FERC's oil pipeline procedures need radical overhaul."

The bill establishes a voluntary mechanism to allow pipelines and shippers to resolve disputes concerning rates, avoiding FERC procedures "which can entail years of time and millions of dollars." And it requires FERC to reform its rate methodology within a year to "minimize the costs and burdens of regulation on all parties."

A FERC commissioner will have to chair all oil pipeline regulatory meetings and staff members could not initiate protests, investigations, or complaints without protests or complaints by outside parties.

Synar said that more amendments on oil pipelines will be offered when the full committee considers the energy bill.

"Pipelines, shipper groups, the administration, and I would like some additional directives put to FERC with respect to the outcome of these new rules," he said.

Copyright 1991 Oil & Gas Journal. All Rights Reserved.