An idea floating around the U.S. Department of Interior would be funny because of its nuttiness if it were not so frightening for the same reason. It suggests that the U.S. and Canada merge the Arctic National Wildlife Refuge with two Canadian national parks to create a huge, transborder area in which nobody could do anything except study animals and plants.
Oil lies at the core of the issue, of course. ANWR holds the best onshore oil and gas prospects in the U.S. But keeping drilling and production equipment out of it is one of environmentalism's holy missions. Congress so far has refused to approve ANWR leasing. The ultimate victory for environmental groups, though, would be wilderness designation for ANWR, which would lock out leasing, drilling, and nearly every other form of economic activity forever.
A TOUGH FIGHT
Wilderness designation for ANWR under U.S. laws would be a tough fight. If the issue came before Congress, the Alaskan delegation would properly ask how certain other states might respond if Washington, D.C., decided to prohibit fishing on federal lands offshore or grazing on federal holdings onshore. Foreclosing economic activity is serious political business. The Interior Department proposition offers a route to ANWR wilderness designation that bypasses the inconvenience of a direct vote in Congress.
Environmentalists love the idea. Their friends in the Interior Department see coordinated management as a way to compensate for the administration's proposal to end the ban on export of Alaskan crude. Political dealmaking like this tends to obscure issues like state's rights, international sovereignty, and economic health.
Someone at the Interior Department sniffed enough essence of rodent to leak word about coordinated management and draw out an official disclaimer to the effect that it all amounted to "low level" banter. But the idea appeared in a memo to high level officials and began in a meeting between Sec. Bruce Babbitt, who supports wilderness designation for ANWR, and Canadian Deputy Prime Minister Sheila Copps. Oil and gas companies should take it seriously.
Moreover, companies of all sizes should take any threat to ANWR seriously. When the ANWR leasing issue surfaced before, some producers dismissed it as the sole concern of a few big companies. That was wrong.
ANWR is one of only two areas in the U.S. that holds out hope for additions to reserves in the billions of barrels and to production in the millions of barrels per day. It is one of only two areas with which the U.S. can compete internationally for significant amounts of exploration and development capital. The other area is offshore.
A MATTER OF SCALE
To be sure, areas other than ANWR and the U.S. offshore are important. They will make or break domestic producers, account for the majority of active rigs in the country, spawn technology, and produce most of the country's oil and gas.
But under all assessments of the U.S. petroleum resource, future reserves and production gains capable of significantly altering current decline rates must come from ANWR or offshore. For simple reasons of scale, the federal government's handling of these two areas tells much about its commitment to domestic production. By extension, it does the same with regard to oil industry investment, technology, and jobs as well as economic activity in general. How the government treats ANWR and the OCS is how the government will treat producers in general. Lately,. that treatment has not been good. If coordinated management locks up ANWR, it will never improve.
Copyright 1994 Oil & Gas Journal. All Rights Reserved.
