Although the U.S. Department of Energy is rethinking the issue, Alaska's senators face their usual uphill battle to persuade Congress to remove the 21 year old ban against North Slope oil exports.
The ban was enacted in the 1973 Trans Alaska Pipeline Authorization Act and the 1979 Export Administration Act. Alaska wants the ban lifted so it can reap higher revenues for its oil. And California independent producers say, removal of the ban would make their crude more competitive on the West Coast market.
A House subcommittee has approved an Export Administration reauthorization bill that would continue the ban, and the Senate banking committee is expected to do the same.
The Clinton administration supports those bills, yet DOE is studying whether the ban should be lifted as part of its gas and oil initiative (OGJ, Dec. 20, 1993, p. 21).
In 1992 Alaska sued the U.S., challenging the constitutionality of the ban. A federal court upheld the ban Mar. 1, and Alaska plans to appeal.
ALASKAN VIEW
A Senate banking subcommittee has explored the issue briefly.
Sen. Ted Stevens (R Alas.) said 1.6 million b/d of Alaskan crude moves to Lower 48 markets, 85% to the West Coast and 15% to the Gulf Coast.
He said that has created an artificial crude surplus on the West Coast, which has depressed the value of Alaskan oil $3[bbl under what it could be exported for, amounting to a $400 million/year royalty loss for Alaska. He said the ban could restrain the development of as much as 10 billion bbl of oil in Alaska and California.
Stevens blamed the ban on "a short-sighted effort to protect a few hundred jobs" in the domestic shipping industry because the Jones Act requires oil moved between U.S. ports to be carried in U.S. flag tankers. He said some of the oil is being illegally exported after it reaches U.S. ports.
Sen. Frank Murkowski (R Alas.) argued the ban does nothing to enhance U.S. energy security.
He said the oil depresses California oil prices, and the only beneficiary, is California refiners. He said if the prohibition were lifted, ample Alaskan oil still would be available for the California market.
OTHER VOICES
Rep. Bill Thomas (R Calif.) said lifting the ban would raise California crude prices $2 5/bbl, which independents need to produce heavier crudes through steam injection.
He said that would increase California production 100,000 200,000 b/d, creating 6,000 15,000 jobs and reducing tanker traffic on the coast.
Philip Ryall, president of Stockdale Oil & Gas Co., Bakersfield, Calif., said his company has 10 million bbl of recoverable heavy oil on one property and 30 million bbl of medium gravity oil on another, which are uneconomic at the present oil price.
But Peter Sutton, Tosco Refining Co. senior vice president, said lifting the ban would raise California oil prices only 75cts to $1/bbl and would not spur oil field investments or production.
He said producers are getting fair market prices for their heavy crude. He noted they can export it to compete in the Far East Fuel oil market, but very little has been shipped because the price is higher in California.
Marine associations also urged Congress to retain the ban.
