The House of Representatives last week repealed another remnant of 1970s-era U.S. energy policy.
The House voted 324-77 to allow the export of Alaskan North Slope (ANS) crude, ending a 22 year ban.
The Senate passed a similar bill earlier (OGJ, May 22, p. 28). Now a conference committee will draft a compromise bill. But the overwhelming votes in both houses and the Clinton administration's support seem to assure enactment.
TIMES CHANGE
Congress imposed the ban on ANS crude exports when it was anxious to preserve U.S. oil for the U.S. market in the event of another oil embargo.
But times have changed. The fluidity of the world oil market and creation of strategic oil reserves have dulled the threat of an embargo, even though imports supply 50% of U.S. consumption.
What's more, removing the ban makes economic sense.
It is cheaper to ship Alaskan North Slope crude to the Far East than to U.S. markets, especially on the Gulf Coast. That means a higher netback for producers and improved economics for marginal oil in Alaska and California, resulting in production of 110,000 b/d of marginal oil. Both states would then collect more royalties and taxes.
California independent producers have long complained that a glut of Alaskan oil has discouraged their heavy oil production. The biggest losers will be Lower 48 West Coast refiners, who would have to pay more for their feedstock.
The Department of Energy predicts only about 1/10th of the 1.6 million b/d of North Slope production will be exported.
The House and Senate bills, which are to go into effect Nov. 1, allow the president to halt exports during an oil shortfall. They require U.S. flagged ships to carry the oil, which the administration says doesn't violate trade laws but could prompt a World Trade Organization complaint anyway.
MILLER'S DISSENT
Rep. George Miller (D-Calif.) complained, "The only sure winners in allowing exports are one multinational oil company, British Petroleum, and one state, Alaska."
The House rejected Miller's amendment to limit exports to the excess of 1.35 million b/d, the volume currently consumed in Hawaii, Washington, Oregon, California, Nevada, and Arizona.
Several proenvironmental congressmen said they feared that lifting the ban will increase pressure for exploration on the Arctic National Wildlife Refuge Coastal Plain.
The House gave Miller some compensation the day after its vote.
It approved his resolution directing House conferees to reject a provision in the Senate bill that would allow the Interior Department to grant royalty relief for marginal oil and gas fields in the deepwater Gulf of Mexico.
Miller argued royalty relief was unnecessary and "simply a raid on the Treasury by major oil companies."
House conferees will be led by Rep. Don Young (R-Alaska), who favors relief and may simply ignore the directive.
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