Major oil producers are taking a wait-and-see attitude as a showdown looms in Washington this month over drilling in a protected area of Alaska. A presumably oil-rich but environmentally sensitive pocket of the 19 million-acre Arctic National Wildlife Refuge remains off limits to oil companies, after more than two decades of debate. Environmentalists have fought hard to protect the refuge's coastal plain, home to polar bears, caribou and musk oxen, while lobbying by oil companies has waned as the battle has turned largely political.
But surging oil prices, hovering around $50 a barrel, coupled with falling United States domestic production and rising dependence on foreign oil has put renewed focus on the United States' largest onshore, unexplored, potentially productive geological basin.
The issue looks set to return to the Senate this month as the Bush administration adopts a new strategy to get approval for drilling, making it part of a budget bill rather that a separate bill that cannot be filibustered by the Democrats.
"If -- or when -- it is opened, then it is probable that most of the industry would be interested in going in," ExxonMobil spokesman Russ Roberts said.
ExxonMobil, ConocoPhillips and BP are the three major producers operating or invested in Alaska's main oil producing area, the North Slope, which is adjacent to the Arctic National Wildlife Refuge or ANWR.
Oil companies argue that Area 1002 of the refuge covering 1.5 million acres of coastal plain between the Prudhoe Bay area of the Alaska North Slope fields and Canada's Mackenzie River Delta, can be developed in an environmentally sound way.
"Advanced technology has greatly reduced the 'footprint' of Arctic oil development. Less than 1 percent of the coastal plain would be subject to exploration and production activities," ChevronTexaco spokesman Mickey Driver said.
But the oil majors face a losing battle to win over environmentalists. Last month more than 1,000 scientists joined forces to lobby President George W. Bush against drilling in the refuge, in hopes of winning permanent protection for the ecosystem.
"It simply does not make sense to destroy the Arctic Refuge for oil that won't lower prices and won't make a noticeable dent in our dependency on foreign energy," said Rodger Schlickeisen, president of Defenders of Wildlife.
The protests along with a lack of critical data, such as seismic, to indicate the area's real potential have sidelined oil companies who have focused on other projects around the globe while the tug-of-war over ANWR continues.
"It is just not an area we would be particularly interested in," said Unocal Corp spokesman Barry Lane. Unocal is active in Alaska's Cook Inlet, which is mainly gas producing.
Geologists estimate between 5.7 billion to 16 billion barrels of oil lie under the tundra and ice of ANWR but drilling is the only way to find out for sure.
With this uncertainty, ChevronTexaco in 2000 withdrew funding from Arctic Power, the main lobbying group seeking to open the refuge, and BP followed suit in 2002.
ConocoPhillips was reported to have also left the group in 2004, but no one at the company was available to confirm this.
ExxonMobil remains in Arctic Power, which receives funding from the state of Alaska.
"The decision on ANWR is up to others and we wouldn't be an advocate either for or against," BP spokesman Darren Beaudo said.
He said if the US Congress and the president approved drilling, BP would evaluate the opportunities and assess them against the other exploration opportunities in its portfolio.
A report from the United States Energy Information Administration last year said if Congress gave the go-ahead to drilling in the refuge, the crude could start to flow by 2013 and reach a peak of 876,000 barrels of oil a day by 2025, boosting domestic production nearly 20 percent.
This would help stem a decline in domestic production and extend the life of the Alaska oil pipeline as production from the adjacent North Slope fields falls, to a forecast 500,000 barrels a day -- half the current levels -- by 2025.
But the EIA report found that even at peak production, the United States, which currently consumes about 20.8 million barrels of petroleum a day, would still import two-thirds of its oil versus an expected 70 percent without ANWR.
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