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SHORT-SIGHTED GOVERNMENT POLICIES ARE DRIVING OIL INDUSTRY JOBS AND DEVELOPMENT OVERSEAS; MAJOR IMPACTS ALSO SEEN IN SOUTHERN CALIFORNIA

SHORT-SIGHTED GOVERNMENT POLICIES ARE DRIVING OIL INDUSTRY JOBS AND

DEVELOPMENT OVERSEAS; MAJOR IMPACTS ALSO SEEN IN SOUTHERN CALIFORNIA
 LOS ANGELES, April 3 /PRNewswire/ -- Short-sighted government policies are not only driving U.S. oil industry jobs and investment overseas at an alarming rate but could lead to the loss of major industrial activities and jobs in Southern California, ARCO Chairman and Chief Executive Officer Lodwrick M. Cook said here today.
 Speaking at a luncheon of the Rotary Club of Los Angeles where he received the club's 1992 Distinguished Citizen Award, Cook said there is a crisis of confidence among oil and gas industry leaders about prospects for survival and growth in the United States. "They don't think they can make it here anymore."
 While U.S. crude oil production has fallen by almost 1.3 million barrels per day since 1986, overseas exploration and development expenditures of U.S. companies have nearly doubled since 1986, growing from less than 30 percent of worldwide spending in the mid-1980s to over 50 percent in 1990, Cook noted.
 To survive, the oil industry must "go where governments encourage us to explore," Cook said, "and a lot of countries are fighting to get this industry's expertise and capital."
 The Senate's recent decision to shelve legislation that would open the Coastal Plain of Alaska's Arctic National Wildlife Refuge (ANWR) to oil and gas exploration "truly symbolizes the industry's despair," Cook said.
 "Why is Congress barring us from ANWR? The stated reason is the environment, yet we've been producing oil on the North Slope of Alaska -- only a few miles from ANWR -- for 15 years. And we've protected the environment. The air is clean. The streams run clear and the caribou thrive."
 The result of such policies, said Cook, is a rising tide of imported oil and petroleum products which last year cost the United States over $50 billion -- more than the nation's trade deficit with Japan.
 Cook said the choice facing the United States "really has nothing to do with ANWR or offshore California or the Gulf of Mexico or offshore Maine or offshore Florida. It's simply an issue of 'Do we want a domestic exploration and production industry?' If we do not, then we're on the right path. If, on the other hand, we want to hedge our bets so that all of our future is not dependent upon OPEC, if we want to sustain and strengthen the finest petroleum industry in the world, then we've got work to do -- starting now."
 Since 1981, U.S. petroleum industry job losses have totaled more than 330,000, or about 17 percent of the industry's workforce. "I could understand the public's indifference if our industry was inefficient, loaded with bureaucracy or made things people won't buy .... No, it's not our products or the way we operate that's driving us away. It's because of a defeatist philosophy that's taken hold in this country.
 "That philosophy says that trying to maintain our energy strength is too hard on our air, water, land and wildlife. So let's get the stuff somewhere else -- until we can do away with it altogether."
 Cook said that the U.S. attitude toward oil reflects both a giant contradiction and a utopian dream.
 "The American consumer wants to use petroleum products, but he doesn't want the crude produced at home -- and he's not at all certain he wants it refined at home, either. In fact, he may not want any crude oil at all, or gas or coal or nuclear -- just some wonderful form of energy that miraculously transports him from place to place, without having to go to the trouble of digging it up and refining it into something useful like gasoline or jet fuel."
 This attitude is often reflected in federal, state and local environmental regulations, Cook said. "ARCO has a good track record when it comes to the environment. We pioneered reformulated gasoline and, almost alone within the industry, supported the stringent and costly clean fuel regulations adopted in California last year.
 "But I must tell you that in the effort to clean up the environment, regulators occasionally become over-zealous. One example is the so-called RECLAIM program proposed by the Southern California AQMD. RECLAIM is unrealistic, unworkable, and over the years will be extremely harmful to the area's economy.
 "RECLAIM masquerades as a market-oriented emissions trading program -- a free-market buying and selling of emissions credits. It is partly that, of course, but what few people realize is that RECLAIM is also a new set of regulations mandating specific annual reductions in three major classes of emissions from factories and plants. Also unrecognized by most people is that these mandatory reductions address only 13 percent of emissions in the L.A. basin. Within a few years, these mandatory reductions will no longer be achievable for two very good reasons -- a lack of technology and a lack of purchasable credits. What then? Not only will RECLAIM discourage new plant investment today, but we firmly believe it will drive many major industrial activities -- and related jobs -- out of the district. It is simply another way of telling industry, 'You're no longer wanted here.'"
 Despite the many obstacles, ARCO has not given up on the United States, Cook added. "There are still good oil and gas opportunities here, particularly in California, onshore and offshore the Gulf of Mexico, and Alaska where ARCO is the second-largest oil producer.
 "And we're not giving up on ANWR, either. It's too important for our industry, for this country and for the state of California."
 Cook noted that between 1980 to 1991, over $21 billion was invested in North Slope oil and gas development, with over $3 billion contributing to jobs in California -- "to blue-collar and white-collar workers, to an engineering firm in Pasadena, to manufacturers in Los Angeles, San Jose, Fresno, Richmond, Costa Mesa, Long Beach, San Diego and Oakland." Currently, Pasadena-based Parsons Corporation is employing an additional 400 people to work on a $1.4 billion gas- handling facility to be installed on Alaska's North Slope.
 If oil and gas were found in ANWR at the levels estimated by the U.S. Geological Survey, California "would figure to get about 80,000 ANWR-related jobs over the years, based on prior experience with Alaskan oil development."
 Saying that the United States must face up to some hard choices, Cook concluded: "Do we want an energy policy in this country that makes sense, that balances domestic petroleum production against imports and prevents us from putting all our eggs into OPEC's basket -- or do we go to war every time the oil supply lines are threatened?
 "I'm happy we were able to take on Saddam Hussein and lick him -- and I'm particularly pleased that Alaskan oil production helped so much to get that job done. But that's not the way to secure our energy future.
 "We've got to come up with something better than that, something we can live with for many years to come. And that choice necessarily involves the question of whether we have finally decided to get rid of oil and gas production in this country.
 "If it happens my industry can survive, and ARCO will be one of the more successful of the survivors. But I still can't believe that deliberately abandoning a prime industry is sound policy for this country. And certainly not today with the economy in such bad shape."
 -0- 4/3/92/1300
 /CONTACT: Albert Greenstein of ARCO, 213-486-3384/
 (ARC) CO: ARCO ST: California IN: OIL SU:


CH-AL -- LA007 -- 4925 04/03/92 15:06 EST
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