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The Clinton question: will the new administration in Washington, D.C., lock up Alaska oil development?

Asking oil patch officials how they feel about Bill Clinton being elected president is like asking Evander Holyfield how he'd feel about facing a bright young Olympic boxer after losing his heavyweight crown.

Having lost a half million jobs since oil prices plunged in the mid-1980s, the industry is skeptical about a new president who picked Al Gore, the U.S. Senate's leading environmental advocate, to be his running mate.

"The general consensus is that it will mean more -- and worse -- trouble, although some might wonder how things could be worse," complains Charles DiBona, president of the American Petroleum Institute (API).

"We are understandably concerned that a new Democratic administration, assisted by a House and Senate controlled by the same party, could put in place interventionist energy policies that would force our domestic petroleum industry and the American consumer farther down the road of economic hardship," says DiBona.

Many in America's corporate community who gambled on Clinton are breathing a sigh of relief that the new president has tapped fiscal moderates and conservatives to fill key economic policy posts. But oil execs are more concerned about how President Clinton and his team will shape the regulatory and resource management climate. So far, there's little to sing about.

Skepticism in the oil patch ranges from privately-whispered anxiety to loud warnings of doom. Many company representatives refuse to comment on prospects for rapport with the new team in Washington. This official silence seems to reflect both the sensitivity of pending issues -- wetlands regulations, development access to the Arctic National Wildlife Refuge -- as well as a reluctance to antagonize an administration that might be flexible on some of these issues.

Alaska Reaction

Representatives of the Alaska Oil and Gas Association declined interviews for this story, citing a greater concern with state than federal political affairs.

"Caution is the word I hear expressed most often," says Esther Wunnicke, a former state commissioner of natural resources and longtime resource policy analyst who participated in Clinton's economic summit in December.

Arco Alaska spokesman John Roots says his firm is comfortable with the new Democratic regime, but concedes he's worried about how well Clinton understands Alaska.

"Everyone's a little apprehensive," says Tom Cook, a former Chevron official. Cook says the health of the industry might improve if Clinton follows through on his economic policy commitments. "I'm a little bit optimistic myself."

One oil company representative, whose firm has operations in Alaska, declined an on-record interview and acknowledges that people are staying mum about their fears so as not antagonize the new administration "too early."

Waiting, Watching

This tentative vigilance appears matched by stock trading indicators, which have remained fairly steady.

"Oil stocks haven't done much of anything," says Mike Maehl of the Anchorage office of Kemper Securities Group. He notes that most fluctuations in oil stock prices during the latter part of the presidential race and since Nov. 3, 1992 are attributable to OPEC machinations.

Maehl says the global reach of America's oil industry makes it less susceptible than it used to be to domestic politics. Today, profits for large oil companies are more dependent on oil prices and the success of overseas exploration programs, he says.

But oil prices are also closely linked to demand in the profit equation, and many in the industry fear that oil consumption will suffer under an administration dedicated to energy conservation, both for its own sake and as a way to rationalize continued restrictions on drilling in ANWR.

For now, the domestic oil industry seems willing to let the American Petroleum Institute play the heavy in opening dialogue with Clinton, Gore and Co. API's president DiBona has obliged by challenging the new administration to accept the election as a mandate to create jobs and growth, not to boost regulation and energy conservation. He shudders at what he sees as the resemblance between Clinton and former president Jimmy Carter.

Flashback to 1976?

"Once again, as in 1976, we are confronted with a leadership that seeks to wean the nation away from oil. But the Carter administration soon learned that other national objectives can, and do, get in the way of simplistic solutions. Objectives like the need to encourage strong economic growth," DiBona says.

While DiBona advocates a positive, proactive relationship with the new administration and what he predicts will be a more environmentally-inclined Congress, his pessimism about the new political order in Washington runs deep. Specifically, he fears:

--An "avalanche" of regulatory and legislative proposals that would dramatically increase bureaucracy and the costs of regulation;

--The impacts of Clinton's announced policy of reducing energy use and boosting development of alternatives to oil; and

--Reintroduction of previously defeated Congressional proposals that would make it more difficult for the oil industry to operate here at home.

Oil provides 40 percent of the nation's energy needs. According to DiBona, it's unrealistic to expect natural gas to substitute for a major portion of that figure and still meet rising energy demands resulting from economic growth.

"If oil imports were, in fact, restricted, demand would surely increase faster than supply. Domestic energy prices would skyrocket above world rates. American consumers and businesses would be stuck with higher energy costs. The price of goods and services would rise. U.S. products would be less competitive in global markets, and, ultimately, jobs would be exported overseas," DiBona asserts.

That's a hypothetical scenario. DiBona predicts that Clinton's strategy of limiting imports and consumption will, in fact, fail, resulting in higher levels of imported oil.

Not everyone is quite as lukewarm to Clinton as the American Petroleum Institute. According to Maria Halkias, a reporter who covers the industry for the Dallas Morning News, smaller independent oil and gas companies are hopeful that a Clinton administration tilted towards energy conservation and alternative fuels will signal a higher priority for natural gas production. Others have remarked that a number of people directly involved in Clinton's campaign came from the independent sector of the industry.

Push Alaska Development

In Alaska, oil industry representatives and those who work closely with them are trying to put the best face on Clinton's rise to power.

"Our main priority is opening our lands on the ANWR coastal plain," says John McClellan, vice president of international business development for Arctic Slope Regional Corp. (ASRC). "We're getting mixed signals from the new administration |on this issue~."

McClellan says Clinton and Gore initially took a position in favor of designating the coastal plain of the Arctic National Wildlife Refuge as wilderness. "But recently they've come out with a position statement to decrease oil imports and American dependence on foreign oil. It'll be interesting to see how they reconcile the two."

McClellan is hopeful that former Democratic Gov. Bill Sheffield, who has been a consultant to ASRC, will be able to influence the Clinton administration to examine the ANWR issue on its merits.

"We're real optimistic about that. We're hopeful that he can carry our coastal plain development message to the new administration," says McClellan.

Sheffield himself is hopeful on this score, and generally hopeful about Clinton. "President Bush didn't help ANWR and neither did President Reagan. What we need to do is make sure Clinton won't lock up ANWR. I've urged the president not to preclude his options in developing energy policy. My guess is he won't lock it up," Sheffield says.

He notes that several of Clinton's energy advisors support or are neutral to ANWR development. But he also warns that advocates of refuge drilling should resist the temptation to blitz Capitol Hill with a new lobbying initiative. Such a move could box Clinton in and force him to honor his early support for wilderness designation.

More Work, More Worries

"If you start that war and somebody introduces a wilderness bill in response, you can't win," Sheffield says. "If somebody else starts a war, you can probably put that fire out.

"I (even) think the new administration will look favorably on lifting the oil export ban," Sheffield predicts. "I think you'll find we'll be okay. We've just got to work within the system."

Arco spokesman John Roots declined to confirm reports that his company provided substantial financial support to the Clinton-Gore ticket, noting company involvement with both major political parties. He says he's upbeat about Clinton's election, but still offers a wait-and-see disclaimer.

"Arco Alaska will be able to work with the Democratic administration very comfortably. I think Clinton is a thoughtful guy. If he continues to draw quality people who are consensus-builders, that would be a hopeful signal to me," says Roots. "I do worry about Alaska because I'm not sure the Clinton administration has anyone there yet who can speak for us on a daily basis. I worry about the wetlands issue, I worry about ANWR."

Says API's DiBona, "The proposals in the Clinton campaign's energy platform, if implemented, could substantially raise the cost of doing business and cause the economic situation to worsen significantly. "I don't believe this is what the American electorate voted for."
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Title Annotation:Alaska's petroleum industry
Author:Richardson, Jeffrey
Publication:Alaska Business Monthly
Article Type:Industry Overview
Date:Feb 1, 1993
Previous Article:BP/Arco spending: Arco and BP, the state's two largest oil operators, are boosting 1993 capital investments to more than $1 billion.
Next Article:Alaska's engineering wonders.

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