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The Russians are coming! Or are they?

Posted: Sunday, October 05, 2003

U S. Senate Minority Leader Tom Daschle, a South Dakota Democrat, said this week that there is no way he will abandon his opposition to drilling for oil on the coastal plain of the Alaska National Wildlife Refuge, not even "to advance the energy bill's ethanol provision," sought by his state's corn farmers. By opposing ANWR production, Daschle transfers our nation's security from the Middle East to Russia.

Some say the Iraqi war is "all about oil." Middle East oil is more important to European nations than to the United States, so we are fighting to protect European oil supplies, if this is "all about oil" - and getting little thanks for it. A Google search reveals that Canada provides more oil to the United States than the Middle East. Mexico and Venezuela provide more oil to the United States than the Middle East. And U.S. dependency on Middle East oil is decreasing even though the United States now is importing more than the 50 percent of its daily oil needs.

After Prudhoe Bay went on line in the 1970s, Alaska soon provided more than 2 million barrels a day to U.S. refineries. That was about 20 percent of the daily U.S. demand. After 30 years, Prudhoe production is down so Alaska provides only about 1 million barrels a day. If ANWR was opened to oil production, it could increase oil through the trans-Alaska pipeline to more than 2 million barrels a day, offsetting the 1.5 million barrels a day the United States imports from Saudi Arabia.

ANWR production requires a footprint the size of Dulles International Airport on ANWR's coastal plain - which one New York Times reporter concedes is a desolate area - out of a 19-million-acre reserve that is three times the size of the state of Maryland.

Forget the Middle East. The Russians are coming and have more to gain with Daschle's stand on ANWR development.

The Wall Street Journal reports that Exxon Mobil, well-known in Alaska, is negotiating to develop oil resources in Eastern Russia to the extent that it seeks 25 percent interest in a Russian oil company. That project would be on the Russian mainland.

Exxon already leads a consortium of five western oil companies developing oil and gas on Sakhalin Island off the Russian coast. The goal is to be producing 250,000 barrels a day of low-sulfur light crude by 2005. Exxon's investment in the Sakhalin project is estimated at $12 billion. There are two other oil and gas development projects on Sakhalin, plus construction of ports, pipelines and other infrastructure. One pipeline project alone is employing 5,000 to 6,000 Russians, while Alaska is losing jobs in its oil patch.

An initial shipment of 700,000 barrels of crude already has been sent to the Philippines from Sakhalin. Two deals have been signed to provide liquefied natural gas to Japan. Readers can keep up to date on this by going to the University of Alaska Anchorage's Russian American Center Web site. The Center (www.arc.uaa.alaska.edu) is an excellent source of Eastern Russia news.

Without saying it, what the news tells us is that when Russia gets its eastern oil reserves developed - thanks to investment by U.S. companies - Alaska will have competition in supplying oil to the West Coast, even though initial Russian shipments are going to eastern Pacific nations. If the radical environmental movement, which prospered in Alaska under President Clinton, continues to needlessly lock up Alaska resources, we will have to be nice to Mr. Putin as we send him our American dollars.

There is more. Officials of Conoco Phillips, with an interest in Alaska gas reserves along with Exxon Mobil, have held talks with the Russian gas monopoly, Gasprom, about developing a giant natural gas field in the Barents Sea. Gas from the $12 billion project would be liquefied and shipped to the United States, which the Wall Street Journal says "is hungry for new supplies." Not so hungry, of course, that Senator Daschle and friends will support a natural gas line from Alaska's North Slope reserves and ANWR.

Daschle and others who say there are alternatives to oil and gas ignore the basic fact that aside from gasoline, plastics for everything from baby pacifiers to jet aircraft come from coal, oil and gas, not from windmills or corn.

Russian oil and gas companies announced plans months ago to build a pipeline and port to send Russian crude to the United States, the Journal reports, with a goal of eventually supplying 10 percent of our nation's demand.

This could be a double whammy for Alaska. First, as part of the United States its security will depend upon a new foreign giant. And, second, oil and gas from Russian fields will be tough competition for Alaska, especially when American companies are invested in them.

This means that Alaskans must enter the international economic ball game with regulations and incentives that make Alaska oil and gas competitive. The sooner the better because the Russians might be already here. Oil companies once heavily invested in Alaska - Chevron Texaco and BP - have sold their leases in National Petroleum Reserve-Alaska and moved on.

• Lew M. Williams Jr. can be reached at lmwjr@worldnet.att.net.



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