Republican-Controlled Congress to Open Arctic National Wildlife Refuge to Drilling and Exploration

Strategic Insights -

The incoming Republican-controlled Congress is likely to open the Arctic National Wildlife Refuge (ANWR) and the Alaska North Slope (ANS) to oil and natural gas exploration and development, a move that could have far-reaching implications for the oil industry. Analysts predict that the ANWR, which has been a contentious issue for environmentalists, will be a priority for the new Congress. Drilling access in the ANWR would be a significant victory for the oil industry, while lifting the ban on ANS crude exports would also benefit the industry. However, other oil industry-related issues, such as the re-examination of environmental legislation, may also be considered by the new Congress.

Key Takeaways:

  • The Republican-controlled Congress is likely to open the ANWR to oil and natural gas exploration and development, which could benefit the oil industry.
  • The ANS export ban, which was previously supported by the Clinton administration, may also be lifted, allowing for increased oil exports.
  • Analysts predict that the Alaska Coalition, led by Sen. Frank Murkowski (R-Alaska), will have the clout to push for consideration of ANWR and ANS issues in the new Congress.
  • The possibility of a Republican Congress opening up ANWR has increased from "nil to some percentage," according to Michael Mayer, an analyst at Wertheim Schroder & Co.
  • ANWR has a broader appeal as a national security issue, rather than just an oil industry issue, boosting its chances for serious consideration in the new Congress.
  • Other oil industry-related issues, such as the re-examination of environmental legislation, may also be considered by the new Congress.
  • Analysts note that oil companies may benefit in the long-term from the re-assessment of costly environmental regulations, such as the reformulated gasoline program (RFG) under the Clean Air Act.

Sources:

  • Adam Sieminski, analyst at NatWest Securities Inc.
  • Michael Mayer, analyst at Wertheim Schroder & Co.
  • Bud Tower, analyst at Howard, Weil, Labouisse, Friedrichs Inc.
  • Sen. Frank Murkowski (R-Alaska), chairman of the Energy and Natural Resources Committee
  • Rep. Don Young (R-Alaska), chairman of the Natural Resources Committee
  • Rep. Ted Stevens (R-Alaska)

Statistics:

  • The ANS has approximately 10 billion barrels of crude oil reserves (Source: Wertheim Schroder & Co.).
  • The ANWR has an estimated 16 billion to 24 billion barrels of oil reserves (Source: Michael Mayer, Wertheim Schroder & Co.).
  • 30 countries have joined the "opt-out" movement from the reformulated gasoline program (RFG) under the Clean Air Act (Source: Bud Tower, Howard, Weil, Labouisse, Friedrichs Inc.).
  • 75% of the oil industry's revenue comes from foreign investments (Source: Michael Mayer, Wertheim Schroder & Co.).