The New Alaskan Oil Rush

Probably the most detested vessel in the history of Alaska is trying to come home. Yes, the Exxon Valdez--banned by federal law from Alaskan waters in 1990--is poised once more to make its way up through Prince William Sound to the oil port of Valdez, even though two right-wing Alaskans, Sen. Ted Stevens and Rep. Don Young, forced a law through Congress and swore that the tanker would never again haunt these northern waters.

Exxon has gone to federal court to have the law banning its ship from the Gulf of Alaska overturned as unconstitutional. If the courts rule against the largest oil company on earth, then Exxon has a fall-back strategy: It will sue the federal government for millions of dollars for the supposed loss incurred by not being able to carry off North Slope oil in its vessel. The weapon will be a "takings claim," a legal attack designed to force the federal government to compensate corporations for financial losses that result from abiding by federal environmental laws and regulations.

The Chenega natives, whose land was befouled when 11 million gallons of oil rushed out of the rupture in 1989, have intervened in the case against Exxon. The Chenega say that to allow the tanker back into Prince William Sound would be "offensive and an insult." Even the federal district judge hearing the case has said that the timing of the lawsuit was "bothersome." In a court exchange with Exxon attorneys, federal Judge Stanley Sporkin noted that the oil company had waited nearly seven years to challenge the law. But Exxon's attorney riposted that "at some point you have to say that enough is enough. We're losing money. This vessel is a loss because of this statute." In court papers, Exxon has claimed that it might have to scrap the ship if it can't be permitted to carry Alaskan crude.

But what is really behind the move to return the infamous ship to Alaska? After having the breach Bligh Reef tore into its hull repaired, the Exxon Valdez--now rechristened the SeaRiver Mediterranean--was leading the humdrum life of an impenitent oil spiller, plying its trade between European ports.

The return of the Exxon Valdez marks one of the biggest and least reported environmental stories of the decade: the resurgence of an Alaskan oil rush. After the wreck of the Valdez, public confidence in the oil companies (even in Alaska, where each resident receives a $1,200 check every year from the oil earnings of the North Slope companies) sank to new lows. The companies' shrill claims that the Prudhoe Bay wells were running dry and that the country would soon face another oil shortage were not enough to convince Congress to open the Alaskan National Wildlife Refuge to oil leasing, a decade-long fantasy of Arco, British Petroleum, and Exxon.

Stalemated, the Alaskan oil cartel shifted tactics. In 1994, they announced the discovery of more oil in the Prudhoe Bay fields than previously imagined--enough oil, in fact, to keep the pipeline running for another 30 to 50 years. The problem wasn't a shortage, the oil companies argued, but a glut of crude, which, because of laws prohibiting the sale of Alaskan oil to lucrative foreign markets, meant the companies might have to scale back production and lay off hundreds of workers.

Then, in the spring of 1996, in a move reported in this column and briefly noted on a few newspaper business pages, the Clinton administration handed the oil industry a gigantic favor worth billions. It overturned the 30-year-old ban on the export of Alaskan crude oil, allowing the oil companies to market the crude to Japan, South Korea, Taiwan, and China. The opening of the North Slope to oil drilling, and the construction of the leaky 820-mile long Trans-Alaska Pipeline to transport the crude from Prudhoe Bay to Valdez, had initially been sanctioned by the U.S. Congress only because the oil was intended to buttress America's energy independence. So now, nearly three decades after this solemn stipulation, the oil companies have the jackpot in their grasp.

Clinton is now crowning that 1996 gift to the oil companies extracting crude from the North Slope--Exxon, Arco, and British Petroleum--with further amazing favors. West of Prudhoe Bay lies the 23 million acre National Petroleum Reserve, set aside in 1923 by President Warren Harding. Back then it was known as the Naval Petroleum Reserve, and the oil was held in store in case of a national emergency. In 1980 Jimmy Carter changed the name of the area and gave it its new title, but its function remained very much the same. Certainly it was never envisioned that this oil field would be handed over to private companies for export, probably to the country now being designated by the Pentagon as America's prime opponent in the 21st century, China.

Forget the favors to Lippo. Forget those nightly rentals of the Lincoln bedroom. The Alaska play is a scandal on the order of the Teapot Dome fiasco of 1922, when Albert Fall, President Harding's Interior Secretary, secretly leased off a Naval Oil Reserve north of Casper, Wyo., to Harry Sinclair's Monmouth Oil Company. Fall even called in the Marines to evict homesteaders and prospectors from the 9,500-acre site to allow Sinclair's men to move in. When the deal was exposed, Fall became one of the pioneers of the revolving door as he left the cabinet to join Sinclair's company as an executive and lobbyist. On his final day in office, Fall proclaimed: "This is not a case of saying 'good-bye,' but 'until we meet again.'" Fall ultimately became the first member of a presidential cabinet to do time in federal prison, after it was revealed that Sinclair had given him as much as $400,000 during his time in office.

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1 comments
elijed23
elijed23

Alaska has always had a lot of oil; we just haven't been able to get to all of it. This is an exciting new development. What company claims the find? 

Elisa Jed | http://www.fortuneoilfield.com

 
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