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Ban Ends on Export of North Slope Crude

Energy: Clinton says free movement of Alaskan oil will benefit the U.S. Experts' opinions are mixed.

April 29, 1996|From Bloomberg Business News

WASHINGTON — President Clinton on Sunday ended a 23-year-old ban against exporting Alaska North Slope crude oil.

"Permitting this oil to move freely in international commerce will contribute to economic growth, reduce dependence on imported oil and create new jobs for American workers," Clinton said in a written statement released at the White House.

The action comes after Clinton signed legislation late last year permitting Alaska North Slope oil exports if they were found to be in the nation's best interest.

Clinton said lifting the ban will generate as many as 25,000 more jobs for Americans in California and Alaska and will boost oil production in the area by about 100,000 barrels a day.

The move will also bring in about $2 billion in additional state and federal taxes by the turn of the century, according to Energy Department figures.

The presidential directive includes a requirement that tankers exporting the oil stay outside environmentally sensitive areas along the Aleutian Islands, that they be equipped with satellite communications systems and are inspected to ensure they are in safe working order.

Clinton did not say how much oil is produced in the area now.

The legislation also waives federal royalty payments for some new deep-water drilling projects in the Gulf of Mexico and requires the government to sell the Alaska Power Authority. The incentives are limited to offshore Texas, Louisiana and Mississippi. Deep-water areas off the coast of Florida are excluded.

Exports of Alaskan crude--both fresh output and oil from storage--will now be allowed by British Petroleum Co. and other oil producers as long as the oil is carried on tankers with American crews and flags. The ships need not be U.S.-built, but they will be subject to yearly inspections by the U.S. Coast Guard.

Analysts predict the change will have little effect on world oil prices, though it could affect local markets. West Coast refiners in particular could see costs go up if British Petroleum ships large amounts of oil to Asia.

California drillers say they will benefit from the measure. If some Alaskan oil is exported, they say, prices for California crude will rise and drillers will tackle costlier projects.

Supporters of the ban disagree. They say that lifting it will increase the nation's dependence on foreign oil, raise costs for small West Coast refiners and boost gasoline prices for California drivers.

Alaskan lawmakers have been fighting the ban for more than two decades. It was enacted in the 1970s to keep Alaskan oil in the U.S., which at the time faced an energy crisis.

"I told President Clinton that the export ban was relic of the past and needed to be lifted," Alaska Gov. Tony Knowles said Sunday. "His action today is a historic moment for Alaska."

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