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July 18, 2002

API confident bill will allow Alaska drilling

WASHINGTON, July 17 (Reuters) - The American Petroleum Institute said Wednesday it remains optimistic that Congress still has enough time this year to pass an energy bill that may allow drilling in an Alaskan refuge--a controversial issue that Senate Democrats have sworn to block.

Senate and House negotiators began talks earlier this month to reconcile sharply different bills that would overhaul the United States' energy policy for the first time in 10 years.

Negotiations are expected to become contentious during the next few weeks as lawmakers debate items including drilling in Alaska's Arctic National Wildlife Refuge (ANWR) and increasing the use of ethanol-blended gasoline and biodiesel used by automobiles.

Senate Democrats have promised to block Alaskan drilling, with Joseph Lieberman of Connecticut saying such a provision "will be dead on arrival."

However, John Felmy, chief economist with API, an industry group, told Reuters: "I think with a cautioned, reasoned approach, a discussion of the facts, it has a good prospect." It "absolutely" has a chance of being part of the energy bill, Felmy said.

"I remain very optimistic that we'll have a good energy bill this year," he added.

"The president has really made it a priority, American citizens believe it's a priority, and I think legislators understand that," Felmy said.

Republicans and the Bush administration contend opening the reserve could lessen the country's dependence on foreign oil, generate jobs and lower petroleum prices.

The Republican-controlled House already has passed an energy bill that would allow drilling in the refuge, which may hold as much as 16 million barrels of oil.

The Alaskan refuge, which spans some 19 million acres (7.7 million hectares), is home to a variety of wildlife including caribou and polar bears.

Congress will be out during August for vacation, then return for several weeks before adjourning prior to the November elections.

In addition to ANWR, the Senate also is struggling to agree on a bill dealing with higher mileage requirements for automobiles, electricity reform and increasing ethanol use.

The Bush administration has pushed Congress to support a provision that would triple the amount of corn-based ethanol and soybean-based biodiesel because it would benefit farmers and reduce pollution.

Still, lawmakers in California and New York have questioned whether additional costs to transport the fuel would result in higher gasoline prices. "Some concerns have been expressed and we are trying to address them," Felmy said.  

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