The Heat Is Online

BP drops ANWRA Drilling Bid

BP Pulls Out of Campaign to Open Up Alaskan Area

The New York Times, Nov. 26, 2002

BP,the world's third-largest oil company, has pulled out of a major lobbying group that is spearheading the campaign to open the Arctic National Wildlife Refuge in Alaska to oil drilling, a company spokesman said yesterday.

Oil development in the refuge is a touchstone of the Bush administration's energy policy. BP's decision to drop out of the drilling debate underscores the growing concern among many oil companies that the matter has become a public relations liability, both critics and supporters of oil production in the refuge said.

BP's move comes just as the Republicans, who back drilling in the area, are about to regain control of the Senate, giving proponents their best chance in years to pass legislation opening the area along Alaska's Beaufort Sea coast to oil exploration.

The company — which has been in Alaska since oil was first produced there and is among the state's biggest oil operators — insisted yesterday that the decision to leave Arctic Power, the lobbying group, was not meant as a broader statement on the economic viability or morality of drilling in the refuge. Opponents of drilling have said that developing oil in the narrow coastal plain of the refuge would destroy one of the world's last remaining bits of untouched wilderness.

Lord Browne, BP's chief executive, said this year that BP was cutting costs in Alaska by ending expensive exploration efforts in new, or "frontier," areas and focusing instead on smaller finds near existing fields and facilities. Still, the company plans to continue investing $500 million a year in Alaska for the foreseeable future, according to Paul Laird, a spokesman for BP Alaska.

"A signal isn't being sent, but a signal is being received," Mr. Laird said in an interview from Anchorage.

"The only message is that we are no longer going to be involved in ANWR debate," he said, referring to the refuge. "When and if the American people decide ANWR should be opened, we will consider it based on its commercial and competitive attributes."

Mr. Laird said that the company had been mulling the decision for the last few months and told Arctic Power of its intentions last week. The news of BP's departure was first published Friday in Petroleum News Alaska, an industry newsletter.

BP played down its involvement in Arctic Power, maintaining that its annual membership fee of $50,000 was small and its activity minimal. But BP had been the host for delegations of Washington politicians and journalists visiting Alaska to see the coastal plain. And Kim Duke, executive director of Arctic Power, said BP's fee was "at the top of the scale for us."

Over the last few years, oil executives have repeatedly said in private that drilling in the refuge is not a priority. Proponents of drilling have said that 16 billion barrels of oil, a huge amount in industry terms, lies below the tundra of the refuge's coastal plain. But a study by the United States Geological Survey estimated that there are 3.2 billion barrels of economically recoverable oil at $20 a barrel.

BP is one of two oil companies to have drilled exploratory wells in the area about 20 years ago, but the results are proprietary. The company said that its decision to leave Arctic Power had nothing to do with those findings, but other parties in the debate said the refuge's economic prospects were likely to have figured in the decision.

"I think it was a confluence of things," said Athan Manuel, director of the Arctic wilderness campaign at the Public Interest Research Group in Washington, which has been pushing BP to take such a step. "They seem to have studied the geology and the economics of how much oil they can get out of there, and I think they decided they can't get the oil out economically. So it's financially risky. And politically, it's not a popular stance."

BP has fashioned an image over the last few years as a company concerned about the environment, and drilling in the refuge cuts against that view. Most oil companies are reluctant to face the popular protests at board meetings and service stations that could follow if they took a vocal role in campaigning for the opening of the refuge, and so have kept a low profile while politicians and environmentalists debated the issue, industry executives say.

Supporters of drilling said they did not think BP's departure from Arctic Power portended more defections. Nor did they think that the move would hurt the effort to open the refuge.

"I fully expect when we have ANWR open, BP will look at the leases for sale," Ms. Duke said. "This is not a signal that they do not want to be a player here from now to the end of time. It's a business decision for them for now."