Clinton Energy Plan Designed to Stem Job Losses, Spur Production

The Clinton Administration unveiled a package of initiatives Thursday designed to stimulate domestic oil and gas production and stem the loss of jobs in the faltering U.S. oil and gas industries.

Domestic petroleum producers, in the grips of a crisis caused by slumping oil prices, welcomed the proposals as a first step but warned they are unlikely to work quickly enough to forestall a new wave of layoffs and the abandonment of more oil and gas exploration projects.

Administration officials said the centerpiece of the plan is the creation of new technology partnerships between American oil and gas companies and three Energy Department laboratories that have worked almost exclusively in nuclear weapons research and development since their establishment.

The scientific and engineering results of those cooperative arrangements--including sophisticated new computer software that could enhance the recovery of petroleum--would be shared with the small wildcat drillers for whom such costly research has been unavailable.

In a move with potentially far-reaching effects for the California oil and gas industry, the Administration promised to examine the possibility of allowing Alaska North Slope oil to be exported across the Pacific.

The flow of Alaskan crude oil into California has created a glut in the market. On Thursday, the cost of California benchmark crude oil slumped to $8 per barrel--described as “below Depression prices” by Dan Kramer, executive director of the California Independent Petroleum Assn., which represents 193 independent producers and 225 service and supply companies.

Administration officials said a decision on North Slope exports would not be made until April at the earliest, leaving the California industry anxious.

“If it continues at this price level from now until April, most of my small and medium-size members will be out of business,” Kramer said.

Energy Secretary Hazel O’Leary told independent oil producers in November she believed the current prohibition on export of Alaskan crude was outdated and would be lifted. Alaska officials also have urged such exports, because of declining demand and falling prices for North Slope crude.

Thursday’s announcement came in the midst of one of the most dramatic oil and gas price troughs in the nation’s recent history. With petroleum prices at levels lower than in 1986, employment in the U.S. oil and gas industry has plummeted in recent months, and many industry leaders were making rescue calls to the Clinton Administration.

Thursday’s package of initiatives made clear, however, that the Administration will not mount any emergency intervention to prop up sagging oil and gas prices, and many of the small producers the initiative is designed to help complained that the steps were not enough.