The state of Alaska is pressing the Carter administration and Congress to approve a three-way swap that would send North Slope oil to Japan in exchange for Mexican crude, which would be diverted from Japanese markets to the U.S. Gulf Coast.
Capping months of consultations between Alaskan state officials and Petroleous Mexicanos (Pemex), the Mexican national oil company, Alaskan Gov. Jay S. Hammond will make a formal presentation of the state's proposal during a meeting with Energy Secretary James R. Schlesinger today.
"We are asking for exports of Alaskan royalty crude oil, with the up-front suggestion that this is a chance to break the taboo against Alaskan oil exports," said Robert LeResch, Alska's commissioner for natural resources.
LeResch said the state has reached an agreement to continue discussion of the oil swap with newly oil-rich Mexico, and that Pemex officils said they would urge President Lopez Portillo to raise the question during President Carter's visit to Mexico later this month.
"I think we have a willing partner in Mexico if we could get approval from the federal government and an agreement on prices," LeResch said in a telephone interview yesterday.
While the amount of crude oil involved is relatively small -- 100,000 barrels a day -- administration approval of the proposal could break an impasse over the so-called oil swaps.
In practice the "swaps" amount to individual sales of oil shipments that allow for significant savings in transportation, ranging from 60 cents to almost $2 a barrel, and increased revenues for the state or the oil companies.
At the Energy Department yesterday, a senior DOE official said Gov. Hammond's proposal "tends to fold into a large range of options regarding the West Coast crude surplus," and that it is unlikely Schlesinger will act immediately on the Alaskan proposal. However, DOE is circulating proposals for Alaskan oil exports within the administration that call for a range of options, including:
Allowing exports of all 1.2 million barrels a day of Alaskan oil production.
Allowing exports of production above the 1.2 million-barrel current production flowing through the Alaskan pipeline.
Over the last year and a half, Energy Secretary James R. Schlesinger has been overruled by President Carter during Cabinet-level discussions on whether the White House should send an Alaskan oil swap to Congress for approval.
The Energy Department at various times has favored Alaskan oil exports as a means of relieving the West Coast oil glut, currently estimated at 400,000 barrels a day, and to provide an added incentive for the major oil companies to increase Alaskan production and expand the capacity of the 800-mile trans-Alaska pipeline.
Under the Export Administration Act and the Trans Alaskan Pipeline Act Congress can veto an administration proposal to export Alaskan oil.
In the past Carter has decided against sending the Alaskan oil swap proposals to Congress because of the awkward position the administration might be politically calling for exporting American oil production while the country is wrestling with its own energy problems.
Arlon R. Tussing, a consultant with the Alaskan state legislature, said, "The swap would not affect domestic oil prices -- the state wants it that way." At the same time, however, Tussing said the state swap with Japan would increase Alaska's share of oil revenues and in turn could increase Mexico's oil revenues as well.
Alaska is entitled to 12.5 percent of the oil production from the Prudhoe Bay fields or, if it chooses, the cash equivalent of the oil. Last year the state earned $431 million from severance taxes, royalty payments and property taxes from oil production -- most of which was related to the North Slope production. Currently the state is accepting about 25,000 barrels a day of its royalty oil for a refinery near Fairbanks and takes the rest in cash.