Is Big Oil unhappy with its champion?
Los Angeles — In public, oil companies have offered only strong words of support for the man many consider to be their champion, Secretary of the Interior James G. Watt.
But behind the scenes, The Christian Science Monitor has learned, some members of the oil industry are highly critical of the secretary's stance in the debate over whether to open four northern California offshore basins for oil development.
On the surface, the schism is an ironic one. For years, oil companies have clamored for faster access to offshore basins. And in public, they have rallied around Mr. Watt's hints that he will reverse a decision made by his predecessor (Cecil B. Andrus) which exempted the four highly controversial basins from being leased to oil companies. The basins -- off Eureka, Mendocino, San Francisco, and Santa Cruz along the northern California coast -- have been exempted from Lease Sale 53, scheduled for next month.
Secretary Watt said April 10 that he will postpone action on those four basins for another 30-to-60 days while he studies comments on the sale. He did say, howeveR, that he will continue on schedule next month with another, less controversial portion of Lease Sale 53, the Santa Maria Basin off the coast of Santa Barbara.
But interviews with insiders from major oil corporations -- who requested anonymity both for themselves and their companies because of the extremely sensitive nature of the issue -- have revealed serious concerns about the secretary's actions.
These industry insiders contend that by contemplating opening up such a politically and environmentally sensitive area as the northern basins, as the four tracts are known, Watt has placed a ready-made issue into the laps of California Gov. Edmund G. Brown Jr. and angry environmentalists, and has jeopardized the positive public-relations image oil companies have been carefully cultivating with state officials and the public.
"He's just handed Governor Brown an issue that will serve as a soapbox for him to draw a lot of attention to," says one source. "It was obvious that this would become an axis for the whole issue of more-aggressive oil leasing."
Reaction within the industry on the four northern basins issue is mixed, these sources say. Some individuals, most notably from Chevron Oil, have aggressively pushed for drilling in these basins, the sources say. The Western Oil and Gas Association, which represents 34 major and independent oil companies , has aggressively urged this leasing as well. Even those who are critical of Secretary Watt will not discuss their feelings publicly because, overall, they support the administration's intentions of aggressive oil leasing.
But industry critics say that Watt has chosen poorly -- that if he wanted a showdown with environmentalists, he should have picked an area with greater energy yield potential.
Industry spokesmen explain that it is impossible to know precisely how much oil these basins contain until exploratory drilling has begun. But the US Geological Survey has estimated that the lion's share of potential oil in Lease Sale 53 is found in the lower Santa Maria basin. Only an estimated 194 million barrels of oil, enough to supply the nation's needs for 10 days, lie in the four northern basins, the survey says.
Although Governor Brown has not opposed drilling in the Santa Maria basin, he has maintained that he will not permit drilling in the four northern basins claiming that the trade-off between the potential amount of oil was not worth the risk of harming California's several-billion-dollar tourism and fishing industries. Scores of other local and state officials, both Democrat and Republican, have taken the same stand.
According to government and industry insiders, the governor and representatives from the major oil companies had hammered out a "detente" on the issue, which has never been made public and which the Western Oil and Gas Association says it knows nothing about.
Under the "gentlemen's agreement," these sources say, the oil industry agreed not to vigorously protest exclusion of the four basins from Lease Sale 53 in return for an agreement that included the governor's promise not to oppose leasing of the Santa Maria basin and to help negotiate agreements on air-quality standards for oil activities in Kern County.
Now, however, that detente appears to be "in substantial joepardy," says one source. The governor has indicated he intends to take the fight all the way to the US Supreme Court if necessary -- drawing battle lines that even association general manager Arthur O. Spaulding admits have caused problems.
In addition, some oil company sources say, Watt's intentions may "blow the lid off" the delicate public-relations campaigns pursued by many companies. Ever since the 1969 Santa Barbara oil spill, oil companies have faced dragged-out lawsuits intended to block offshore drilling -- despite the fact that the National Science Foundation has estimated that only 2 percent of the oil found in the marine environment is the result of offshore drilling.
But with the oil crunch of recent years, say industry insiders, heated opposition has cooled somewhat and the public has begun to look more favorably on offshore drilling, provided it can be done safely.
Now, fret some sources, oil companies may once again be portrayed as the "bad guys" if Watt eventually decides to open up the four basins. Environmental opposition already is intense -- with a battery of activists from "Friends of the Sea Otter" to "Friends of the Earth" protesting the interior secretary's apparent intentions.
"This is going to serve as an enormous rallying point for environmental groups that have just been sitting back and waiting to see what this guy [Watt] does," says one source. "They've got all these contributions pouring in. They won't have any trouble financing [a] lawsuit [on these basins] or others like it."
Although no one professes to know what Watt's final decision will be, industry and government sources say the political pressure surrounding the issue -- which is said to include displeasure from the White House --may be sufficient to cause the secretary to back down.
Although a spokesman for Watt says he was "surprised" to hear of dissent on the leases within the oil industry, he adds, "Unofficially, I would say the secretary will take all these factors into consideration."