September 1998 Vol. 219 No. 9  Washington

Charles D. Matthews,  Contributing Editor

Good news in the oil patch, we hope

As the Senate was rushing to leave town for its annual August recess, it approved by a unanimous vote the nomination of former New Mexico representative, and outgoing U.S. Ambassador to the United Nations, Bill Richardson to be Secretary of Energy. He replaces the retired Federico Peña for the remainder of President Clinton's term. Richardson comes to the job with some very good qualifications, beginning with his election to the House in 1982. During his more recent years, Richardson gained a positive reputation as a free-lance private negotiator in a few sticky international situations.

As a result of those activities, Clinton appointed Richardson as U.N. ambassador last year, replacing Madeleine Albright, who left the U.N. to become Secretary of State. General reaction from most of the domestic energy community was positive. Senate Energy and Natural Resources Committee Chairman Frank Murkowski (Republican-Alaska) promised to consider his confirmation "with all deliberate speed." He said that since Richardson had been confirmed last year for the U.N. job, "unless something unusual arises, I would again anticipate confirmation." Former Energy Secretary Peña said, "He has the experience to tackle the important energy security, national security, science and technology, and environmental cleanup of the department." The API's approbation was, "We are encouraged that someone from an energy-producing state has been nominated. We look forward to working with Ambassador Richardson on the various issues that face the energy industry in the U.S."

IPAA Chairman George Yates, of Roswell, New Mexico, knows Richardson well from his years representing half of the state in Congress. Speaking for independents, Yates said, "Bill Richardson is not a stranger to energy policy ... if confirmed, I hope Mr. Richardson will be a spokesperson for America's oil industry because of its importance to the nation's economic and national security."

Secretary Richardson has a big job ahead. The Clinton administration has long been overburdened with environmental bomb throwers like V.P. Gypper Gore, EPA's Carol Browner and Interior's Bumbling Babbitt. Richardson will be a welcomed contrast to that gang, if the Head Honcho will just "let Richardson be Richardson." He has a reputation for fighting for issues he believes to be right, which is likely at times to put him at odds with other cabinet members and with other Democrats.

The domestic oil and gas industry is fortunate to have had such a choice at this time for the new Secretary of Energy. IPAA President Gil Thurm put this event in its proper perspective, when he said Richardson very well might be "the right man at the right time. He will no doubt face one of the greatest challenges of his public service — saving America's producers." We join the oil and gas industry in wishing Secretary of Energy Bill Richardson good luck in the months ahead.

Senate moved favorably on SPR before recess. The Senate also approved an amendment giving the Energy Secretary emergency authority to purchase oil for the Strategic Petroleum Reserve (SPR). If the amendment is approved by Congress when it gets back in September and is signed by the President, a $420-million emergency appropriation will be made available to buy 28 million to 35 million bbl of oil for the SPR. A lot of the credit for this purchase idea should go to the hard work done by IPAA and the National Stripper Well Association, when they came to Washington last January and again in June.

The amendment was introduced by Sens. Jeff Bingaman (Democrat-New Mexico) and Frank Murkowski. Co-sponsors were Sens. Robert Torricelli (Democrat-New Jersey), John Breaux (Democrat-Louisiana), Pete Domenici (Republican-New Mexico) and Mary Landrieu (Democrat-Louisiana). Sen. Domenici made it clear that "the oil patch is in a state of emergency," and "if you are looking at how far we have gone in our oil dependence, small producers of oil in the United States are in the most serious problem they have been in, in modern times ... this is a small step to show support for our domestic industry."

Calculating oil royalties still in dispute. Regulators, lawmakers and industries are still disagreeing about the issue of oil valuation for calculating royalties due the federal government. MMS wanted to publish new valuation rules four months ago, but it was checkmated by language in a supplemental appropriations bill for the Department of the Interior (DOI), authored by Sen. Kay Bailey Hutchison (Republican-Texas).

Meantime, co-chairs of the Congressional Oil and Gas Forum, Sens. Hutchison and Breaux, tried to remove the roadblocks by getting the adversaries together to discuss the different issues. The first meeting was held July 9 and involved senior executives of major and independent oil producers, plus Assistant DOI Secretary for Land and Minerals Management Bob Armstrong, MMS Director Cynthia Quarterman and other MMS officials. Joining the group were Sens. Hutchison, Breaux, Landrieu, Nickles and Bingaman.

This meeting got a dialogue going again. Industry attendees reportedly did a good job of explaining their concerns with the substance of DOI's position on oil valuation. There also was optimism about the way that senators participated in the discussion and the interest they took in the issue. Several more meetings have been held between subgroups of the participants, but final solutions remain elusive. Meaningful decisions will not be made until the Senate returns in September and considers DOI's appropriations.

Congress takes a rest. The Senate left for its August recess on July 31, and the House followed the next week. The two houses return this month, meet for 30 days and then adjourn for the fall elections, to determine who will return next year.

Charles D. Matthews is president of Charles Matthews & Co., consultants and advocates on government relations, Arlington, Virginia.

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