May 10, 2002	Friday	Safar 26, 1423

RIYADH: In the post Sept 11 era, debate on energy security has intensified in the US, say analysts in Dhahran, the uncrowned global energy capital. The 911 events have once again generated a debate in the US about its vulnerability and dependence on imported oil.

Imports provide more than 50 per cent per cent of the US oil requirement. With only five per cent of the global population, US energy requirements is estimated to be about 25 per cent of the total global oil output of 76 million barrels a day. It’s reliance on oil imports has increased by 11 per cent over the four years. The Middle East currently accounts for almost 30 per cent of its oil imports, with almost 20 per cent coming from Saudi Arabia and another about eight per cent from Kuwait and Iraq.

The Bush administration is working on a short term and long term programme to overcome this vulnerability. In the immediate aftermath of the 911 events, the US ensured the filing up of its Strategic Petroleum Reserve (SPR) to its capacity of 700 million barrels. Then last October; the House passed a non-binding resolution to increase the SPR to its authorized capacity of one billion barrels, at an estimated cost of six billion dollars, but without appropriating any money for it.

In the longer run, Bush administration is working on strategy provided in the President’s national energy policy, released in May 2001. The policy plans to reduce dependence on imports by increasing domestic production of oil and gas; expanding nuclear energy and the use of coal in power generation; and also to improve security by diversifying the sources of oil imports.

Increase in domestic oil production is to be achieved through enhanced oil and gas recovery from existing wells; provision of incentives for offshore oil and gas development and the bringing on stream of small fields that otherwise would be uneconomical and the development of 1002 Area of Alaska’s National Wildlife Refuge (ANWR) and other federal lands. The ANWR is estimated to hold between 2 billion and 10 billion barrels (10 billion barrels would be equivalent to about 20 years of supplies from Saudi Arabia at the current rates). The policy also calls for construction of a gas pipeline from Alaska to the lower 48 states and the renewal of the Trans-Alaskan pipeline system lease to ensure continuity of Alaskan oil flow to the west coast of the country.

However, the rejection in the US Senate last week to permit drilling in the ANWR has come as a blow to the US policy in that sector. The US Senate refused to authorize oil drilling in ANWR because of environmental concerns. It has now been revealed that the Bush administration is quietly preparing to open 9.6 million acres of pristine coastal lands on the other side of Alaska’s North Slope for oil and gas leasing in 2004. Unlike ANWR, the lands within the National Petroleum Reserve-Alaska, west of the Prudhoe Bay oil field, do not require further Congressional approval for oil drilling. As early as June 3, the Bureau of Land Management will reopen the 4.6 million acre northeast quadrant originally offered for leasing in 1999.

To achieve greater degree of energy security, the US is also taking a continent-wide approach. A key element of this approach is the Trilateral North American Energy Working Group (US, Canada, Mexico) to promote a more integrated energy market among the three North American Free Trade Association (NAFTA) countries.

The administration has been urging Mexico to allow more investments by the US companies in the state run oil sector to ensure Mexico remains a reliable and significant oil supplier to the US. Mexico is currently the second largest supplier of oil to the US after Saudi Arabia.