Exxon Touts Surefire Plan to Stimulate Economy: Drilling Creates Jobs

WASHINGTON (THE WALL STREET JOURNAL BLOG via Dow Jones Newswires), Feb. 5, 2009

Washington D.C. is full of talk about how to stimulate the economy -- insulate houses, drop mortgage rates, build infrastructure. Exxon Mobil Corp. has its own plan: Let us drill.

With jumbo-sized bundles of pink slips being dropped by corporations daily, it might not be a bad political strategy. The company used this approach last month to resolve a long-standing dispute with Alaska over the fate of the giant Point Thomson oil-and-gas field.

The big state and the big company have been at loggerheads over Point Thomson, one of the largest undeveloped fields in the U.S. for years. Last year, a few months before she became the Republican vice presidential nominee, Gov. Sarah Palin attempted to revoke Exxon's license to develop the field because they were moving too slowly. Exxon is ready to move quickly now, arguing at a recent administrative hearing that it could begin drilling before the end of winter, if the state gave it a license to build an ice road to move in a drilling rig the size of the Statue of Liberty. Late last month, the state complied, Palin's recent green conversion apparently notwithstanding.

What was the winning argument? Essentially, Exxon promised to move quickly this time, generating jobs, investment and ultimately revenue from oil and gas production. Exxon's first witness, Alaska production manager Craig Haymes, dove right into the job creation angle at the beginning of his testimony.

"Over the last year we've spent over $120 million to prepare for drilling. That $120 million has been spent through over 50 Alaskan companies and as I mentioned we've had over 150 people working on the project We will be spending over $200 million a year and that's based on 2008 dollars. With escalation inflation it will obviously be higher than that. And we'll have over 400 jobs per year involved with this project. We're already over 150, if we can commence drilling in six weeks we'll be over 200 and we'll continue to ramp up from there."

Note that Haymes is talking about creating jobs in the next few weeks. Critics of President Barack Obama's green jobs push contend it will take months or years to materialize, potentially too late to be much help in the current recession.

This oil-development-as-economic-development argument has long been successful in Alaska, a state that needs a steady supply of oil and oil jobs to keep the wheels from falling off. But is the company willing to trot out the same argument in the Lower 48, now that the wheels appear to be falling off also?

It seems so. Kenneth Cohen, Exxon's vice president in charge of public affairs and lobbying, made a similar argument late last month on a telephone call with reporters. Citing a recent study by the American Petroleum Institute, he said opening up new areas to drilling offshore, in Alaska and the Rockies "could create as many as 160,000 new jobs and generate about $1.7 trillion in federal, state and local government revenues to fund critical government priorities." The API also has a television ad that says increased oil and gas production will "create well-paying jobs" as well as help pay for schools, libraries and the police.

While Washington politicians are focused on creating green jobs, Exxon is raising the question: What generates more jobs more quickly? The new green economy? Or the old-fashioned oil industry?

Still, given Interior Secretary Ken Salazar's recent decision to spike leases on 130,000 acres in Utah, it seems that Exxon's strategy has an uphill climb.  

Copyright (c) 2009 Dow Jones & Company, Inc.


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