News Notes
Energy policy
ANWR in black and white

[Bears walk the tightrope on the Trans-Alaska Pipeline. Alaska Dept. of Natural Resources.]
The Bush administration has put opening the Arctic National Wildlife Refuge (ANWR) in the spotlight of its energy policy agenda. The United States imports too much oil and produces too little, say many administration officials. Prices are skyrocketing and something needs to be done, say others.   Statistics on the amount of recoverable oil that exists beneath the coastal plain of ANWR are used selectively to support partisan viewpoints on both sides of the issue. But the methods behind the data are not always well explained and those that are able to dig through the details thus far are often confused when economic considerations put a different spin on the energy “crisis.” The truth is, not many Americans understand what’s going on in Alaska.
Just one six-foot piece of pipe — the top of a three-mile well shaft — stands exposed in the 19-million-acre preserve. There is only one well, and it was drilled in 1985. Direct scientific data on oil reserves are not available because it is illegal to drill in ANWR. The only way to obtain direct evidence of the presence of oil is by drilling into the ground to find it. Even seismic profiling permits require an act of Congress, which has not been forthcoming.
Today’s estimates are derived from 1,400 miles of seismic reflection data that the U.S. Geological Survey (USGS) collected between 1984 and 1985. These numbers were re-examined and analyzed, taking new drilling technologies into account, to derive oil and gas resource estimates for the USGS’s 1998 study. The numbers are broken down again into technically recoverable resources — the amount recoverable if cost is not a consideration — and economically recoverable oil — what is economically sound to recover, given current technologies and a stable price around $24 per barrel.
“When people talk about how much [oil] might be there, it’s an undiscovered resource estimate,” says Mark Myers of Alaska’s Department of Natural Resources. “It’s a subjective call based on data available to interpret.”
The USGS’s 1998 assessment of oil and gas resources in ANWR estimates with 95 percent confidence that 5.7 billion barrels are technically recoverable. On the other end of the probability scale, the USGS estimates there is a 5 percent chance that 16.0 billion barrels are technically recoverable. The 50-50 estimate is 10.3 billion barrels. Most of the economically recoverable oil lies to the west of the Marsh Anticline in the undeformed region closest to the existing network of roads and pipelines that support the oil rigs of the developed North Slope. That region is thought to contain about 2.6 billion barrels of economically recoverable oil. The minimum size of a commercially developable field is approximately 512 million barrels of recoverable oil, according to the USGS.
For comparison, consider Prudhoe Bay, the center of oil activity on the North Slope. Since production began in 1977, Alaskan oil has provided 20 to 25 percent of the country’s total supply. At the time, it was estimated that 9 billion barrels would be recovered. Today it looks like more than 12 billion barrels will be recovered before the wells are shut down, says Naresh Kumar of Growth Oil and Gas Company and formerly North Slope Exploration Manager for ARCO Alaska.
Scientists are not certain how much oil is actually recoverable in ANWR. They can only proffer their most educated guesses, Myers says.
If granted permission to drill in ANWR, oil companies will start by setting up exploration wells. Even if the refuge were opened tomorrow, it would still be seven years at the least before a single barrel of oil is produced.
What’s more, the definition of economically recoverable is in a constant state of flux as markets soar and plummet and energy usage in terms of fuel source and overall consumption changes over time.
Opponents of the president’s proposal point to that variability in arguing that exploration in ANWR is not worth the environmental risk to a pristine wilderness. A joint press statement issued Feb. 22 from Senate Minority Leader Tom Daschle (D-S.D.) and Sen. Byron Dorgan (D-N.D.), the chairman of the Democratic Policy Committee, cites statistics on the role that ANWR oil will play in the world market. The U.S. holds only 3 percent of the world’s oil, and ANWR is a mere fraction of that, they say. “The price of oil is a world price and is largely determined by the international market. For example, last year’s gasoline price spikes were the result of a decision by OPEC producers to cut production when demand dropped following the Asian economic crisis, not because of changes in domestic oil production.”
There is pressure to drill for reasons other than the country’s oil needs. The Trans-Alaska Pipeline that delivers oil from Prudhoe Bay to the Pacific Northwest is flowing at half its capacity. At its peak, Prudhoe Bay produced 2 million barrels of oil per day. Today it produces only 800,000 barrels of oil. Combined with the rest of the North Slope oil, 1 million barrels of oil flow down the Trans-Alaska Pipeline System.
A certain number of barrels of oil per day have to flow though the pipeline to keep it operational. If it runs dry, the laws under which it was constructed mandate that it be torn down and the area be returned to its natural state. Oil companies — namely big Alaskan players including BP, Phillips Alaska and ExxonMobil — stand to lose money if that happens. They are looking for ways to keep the line up and running.
There are two options: ANWR to the east and the National Petroleum Reserve Alaska to the west. Although a lease sale is planned for the National Petroleum Reserve in 2003, industry analysts do not expect production levels to sustain pipeline flow in the long term and keeping up the pressure to open ANWR.

Laura Wright

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