The Arctic National Wildlife Refuge Heats Up (11/01)

The following column by GAP Intern Michelle Williams is reprinted from the November 2001 issue of The Professional Geologist, a publication of the American Institute of Professional Geologists . It is reprinted with permission.

Over the past several months, the Arctic National Wildlife Refuge (ANWR) has become a household word. As the Bush administration and Congress struggle to develop an energy policy to address both short- and long-term demand opening ANWR for petroleum (specifically crude oil) exploration has developed as a key point of contention. The President's national energy policy included opening up the refuge, and the anticipated revenues generated by ANWR drilling were incorporated in the President's long-term budget plan.

As the 107th Congress struggles to develop its own national energy policy, opening ANWR has become a defining issue. Prior to the August recess the House passed the Securing America's Future Energy (SAFE) Act of 2001 (H.R. 4) introduced by House Energy and Commerce Committee Chairman W.J. "Billy" Tauzin (R-LA). Several amendments on ANWR were considered during the House floor debate, including successful ones to limit the drilling-surface area to 2000 acres and to support energy efficiency and conservation technology with revenues from ANWR production.

The ANWR debate has heated up in the Senate as well. Majority Leader Tom Daschle (D-SD) heads the opposition and recently asserted that the ANWR position in H.R. 4 is "dead on arrival" in the Democrat-controlled Senate. Alaska's two Republican Senators, Frank Murkowski and Ted Stevens, have led the charge in support of opening ANWR. Prior to the shift of power, Murkowski -- then chairman of the Senate Energy and Natural Resources Committee -- introduced several bills incorporating ANWR into a national energy policy. Stevens has threatened to filibuster any energy legislation that does not open the refuge for drilling. Thus, the fate of energy policy may hinge on ANWR.

Defining ANWR
The debate over petroleum exploration in ANWR has been going on for over 20 years. In 1980 the Alaska National Interest Lands Conservation Act (ANILCA) established ANWR as the nation's second largest refuge, covering 19 million acres. This act left open the possibility of future congressional action to open 1.5 million acres of the refuge's coastal plain for exploration. Preliminary exploration indicated that this region, referred to as the 1002 area, was likely to contain significant recoverable petroleum resources.

Currently the U.S. imports 57% of its oil. While recognizing that ANWR will not alleviate all of the nation's dependence on foreign oil, drilling proponents argue that it would help provide a long-term response to oil supply. Estimates anticipate a 7 to 12-year lag time from congressional approval to production. In addition to concerns about the U.S. dependency on foreign oil, ANWR supporters also point to the decrease in production at Prudhoe Bay, which threatens to close the Trans-Alaska Pipeline System due to insufficient oil passage. They argue that increased production from ANWR would decrease the per barrel transporting cost through the pipeline. But how much oil is there?

Oil Numbers
Since the passage of ANILCA, several attempts have been made to quantify the extent of the petroleum resources in ANWR. In anticipation of the political debate surrounding ANWR in a national energy policy, the USGS conducted an in-depth technical review of petroleum assessment of the 1002 area in 1998. This assessment used more detailed technology to more thoroughly analyze and update the previous USGS 1987 Report to Congress on ANWR. The 1998 assessment include estimates and economic analysis, specifically focusing on crude oil reserves since natural gas is considered non-economic in the absence of any pipeline system from the North Slope. Methods of data collection included reprocessing extensive amounts of seismic data from an earlier industry-funded study as well as defining and analyzing ten petroleum plays. The USGS defines a play as "a volume of rock which contains similar geological parameters (such as occurrence of conditions of petroleum generation, and sufficient rocks to hold and trap the reservoir) which determine petroleum potential."

The purpose of the USGS study was to determine the in-place petroleum reserves (crude oil, natural gas, and liquid natural gas) and combine these quantities with technical and economic data to calculate technically and economically recoverable amounts of petroleum. The technically recoverable amount refers to the quantity of oil that can be recovered using current technology regardless of costs. The economically recoverable amount is the quantity of recoverable oil available once assumptions about oil prices, production cost, etc. are factored into the equation.

The USGS estimates that the technically recoverable amount of crude oil in the 1002 area is between 4.3 and 11.8 billion barrels, with a mean value of 7.7 billion barrels. These estimates are for the federal land enclosed in the 1002 area and are thought to vary within the region due to the amount of deformation that has occurred. In the less deformed area in the northwest, the amount of recoverable oil is estimated to be much higher than in the eastern deformed area. The USGS further states the economically recoverable estimates of oil when the costs of $30 per barrel (finding, developing, producing, and transporting) are calculated are between 3 and 10.4 billion barrels with a mean value of 6.3 billion barrels. These estimates are based on a 12-percent after-tax return on investment calculated in constant 1996 dollars and are larger than previous reports and estimates from the USGS.

Debating Numbers
Estimates of recoverable resources are a key data set for policymakers seeking to evaluate ANWR's potential as an oil field, but they are also ripe for manipulation in a highly charged political debate. The USGS assessment included both the technically and economically recoverable estimates and most reports only cite the technically recoverable estimates that ignore any economic parameters in drilling. At high prices, the disparity between the technically recoverable values and economically recoverable values is relatively small -- at $40 per barrel the mean value estimates are around 6.7 billion barrels compared with a technically recoverable mean estimate of 7.7 billion barrels. But at lower prices, the economically and technically recoverable estimates diverge substantially with economic estimates ranging from a mean value of 2.4 billion at $18 per barrel to 6.3 billion at $30 per barrel.

Other number manipulation has occurred as the result of the USGS reporting estimates for only federal lands in the 1002 area and also for the included enclosed Native Lands and the 3-mile offshore state land. The mean values of the entire 1002 area and only the federal land are 10.4 and 7.7 billion barrels, respectively. With this range of reported estimates, organizations, groups and individuals may selectively cite the estimates that best support their claim on ANWR. More deceptively, groups on both sides have used the high or low estimates (5th or 95th percentile) rather than the mean to score political points.

Do Numbers Matter?
For opponents of drilling in ANWR, resource estimates are often beside the point. Former Interior Secretary Bruce Babbitt memorably described the refuge as "America's Serengeti." Report language of the 1002 section of ANILCA describes the area as "the most biologically productive part of the Arctic Refuge for wildlife and . . . the center of wildlife activity." Opponents rally around this statement arguing that intrusion in the refuge will destroy a fragile arctic ecosystem that should remain undisturbed. Concerns over the biota, including caribou, grizzly bears, polar bear, wolves, snow geese, migratory birds and wildflowers, range from aesthetic enjoyment and ecological quantity to sport hunting and fishing issues. Other potential problems discussed are the quality and quantity of the water supply in light of a past history oil spills and environmental leaks.

Proponents respond that the environmental footprint on the area would be minimal with the current technology, an assertion that led to the House's vote to decrease the area available for exploration from 1.5 million to 2000 acres. This smaller acreage, however, would not be a contiguous plot but the total of the surface area covered by equipment spread out across a much broader space. Opponents also express concerns that, once in place, the infrastructure built for production will expand far beyond the initial footprint.

While ANWR may provide for the long-term domestic oil supply, it is very highly unlikely it will become the staple of a national energy policy. Strong industry and environmental feelings clash in every arena of energy discussion that includes AWNR. The ANWR debate has created a battlefield in Congress. When this happens, more often than not, the result is inaction.

Michelle Williams has returned to the University of Nevada Las Vegas, where she is a master's student in tectonic sedimentology.

This article is reprinted with permission from The Professional Geologist, published by the American Institute of Professional Geologists. AGI gratefully acknowledges that permission.

Please send any comments or requests for information to the AGI Government Affairs Program.

Posted May 13, 2002

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