Archive for the ‘ANWR’ Category

In the course of exploring issues related to drilling for oil in the Arctic National Wildlife Refuge (ANWR), I’ve argued that it is coming down largely to deciding between twenty cents or so off a gallon of gas in ten years versus the environmental impact. I haven’t given much ink to what the environmental impact would be, so here is what I have found.

Drilling protagonists, including Alaska Governor Sarah Palin, assert that the entire operation could be done on a mere 2,000 acres. As the National Resource Defense Council explains

President Bush made a speech on March 9, 2005 in which he repeated the widely discredited claim that the oil in the Arctic National Wildlife Refuge could be reached by drilling on only 2,000 acres.

“Thanks to advances in technology…we can now reach all of ANWR’s oil by drilling on just 2,000 acres,” he said. “Two thousand acres is the size of the Columbus [Ohio] airport. By applying the most innovative environmental practices, we can carry out the project with almost no impact on land or local wildlife.”

The reason this claim is widely discredited is that the 2,000 acres refers only to the actual footprint of the facilities and stanchions of the piplines, which would not be in a compact area but spread out over the 1.5 million acres of the coastal plane. The U.S. Fish and Wildlife Service says (bold is mine),

Newer technologies that are applied today in Alaska’s expanding North Slope oil fields include directional drilling that allows for multiple well heads on smaller drill pads; the re-injection of drilling wastes into the ground, which replaces surface reserve pits; better delineation of oil reserves using 3-dimensional seismic surveys, which has reduced the number of dry holes; and use of temporary ice pads and ice roads for conducting exploratory drilling and construction in the winter. As the oil fields expand east and west, additional oil reserves are consequently being tapped from smaller satellite fields that rely on the existing infrastructure at Prudhoe Bay and Kuparuk.

Although technological advances in oil and gas exploration and development have reduced some of the harmful environmental effects associated with those activities, oil and gas development remains an intrusive industrial process. The physical “footprint” of the existing North Slope oil facilities and roads covers about 10,000 acres, but the current industrial complex extends across an 800 square mile region, nearly 100 miles from east to west. It continues to grow as new oil fields are developed.

The 100-mile wide 1002 Area is located more than 30 miles from the end of the nearest pipeline and more than 50 miles from the nearest gravel road and oil support facilities. According to the U.S. Geological Survey, possible oil reserves may be located in many small accumulations in complex geological formations, rather than in one giant field as was discovered at Prudhoe Bay. Consequently, development in the 1002 Area could likely require a large number of small production sites spread across the Refuge landscape, connected by an infrastructure of roads, pipelines, power plants, processing facilities, loading docks, dormitories, airstrips, gravel pits, utility lines and landfills.

The counterargument to this is that ANWR is a remote place where nobody goes, and drilling in nearby Prudhoe Bay is about as conscious of environmental impacts as you can get. For a gritty, personal, often humorous account that nicely gives this side, see this Jonah Goldberg post. He says, for example,

Today, crews aren’t allowed on the tundra. “If I took a leak out there, I’d get fired,” an engineer tells me. “In the winter, if you spill some coffee into the snow, you’d better go get a shovel and dig it up.”

One of the reasons there is so little environmental impact is that these are the M*A*S*H units of oil exploration: The entire operation is on wheels. Pretty much everything in Alpine doubles as a cosmic-sized Tonka truck. In order to avoid roadwork on the precious tundra, the oil companies build immense ice roads that can bear massive stresses, but still melt harmlessly during the summer. Divided into 15 modules weighing over 15,000 tons, almost the entire Alpine installation was driven, literally, over the Arctic Ocean, and across miles of tundra-without leaving so much as a pothole.

Before the near meltdown of the financial system, the big talk was the escalating price of oil. High gas prices have been putting the crunch on all of our wallets and purses, not only when we fill up the family vehicle, but also, well, for the price of everything. We can be sure that while the price of oil has subsided a little, the problem has not gone away.

As a remedy, Republican Presidential Candidate John McCain has started advocating more domestic drilling, particularly in the form of offshore drilling. Also, although McCain has traditionally been against it, his new running mate, Alaska Governor Sarah Palin, has been also for drilling in the Artic National Wildlife Refuge (ANWR).

To be sure, there are many arguments for and against opening up offshoring drilling (~18.7 billion barrels) or ANWR (~10.4 billion barrels). One of the arguments put forward by protagonists is that it will help reduce the price of gas at the pump. And that’s what we really care about, isn’t it?

Politifact has gathered together some salient views on the relationship of expanded drilling to price at the pump. Here’s the summary in a nutshell:

• Opening up drilling is a long-term plan, not a short-term solution. Although Gov. Palin claims only 5 years are needed to bring ANWR online, energy experts say 10 years is a more realistic estimate.
• The impact to gas prices at the pump would be marginal at best

Both the offshore continental shelf reserves and ANWR are only small contributions to the overall world reserves. So, their effect on price is small. A report by the Energy Information Administration estimates that oil from ANWR could “subtract anywhere from 41 cents to $1.44 per barrel of crude oil around 2025.” This could perhaps be doubled if both offshoring drilling and ANWR came online together. These will be a few percent changes in price, which translates to small change at the pump–a few pennies to perhaps 25 to 40 cents.

To make a good choice about whether to support such drilling, we have to consider the benefit (a small reduction at the pump in 10 years) versus the potential environmental impacts.

In this post, I’m going to summarize the situation around drilling in the Artic Wildlife Refuge and the positions of some candidates regarding this option.

Background

A big part of the US energy dilemma is that the internal reserves of easily accessible petroleum are becoming depleted, causing a commensurate decline in domestic production. This is happening despite the National Petroleum Reserve-Alaska (NPRA) having been opened on the north shore of the Brooks Range. Although oil from that region has augmented production for many years, Alaskan production is now declining as well. The graph at right shows the petroleum production of Alaska vs the remaining 48 states.

As discussed a few days ago, declining production and increasing demand are creating an ever more perilous energy situation for the United States.The basic situation updated to July 2007 is summarized below*.

* If, like me, you are wondering why the inputs don’t seem to add up to the outputs, its because there are a few more inputs. See this nifty drawing of petroleum flows.

Of course, the demand is not expected to let up. Rather, it is expected to keep increasing robustly. The EIA also provides extensive forecasts for petroleum production and consumption for those who are interested.

Proven Reserves

If the challenge were just a matter of producing more, that would be one thing. Americans are good at that. But the underlying issue is that petroleum reserves are fixed, and so producing and consuming more just uses them up faster. Although there is continual discovery and development of more usable sources, ultimately reserves will run out. It is just a question of when.

Precisely determining the amount of international proven reserves is inherently difficult and prone to error, but the world oil reserves are roughly 1.15 trillion barrels, broken down as shown in chart to the right. (Click to enlarge.) These numbers are approximates taken from vastly conflicting sources and are used for illustrating the situation only. For another breakdown on oil reserves, see here, and here is a nice world map style graphic.

As a result of the continued demand and shift of supplier primacy to the Middle East, there is great pressure to find and exploit any available oil resources within the United States. As Alaska has the largest oil fields, a lot of attention has been directed there.

• National Petroleum Reserve - Alaska (NPRA). This is where existing Alaskan production mainly originates from now. According to the Department of the Interior, “The US Geological Survey issued a new report in 2002 that significantly revised hydrocarbon estimates upwards. The agency now estimates that the National Petroleum Reserve-Alaska has between 5.9 to 13.2 billion barrels of technically-recoverable oil on the federal lands in the National Petroleum Reserve-Alaska with a mean estimate of 9.3 billion barrels. Assuming price levels of $22 to $30 per barrel, there are an estimated 1.3 to 5.6 billion barrels of economically recoverable oil, an amount equal to what we import from Saudi Arabia in 3 to 6 years.”
• Arctic National Wildlife Refuge (ANWR)—The ANWR is a federally protected reserve that would require congressional approval for drilling to begin. The area contains an estimated 5 to 15 billion barrels, and would hypothetically be enough to supply 100% of current U.S. demand for 1 to 2 years or perhaps 10 to 15 years if used to offset imports by approximately 5%.

Arctic National Wildlife Drilling Explored

Allowing oil extraction in the Artic National Wildlife Refuge is the most hotly contested option for increasing domestic supply. ANWR is an area of about 19 million acres located just east of NPRA (23 million acres). ANWR is considered by most to be the last major, untouched wilderness area in the United States. Currently, there are no roads into into or within it. There are only a few native settlements. Here is a nice online book review that gives a sense of what the reserve is like.

The Debate

Many oil companies and politicians would like to a small coastal slice of ANWR called section 1002 for drilling. The arguments on both sides are summarized in the table below.

¹ Arguments offered by anwr.org, which makes a comprehensive case for drilling.

² See this nice compilation of many sides of the issue by the University of Connecticut. Also, the Sierra Club presents the against side of the issue.

There are a couple of common “against” arguments that I did not include in the table because I consider them to be logical fallacies. In the interests of fair play, I give them below and my response.

1. The Evil Profit Monger Argument

In this argument, those opposed to drilling argue that the big oil companies want to do it just to make a quick buck. For example, from a National Resources Defense Council article,

“The drive to drill the Arctic Refuge is about oil company profits and lifting barriers to future exploration in protected lands, pure and simple….Opening the Arctic Refuge to energy development is about transferring our public estate into corporate hands, so it can be liquidated for a quick buck.“

The problem with his argument is that asserts that the motivation to make a profit is somehow a reason not do it. If this were a good reason, it would apply to every for profit business in the world. Profit is the reward for businesses to take risks to serve the public good. The question is “Would allowing companies to pursue profit in this way be in the public interest?”

2. Drilling in ANWR Leads to Drilling in Other Pristine Environments

People who make this argument assert that if ANWR is opened up, then opening up other protected areas will follow. Some even argue that breaking down the federal protection of refuges is the goal of corporate efforts to open up drilling in ANWR. But this argument is a slippery slope fallacy, because the cause and effect linkage between the authorization for drilling in Alaska to authorization other places is extremely weak. Although I suppose a type of precedent might be set, obtaining additional authorizations would likely involve a complicated series of legal moves in different conditions and circumstances on a case-by-case basis. It would not be guaranteed, and there is no reason to believe that those decision makers would feel more inclined to open up more refuges versus feeling that an exception was already made and that sufficient latitude was already given.

Positions of 2008 U.S. Presidential Candidates

The table below lists the positions of the top 2008 presidential candidates. As one might expect, Democrats tend to be opposed to drilling in ANWR, and Republicans tend to be a less unified.

Interim Conclusions

The essence of the ANWR issue regards whether it is worthwhile to take a chance with one of the remaining pristine areas on the globe to satisfy relatively short-term needs for oil. The drilling would probably cover only small percentage of ANWR, but it would still be a sizable area of land that would have drilling rigs, roads, and other support structures installed. Undoubtedly there would be some environmental damage, but how much is uncertain. Similarly uncertain is how much oil would be recovered and how much that oil would actually help the economy. We must balance how much is it worth to preserve this last-of-a-kind area versus the need to relieve pressing demands for oil now.