Drilling In Arctic National Wildlife Refuge Is Poor Energy Policy

16 February 2001

By Stentor Danielson

President Bush has done a better job than expected of getting on environmentalists’ good sides in his first month in office. As a candidate, Bush was vilified by greens, causing many who would otherwise have voted for Green Party candidate Ralph Nader to support then-Vice President Al Gore to keep Bush out of office. But as President, Bush stunned many by publicly recognizing the dangers posed by global climate change (formerly known as the greenhouse effect) and the need for action. Two weeks ago, I wrote an Editor’s Column praising the Bush administration for pushing emissions trading programs that would meet environmentalists’ goals without needlessly antagonizing industry. Wednesday he released a budget proposal asking for $56 million more than Bill Clinton had requested to fund the Environmental Protection Agency’s brownfields cleanup programs.

This relief -- this feeling of "whew, the next four years won’t be so bad after all" -- is threatened by a bill introduced in Congress this week. The bill would open the Arctic National Wildlife Refuge (ANWR) to oil exploration and drilling. Bush regards this issue as central to his energy policy. Senator Frank Murkowski (R-Alaska), the bill’s primary sponsor, said "Our national security demands it." Luckily, dissent by a few Republicans in the evenly split Senate makes passage of the bill less likely.

The philosophy behind opening ANWR to drilling is that the United States should reduce its dependence on foreign oil. Currently the United States consumes almost 20 million barrels of oil per day, about 10 million of which are imported from Venezuela, the Middle East and other foreign nations. This dependence has led to entanglement in conflicts such as the Persian Gulf War and continued patrolling of Iraq.

So far, so good. Self-sufficiency, if it can be achieved without increasing the cost to the consumer, is not a bad goal. But ANWR’s contribution to that goal would be small -- so small as to make it not worth the cost.

Both sides cite a U.S. Geological Survey (USGS) report on oil in ANWR. The USGS report indicated a 95 percent certainty that ANWR held three billion barrels of "technically recoverable" oil -- that is, oil that can feasibly be extracted -- and a five percent certainty that up to 16 billion barrels are technically recoverable.

But the oil companies’ first and foremost interest is the bottom line. So it is more useful to look at figures for "economically recoverable" oil -- oil that it would be profitable to extract, given an assumed average price of $24 per barrel. USGS gave a 95 percent certainty of only two billion barrels, and a five percent certainty of as many as nine billion barrels. The gap between the standards is oil that could technically be acquired, but would cost more to extract than it would bring on the market. It would take a national emergency (with government subsidies for production) or a massive price hike by the Organization of Petroleum Exporting Counties, to convince oil companies to drill for that oil.

Comparing the estimated potential of ANWR to U.S. consumption figures, it has been estimated that ANWR oil could "fill in" for oil that would otherwise be imported for about six months. I grant that that figure is a worst-case scenario -- the United States would likely not simply quit importing oil once ANWR opens. Indeed, oil companies cross international borders, so many companies own the foreign drilling sites that provide U.S. import oil. It would be a bit much to assume that transnational oil corporations feel a patriotic desire to let the United States be self-sufficient in oil. But even if production is spread out over a longer period of time (thereby reducing ANWR’s contribution to self-sufficiency), the Refuge is far from the seemingly limitless oil reserve of the Middle East. The bottom line is that it will run out, and sooner rather than later.

It is also important to note that ANWR is not the only source of oil in Alaska. At 1.5 million acres, it makes up only ten percent of Alaska’s North Slope. Oil exploration is allowed and encouraged in the remaining ninety percent.

Politicians and oil companies are preparing to jump into ANWR, land specifically set aside to keep industrial development out, before the oil potential of the rest of Alaska is exhausted. There are known oil supplies on state land to the west of ANWR that have not yet been tapped. The Sourdough prospect was discovered in 1997, but no move has been made to extract the 100 million barrels of oil estimated to lie in the ground there.

The argument offered to explain the lack of development on legal sites is the remoteness of the location, and the consequent difficulties of getting equipment and personnel in and oil out. Why those concerns do not apply to ANWR is left to the imagination -- perhaps the extra barrels of oil that ANWR holds would push the project to critical mass, making it profitable. But that fails to explain why the Badami oilfield, which has the facilities in place to extract 35,000 barrels per day, is only producing 2,500. Clearly, Alaskan oil is not an efficient means to meet American consumer demand while oil continues to flow from Venezuela and the Middle East.

In fact, most oil produced in Alaska now flows not to the lower 48 states but to foreign nations. Though the United States is a net oil importer, it still exports a million barrels of oil each day, primarily to Canada, Korea and Japan. This oil is drawn from Alaska’s oilfields. So as long as free trade -- of which Bush is a staunch supporter -- remains our policy, oil exploration in Alaska will do little to free America from dependence on foreign oil. Increasing Alaskan oil production would in fact deepen our dependence, as American businesses would be dependent on foreign oil markets for a larger sector of their profits. Alaskan oil would only benefit the nation in the case of an emergency which cut us off from the world oil market, in which case Alaskan oil could be diverted to other states, presumably at higher prices.

Most opponents of drilling for oil in ANWR appeal to our stewardship of the natural world -- the Porcupine Caribou herd, arctic wolves and other wildlife that would be hurt by oil exploration. Others cite the devastating impact on the traditional subsistence of the native Gwich’in people. But there is a more fundamental flaw. Oil drilling in ANWR is a capitalist economic proposition, but it fails on those terms.

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