Arctic National Wildlife Refuge (ANWR)

ANWR – The Developing Controversy

The Arctic National Wildlife Range is a fairly desolate frozen tundra region encompassing 8.9 million acres in the Northeast corner of Alaska. It was established in 1960 by the U.S. Department of the Interior as a wildlife refuge. Eight years later the largest oil field in North America, known as Prudhoe Bay, was discovered and developed nearby and the famed Trans-Alaska Pipeline was constructed to transport oil from this area near the range down to the southern portions of Alaska. This prompted interest in the exploration of oil in this wildlife refuge, starting a controversy between the environmentalists and pro-energy groups.

The controversy was temporarily resolved in 1980 with the passing of the Alaska National Interest Lands Conservation Act (ANILCA). Its specific elements are:

• The ANILCA doubled the size of the Arctic National Wildlife Range and renamed it the Arctic National Wildlife Refuge (commonly referred to as ANWR). Most of the ANWR was designated as wilderness and therefore protected from oil and gas exploration In all but a small area. This area is referred to as Area 1002, after section 1002 of the Act, and could be opened for exploration if authorized by Congress.
• In 1998 a U.S. Geological Survey estimated that as many as 16 billion barrels of oil could exist in Area 1002 of the ANWR, prompting tremendous pressure from pro-energy groups for Congress to authorize the exploration and development for oil. They cite the need to alleviate U.S. dependence on foreign oil as justification.
• Environmental Groups, on the other hand, oppose any such action as harmful to the wilderness.

The issues continue to be debated and the lines are drawn. In this article, we will investigate Area 1002’s potential for oil reserves and the wildlife it supports, and the impact that oil development in ANWR could have on world oil production and consumption in the U.S.

Cold, Barren, Mostly Government Owned

The Arctic National Wildlife Refuge (ANWR) is comprised of 19.6 million acres of which 1.5 million acres (8 percent of the total ANWR area) is Area 1002, located in the northernmost reaches of Alaska:

• ANWR is ecologically classified as arctic tundra, with the ground beneath the surface frozen all year, summer temperatures averaging about 40 degrees Fahrenheit with mostly cloudy skies, and winter temperatures dropping to an average of about minus 4 degrees Fahrenheit with continual darkness.
• Numerous mammals (e.g. caribou, polar bears, and oxen) and birds habituate the area, with many nesting or making their dens in Area 1002.
• The Gwich’in Indians and Inupiat Eskimos reside in the ANWR and they depend on either the caribou (Gwich’in Indians) or whales, musk oxen and sheep (Inupiat Eskimos) for food.

With the signing of the Alaska Native Claims Settlement Act (ANCSA) in 1971, the Kaktovik Inupiat Corporation (KIC) formed the city of Kaktovik, Alaska (located in Area 1002), establishing the only portion of land within the ANWR not owned by the U.S. government.

Area 1002 Oil – Availability, Timing, and Economics

The 1998 U.S. Geological Survey (USGS) projected between 5.7 billion and 16 billion barrels (averaging at 10.4 billion barrels) of technically recoverable oil in Area 1002 of the ANWR:

• 74 percent (or an average of 7.7 billion barrels) of oil is estimated to exist on federally-owned land.
• The remaining 26 percent (2.7 billion barrels) of oil is on state or native-owned land.
• The U.S. DOE estimates that there are 120 billion barrels of undiscovered, recoverable oil in the U.S. Therefore, based on the 1998 study, Area 1002 represents 8.7 percent of the total available oil within the U.S.
• With respect to how soon oil production could begin (notwithstanding inevitable legal challenges), the U.S. Energy Information Administration (EIA) projects a minimum of 10 years to explore and drill in the ANWR, once approval is obtained.

The 10-year time period is attributable to a number of factors:

• Seasonal Challenges: Oil companies can only drill during a 3 to 4 month span of time each year (winter) and the heavy drilling equipment can only be transported to and from the ANWR drilling sites by ocean barges during the summer (another 3 to 4 month window of time,)
• Preliminary Support: Obtaining leases and drilling exploratory wells necessarily precede the construction of producing wells.

Therefore, the earliest that oil production is likely to begin in significant quantities is around 2020 with an additional 10 years before ANWR oil production contributes to U.S. oil production and peak. According to the EIA, ANWR daily oil production can represent about 10 percent of the U.S. daily oil production by 2030 (or 2.6 billion barrels of oil between 2020 and 2030).

In terms of the economic impact represented by the ANWR oil opportunity:

• Little, if any, impact on world prices because it is less than 1.5 percent of the projected world oil consumption by 2030.
• Even with ANWR oil, the U.S. will still need to import 10.6 million barrels of oil per day (ANWR at its peak will contribute approximately 0.8 million barrels of oil per day).
• If ANWR is opened for production, the amount of money spent by the U.S. on foreign oil would decrease by $202 billion.

The Arguments For and Against ANWR Drilling

The arguments posed by environmentalists and those supportive of drilling focus in the following areas:

• Extraction of oil: The opponents of drilling in the ANWR claim that Area 1002 will be littered with oil drilling platforms, whereas proponents point out that with the improvements in technology, such as directional drilling, the number of wells required will be significantly reduced.
• Infrastructure required to build the drilling platforms: Opponents believe that building roads to facilitate the transport of construction equipment will likely disrupt the tundra yet the impact of gravel roads can be lessened by building of roads made of ice. The challenge commonly voiced by the opponents is that the hilly terrain of Area 1002 limits the use of ice roads.
• Area impacted by drilling: The transport of the extracted oil from the area requires pipelines or tanker trucks. The argument here revolves around the area these roads or pipelines will require where proponents for drilling estimate that only 2,000 acres (just over 0.1 percent of Area 1002) will be required for these infrastructural elements, numbers that are not at all embraced by the opponents.
• Impact on wildlife: The proponents of drilling state that the wildlife near Prudhoe Bay has not been impacted since drilling began over 30 years ago, the National Academy of Sciences published a report in 2003 that stated drilling operations in Area 1002 will change the migration patterns of the bow head whales (which are hunted by the Inupiat Eskimos), possibly the dispersal and reproduction of the herds of caribou (a staple of the Gwich’in Indians), and the populations of predators and migratory birds.
• Potential for oil spillsOil drilling and extraction are not clean activities, and though the small number of incidents at Prudhoe Bay since the 19702 might suggest such concerns are overblown, there have been enough incidents of significant enough magnitude. For example, a corroded pipeline dumped 200,000 gallons of oil into the tundra at Prudhoe Bay in 2006 and a tanker truck leaked 7,000 gallons of diesel fuel in a frozen pond in 2007 to arm opponents with plausible arguments. Of course, the greatest fear is an accident of the size of the Exxon Valdez spill that would devastate the region.

The arguments over drilling in the ANWR will likely continue with no apparent compromise in sight. Local public opinion is varied:

• Many Alaskans are positively disposed towards drilling in the ANWR, mostly because of its potential to strengthen the local economy and provide jobs.
• The Inupiat Eskimos are in favor with the caveat that it be done environmentally safe and that they have input into the process and revenues.
• The Gwich’in Indians are absolutely opposed to it.

National opinion tends to waver based on the retail price of gasoline. Regardless of the ultimate outcome of this debate, there is likely to be continued controversy, reversals, and challenges from opponents and proponents. At best, a final decision to drill will be symbolic and can only be successful if viewed through the lens of a comprehensive energy strategy.

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