Would Drilling in Alaska Solve the U.S. Energy Crisis?

With gasoline prices soaring, and the question of security a constant concern, many in the United States are looking for ways to reduce our dependence on foreign oil. Some oil companies are making it seem like opening up the Artic National Wildlife Refuge (ANWR) is a simple solution to the foreign oil problem. (Given the amount of money they will make if the refuge is opened, it is not surprising that they are framing the case this way.) If this actually WERE the case, there might be a good argument to do so. Unfortunately, it is not.

 

What makes the Arctic Refuge special?

One of the reasons that this area was originally set aside as an Arctic Refuge is because this single protected area includes a unbroken system of arctic and subarctic ecosystems, providing an important value for the species that live in these systems. The Refuge is inhabited by 45 species of land and marine mammals and 180 species of birds, with 36 species of fish in its waters. The Refuge supports more plant and animal life than any other Park or Refuge in the circumpolar arctic. The refuge is also home to people: it includes the traditional homelands and subsistence areas of both Inupiaq Eskimos (on arctic coast) and the Athabascan Indians (in the interior). These communities live in close relationship with the land and depend on the natural systems to find food and maintain their culture. The refuge is remote, roadless, and untouched by civilization. [1]

 

How much oil can be found in the Arctic Refuge?

According to USGS studies, the total quantity of technically recoverable oil within the entire ANWR area is estimated to be between 5.7 and 16.0 billion barrels (95-percent and 5-percent probability range, respectively), with a mean value of 10.4 billion barrels of oil (BBO). Estimates of “economically recoverable oil” show that at a price of $30 per barrel, between 3 and 10.4 billion barrels are estimated. The estimated total quantity of technically recoverable oil in the area being considered is 7.7 BBO (mean). [2]

How long would 7.7 BBO last? ANWR.org, a lobbying group committed to opening ANWR for exploration, says that 1.5 million barrels of oil (MBO) a day represents 25% of our domestic production. If there are in fact 7.7 BBO of oil in ANWR, how long would that last us at this rate (assuming that we did not increase our domestic production, which we certainly will)?

By my calculation, 6 MBO each day X 365 days X 3.5 years = 7,700 MBO. If used exclusively, the oil would only last us for 3.5 years. Even at the upper limit of 16 BBO (all potentially existing, technically recoverable oil within the entire area regardless of limit or economic feasibility), that is still only about 7 years.

 

A “Drop in the Bucket”

A July 2005 study by the Energy Information Administration (EIA) of the Department of Energy, commissioned by Congress, assessed different energy strategies, including offshore drilling and drilling in the Refuge, to see whether they would make any impact on our gas prices and found that these provisions would have only a “modest impact on energy production, imports, oil prices, overall energy consumption, and economic growth.. Opening ANWR reduces oil import dependence by 4 percentage points in 2025, from 68 to 64 percent of petroleum product supplied.” [3]

With the different energy strategies assessed by the EIA (including drilling in the Arctic Refuge), there would be no change in available oil for ten years (until at least 2016). By 2025, drilling in the Refuge would reduce world oil prices by 57 cents per barrel (a mere 1.9 percent) in constant 2003 dollars.[4] Assuming a one-to-one impact on gasoline prices, $0.57/42 = drilling in the Arctic would save us just 1.4 cents per gallon beginning in 2025.[5]

 

A Real Solution

The United States consumes about 25% of the world’s oil, but has less than 3% of the world’s proven oil reserves.[6]We simply cannot drill our way to lower prices and energy independence. The solution to the U.S. energy crisis? More efficient cars and trucks, and investing in renewable energy!
 

Notes:

[1]     http://www.fws.gov/refuges/profiles/index.cfm?id=75600
[2]     http://pubs.usgs.gov/fs/fs-0028-01/
[3]     http://www.eia.doe.gov/oiaf/servicerpt/hr/pdf/sroiaf(2005)04.pdf
[4]     Ibid.
[5]     http://www.savearcticrefuge.org/PennyaGallon20yrs.pdf
[6]     http://www.eia.doe.gov/emeu/international/reserves.html
 

Originally posted in “On Eagles’ Wings” May 9th 2006.

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