Oil Companies, Greens, Face Off Over Alaska Oil
Little oil that's easily produceable remains to be found in the United States. The last hope for major discoveries lies in frontier areas in Alaska and offshore, including the deep waters of the Gulf of Mexico.
Prudhoe Bay, Alaska — EVERY day along the North Slope of Alaska, oil rigs are bringing up nearly 2 million barrels of petroleum, which is one-fourth of all United States domestic production. With about 12 billion barrels of recoverable oil and gas-related liquids when first discovered in the late 1960s, this "supergiant" is the largest oil field in North America and the 18th largest in the world.But Alaskan oil production peaked about two years ago, and, according to British Petroleum (the largest North Slope leaseholder), even with enhanced recovery methods it will drop to less than one-third its current rate by the end of the decade and then taper off to nothing as the holes run dry. Meanwhile, so the industry and government scenario goes, US oil demand will increase and so will reliance on foreign sources (which is now over 50 percent). Just to the east of Prudhoe Bay is the Arctic National Wildlife Refuge coastal plain, which Uncle Sam, the state of Alaska, and the oil industry are panting over as another potential source of oil. The environmental issues include impact on the arctic ecosystem, especially wildlife habitat, and pollution of land and air (see The Christian Science Monitor, July 30). The main energy question is: How much oil lies beneath the tundra and the permafrost? This is a question with important political and legal r amifications. In 1987, the US Interior Department reported to Congress that there was a 19 percent chance of finding economically recoverable oil in the wildlife refuge, that the midrange resource estimate was 3.2 billion barrels, and that the oil field could hold as much as 9.2 billion barrels. The high estimate would make it the third largest oil find in US history (only Prudhoe Bay and East Texas are larger), and the Interior Department said go for it. While a one-in-five chance might seem small, says ARCO geologis t David Hite, "in the real oil business a 2 to 3 percent chance is good and in frontier areas anything over 10 percent is astronomical." In April, the US Bureau of Land Management officially raised the midrange or mean resource estimate to 3.6 billion barrels and - what really made oil executives' hearts go pitter-pat - boosted the marginal probability of economic success to 46 percent. The BLM's new figures were based on a 10-month study that included geological data from four test wells drilled nearby (except for one test well six years ago, drilling has not been permitted in the coastal plain), 800 miles of geophysical evidence taken a long the plain, and additional offshore seismic data. The wildlife refuge lies right between the known oil fields at Prudhoe Bay and the MacKenzie River delta in Canada, and BLM's new assessment led the agency to conclude that "the potential for the discovery of commercially producible oil in the coastal plain is extremely high." Environmental groups, which already are suing the federal government over plans to drill for oil in the wildlife refuge, vigorously protested the way BLM arrived at its rosier estimates - with some apparent justification. In late July, federal district Judge Joyce Hens Green ruled that the Interior Department (of which the BLM is part) had violated the National Environmental Policy Act in failing to consider public comment on the potential environmental impact of drilling. For their part, the oil companies hoping to compete for leases there are playing their estimates of oil field size and location close to the vest. Particularly hard to determine at this point is the likely size of any discovery. - the 3.6 billion barrel mean resource estimate. Citing oil-stained rocks found in the refuge and other geological similarities to Prudhoe and especially the MacKenzie delta, ARCO's Hite says "there's a 65 to 70 percent chance the reserve could be higher than the mean numbers." This could put even the low-end resource estimate in the "supergiant" category (reserves exceeding 500 million barrels). The Interior Department figures overall US economic benefits could reach $325 billion from petroleum production in the refuge's coastal plain. Citing a 1990 report by Wharton Econometrics Forecasting Associates, analyst Michael Giberson of the prodevelopment group Citizens For the Environment says oil production there "could raise US gross national product as much as $50.4 billion during peak production." "Increasing non-OPEC sources of oil production will also reduce OPEC political influence over the world market and limit the effects of other market disturbances," Mr. Giberson says. Opponents of drilling in the Arctic National Wildlife Refuge say that even if economically recoverable oil is found there it will not be enough to risk the environmental damage of exploration and production activities, not to mention pumping more oil south through an aging 800-mile pipeline and then trusting it to tankers that have been known to spill large quantities. "According to the federal government, if any oil exists in the refuge ... it would most likely amount to less than 3 percent of the nation's total hydrocarbon resources or less than 200 days' worth of oil at current US consumption rates," states a report published jointly by the Natural Resources Defense Council, the National Wildlife Federation, and Trustees for Alaska. Robert Watson, an energy analyst with the Natural Resources Defense Council figures cost-effective and technologically-feasible efficiency measures in automobiles, aircraft, buildings, and appliances taken over the next 30 years would produce the equivalent of the most optimistic estimates for Arctic refuge oil - but keep on producing because it would never run out as the petroleum inevitably would. Those pushing for new oil exploration and development in Alaska say they're all for conservation and efficiency, but that Americans will continue to demand fuel as well. US oil consumption has gone up about 1.5 million barrels a day since the mid-1980s, but domestic production has dropped by 1.7 million barrels, according to the American Petroleum Institute. And while advocates of exploration acknowledge that the Arctic refuge will likely yield about six months' worth of oil, they say that's still a very important portion of overall US needs - providing a steady flow for 20 or 30 years. Industry groups point out that "of the more than 27,000 oil fields in the United States, nearly 80 percent have reserves of less than 1 million barrels (far less than one day's consumption). Yet, together, these fields produced nearly 3 billion barrels of oil in 1988." And with most of those other oil fields having passed their peak production, the question for lawmakers is: Should the drilling begin?