THEGREENGROK

Is Drilling the Answer? Part II


by Bill Chameides | October 16th, 2008
posted by Erica Rowell (Editor)

Permalink | 1 comment

Oil from Alaska is brought to the rest of the U.S. via the Trans-Alaska Pipeline System (TAPS). TAPS’s maximum carrying capacity is about 2 million barrels per day.

Last month I showed that lifting the ban on offshore drilling could meet only about 1 percent of our thirst for oil — and we’d have to wait until the 2020s for those drips to start. A number of readers wrote in asking about the Arctic National Wildlife Refuge (ANWR); would drilling there make a bigger difference? Here’s the answer.

They say a picture tells a thousand words so here’s another visual that shows the amount of oil we could get from ANWR. What does this mean in words? According to analysis by the U.S. Energy Information Administration (EIA), there would be no oil from the ANWR oil rigs until the end of the next decade, and a peak contribution of less than 5 percent of the country’s projected oil demand sometime in the 2020s.

 

According to analysis by EIA, opening ANWR to oil exploration might contribute a little less than 5 percent of our daily intake of crude oil at its peak in the mid-2020s. (After Architecture 2030. Data from EIA.)

Government estimates put the amount of ANWR’s undiscovered technically recoverable resource (UTRR) at about 10.4 billion barrels. (Remember this is a very speculative type of oil–see our glossary to learn more.)  About 7.7 billion barrels of this kind of oil is located on federal land known as Area 1002. The rest is located on state and native lands adjacent to Area 1002. (ANWR refers to the entire area.) Even though ANWR has a smaller overall potential oil resource than the outer continental shelf (OCS), analysis by EIA indicates we could tap more of it more quickly than the oil resources off the OCS. (See our earlier post on OCS oil.)

Production Timeline and Projected Quantity

10.4 billion barrels sound good, but they can’t all be produced at one time. EIA’s analysis indicates that initial production of about 40,000 barrels per day could begin about 2018 if we were to get busy right now. At its peak, ANWR might add 780,000 barrels per day in 2027, after which production would decline to about 710,000 barrels per day in 2030. What this means is that ANWR could cover less than 5 percent of our daily needs at its peak production in 19 years.

Would ANWR Oil Reduce Crude and Gas Prices?

EIA takes its analysis further and finds that this additional supply — the almost 5 percent of the U.S. daily intake of crude in 2027 — would only lower crude oil prices by about $0.75 per barrel. Now, if that entire price break was passed on to us at the pump, you would save between 2 and 3 cents per gallon.

So, should we drill in ANWR? Is it worth sacrificing one of our most unique natural reserves? I’m going to leave that to each of you to decide. But at least now you have the facts.

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1 Comment

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  1. OmegaBob
    Oct 17, 2008

    While it is easy to dismiss the impact of 1% or 5% additional U.S. Oil, all one needs to do is to see what a cutback of a few percent of consumption has had on international oil markets. Oil has fallen from $140 to $70 a barrel. The value of ANWR and other domestic sources of oil are more correctly viewed as necessary but temporary step in the evolution of the countries energy supply. They buy us time to bring other alternatives online. While we can’t “drill” ourselves out of this problem, we must drill to buy time and to reduce economic upset ten years down the road.” title=”Even a small decrease in foreign oil causes huge price swings

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