|ANWR production would peak in 2028 (ten years after the start of production). Click to enlarge. Source: EIA|
The opening of the Arctic National Wildlife Refuge (ANWR 1002 Area) to oil and natural gas development would result in additional oil production of a peak 780,000 barrels per day in 2027, according to the mean case developed by the Energy Information Administration in a revised assessment of ANWR potential. That would result in trimming $0.75 (in 2006 dollars) off the projected cost of a barrel of oil, according to the EIA.
In an assessment of ANWR four years ago, the EIA concluded that ANWR production would peak, in the mean case scenario, in 2024 at 870,000 barrels of oil per day. (Earlier post.) EIA revised its earlier assessment in response to a request from Alaska Senator Ted Stevens.
|Opening ANWR would drop US dependence on imported oil in 2030 by 3 percentage points in the mean case—from 54% to 51%. The high and low resource cases project a 2030 oil import dependency of 48% and 52%, respectively. Click to enlarge. Source: EIA|
The new analysis—like the earlier one—assumes production begins 10 years after the opening of the area to development via enabling legislation. The primary constraints to a more rapid development of the ANWR oil resources are the limited weather “windows” for collecting seismic data and drilling wells (a 3-to-4 month winter window) and for ocean barging of heavy infrastructure equipment to the well site (a 2-to-3 month summer window).
The assumed timeline is as follows:
2 to 3 years to obtain leases, including the development of a US Bureau of Land Management (BLM) leasing program, which includes approval of an Environmental Impact Statement, the collection and analysis of seismic data, and the auction and award of leases.
2 to 3 years to drill a single exploratory well. Exploratory wells are slower to drill because geophysical data are collected during drilling, e.g., rock cores and well logs. Typically, Alaska North Slope exploration wells take two full winter seasons to reach the desired depth.
1 to 2 years to develop a production development plan and obtain BLM approval for that plan, if a commercial oil reservoir is discovered. Considerably more time could be required if the discovered oil reservoir is very deep, is filled with heavy oil, or is highly faulted. The petroleum company might have to collect more seismic data or drill delineation wells to confirm that the deposit is commercial.
3 to 4 years to construct the feeder pipelines; to fabricate oil separation and treatment plants, and transport them up from the lower-48 States to the North Slope by ocean barge; construct drilling pads; drill to depth; and complete the wells.
The analysis also assumes sequential development of fields, with new fields in ANWR beginning development 2 years after a prior ANWR field begins oil production. The decision to use a 2-year time lag in bringing ANWR fields into production is driven by four factors, according to the EIA:
The large expected size of the ANWR fields, which complicates the logistical problems associated with their development.
The required considerable investment infrastructure to begin production in these fields and to link these fields to the TransAlaska Pipeline System (TAPS).
Competition in investment and drilling resources from other domestic and foreign projects, which potentially limits the resources available for ANWR development.
Increasing the rate of ANWR development might also require an expansion of TAPS throughput capacity.
In the new low and high ANWR oil resource cases, additional oil production resulting from the opening of ANWR peaks in 2028 (10 years after the beginning of production) at 510,000 and 1.45 million barrels per day, respectively. Between 2018 and 2030, cumulative additional oil production is 2.6 billion barrels for the mean oil resource case, while the low and high resource cases project a cumulative additional oil production of 1.9 and 4.3 billion barrels, respectively.
Crude oil imports are projected to decline by about one barrel for every barrel of ANWR oil production. Opening ANWR results in the lowest oil import dependency levels during the 2022 through 2026 time frame, when oil import dependency falls to the minimum values of 46 and 49% for the high and low oil resource cases, respectively. During that timeframe, the mean resource case and AEO2008 reference case project an average oil import dependency of 48 and 51%, respectively.
Because ANWR oil production is declining after 2028, US oil dependency rises to 51% in 2030 in the mean resource case, compared to 54% in the AEO2008 reference case. The high and low resource cases project a 2030 oil import dependency of 48% and 52%, respectively.
Additional oil production resulting from the opening of ANWR would be only a small portion of total world oil production, and would likely be offset in part by somewhat lower production outside the United States. The opening of ANWR is projected to have its largest oil price reduction impacts as follows: a reduction in low-sulfur, light crude oil prices of $0.41 per barrel (2006 dollars) in 2026 for the low oil resource case, $0.75 per barrel in 2025 for the mean oil resource case, and $1.44 per barrel in 2027 for the high oil resource case, relative to the reference case.
The EIA projects world oil consumption will be 117.6 millions barrels per day in 2030.
The steady rise in oil prices has re-energized efforts in Congress to open domestic oil and gas resources for exploration and production. Among the legislation proposed is a bill co-sponsored by Representative Roscoe Bartlett (R-MD), who had formerly opposed opening ANWR for exploration.
The American Energy Independence and Price Reduction Act (H.R. 6107), introduced by Rep. Bartlett and Rep. Don Young (R-Alaska), would use revenues from the ANWR leases to fund a variety of alternative and renewable energy programs. The bill assumes production will come online in 5 years.
I have resisted drilling in ANWR because I believe that these oil reserves are like money in the bank that is yielding huge interest rates. I don’t think you ought to rush to the bank and pull it out and spend it. Today, with oil at $134 per barrel, there is obviously no surplus energy or capital to invest in alternatives. I am joining as an original cosponsor of this new bill because it dedicates the entire federal share of revenues from ANWR to increase federal investments in the research, development and production of cleaner domestic, alternative and renewable sources of energy, energy efficiency and conservation.
Of course, it is impossible to drill without some environmental impact. However, I have been to ANWR. I am convinced that the environmental impact will be minimal.—Rep. Bartlett
Bartlett has been a consistent voice in the House about the issue of Peak Oil.