EIA: ANWR Oil Production Would Peak at 780K Barrels per Day
23 May 2008
|
| 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.
Resources
now the time has run out and we have to start a crash drilling program.. the environment will recover,hopefully... nature can deal with spilled oil and a few dead caribou.
We have to get to that oil before it is worthless
Posted by: Herm | 23 May 2008 at 01:34 PM
We should've opened it ten years ago, when we could've been much more careful. In a peak oil situation I wonder if even a Democratic President would even approve a crash drilling program?
Posted by: Cervus | 23 May 2008 at 01:48 PM
What I don't understand is how this little amount of oil is supposed to help solve or even reduce the impact of the high price of oil due to increased demand. The article indicates that the price of a barrel of oil would drop by $0.75 per barrel. With oil prices going up $2 - 3 per day, who would even notice this drop.
What does this extra supply really do in terms of making gas cheaper? Nothing.
When will it start to help? Ten years from now.
Who would profit from it? The oil companies who are earning record profits.
Who will lose? The people of the US that live in Alaska and all of the animals that depend on those lost as part of the food chain.
More toxic waste to clean up, and more wildlife lost in a very clean area.
Posted by: jrojai | 23 May 2008 at 01:51 PM
oil supply is very inelastic, you cant store many barrels of it economically so even this little amount will help tremendously.. just may be enough to tide us over to full electrification of vehicles.. plus with a crash program (without worrying about the environment) they may be able to increase production.
Per T boone Pickens, there is a world shortage of about 2 million barrels per day (production 85m barrels vs comsumption of 87m barrels daily).. and that accounts for the massive price increases.. this area alone may take care of half of that, so a massive impact.. way more than $0.75 a barrel
Posted by: Herm | 23 May 2008 at 03:01 PM
jrojai - nice feelings, but you really need to join us in reality.
The chance that something harmful might possibly happen is so small that it is statistically nill. If by some stroke of the worst kind of luck something did go wrong, the area affected would be equivalent to the size of a postage stamp in a region the size of a football field. Less than 1/2 of 1% of the wildlife reserve is considered viable for drilling.
Why this is even an issue, defies common sense.
Posted by: Joseph | 23 May 2008 at 03:02 PM
Herm:
Pickens may or may not be right. The Iranians are storing over 20 million barrels of crude they can't sell on supertankers, just like they did in 2006. And prices are in contango--spot prices are less than futures.
That said, I think it's neither one nor the other. Supplies are very tight, but there is a vast amount of speculation going on here due to unregulated electronic exchanges.
Posted by: Cervus | 23 May 2008 at 03:06 PM
Why do we need to start a crash drilling program? Oil is approaching its true value, but we are not there yet. Let it rise and we will learn to adapt. Adaptation is already happening.
There are more intelligent ways to attack high oil prices - like learning how to use less. There are many ways to use less right now that would have a greater impact than drilling for more. Many methods don't even depend on technology. For example, transportation fuel consumption can be significantly reduced if folks would buy more appropriate vehicles and drive smarter. A federal 55mph speed limit could have a greater impact on oil prices and cost to the consumer than opening ANWR (could boost vehicle fuel economy up to 20%).
ANWR will not help us in the short or long term. ANWR is too little, too late. With regard to developing renewable energy feedstocks, is the U.S. not spending more on subsidizing oil and coal than subsidizing renewable energy systems?
Posted by: Relocalize | 23 May 2008 at 03:37 PM
At today's price, that's $35 Billion/year that would stay here instead of going to the Arabs. At the 2027 price, I can't imagine.
Drill now.
Posted by: | 23 May 2008 at 04:07 PM
"Drill now."
Why not buy a more fuel efficient car now?
Posted by: | 23 May 2008 at 04:22 PM
It may be too little too late. What impact will a 3% to 4% decrease in Oil imports (due to ANWR) realy have on trade deficit and GHG?
A much greater (triple) impact can be obtained by reducing yearly consumption (oil import and GHG) by 4% for the next 15 years, i.e. for a total potential reduction of 60%.
This reduction can be easily realized by agressively switching to smaller more efficient Hybrids, PHEVs and BEVs at the rate of 4% per year. Within 15 years, 60% of all vehicles would be hybrids-PHEVs-BEVs and that would have a much greater longer lasting impact than 3 to 5 ANWR.
Americans have a choice to make, the wiser option is to reduce OIL consumption (oil import and GHG) not to maintain or increase it.
Posted by: Harvey D | 23 May 2008 at 04:25 PM
This is complete BS:
You simply cannot make that kind of forecast until after extensive seismic and test drilling is conducted. Complete speculation under the title of an official report.
(I'm neutral on drilling ANWR, but I have to call out bad science)
Posted by: Mike Z. | 23 May 2008 at 04:36 PM
Harvey D: "the wiser option is to reduce OIL consumption (oil import and GHG) not to maintain or increase it."
Every dollar sent to the oil companies is a dollar wasted looking for ever smaller, completely insignificant, puddles of the stuff, ripping the Earth asunder trying to shake oil from tar sands, and generally maintaining a business model that truly needs to die an immensely painful death.
Every gallon of gas not burned by using a more fuel efficient car is a gallon of gas that can be used to bring food to your table, HDTV monitors to your living room, and dispatch the ambulance when your kid goes into anaphylactic shock.
The phrase of the week was "demand destruction." Bring it on!
Posted by: | 23 May 2008 at 04:38 PM
Harvey:
The way gas prices are going, you don't need to mandate any MPG increases. Just sit back and watch $4 gas do its thing. SUV sales have completely collapsed. And I fear my co-worker waited too long to sell his Toyota Tundra. I was helping him find bus routes to work the other day.
In the end, you have to look at both conservation and the supply side of the equation. If we stop drilling completely it'll make the peak oil downslope much, much worse.
Posted by: Cervus | 23 May 2008 at 04:45 PM
I was privileged to fly, in a bush plane,into ANWR last August, and camp/backpack for 10 days. It was and is unique, gorgeous, and very delicate, with a 4 month growing season at best.We even were fortunate enough to see a muskox! Now, in my book, keeping most,if not all,of the remaining fragile and unique places on this planet should be a priority. Talk to me about developing it after everyone in the US gets out of their huge SUV's and trucks for grocercy erands, 2 person 3-6000sq foot homes,and other wasteful habits!
And really, if,(and I for one think this is true) we are running out of oil, then keep some in reserve, and don't squander it now!
Posted by: Richard Burton | 23 May 2008 at 05:22 PM
Cervus:
Oil contango will not last long: oil storing capacity is very limited. 20-30$ per barrel added by speculators will inevitably burst, and I suspect that pension mutual funds foolishly entering en masse oil games will foot the bill.
Posted by: Andrey Levin | 23 May 2008 at 05:24 PM
US is addicted to oil and drilling in the ANWR is like giving the last shot to a drug addict before he collapses. Not sure that this last shot will come in time by the way, 10 years from now the price of gas might be so high that everybody would have shifted to electric or biking or biofuels.
Anyway this drilling shouldn't be allowed until serious measures of energy conservation has been undertaken. 10 billion of barrels of oil is just 16 months of US consumption at current rate.
Posted by: Treehugger | 23 May 2008 at 05:49 PM
Yep... Here it comes. The power mongers who have to have it their way and on their timetable have pushed the button on re-addiction. Or, perhaps more correctly, have SLOWED the transition to renewables and endangered sensitive habitat by hyping (aka exaggerating) oil pricing. This is the result of GREED - not necessarily monetary GREED - just plain ol' power monger GREED.
As unrealistic oil prices put more and more small-medium businesses out of business and cost the Pentagon $$unds allocated for shiny weapons programs, the hew and cry will be national security *not* emergency. Congress attempting to quiet the screaming will pass a fast patchwork of drill, explore and refine packages with the stipulation that recovered oil pricing be "capped." To make it all look handsome they throw the Fed portion of revenues into the green kitty... Sorta like what's happening now:
"(H.R. 6107), introduced by Rep. Bartlett and Rep. Don Young (R-Alaska), would use revenues from the ANWR leases to fund a variety of alternative and renewable energy programs. The bill assumes production will come online in 5 years."
All the result of GREED driven (not $$-driven) power brokers trying to get their way not matter what it takes. Remember, whole war efforts have been predicated on far less than predatory power grabs (e.g. Gulf of Tonkin.)
Posted by: Sulleny | 23 May 2008 at 06:28 PM
People:
Come to your senses. You are being manipulated by the oil companies by outrageous prices into illogical actions. Oil is a toxic substance that is better sequestered in the earth rather that brought up to the surface to continue poisoning our atmosphere, and killing off the animals and your families.
Take the money and bring solar power and electric cars to resolution instead of continuing to burn toxic chemicals in ineffecient internal combustion engines.
Posted by: Lad | 23 May 2008 at 06:55 PM
Opening the Arctic to oil production would be a criminal assault on that fragile environment.
Worse, the gains are fiction and imaginary. Chunking more oil onto the world market just increases global warming and delays the switch to sustainable environmentally friendly alternatives.
Who does it help? A few oil investors, and a lot of SUV drivers.
There is an obvious better alternative. Take the money needed and promised to develop arctic oil, and instead invest it in solar or wind or geothermal projects, ... the payoff is greater, the energy delivered is greater, and the power supplied is sustainable.
Watch who supports this bill and vote them out of office for being greed driven idiots pandering to oil interests. We need to look after the best interests of the country, the people, the wildlife, and the world that sustains us.
Posted by: John Taylor | 23 May 2008 at 07:27 PM
Doubt the oil barons really give damn that their GREED is endangering the sustainable movement? They don't. They just want to have things their way when and where THEY say. Because THEY know better than us. And THEY want everyone to jump when THEY raise prices. Because they are unremittingly driven by GREED for power and control.
Thanks oil barons for the education.
Posted by: Sulleny | 23 May 2008 at 08:12 PM
Best thing to do:
Convert at least one of your vehicles to CNG and use
MyPhill at home to tank up ...or
E-Fuel-100. A home ethanol brewing unit that you can
purchase for around $9,000. They also have an ethanol
conversion kit for your gasoline guzzler.
Get a hybrid, or get on the electric car bandwagon for
2010.
Good luck.
Posted by: swen | 23 May 2008 at 08:35 PM
Frankly, greed can be a good thing. You'll get more investment flooding into sustainable energy tech if the venture capitalists know they can make a lot of money doing it. Look at T Boone Pickens, who wants to build the largest windfarm in the world, in Texas. And he talks about a huge solar corridor from Texas to California. He thinks he can make a lot of money with this project, and wouldn't be doing it otherwise.
And Pickens is an oilman. Hmm.
Posted by: Cervus | 23 May 2008 at 08:44 PM
While anwr by itself will only do so much anwr plus east and west coast plus ctl plus oil shale will combined with h2 bio bev and downsizing to get us along to the point all the new techs can take over.
The real point of anwr tho is not the us its the smaller nations who will have to fall because they cant outbid anyone else for oil and that little trickle is the difference between making it to 2949 and going down in flames before 2020.
And no it wont destroy anwr.
Why must we spend billions on bio and bev AND fc and ctl and gtl and dinisg pianis to liquids... because bev soon means several small nations continue to eat 10 years from now.. h2 soon means many small nations continue to eat 20 years from now.
Every barrel we dont replace or displace or negate the need of is a dead child. And no its not good enough to just do some things and not others because no matter what there will be dead children.
Posted by: | 23 May 2008 at 10:35 PM
DOH! Us eggheads overreacted and made things worse!
Posted by: DOH! | 23 May 2008 at 10:57 PM
And as if we really need to be told about the largest petroleum find in North America, now we have this to contend with:
http://www.energyandcapital.com/aqx_p/4211?gclid=CKzJnre7vpMCFR4sagodyGPuCA
Unfortunately, a little foresight would have seen this kind of blowback coming.
Posted by: gr | 23 May 2008 at 11:09 PM