If new Alaskan oil could replace 40 percent of production there wouldn’t even be a debate. The key consideration is economically recoverable. We can get oil from shale if the market makes the cost of doing so favorable. It doesn’t so all of those resources become paper resources in practical usage.
The USGS estimated:
This new assessment concludes that the volume of technically recoverable, undiscovered oil beneath Federal lands in NPRA ranges between 5.9 and 13.2 billion barrels (95% and 5% probabilities), with a mean (expected) value of 9.3 billion barrels. Most of the oil is estimated to occur in the northern third of NPRA, to be distributed among several plays, and to occur in accumulations of moderate size. It is unlikely that a Prudhoe Bay-size accumulation occurs in NPRA.
Over a range of market prices between $22 and $30 per barrel, between 1.3 and 5.6 billion barrels of oil are estimated to be economically recoverable, [edit: this is well above what OPEC can accept and still make a profit - it practically gushes out of the ground in many areas like Saudi Arabia] on the basis of the mean estimate of technically recoverable oil volumes. Estimates of technically recoverable, undiscovered nonassociated natural gas resources for the same area range between 39.1 and 83.2 trillion cubic feet (95% and 5% probabilities), with a mean (expected) value of 59.7 trillion cubic feet. The economic viability of these natural gas resources will depend on the availability of a pipeline to transport the gas to market.
The amounts of oil and gas estimated for the NPRA area are significantly greater than USGS estimates made in 1980. The increase in estimated oil resources is largely the result of the recognition of new plays based on oil accumulations recently discovered just east of NPRA. Increased gas estimates result from improved understanding of thermal maturity, reservoir development, and timing of trap development relative to hydrocarbon generation.
The amount of technically recoverable oil estimated for NPRA is similar to that estimated for the ANWR study area. However, economic analysis—which takes into consideration differences in accumulation sizes, the number of accumulations of various size, and proximity of those accumulations to infrastructure—shows that for market prices below $35 per barrel, a larger volume of oil will be economic in the ANWR area.
The effect of oil from ANWR on US oil imports and OPEC’s ability to influence prices is limited by the timing of production. If development started today, it would take about twelve years for production to reach 1 million barrels per day (mbd); in another six years production would peak at about 1.3 mbd, and five years later, production would drop below 1 mbd (mean case) (8). For the 5 percent best case scenario, production would reach 1 mbd in eight years, peak at 1.9 mbd in 22 years, and drop below 1 mbd in another seven years. These long lead times imply that production from the ANWR will not contribute significantly to US supply for more than a decade.
This schedule of production from the ANWR will have relatively little effect on prices. Prices in the world oil market are determined by a combination of geological, institutional, and economic factors (9). Increased production from the ANWR will reduce prices by reducing capacity utilization by OPEC and that its share of the world oil market. The actual effect on capacity utilization will depend on OPEC’s degree of foresight. If OPEC correctly anticipates production from the ANWR, which would not be difficult given its long lead times, OPEC could slow additions to capacity very modestly such that its utilization rate (and its effect on price) would be unchanged relative to a scenario in which no oil is produced from the ANWR. The effect on price in this case would be negligible. In the unlikely case that OPEC acts with no foresight, an extra 1 to 2 mbd of production from the ANWR would reduce capacity utilization by at most 2 to 3 percent (In their base case, the US Department of Energy forecasts that OPEC will produce 62.4 mbd of the world’s demand of 122.4 mbd in 2020). Regardless of OPEC behavior, the 1 to 2 mbd from the ANWR would reduce OPEC’s share of the world oil market by 2 to 3 percent. Such a change would be virtually undetectable given the large fluctuations in crude oil prices. http://www.oilanalytics.org/policy/dejavu.html
The result of ANWR drilling would likely not be a reduction in imports, but the shutting down of current domestic production that is even less cost effective. In fact, wells that when shut down would be hydrologically impossible to restart - so much for making every drop count. Similarly, the proposed higher mileage requirements that were shot down a few years ago were estimated to have roughly the same impact as ANWR drilling, but no one seemed to lose any sleep over that. Since we do not have a national oil industry in the US or a regulated market, there is no incentive to use this oil to artificially lower prices or artificially replace imported oil, which is far more economical. It doesn’t just squirt out of the ground like it does in the Middle East, for example. It might provide some pressure towards lowering prices, but not significant given the actual impact on world markets.
Confusing the issue, the oil companies spend a lot of money spreading the myth, because even though it would have relatively little impact on domestic oil supplies and the price at the pump, E&P (exploration and production) is where the corporate money is and the oil companies will do quite well. Especially true since E&P in the Middle East and other areas strongly favors the local national oil companies. To make the sell they like to use older USGS data and any data very selectively to spin the benefits. Sadly, we are no longer, (and haven’t been for a while) a significant producer of world oil. We are also spoiling what wilderness we have at a rapid rate. Since I’m not a CEO or significant shareholder in a major oil company, an Alaskan getting tax bribes, a member of the appropriately funded “think tank” or a politician looking for a check, at least for me, the benefit doesn’t outweigh the potential damage. If it really, really did then my opinion would be different
Charon
