The Arctic National Wildlife Refuge (ANWR) is located on the northern coast of Alaska, due east of both Prudhoe Bay and the National Petroleum Reserve-Alaska (NPRA). The coastal plain (the 1002 Area) covers 1.5 million acres and is about 8% of the total area of ANWR.

A Minimum of 5.7 Billion Barrels Await Drillers at ANWR

USGS 1002 Area Map

In its latest (1998) resource assessment, the United States Geological Survey (USGS) estimated that the total technically recoverable crude oil resource for federal lands, state waters and native lands in the coastal plain has a 95% chance of being more than 5.7 billion barrels and a 5% chance of being as high as 16.0 billion barrels, with a mean estimate of 10.4 billion barrels.

Slow start, but reliable

The middle resource case projected by the EIA (Mean ANWR) shows an increase of 3.4 billion barrels in cumulative U.S. crude oil production from 2031 to 2050, compared with the AEO2018 Reference case.

According to the EIA, production from ANWR does not start until 2031 because of the time needed to acquire leases, explore and develop the required production infrastructure. Crude oil production from the coastal plain of ANWR peaks at about 880,000 BOPD in 2041 in the Mean ANWR case.

A Minimum of 5.7 Billion Barrels Await Drillers at ANWR

Domestic production reduces imports, saves money

Between 2031 and 2050, cumulative crude oil production in the United States is 3.4 billion barrels higher in the Mean ANWR case than in the AEO2018 Reference case. Every additional barrel of crude oil produced from ANWR is projected to reduce U.S. net imports of liquid fuels by about one barrel, the EIA said.

A Minimum of 5.7 Billion Barrels Await Drillers at ANWR

The reduction in U.S. imports of crude oil and petroleum products improves the U.S. balance of trade by reducing the levels of expenditures on crude oil and petroleum products imports.

In the AEO2018 Reference case, cumulative U.S. expenditures on imported crude oil and petroleum products are about $4.9 trillion (2017 dollars) between 2031 and 2050.

A Minimum of 5.7 Billion Barrels Await Drillers at ANWR

In the Mean ANWR case, comparatively higher domestic crude oil production from 2031 through 2050 reduces cumulative expenditures on imported crude oil and liquid fuels by about $409 billion (8%).

Jones Act of 1920

The EIA said that nearly 80% of oil produced in Alaska in 2017 was sent to Washington and California on Jones Act vessels at a shipping cost of about $5.50 per barrel.

The Jones Act requires that all goods transported by water between U.S. ports be carried on ships constructed in the United States, owned by U.S. citizens and crewed by U.S. citizens and permanent residents.

Availability of vessels compliant with the Jones Act and constraints through high-traffic waterways on the West Coast could also limit the amount of Alaskan crude oil that gets processed in domestic refineries, the EIA said.

Given these factors, it is likely that some volumes of Alaskan oil including new production from ANWR would be exported to Asia.

About 15% of Alaskan crude oil production was processed in Alaska. A small amount of Alaskan crude oil was shipped to Hawaii or exported to international destinations in 2017.

Trans-Alaska Pipeline needs more oil

Alaska also relies on the 40-year-old Trans-Alaska Pipeline System (TAPS) to transport crude oil from the frozen North Slope to the warm-water port at Valdez on the state’s southern coast. The 800-mile pipeline was built from 1974 to 1977, and achieved peak flow in late 1980s at 2 MMBPD. According to the EIA, the current flow is only about 500,000 BPD.

A Minimum of 5.7 Billion Barrels Await Drillers at ANWR

Trans-Alaska Oil Pipeline

Less oil production leads to slower flow, meaning that crude oil spends more time in the pipe with less movement. The slower flow may cause more wax to accumulate in the pipe, driving up maintenance costs. Additionally, the more time oil spends in the pipe, the more heat it loses – causing a higher risk of ice problems. Adding oil production from ANWR into the pipeline would directly address the lack of oil flow.

Background on ANWR – 1002 Area

In 1960, the Secretary of the Interior signed an order protecting the northernmost parts of Alaska at the federal level. The order protected 8.9 million acres and named it the Arctic National Wildlife Range. In 1980, President Carter signed the Alaska National Interest Lands Conservation Act (ANILCA) into law, renaming and enlarging the Arctic National Wildlife Refuge (ANWR) to over 19 million acres, with eight million of the 19 million ANWR acres designated as Federal Wilderness.

A Minimum of 5.7 Billion Barrels Await Drillers at ANWR

USGS 1002 Area Map

The non-wilderness area is called the 1002 Area and could be developed with Congressional approval. The 1002 Area is approximately 1.5 million acres and is a target of E&P development. Alaskan Senator Lisa Murkowski had proposed limited development of up to 2,000 acres.

After 4 decades of debate, ANWR development law makes it through committee and is passed by Congress

On November 15, 2017 the Senate Committee on Energy and Natural Resources approved Senator Murkowski’s ANWR energy development plan. The budget reconciliation legislation came favorably out of committee on a bipartisan vote of 13-10. Senator Murkowski voted in support of the legislation, which passed the Budget Committee and was put up for a vote, with both houses passing the act just a week before Christmas 2017.

“After decades and decades in this chamber, we are opening up a small non-wilderness area of the Alaska National Wildlife Refuge for responsible development. That is the most ambitious step we have taken in years to secure our own energy future,” House Speaker Paul Ryan said at the time.

The Congressional Budget Office estimates the legislation will raise nearly $1.1 billion over the 10-year budget window. Between rents, royalties, and federal taxes, it will raise substantially greater revenues once production from the 1002 Area begins.

Sen. Murkowski said on her website that opening the 1002 Area will generate $124.6 billion in royalties alone, based on current estimates.

Now the work begins before drilling can start—creating an environmental impact statement for the 1002 Area before it can be drilled and produced. After that the Federal Government would schedule lease sales. In March, the White House called for swift leasing action for ANWR, but experts say it may take two or more years before an EIS is ready.

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