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Alaskas Oil

To Tap or not to Tap

James L Bradley February 9th 2012
For going on 36-years the question on whether or not to tap into the oil reserves estimated to be beneath the barren landscape of the Arctic National Wildlife Refuge (ANWR) has been a political football used by both sides of the aisle, especially during heated election cycles. The hotly contested ANWR consists of some 29,688 square miles or approximately 4.476% of the total area of the State, situated between the Beaufort Sea on the north, the Brooks Range to the south, and Prudhoe Bay to the west and is the largest protected wilderness in the United States. The area was created by Congress under the Alaska National Interest Lands Conservation Act in 1980, whereas Section 1002 of the Act deferred a decision on the management of oil and gas exploration and development of approximately 2,343.76 square miles or 7.895% of ANWR, commonly known as the Coastal Plain a very controversial section known as the 1002 Area.

At its widest points the Coastal Plain is around 100-miles-across and about 30-miles-deep, an area slightly larger than the State of Delaware a large expanse of barren land dotted with thousands of small tundra ponds, with the area to the south holding gentle rolling treeless hills which eventually morph into foothills that merge into the Brooks Range.

There is one village on Barter Island, an island that is about 4-miles-long and 2-miles-wide, having on its north east coast Kaktovik with some 275-to300 residents. Overtime it was once home to a large whaling station, then settled by a family out of Barrow in 1919 (Tom Gordon and his wife Mary Ann Gordon, with family and friends, with Marys younger brother choosing the present location for its harbor), during 1953-1954 the DoD established a link in their Distant Early Warning Line and constructed a runway the runway was incorporated into Kaktovik in 1971 and the official designation of the village was changed to the City of Kaktovik. Actually the proposed exploration and drilling would encompass around 3.13 square miles of the Coastal Plain or around 0.0105% of ANWR, there are small cow pastures bigger than this across North America. One argument is that ANWR would only produce around 6-months of our nations fossil fuel requirements and that it would take at least a decade for the oil to morph into our markets pushed aside within these two over-statements is that most people assume that ANWR would be the nations only source of fossil fuel, and that the available oil would be recovered in one fell swoop. At one time the TransAlaska Pipeline pushed over 1.5mil plus barrels per day, whereas today its average is around 500,000 to 600,000 barrels a day and decreasing. Some 35-years and 6-months have transpired since the first barrel of crude spilled from the end of the 800-mile long pipe at Valdez, where since 1977 over 17,000 tankers have transported the crude around the Pacific. Oil transport from Section 1002 would mean the construction of a 35-40 mile pipeline to merge with TAPS at Prudhoe Bay, with construction facilitated with ice roads and pads along the route, at best a minimal impact of the environment, and at the most inject up to another million barrels per day at peak removal. Although the TAPS line is considered beyond it effective design to transport 2 million barrels per day, the revenue from ANWR would provide a much larger maintenance value for the 800-mile TAPS pipeline extending its overall life span, and replacement and upgrading of some sections.

At one-million barrels per day the Coastal Plain would provide oil for over 25-years to the US market, not just 6-months. In reality we all know that any oil from the Coastal Plain will not eliminate the need for foreign sources of oil, but it will decrease our demand for the same, which is running around 45% of American demands translation almost 45% of every gallon you pump into your beloved vehicle is pumped from foreign soil, the bulk from Canada imagine 45% of a gallon of milk coming from foreign cows. It was a little shy of 12-years-ago that Senator Maria Cantwell (D-WA) argued that oil extraction from the wildlife refuge wouldnt reach refineries for 7-to-10 years, along with Senator Jeff Bingaman (D-NM) saying drilling in ANWR wouldnt get us any oil for at least 10-years, and in chorus with them our now Secretary of State Senator John Kerry (D-MASS) said, If we opened ANWR today it wouldnt produce any oil for at least 10-years. Today we see an increasing uproar over oil companies employing the process of fracking in the lower-48 and parts of Canada, with activist screaming at the top of their lungs along with bundles of people protesting the operation, now couple this with the same crowd hanging tight to not extracting any of the cheap oil from ANWR and you wonder how these same propose we solve our addiction to the fossil fuels needed to heat our homes or propel our vehicles? Senator Cantwell is now stating that the oil from ANWR would only maybe decrease the cost of a gallon of gas by some 3-to5 cents, and that wouldnt happen until around 2030 sensible people know you cant lick the situation by doing nothing, and yet these detractors who want the industry to stay away from the 3.13 square miles stomp their feed and cry that were too dependent on foreign oil. From the President on down the line we find strong opposition to removing the oil in the 3.13 square miles, where he stated, I strongly reject drilling in the Arctic National Wildlife Refuge because it would irreversibly damage a protected national wildlife refuge without creating sufficient oil supplies to meaningful affect the global market price or have a discernible impact on US energy security. Even Senator John McCain dropped in his two cents in 2008 stating that as far as ANWR is concerned, I dont want to drill in the Grand Canyon, and I dont want to drill in the Everglades. This (ANWR) is one of the most pristine and beautiful parts of the world.

Now Im not disagreeing that in some eyes it is a barren pristine land, compare it to the whispering shifting sands of Arabia or the Sahara in its beauty we find a desolate 3.13 square miles that to most of the wealthy detractors is a small section of their backyard. Albeit is also true that our oil industry or the government doesnt really know the true potential of the region, well never know until we explore its capabilities, in my opinion all the guessing and suggested surveys are so much wind until we pop a few holes in the ground. To state with strong conviction on either side of the debate is foolish, that is unless youre linked to some huge fund that has invested in foreign oil, then guess away. Throw away the statements that the oil beneath the 1002 region as being insignificant until we learn what actually sits beneath the tundra, which by the way is thawing much early and for longer periods of time releasing tons of methane into our atmosphere. Most congressional Democrats and persistent environmentalists argue against drilling in the 3.13 square mile area stating that the required network of oil platforms, pipelines, roads and support facilities and not to mention the threat of oil spills, garbage and whatnot would play havoc with the wildlife, repeating time after time that the coastal plain is the calving ground for some 130,000 caribou. They argue against the 3.13 square mile area stating that the actual footprint of the planned drilling complex would create a spiderweb of industrial sprawl across the entire 2,300 square miles of the Coastal Plain, to include drill sites, airports and roads, and gravel mines whereas the area impacted would be equal to 1,000 square miles of infrastructure in addition to all the waste created by the operation including oil spills. The US Fish and Wildlife Service weighs in with its statement that the 1002 area has a greater degree of ecological diversity than any other similar area of Alaskas north slope, and that those who campaigned to establish the Arctic Refuge recognized its wild qualities and the significance of these spatial relationships. They further noted, Here lies an unusually diverse assemblage of large animals and smaller, less appreciated life forms, tied to their physical environment and to each other by natural, undisturbed ecological and evolutionary processes.

The Alaska Inter-Tribal Council, representing 229 Native Alaskan tribes or clans, officially opposes any development in AWNR whereas in the past Luci Beach, the then director of the steering committee for the Native Alaskan and Canadian Gwichin Tribe (member of Alaska Inter-Tribal) said that drilling in ANWR is a human rights issue and its a basic Aboriginal human rights issue. Sixty to 70% of our diet comes from the land and caribou is one of the primary animals that we depend on for sustenance. With regard to this the Gwichin people feel that any activity would have a serious effect on the Porcupine Caribou Herd of which they depend on for food. At last count 50 of the 300 or so living in Kaktovik along with 6,000 Gwichin people feel that their lifestyle would be disrupted or even destroyed, where the Inupiat from Point Hope have passed a resolution recognizing that opening up ANWR would eventually lead to the expansion of drilling in similar wilderness areas, in other words theyre against it. Many Native Tribes are opposed to drilling, yet demand a reasonable and sustainable energy source along with obtainable energy policies recent events with Shell Oil have provided more ammunition against drilling in ANWR, basically that as noted in a resolution passed 7-years ago by the Kaktovik council that stated that the Shell Oil Company is a a hostile and dangerous force whereas the community authorized the Mayor to take legal and other actions to defend the community. The resolution also called for all North Slope communities to oppose Shell owned offshore leases unrelated to the AMWR controversy until the company becomes more respectful of the people at the time Shell had no plans in force that would protect the bowhead whales which are a major part of the Native culture, subsistence live and diet. One indication that our recession is drawing to an albeit slow close is that our gasoline demand has increased by some 379,000 barrels per day over the same date last year, our demand now is 8.417 million barrels a day (2.99 billon barrels annually) with a national average cost per gallon at $3.538 per-gallon with the average on the West Coast at $3.738. At 19 gallons (average) of gasoline per barrel of crude, our demand for gasoline is approximately 157.4 million barrels annually noted is that we have

decreased our demand for imported gasoline in fact we are exporting the finished product. One reason for the high prices is that the producers are receiving a higher cost per gallon off-shore, decreasing our overall availability. It was over 15-years-ago that the USGS estimated that there was 5.7 to 16.0 billion barrels of technically recoverable crude oil and natural gas liquids within the Coastal Plain, with a calculated mean of an estimate 10.4 billion barrels, of which 7.7 billion barrels within the 1002 region during that time it was estimated that in the entire USA there was a technically recoverable volume of 120 billion barrels or which 6.47% in the Coastal Plain. Remember these are NOT proven reserves, being in the category of prospective resources, the USDOE reports we have around 29 billion barrels of proven crude and natural gas with 21 billion barrels being crude, and from a variety of sources it is said world wide there is a reserve of 1.1 to 1.3 trillion barrels. The DOE has stated in numerous reports that there is more than just a bit uncertainty related to the beneath ground resources in ANWR, The USGS oil resource estimates are based largely on the oil productivity of geologic formations that exist in the neighboring State lands which continue into ANWR. Consequently, there is a considerable uncertainty regarding the size and quality of the oil resource that exist in ANWR. Wind! In 2010, the USGS revised their estimate of the oil in the National Petroleum Reserve-Alaska (NPRA), their conclusion being that it contained approximately 896 million-barrels of conventional undiscovered oil. The NPRA is west of ANWR, there reason for the dramatic decrease is due to exploratory drilling that showed that many areas that were believed to hold oil actually held natural gas. Now with the price of Natural Gas heading towards the basement, any prospect of constructing a natural gas pipeline has flown out the window. ANWR was once and still is in some cases touted as a partial solution to our oil and natural gas problem, (throw on the last category), to increase our projected domestic crude oil production in five-years it is Thus, the potential ultimate oil recovery and potential yearly production are highly uncertain.

approximated that over time could reach 780,000 barrels a day by as early as 2027, then decline to 710,000 per day in 2030. In the low and high examples it is projected that ANWR production in 2028 within in wide window, 510,000 barrels a day to 1.45 million barrels a day, now that is a projection! The overall production between lets assume 2018 and 2030 comes in at 2.6 billion barrels at the mean, with the low and high at 1.9 billion to 4.3 billion barrels. What remains to be answered is will it create jobs, for Alaskans, well yes and no as with TAPS and Prudhoe the project will required skill labor, roughnecks if you will albeit there will be an abundance of available labor the work force rounded up for TAPS has aged a new gang will be needed.