Opening up Alaska’s resources

Not since the energy crisis in the 1970s has interest in the oil and natural gas on Alaska’s North Slope been so strong. High energy prices, OPEC’s revival and rapid depletion of the world’s easy-to-produce petroleum have coincided with rising global demand for oil and natural gas.

The North Slope could provide as much as 36 billion barrels of oil and 137 trillion cubic feet of natural gas, enough to help meet our nation’s energy needs beyond 2050, according to the U.S. Department of Energy.

But these resources will not become available until Congress opens up parts of the Arctic National Wildlife Refuge and the National Petroleum Reserve to oil production, and allows drilling access to offshore resources in the nearby Beaufort and Chukchi seas. Although ANWR possesses a substantial volume of economically recoverable oil and gas, drilling is banned because of environmental concerns.

The ban is imprudent, since exploration and production would be confined to a small area within the 19-million-acre refuge. While the refuge itself is roughly the size of South Carolina, the area needed to drill is confined to the size of a large airport. Horizontal and directional drilling now enable producers to recover oil and natural gas as far as eight miles from a single drilling pad, resulting in little or no environmental impact.

The outer continental shelf in the Chukchi Sea may hold oil and natural gas resources of potentially strategic significance. According to the Minerals Management Service, the Chukchi holds about 15 billion barrels of recoverable oil and 76 trillion cubic feet of recoverable natural gas. The outer continental shelf beneath the Beaufort Sea and Bristol Bay are also believed to have substantial petroleum resources.

Exploration efforts on the North Slope through 2015 could add another 3 billion barrels of oil and 12 trillion cubic feet of natural gas to the economically recoverable supplies. With the United States holding just 2 percent of the world’s oil reserves and accounting for about a quarter of current global oil consumption, the nation cannot afford to forgo the use of its domestic oil and natural gas resources. The U.S. Energy Information Administration projects a 19 percent increase in demand for oil and 7 percent increase in natural gas use by 2030, even with greater use of biofuels and energy-efficiency improvements.

Developing U.S. energy sources – oil and gas in Alaska and the ultra-deep waters of the Gulf of Mexico as well as natural gas on federal lands in the mountainous West – should be a national priority. Currently, the United States uses about 21 million barrels of oil a day, but produces less than 5 million barrels. We are dependent not only on growing imports of oil but also for natural gas. This is becoming increasingly worrisome because U.S. natural gas prices are the highest in the world, and constraints on domestic gas production are costing U.S. manufacturing jobs, pushing up the cost of electricity and harming the economy.

Increased supply from Alaska’s North Slope could help moderate oil and gas prices. In 1988, when production peaked at 2.2 million barrels per day, Alaskan output accounted for about 25 percent of U.S. production. North Slope production fell below 800,000 barrels per day in 2006 but it still amounts to about 17 percent of U.S. domestic production.

Forty years of crude oil production on the Alaska North Slope have demonstrated that the energy America needs can be produced in some of the most challenging conditions encountered anywhere in the world in a manner that protects the environment. The environmental footprint of each new field brought into production has diminished. With operating experience on the North Slope, technologies and safety practices have advanced, providing the industry with an opportunity to use its newly gained knowledge to tap energy resources in other harsh environments.

Meanwhile, the Trans Alaska Pipeline System is being refurbished to provide transportation of crude oil from the next generation of North Slope fields. But if we hope to make full use of the North Slope’s energy resources, regulatory obstacles and restrictions on development need to be removed. Tax policies should be adopted that encourage investors to provide the significant capital that will be required to develop resources of strategic scale in remote Arctic locations. Unless new oil fields are opened on land and offshore, oil shipments in the Trans Alaska Pipeline System could drop to below minimum flow rates necessary to support the costs of its operation. Shutting the pipeline could strand about 1 billion barrels of oil reserves.

Congress needs to fix policies on oil and natural gas development that hurt the national interest. If our country is to be assured of adequate fuel supplies and clean air in the years ahead, regions now closed to oil and natural gas production need to be opened up. Alaska’s North Slope is a good place to start.

Donald A. Grant is chair and professor emeritus of the mechanical engineering department at the University of Maine.