Four and six-fold increases in the assessed po tential of oil and natural gas recovery from a federally owned area are good news for the US. In the case of the National Petroleum Reserve-Alaska (NPR-A), however, they're a mixed blessing (OGJ, July 8, 2002, p. 34).
The US Geological Survey (USGS) recently increased its estimate for NPR-A potential on the basis of information, assessment methodology, and exploration and production technology that have emerged since its previous study in 1980. Technically recoverable oil in federally owned parts of NPR-A, according to the new estimate, almost certainly exceeds 5.9 billion bbl. There's a slight chance the volume exceeds 13.2 billion bbl. The mean, or average, probability is that technically recoverable oil in NPR-A amounts to 9.3 billion bbl. The 1980 assessment put the number at 2.1 billion bbl.
Resource vs. reserves
USGS's assessments concern the NPR-A resource, not reserves. An estimate of how much oil actually exists in NPR-A and can be produced awaits ex ploration, development, and commercial judgment.
The distinction between resources and reserves is especially important for North Slope gas, which has no way to move to market. Until transport capacity is in place, most of whatever gas exists can't be economically produced and therefore can't qualify as reserves, even if exploration and development validate the volume estimate. Still, the potential is great. USGS raised its mean-probability estimate of technically recoverable gas in NPR-A to 59.7 tcf from its 1980 assessment of 8.5 tcf.
These numbers merit warm welcome by the federal government. They represent potential contributions to mostly overlooked national interests. There will, of course, be patriotic lip-service to the energy-security benefits that accrue insofar as NPR-A production displaces imported oil. But other interests enhanced by resource development, such as employment and government fiscal health, will escape notice outside of Alaska, although the benefits would hardly be confined to the state.
In fact, improvement in the outlook for NPR-A is receiving more applause than it otherwise might-but largely for the wrong reason. Opponents to leasing of the Arctic National Wildlife Refuge (ANWR) coastal plain, also on the North Slope and separated from NPR-A by the producing area around Prudhoe Bay oil field, claim that it supports their argument.
"The volume of rhetoric about drilling in the arctic wildlife refuge may have confused some into believing that ANWR is the only place in the US where you can find more oil," declares Senate Energy Committee Chairman Jeff Bingaman (D-NM), an ANWR leasing opponent. "That's not so." He says the NPR-A assessment "will be very useful" when ANWR leasing comes up in the conference committee working to reconcile divergent House and Senate energy bills. Leasing opponents will argue that NPR-A's enhanced potential makes it unnecessary to assess ANWR. That's perverse.
The USGS mean-probability estimate for technically recoverable oil in ANWR is 7.7 billion bbl. From the producer's view, ANWR might be more attractive than NPR-A, despite the lower resource number, because structures are larger and closer together. Decisions about relative attractiveness, of course, belong to industry.
From the government's view, the decision should be whether to allow activity that would approximately double the benefit shaping up at NPR-A. It seems simple. Chances are good that NPR-A will yield domestically produced oil, jobs, incomes, and tax revenues in significant quantities. NPR-A plus congressional approval of ANWR leasing roughly equal those national benefits times two.
Why would Congress not approve ANWR leasing? Because-and only because-environmentalists object. They say drilling and production would spoil a natural treasure and disrupt the mating of caribou. Both claims are exaggerated. Leasing, drilling, and production in the tiny, unlovely area of ANWR that would be leased won't disrupt anything. Politicians craving environmentalist votes oppose leasing anyway.
Multiplying the yield
The North Slope of Alaska has contributed mightily to US interests since Prudhoe Bay started producing. NPR-A will enhance the contribution. ANWR might multiply the yield if Congress will only allow it. The environmental consequence is minor. And NPR-A's potential is certainly no reason to oppose leasing.
At a time of economic uncertainty, refusal to allow the pursuit of wealth from resource development is perplexing. Politicians opposing ANWR leasing should be held to account when attention turns to the federal deficit.
