I'm glad you responded in your editorial (OGJ, July 22, 2002, p. 19) to the comments by Senator Bingaman of New Mexico quoted in (OGJ, July 8, 2002, p. 35). Using the new, higher resource estimate in NPR-A by the USGS as a reason for not opening ANWR is so illogical it's painful. As I understand them, the issues on opening ANWR are:
Pro:
- The possibility of improving the country's energy security with increased domestic oil and gas reserves and production.
- The opportunity to strengthen our country's economy by importing less oil and improving our balance of payments.
- Other benefits to our people and economy from the investment, expenses, and jobs required to develope and operate any field discovered on ANWR.
Con:
The desire to maintain ANWR in as pristine a state as possible so as to preserve its environmental values.
I'm not going to comment on the validity and strength of the environmental issue. What really bothers me, though, is when those opposing ANWR exploration minimize or even, as with Senator Bingaman, use the other issues as arguments against opening the reserve to exploration. In the statistics section at the back of the Journal (July 22, 2002, p. 68) you list demand in the fourth quarter of 2001 for the US and its territories as 19.74 million b/d. That's a shortfall of 10.63 million, and that jibes pretty well with the imports rate of 10.957 million b/d listed for March 2002. With an average imported oil price of $23.73/bbl from the same set of statistics, that's an outflow of $260 million/day or $95 billion/year. If the average monthly deficit of $27.7 billion/month through May persists, our balance of payments in 2002 will be a $330 billion net outflow. So oil imports are accounting for almost 30% of the trade deficit.
If NPR-A producible reserves match the USGS mean resource potential estimate of 9.3 billion bbl, it will help. But it sure won't cancel out the stream of imported oil or exported dollars. Production would come on gradually and would probably peak at well less than Prudhoe Bay's peak of 1.5 million b/d. Even at that rate, NPRA-A would back out less than 15% of current imports. And US demand is increasing, so that percentage would probably be lower when NPR-A reached its peak.
There is no question that the US economy would be improved and our energy security strengthened by successful exploration and development of both NPR-A and ANWR. In addition to the balance of payments and security of supply benefits-probably double that from NPR-A if ANWR were also developed-the positive effect on jobs and domestic spending would be substantial. I'd be surprised if the total finding, development, operating, and transportation cost of oil on the North Slope would be lower than $10/bbl. Using that figure, that would be $100 billion for the USGS mean estimated potential of 10.4 billion bbl in ANWR's 1002 area, the lion's share spent in America.
It's impossible to express the environmental values of the ANWR coastal plain in the same terms as can be estimated for development. In this letter, I'm making no attempt to judge one value vs. the other. What I am suggesting is that the opponents of opening ANWR should stick to their environmental arguments and not erroneously downplay the economic and security values of oil development there.
Dennis E. Gregg
Houston
e-mail: [email protected]
