GAO: ANWR PLAIN LIKELY TO HOLD COMMERCIAL OIL

The General Accounting Office has agreed with a U.S. Interior Department estimate that the Arctic National Wildlife Refuge (ANWR) Coastal Plain on Alaska's North Slope is likely to contain an economic oil field. In 1987 Interior estimated there was a 19% probability the area contained an economic oil field. Then, based on new geophysical data, in 1991 Interior revised that to a 46% probability. At the time, President Bush's administration was urging Congress to allow leasing and

Aug. 30, 1993

3 min read

In 1987 Interior estimated there was a 19% probability the area contained an economic oil field. Then, based on new geophysical data, in 1991 Interior revised that to a 46% probability.

At the time, President Bush's administration was urging Congress to allow leasing and exploration of the Coastal Plain.

Rep. George Miller (D-Calif.), chairman of the House natural resources committee and an opponent of ANWR leasing, asked for the GAO review.

'SUBSTANTIAL' OIL

GAO reported, "While no one really knows how much oil may be in ANWR, we believe Interior's estimate of oil resources in ANWR used the best available geologic and geophysical data for making such an assessment without having actual drilling data from the refuge.

"Overall, we agree with Interior's view that ANWR's Coastal Plain may contain a substantial amount of oil.

"Interior used a generally accepted methodology and concluded there is a 46% probability that at least one economically viable oil field exists in ANWR's Coastal Plain.

"However, this conclusion does not reflect the uncertainties in a field's development potential that can result from variations in future oil prices or costs.

"For example, if oil prices are lower than Interior estimated, a larger field is required for economic viability, and the probability of such a field existing decreases. Conversely, higher oil prices make smaller fields economically viable and increase the probability that such a field exists.

"Cost factors could also influence Interior's estimates in at least two ways.

"First, Interior assumed that each area in ANWR that was developed would bear the full cost of production facilities and of a pipeline to Pump Station 1 of the Trans-Alaska Pipeline System.

"Because each area must independently support all of these costs, rather large fields would be required for economic viability.

"However, the history of oil production on the North Slope shows that when one large economic field is developed, other much smaller fields that are not economically viable by themselves can share facilities or costs with the larger field and become profitable.

"Second, if Congress authorizes development in ANWR, it is likely to require special measures designed to minimize the impact that development may have on ANWR's environment. These measures could prove costly and the greater cost would increase the field size needed for the development of ANWR to be economically viable. These costs are not fully known and were not factored into Interior's estimates."