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Vol. 12, No. 8 Week of February 25, 2007
Providing coverage of Alaska and northern Canada's oil and gas industry

Odds against ANWR reserve

Consultants: Making refuge part of U.S. emergency petroleum stockpile impractical

Rose Ragsdale

For Petroleum News

Consultants in Alaska most familiar with the controversial debate over drilling for oil in the Arctic National Wildlife Refuge applaud the notion of considering all avenues to find a viable path to development.

But they mustered little enthusiasm Feb. 21 for the idea of making the oil resource believed to lie beneath the refuge’s 1002 Area part of the U.S. Strategic Petroleum Reserve. The 1002 Area, or coastal plain, of ANWR is a 1.5 million-acre strip of land that borders the Beaufort Sea at the northern edge of the 19 million-acre refuge. Geologists say it could supply oil to the United States at a rate of 1 million barrels a day for 30 years. Environmentalists, however, say oil development in ANWR would upset the ecological balance of America’s last major wilderness.

The idea of putting ANWR in the reserve surfaced Feb. 18 in a Washington Post editorial, where author Gal Luft criticized President Bush’s plan to expand the Strategic Petroleum Reserve by purchasing more oil and stashing it in Richton, Miss., not far from Gulf Coast refineries and infrastructure. The SPR currently has millions of barrels of oil stashed in salt caverns in Texas and Louisiana.

Luft is executive director of the Institute for the Analysis of Global Security, a Washington, D.C.-based energy security think tank.

He noted that the Gulf Coast is vulnerable to hurricanes and urged Bush to establish additional caches of oil in other parts of the country.

“The administration should consider a radically different and much cheaper approach to boosting our security: make ANWR our strategic reserve. For many years, supporters of drilling in the Arctic National Wildlife Refuge have failed to open it for production. With the Democrats controlling Congress, the chances of drilling are slimmer than ever. President Bush didn’t even bother to raise the issue last month. But reframing the issue to cast the refuge as an emergency stockpile rather than a source of production might well change the politics,” Luft wrote.

Alaska senior Sen. Ted Stevens told Alaska reporters Feb. 20 that he, coincidentally, had been considering the same idea and would like to press for its consideration in Congress.

Idea greeted with consternation

Other Alaskans greeted the notion with consternation.

“I still don’t know or understand what Sen. Stevens is proposing,” said longtime ANWR lobbyist Roger Herrera. “The whole purpose of the SPR is to have a reserve of certain oil that is available instantly. At the moment ANWR oil is neither certain nor quickly available.

“If the idea is to prove the area up and then shut it in, that’s fine, except who will pay for everything? The federal government? How does Alaska get its 50 percent share? And so on and so forth. I simply do not understand enough to comment,” Herrera added.

“Furthermore, I have a hard time coming up with a concept that might work. However, I would prefer to reserve judgment.”

Former Alaska oil and gas director Ken Boyd also raised concerns.

“I may have testified against this idea in Congress once,” Boyd said. “ANWR is not an oil bank. We don’t know what’s there.

“The part of this idea that I don’t like is, ‘how do you do it?’ You can’t ask a capitalist company to spend the money to explore for and develop oil in ANWR and then just shut in the wells,” Boyd said.

Not only would maintaining an oil reservoir in ANWR be “fantastically expensive” and extremely difficult for government agencies to do, it also would be highly impractical and dangerous, Boyd said.

“The oil would still be in the ground, in the rock as nature put it there 100 million years ago. It’s not like the oil is in a jar,” he observed.

Moreover, the SPR is designed to allow the president to respond quickly to a national emergency. ANWR oil could not be produced, processed and shipped to refineries on the West Coast fast enough to make a difference quickly in a volatile oil market, he said.

The only way the idea could possibly work, according to Boyd, is if ANWR’s 1002 Area was explored and developed in the normal fashion and then the U.S. government bought the oil when it reached the West Coast or some other designated U.S. market.

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