Executive Summary:
Reporting on the Drilling in Alaska
In response to a request by Albert Smith, Professor of Business Management at Radford University (RU), Downey Consulting Services was hired to report on the drilling for oil in the Arctic National Wildlife Refuge located in Alaska. In particular, Mr. Smith wanted to know how the drilling would affect the land, wildlife, and economy of the ANWR and United States.
Drilling Population
To put the size of the ANWR (Arctic National Wildlife Refuge) in perspective, keep in mind that Alaska contains 591,000 square miles, or about 378,000,000 acres. The ANWR is five percent of Alaska or 19 million acres. Of these acres, eight percent have been proposed for development, and only one percent would be affected by oil production. Fewer wells would have to be drilled than if the refuge had been opened 20 years ago, thanks to better detection and drilling technology. The higher the oil price gets the greater the incentive to drill and pump. If oil is not found directly beneath the well location, new technology allows the well to be drilled horizontally, drastically reducing the area of land affected by the oil development.
The Environment in Alaska
Modern technology has made it possible to build the oil fields on gravel pads that make a solid foundation for the equipment and insulate the underlying permafrost. This means that the wells are not only small, but quiet. Previously, oil drilling pads had to be big enough to accommodate many reserve pits to hold the waste water and mud from drilling. Now, however, a new technique of pumping the wastes back into the ground eliminates the waste of space, maintains a subsurface pressure high enough to keep oil flowing, and reduces the possibility of spills on the tundra. Caribou numbers, for example, grew from 3,000 at the beginning of Prudhoe development to 5,500 at the end of development. From there the population steadily increased to its present number of 20,000 animals. The oil producing companies have taken great care to elevate the pipeline or build ramps over it for caribou migration. The only snow goose colony in the United States has also steadily increased from 50 to 180 nests.
Recommendations
With all the new technology in place it would be difficult to disagree with the rising interest in actually going forward with the drilling for oil in Alaska.
Drilling in Alaska
By: Matthew J. Downey
Introduction
There has long been a controversy between environmentalists and oil companies over whether to allow oil drilling in the Arctic National Wildlife Refuge, commonly referred to as ANWR (Appendix – Exhibit 1). To put the size of the ANWR in perspective, keep in mind that Alaska contains 591,000 square miles, or about 378,000,000 acres. The ANWR is five percent of Alaska or 19 million acres. Of these acres, eight percent have been proposed for development, and only one percent would be affected by oil production. This means that about 15,000 acres, or .004 percent of Alaska, would be affected. Actual production facilities including roads, drilling pads, living quarters, and pipelines would cover a thousand acres. (Anderson)
The refuge is located just east of the North Slope oil production area and the pipeline that ships crude oil to the Pacific coast and then to world markets. Fewer wells would have to be drilled than if the refuge had been opened 20 years ago, thanks to better detection and drilling technology. Exactly how much oil and natural gas might be in the refuge is uncertain, and production would in turn depend on the price for oil. The higher the oil price gets the greater the incentive to drill and pump. They note it would take up to a decade to even see oil from the refuge and that more could be done sooner via higher mileage cars, either by requiring industry to raise fleet averages or by providing greater incentives to purchase fuel efficient cars. (MSNBC)
North Slope
A large percentage of the two million barrels of oil produced every day in Alaska comes from an area known as the North Slope. The North Slope is on the eastern end of the north coast of Alaska and consists of mostly coastal plains. There are five oil fields currently in production on the North Slope; the biggest of these is Prudhoe Bay, which is also the largest oil field in North America. Another oil field of particular interest is Endicott, located about ten miles northeast of Prudhoe Bay. Endicott is the first continuous, offshore oil-producing field in the Arctic. The field is in fact two man-made islands that require a ten-mile access road and a five-mile causeway connecting the two islands. The other three fields are Kuparek, Lisburne, and Milne Point. (Anderson)
Modern Technology
The Prudhoe Bay field encompasses 5,000 acres, and Endicott, the sixth largest oil field in North America, encompasses only 55 acres. It is possible for oil fields to be small because the oil wells themselves are only ten feet square. They are placed immediately next to one another. The oil is not pumped from the wells but, when the reserve is tapped, the oil flows out under natural pressure. This means that the wells are not only small, but quiet. Modern technology has made it possible to build the oil fields on gravel pads that make a solid foundation for the equipment and insulate the underlying permafrost. Previously, oil drilling pads had to be big enough to accommodate many reserve pits to hold the waste water and mud from drilling. Now, however, a new technique of pumping the wastes back into the ground eliminates the waste of space, maintains a subsurface pressure high enough to keep oil flowing, and reduces the possibility of spills on the tundra. If oil is not found directly beneath the well location, new technology allows the well to be drilled horizontally, drastically reducing the area of land affected by the oil development. (Anderson)
When the 800-mile trans-Alaskan pipeline was built, temporary access roads were required for construction and maintenance. A breakthrough in road technology has eliminated the need for these gravel roads that leave an impact on the environment. Ocean water is pumped onto the tundra where it freezes to form an ice road from which maintenance can be done during the winter. In the summer these roads melt and leave no trace. Vehicles with huge rubber tires use the roads. Ice roads are also used for oil exploration. (Anderson)
At Prudhoe Bay the majority of oil spills are small and never leave the gravel pads. All spills are promptly reported to government agencies and thoroughly cleaned up. There are about 250 spills each year, which sounds terrible, but a "spill" includes a single drop of oil. By this standard the average parking lot has more oil spills than that each year. Of those 250 spills, nearly half are zero to five-gallon spills that never leave the gravel pad. The contaminated gravel is all scooped up and taken to an incinerator where the oil is burned off. (Anderson)
Effects on Wildlife
Environmentalists claim that oil drilling affects the wildlife; however, if the drill sites are any indication, most animal populations are not affected or their numbers have risen. Caribou numbers, for example, grew from 3,000 at the beginning of Prudhoe development to 5,500 at the end of development. From there the population steadily increased to its present number of 20,000 animals. A group of about 100 caribou usually winters in the Prudhoe area. The oil producing companies have taken great care to elevate the pipeline or build ramps over it for caribou migration. The only snow goose colony in the United States has also steadily increased from 50 to 180 nests. (Anderson)
Oil drilling companies take great care to clean up and revegetate the areas they use. Parts of gravel pads that are not needed anymore are manually shoveled or raked up to reduce damage to the underlying vegetation. Studies have been done on what types of grasses to use to revegetate an area and the oil companies take pride in bringing the tundra back to its original state. (Anderson)
Automobile Effects
According to the American Petroleum Institute, there are “70 million more drivers on the road driving about 113 million more vehicles today than there were 30 years ago. Over this same period of time, drivers have increased the miles they each drive by about 44 percent, which means that vehicles traveled per year had increased by about 145 percent since 1970.” The increased need for vehicles has come with an increased need for fuel. The U.S EPA (Environmental Protection Agency) found that vehicle emissions have declined 41% since 1970 despite the increased amount of vehicles on the road. A major issue is the process of retrieving crude oil from the earth. Pipe leaks, accidents during transport and spills are still commonplace. The American Petroleum Institute claims that many steps are taken to “assure that oil and natural gas can be produced with minimal environmental impact.” (EcoWorld)
The Other Side
If you realistically measure the areas influenced by oil rigs, it is really spread out. Think of it as a spider web: When the web is spread out, it covers a very large area but when you ball it up it is only a fraction of its original size. They [the oil industry] are giving you the number made up of all the rigs without counting the area in between-the industry is giving you the balled up number. Roads and platforms, these things are all spread out and cause fragmentation of habitat. “The amount of oil in the refuge is marginal at best. It is not going to make a difference. Drilling in the Arctic Refuge is symbolic of a larger effort. It’s about getting into one protected area and using the momentum to get into another.” (EcoWorld)
The Bush administration officials claim that drilling in the Arctic will enhance U.S security by reducing dependence on imported oil. They also promote this controversial venture by stating that drilling will reduce the country’s energy shortages. However, very little electrical power comes from oil. Another argument states that drilling will reduce the oil prices. The American Petroleum Institute explains how this would work: “Crude oil prices are established in world markets responding to supply and demand. New discoveries are crucially important to supply. Every barrel of oil produced domestically is one less barrel that must be purchased from foreign sources. In the long term, additional U.S. supplies help to hold down crude oil prices because demand for crude oil from non-U.S. sources is lower than it would be without added domestic production.” Moore explains that “the argument they put forth is that drilling will reduce our dependency on foreign oil. The Department of Energy, however, stated that if we started drilling today, oil would not reach peak production till after 2020 and if oil is in fact present, it would only reduce oil dependency by about 2%.” It is assumed that the oil present in Alaska is not enough to meet even a fraction of America’s needs. Projections in 1998 showed a 95% chance of finding 3 billion barrels of oil and a 5% chance of finding 10.5 billion barrels of oil. Three billion barrels of oil would barely supply enough oil to last half a year in the U.S. It is hard to believe that drilling in Alaska will benefit U.S citizens since any oil that exists will take about a decade to reach the market and estimates on the amount of oil in the area are speculative. Further more, prices will not fluctuate from drilling in Alaska since the amount of oil found in the refuge is minimal. (EcoWorld)
Conclusion
With all the new technology minimizing damage done to the refugee, drilling for oil can only help the economy and tap a much needed resource. The animals and wildlife populations are growing and though may suffer a little will not be in any real danger. There is oil up there and the oil companies want it, it will help the cost of oil for gasoline as well.
Appendix
Exhibit 1
Sources
http://www.libertyhaven.com/countriesandregions/alaska/oil.shtml (Anderson)
http://www.msnbc.msn.com/id/6407196 (MSNBC)
http://www.ecoworld.com/Home/Articles2.cfm?TID=360 (EcoWorld)