My Heartfelt Thoughts on Oil Drilling in the Arctic Refuge

The Political Context
Most of my friends Outside are shocked when I tell them two-thirds of Alaskans favor oil drilling in the Arctic National Wildlife Refuge. They’re even more shocked when I tell them Alaska may be the most pro-development state in the country.

Years ago, I started a public opinion research business in Alaska. Over the course of five years, we conducted over 150,000 interviews with Alaskans. It gave me real insight into the concerns and beliefs of Alaskans.

Sometimes, I would ask Alaskans the same questions other pollsters would ask of Lower 48 voters. One of those questions was: “What worries you more—protecting the environment or creating good jobs and economic growth?”

Now if you asked that question in some Eastern states, some respondents would reject the very structure of the choice—they would contend that protecting the environment and economic growth go hand in hand. If you asked that question in the resource-based states of the Rocky Mountains, respondents wouldn’t reject the question, but they would be equally split in their responses. But when you ask that question in Alaska, you find that a solid majority is more concerned about jobs and the economy.

Why is that?

How Alaska’s Different
The reality is that Alaska’s economy is resource-based. Oil revenues fund 80% of state government and services. Alaska has no state income tax; instead each year we get a check from the state’s oil savings account that ranges from $800-$1600 (called a “PFD check” for permanent fund dividend). So for economic reasons, many Alaskans view continued oil development as key to the state’s economy and continued prosperity. Even apart from that, most Alaskans just seem to be comfortable with the idea of development.

But what about the environmental tradeoffs? The truth is that most Alaskans do see the environment as important to their quality of life. (Less than a quarter of Alaskans would be classified as staunchly anti-environment—that is, they never saw a development plan they didn’t like.)

But there’s a critical difference between Alaska and the Lower 48 which my friend Roman Dial, a Stanford-educated wildlife biologist, pointed out to me when I first moved to Alaska in 1990. In Alaska, wilderness surrounds postage-stamp-sized cities; in the Lower 48, cities surround postage stamp-sized wilderness preserves. In other words, people in the Lower 48 are deeply concerned about losing what remaining wilderness they have left; most Alaskans aren’t.

Alaskans’ Independent Streak
Not only are most Alaskans not concerned, but they bristle at the thought that voters from the Lower 48—who’ve already screwed up their own environment—would now tell Alaskans how to manage theirs. This reaction stems from a more general resentment Alaskans have towards federal control over our lands (the feds own 67%) and Lower 48 control over our industries (oil, timber, mining, fishing). But I personally don’t subscribe to this view.

The reality is that ANWR is federal property, Alaska is a part of the U.S., and we receive more federal subsidy per capita than any other state. So Lower 48 taxpayers do have a legitimate say in what happens up here. In the case of the Refuge, over 60% of Americans are against drilling. Rather than criticize them for their opinion, I appreciate the fact that they care about Alaska, take pride, feel a sense of ownership. On a more general level, I wish more Americans would speak up for what they believe in. The alternative—to descend into an apolitical, cynical funk—would only serve to leave policy-making to the special interests.

Throughout American history, those living on the frontier have always perceived the wilderness as a vast, inexhaustible resource. It has always been those living in the East that recognized its finitude and spoke out for its protection. And it’s always been the case that locals living in those areas have lost short-term economic opportunities and freedoms as a result of these protections. The debate in Alaska today is probably little different from the debate surrounding the creation of Yellowstone and Yosemite in the late 1800’s.

So Is ANWR Worth Protecting?
If you’re pro-drilling, you’ll characterize ANWR as a desolate, frozen tundra plain six months out of the year, and a place few Americans will visit even in summer. You’ll point out that Congress is proposing to open only a small sliver of ANWR’s Coastal Plain and that Alaskan’s oil industry is the world’s most environmentally sensitive. You’ll note that Prudhoe Bay oil development hasn’t harmed caribou populations and that ANWR may be one of our best prospects for a new multi-billion barrel field. In short, you’ll argue that responsible oil development and wilderness can co-exist.

If you’re anti-drilling, you’ll retort that ANWR is different from Prudhoe. Prudhoe lies in the caribou’s migration path, ANWR in its birthing grounds. As one biologist said, “There’s a difference between operating a jackhammer a block from the hospital versus right in the maternity ward.”

You’ll describe ANWR as America’s Serengeti, our last surviving example of the type of big game migrations that once extended clear across the American West. You’ll argue that, in all of America, there should be one place where our children can go to see Nature as our Creator intended it, where they can look as far as the eye can see at migrating herds of caribou and nowhere see the marks of man.

And you’ll point out that the political rhetoric about a small exploration footprint is deceiving—it remains silent about the dozens of miles of roads, pipelines, and industrial facilities that will need to be built to get the oil out if it’s discovered. In short, you’ll argue that no amount of technology can prevent oil development from disrupting and destroying the higher values of ANWR.

In reality, both sets of facts are true. And I think most reasonable people are sympathetic to both points of view. It’s not a question of what’s true, it’s a question of what’s important—and that’s really a function of how you apply our own value system to the same set of facts. But, in my view, both lines of argument miss the bigger picture.

How Beneficial Will ANWR Be?
The bigger picture is this: What will opening ANWR accomplish? Alaskans believe it’s their economic panacea; Lower 48 drilling promoters believe it’s an important part of US energy policy. I seriously question both.

Two years ago, I helped launch a North Slope oil exploration venture with some of the state’s most talented geoscientists. What I learned is very different from what you hear on the news. We’re not almost out of oil. Quite to the contrary, even without ANWR, we’ve got a good 20 years of very attractive oil exploration prospects on the North Slope. President Bush just opened 8 million acres in NPRA (the Northwest Arctic) which likely has billions of barrels of economically recoverable reserves. In addition, over 100 undeveloped smaller satellite fields lie near existing infrastructure (meaning quicker development and lower risk).

The problem with the North Slope isn’t too little oil. The problem is that the basin is still dominated by major oil companies three decades after its development. By necessity, majors are big bucks, high-cost operators that need to focus on multi-billion barrel discoveries. Yet smaller North Slope fields represent a ton of proven oil—and the type of opportunity that a typical independent oil exploration company would die and go to heaven for.

The issue we need to focus on is not how to open another big field like ANWR, but how to transition existing North Slope assets over to independents who can get more oil out of them and rejuvenate the basin like they did in the North Sea and Gulf of Mexico. I fear that focusing on ANWR is a copout from the hard political work that needs to be done.

Selfishly, here’s what I would ask Alaskans: What will create more wealth in this state: 1) Inviting large multinationals into ANWR and negotiating for a piker’s share of the royalty? or 2) Focusing on transitioning the massive, known reserves over to independent exploration companies that Alaskans can have a more meaningful ownership interest in?

And here’s what I would ask Americans: Will opening ANWR really advance the cause of national energy independence? It’s now 20 years after we opened Prudhoe Bay, a field much larger than anyone expects ANWR to be—and America is more dependent on foreign oil now than we were then! New thinking is clearly needed.

ANWR: A Distraction
Our basic problem is we’re a country that uses a quarter of the world’s oil but has only a few percent of its reserves. ANWR is just a big distraction from the real issue we should be focusing on: How do we muster the political will to accelerate energy conservation and alternative energy? And how do we stop pumping billions into the coffers of corrupt Mideast regimes?

I take offense at the suggestion that Americans no longer have the ingenuity to meet our national energy needs without abandoning our long-standing support for preservation of our wildest places.

Comments

[Albert]

Very interesting. The sooner the "Oil Regime" that governs our political and economic climate ends, the better. Oil produces nothing more than poor environmental conditions and greed. If we weren't dependent on it, there's absolutely no doubt we would pursue other options much more vigorously.

[Chris Deile]

I agree with your article. Well written. You took our photo yesterday-- me and Polenka, my dog--near trailhead. Will read more of your website and watch for photos. Thanks much---Chris Deile

[Chris Deile]

Me again. Re-read your article, and again must compliment you on how well it is written. It is easy to read and understand, and the final points made are good ones.

[John Maki]

Bob,

You made a very interesting observation about the need to shift North Slope from the Majors to Independent oil producers and that ANWR takes the discussion in the wrong direction.

I think it would be helpful to work out the Alaskan economics of the two options. I suspect that Alaskans would get 10x more economic benefit by facilitating shift to independets of existing area than openninng up ANWR.

Furthermore, you can make the argument that exploitation of existing fields will occur much faster (2-3 years) versus 8+ years to develop ANWR. In other words, independents could actually have an effect on US supply/demand balance in the relevant future -- not out 8+ years when we do not know what conditions will be like.

Overall, you have a number of interesting points --- I think further development of them, especially that tie the economic benefit of Independet versus Major production.

Also, you might also start seeking changes in the laws that would either force Majors to develop or transfer all relevant assets to others who will develop the resources. Understanding all the barriers and what laws/shift in property rights could facilitate development seems important and could enable the Alaskan legislature to accelerate development.

Overall, great points. ANWR is red herring -- and really just a big benefit to the big boys with the people of ALaska getting minimal benefit relative to other approaches (shift to independents and full exploitation of existing fields).

Also, as you point out, not only is ANWR not a good deal for Alaskan economically, it compromises an environmental treasure (development should only occur slowly to make sure that consequences are understood before permanent damage occurs)

[Chris Cline]

Hi Bob-
I just discovered your site while doing research on Alaska for an upcoming trip this summer (we may have a mutual friend, Harry Brod).

Anyway, about ANWR- I work for the USFWS, and have been highly disturbed that they seem to be leading the charge for development of oil on the refuge, characterizing it as "a small area of the vast Arctic coastal plain", and putting out press releases about how modern drilling practices are environmentally friendly. I've heard the argument (and made it myself) that ANWR's reserves only add up to weeks or months at best of America's oil needs, but I had never thought about the fact that Prudhoe Bay has not changed (improved) our dependence on foreign oil, and neither will ANWR-- your point is very well taken.

You also point out the suspicion (probably very well-founded) that ANWR development is all about cherries for the major oil companies. Knowing this administration, you're probably right. However, one thing you might want to consider about the smaller oil companies is the difficulty with ensuring that they are environmentally responsible-- not so much in development, which is where all the excitement is, and therefore all the attention and oversight by regulators and activists; but more importantly over the long haul, in routine operation and maintenance of the oil fields once they are producing. Development is just the tip of the iceberg with respect to environmental impact, it's the long term operation where the damage can be done.

In my job for the FWS, I'm the "kill and spill" coordinator for Utah, receiving, and where warranted, investigating oil and other hazardous material spills in the state. We are also getting a lot of oil and gas development pressure here-- we have nearly as much public land (and per capita public subsidy) as Alaska. For Utah, the issue is development of wilderness study areas (therefore disqualifying them as wilderness study areas)- same thing only different. Anyway, in my experience, the big oil companies are noticably better about a) maintaining their facilities in better condition to prevent spills, and b) reporting and remediating when it does happen. So, while I heartily agree that local/smaller is usually better, and particularly in this case with respect to "better for the Alaska economy", one of the unintended consequences of this strategy (but one that can be managed by foresight and planning) is a higher degree of environmental impact by small companies that are either: a) operating at the edge of their profit margins, and not willing/able to do the necessary upkeep, inspection, and maintenance on their pumps and pipeline systems; or b) made up of local Alaskans with the attitudes of "there's plenty o' wilderness up here" that you pointed out, who just plain don't see the value in preventing impacts to the place that is after all, to them, just a drill pad.

So, in closing, very good blog, great pictures, and good, unique thoughts on the ANWR issue. I appreciated reading them, and who knows, maybe I'll make your acquaintance this summer.
-Chris

[Bob Kaufman]

Chris,

You raise a real concern: Will smaller exploration companies have the capital or desire to maintain the same environmental safeguards that big companies do?

As you point out, smaller exploration companies don't have the same financial resources as larger ones. If there's one thing you can say about BP or Conoco Phillips, it's that they certainly have the cash to do it right! Also, the bigger players tend to be large, publicly-traded companies who have not only their stock price to worry about but also their reputation, since they are also operating in other basins around the world.

What you bring up is a very real concern with smaller companies. Hopefully, they will be innovative not just in their exploration methods but also in their environmental safeguards. For example, Pioneer has been developing a year-round exploration rig for the North Slope that stands on posts above the tundra. I don't know where it stands currently, but it seemed like a novel idea.

Bob

[Chris Cline]

Hi Bob-
I can go on and on about this topic, but I'll spare you (I'd much rather talk about skate skiing, too). I will say that the one thing that seems to help with the smaller companies is if they are integrated with the community and share the community's values--i.e., community peer pressure is one of the things that holds them in line. I'm resisting the urge to be skeptical that this would help in Alaska given many residents' priorities. But how do they feel about people trashing "their" property? Do they feel enough "ownership" of ANWR and its resources to be angered by a company (even or especially a local one) that is polluting their environment? Or do they just figure that it's somewhere remote from them, and it's just a "cost of doing business" to get that resident dividend check? If there is some force of community peer pressure that can be brought to bear against these smaller companies, that would help. If not, ask me about southern Utah...
Chris

[Chris Deile]

First things first. Here's a big company with lots of money but a bad environmental track record:

http://www.oriononline.org/pages/om/03-4om/Sherwonit.html

[Chris Deile]

Re; The Iditarod: I used to love it, took much pride in it having grown up in Anchorage. But just figured: 1150 miles in 8 days = 141 miles/day AVERAGE. Compare to Appalachian Trail--Georgia to Maine--fastest time is 2150 miles in 54 days by a teenager = 40 miles/day. If the fastest time for humans on the AT is only 40/day, isn't 141/day for dogs animal cruelty? The Iditarod director is from Kentucky, with experience in horse racing, not even an Alaskan. Take away the money aspect and make the Idiitarod recereationa. Otherwise it's a disgrace to Alaska.

[oilfield equipment]

i never new this about alaksa. Are you saying that you want then to drill for oil. I think this would be a great idea.

[stock market newsletter]

Hi,

Nice article....I saw your blog while searching in google , over all its a great idea ....
stock market newsletter

[tinggi badan]

Rocky Mountains, respondents wouldn’t reject the question, but they would be equally split in their responses. But when you ask that question in Alaska, you find that a solid majority is more concerned about jobs and the economy.

[supra shoes]

Truth is the torch, but also a huge torch. Therefore, we want to go over his eyes, or even worried about being burned.