 The U.S. Geological Survey released new estimates yesterday about possible petroleum reserves in the Arctic Circle.
The sound-byte trumpeted by the Wall Street Journal, and the "drill here drill now" simpletons, is this:
The area north of the Arctic Circle has an estimated 90 billion barrels of undiscovered, technically recoverable oil, 1,670 trillion cubic feet of technically recoverable natural gas, and 44 billion barrels of technically recoverable natural gas liquids in 25 geologically defined areas thought to have potential for petroleum.
The U.S. Geological Survey assessment released today is the first publicly available petroleum resource estimate of the entire area north of the Arctic Circle.
These resources account for about 22 percent of the undiscovered, technically recoverable resources in the world. The Arctic accounts for about 13 percent of the undiscovered oil, 30 percent of the undiscovered natural gas, and 20 percent of the undiscovered natural gas liquids in the world. About 84 percent of the estimated resources are expected to occur offshore.
"Before we can make decisions about our future use of oil and gas and related decisions about protecting endangered species, native communities and the health of our planet, we need to know what's out there," said USGS Director Mark Myers. "With this assessment, we're providing the same information to everyone in the world so that the global community can make those difficult decisions."
(Emphasis mine)
First, I appreciate this report. Energy is important, and we need to know what the scientists think about what may be out there. But it's important to know a couple of things about the report before we jump to conclusions about what it might mean for drilling in the Arctic National Wildlife Refuge (ANWR)
1. This report covers the entire Arctic circle, of which the North Slope of Alaska is a small (but significant) portion.
2. Of the estimated productive oil areas in Alaska and offshore in U.S. Territorial waters, only a tiny portion overlaps the Northern part of ANWR. (ANWR is the little salmon-colored blip on the map to the right. Click to enlarge.)
3. Most importantly, if you read the project's methodology more closely (pdf), you get this:
The study included only those resources believed to be recoverable using existing technology, but with the important assumptions for offshore areas that the resources would be recoverable even in the presence of permanent sea ice and oceanic water depth. No economic considerations are included in these initial estimates; results are presented without reference to costs of exploration and development, which will be important in many of the assessed areas. So-called non-conventional resources, such as coal bed methane, gas hydrate, oil shale, and tar sand, were explicitly excluded from the study.
(emphasis mine)
Although the estimates don't include deposits currently considered technically infeasible, the estimates don't take into account the economic feasibility of such production. For all we know, these deposits might cost 5 times what the market could bear. I'd really be interested to understand how an offshore rig could produce when the sea beneath it is covered in pack ice.
Further, most oil production around the world externalizes environmental and economic risk. If the oil producers had to go on the free market and purchase full insurance coverage to promptly remedy and compensate for accidents, no matter how catastrophic, the prices would be significantly increased. |
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