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Brooks Range in the Arctic National Wildlife Refuge (ANWR) where Congress may allow drilling.
Brooks Range in the Arctic National Wildlife Refuge (ANWR) where Congress may allow drilling.

The Dollars and Sense of Drilling in ANWR

Arguments against opening the last great American wilderness to oil companies tend to get emotional, but the best argument may be the cost

Published: 
Brooks Range in the Arctic National Wildlife Refuge (ANWR) where Congress may allow drilling.

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The Senate is expected to vote on the tax reform package shortly after the Thanksgiving break. If gifting to the wealthy and weren鈥檛 controversial enough, the plan also includes opening the Arctic National Wildlife Refuge to the oil industry. Drilling in ANWR comes up nearly every year in Congress, but this time Republicans need only a simple majority鈥51 votes鈥攂ecause they鈥檙e pushing the tax package through a process called budget reconciliation. It鈥檚 the greatest chance in decades Republicans have to auction away, then dig, trench, and drill land that has been called the last great American wilderness.

Slipping ANWR into tax reform is a carrot for Alaskan Senator Lisa Murkowski, who鈥檚 proven a bit of a wildcard Republican in the Trump era. Murkowski has wanted to open to drilling since she came to the Senate in 2002. (So did , who held the seat for 20 years.) And the tax reform package comes with an oddly specific request for the Energy and Natural Resources Committee, which Murkowski chairs, to find $1 billion in additional revenue. That happens to be the precise amount Murkowski says drilling in ANWR would fetch the government over ten years. 鈥淩evenues,鈥 Murkowski at a committee meeting, 鈥渁re not the only benefit that will result from careful development鈥e will also create thousands of good jobs that support families and help put kids through college.鈥

For some people, it would never make economic sense to drill in ANWR. 鈥淚f there is oil, it鈥檒l be gone in a generation,鈥 says Adam Kolton, executive director of the Alaska Wilderness League. 鈥淏ut the damage would last for thousands of years.鈥 These kind of ideological debates, especially about the environment, often fall back on emotion. But the strongest argument against drilling might be the numbers, because while Republicans have always wanted to drill in the refuge, doing so today makes about as little economic sense as it has in ANWR鈥檚 57-year history.

ANWR was created in 1960, and, at 19 million acres, is the largest refuge in the nation. There are no roads, and it鈥檚 home to polar and grizzly bears, wolverine, wolves, seals, migratory birds from six continents, muskox, and caribou herds that make the longest land migration on earth. It鈥檚 an almost prehistoric place. But because it鈥檚 so inaccessible, it鈥檚 also easy to forget.

鈥淎NWR is a pristine place, and if they found oil in the Grand Canyon, I don鈥檛 think I鈥檇 drill in the Grand Canyon.鈥

Steve Barker, founder of Eagle Creek Travel Gear and board member of the Alaska Wilderness League, has spent recent years taking outdoor industry CEOs on trips to ANWR, hoping to impress upon them the importance of protecting the refuge. We spoke after he had returned from a monthlong trip in Mongolia, and Barker says that as much as he鈥檚 traveled around the world, ANWR is unlike any other place. Once, he says, he and a group watched a wolf pack wander nearby, and the animals just stared at everyone, sniffing the air, completely unconcerned. 鈥淭hey鈥檇 probably never seen a human before, and they wanted to sniff out who the hell we were.鈥

鈥淲e, as man,鈥 Barker says, 鈥渉ave preserved this place for more than a hundred years, and if we destroy it now, in 40 or 50 years, a time when we probably won鈥檛 need oil all that much, what a travesty it would be.鈥

That any drilling can happen in ANWR is possible because of former president Jimmy Carter. In 1980, he signed the Alaska National Interest Lands Conservation Act, and while it greatly expanded ANWR鈥檚 territory, as a compromise it allowed extraction on , called the 鈥1002 area.鈥 Ever since, many Republicans in Congress have attempted聽to open this section of ANWR to drilling. They鈥檝e tried . But the hurdle has always been finding 60 votes, because a group of moderate Republicans have consistently voted it down.

鈥淧eople have said to me, 鈥業鈥檓 going to bring you new information about ANWR, how environmentally we can make it safe,鈥 Arizona Senator John McCain told in 2008. 鈥淚鈥檒l be glad to accept new information鈥ut I also believe that the ANWR is a pristine place, and if they found oil in the Grand Canyon, I don鈥檛 think I鈥檇 drill in the Grand Canyon.鈥欌 (The Trump administration is, in fact, considering Grand Canyon.)

Besides being a politically opportune time to sneak drilling into a tax package, Alaska has recently learned the consequence of that old 鈥渢oo many eggs in one basket鈥 adage. After oil prices plummeted this decade from $100 a barrel to , the state budget flopped from a surplus to a deficit. As a remedy, some politicians pushed to create an income tax. (Alaskans pay neither sales nor income tax, and the government sends residents a check each year from the state鈥檚 permanent fund, which is also supported largely through oil revenue.) The state Senate rejected the income tax, so instead of balancing its budget, Alaska has been looking toward ANWR, a massive pot of gold beneath the permafrost.

鈥淚f you鈥檙e in debt,鈥 says Kolton, 鈥渋magine going to Vegas and taking your last bit of money and betting it all on red. This is a hope for an oil bonanza.鈥

And 鈥渉ope鈥 is the operative word. Except oil executives, no one knows for certain how much or little oil waits beneath ANWR. It is one of the tightest . But outside the oil industry, the most-informed person on ANWR鈥檚 oil is probably David Houseknecht, a senior researcher with the U.S. Geological Survey. Houseknecht worked on the last seismic survey in the area, done more than 30 years ago. He says that data puts ANWR鈥檚 oil between . If true, it would become the largest producing field in North America. Then again, that could be wrong. 鈥淚n past years,鈥 Houseknecht says, 鈥渨hat we saw was that some of the major multinational companies departed Alaska and are no longer exploring it.鈥

ANWR would fetch much, much less than the $1 billion Murkowski needs.

Drilling in the Arctic is tough. There are the two months of consecutive darkness. There鈥檚 freezing weather. And when it鈥檚 too warm, some of the ground has the stability of a soggy pillow鈥攁 condition that has grown worse with climate change. 鈥淭he irony,鈥 Houseknecht says, 鈥渋s that as we reach higher global temperatures, the ice pack on shore has retreated, so now there鈥檚 actually a longer offshore drilling season.鈥

With all the political chaos overseas, Houseknecht says major oil companies are again considering the Arctic. But they鈥檇 still need to weigh how expensive it is to drill there. A report by the Center for American Progress (CAP), a liberal think tank based in Washington, D.C., says that to break even in ANWR, oil companies need to make $78 a barrel. That鈥檚 well above the current rate of a barrel. There鈥檚 also the added cost of litigation, because environmentalists would undoubtedly sue. And it鈥檚 not like the United States is desperate for oil at the moment. The country is in a glut. From , the United States nearly doubled its crude reserves because of offshore drilling allowed under the Obama administration.

The CAP study also found there鈥檚 plenty of land in Alaska鈥41 million federal acres, land roughly the size of Florida鈥攁vailable to drill, and that 98 percent of this is sitting idle. There are also analyses how much nearby Arctic leases have gone for, and they say ANWR would fetch much, much less than the $1 billion Murkowski needs.

鈥淭he Arctic refuge is not needed from an energy production standpoint,鈥 says Matt Lee-Ashley, a senior fellow at CAP who wrote the analysis. 鈥淭his is really more about Alaska putting a hide on the wall, so to speak.鈥

If opened, it would still be years before any of ANWR鈥檚 oil saw a pipeline. By then, all this arithmetic will probably have changed, and it may or may not prove to be profitable for oil companies. There are a lot of ifs when it comes to the refuge. But what鈥檚 for certain is that if companies are allowed to drill on the coastal plain, ANWR will no longer be America鈥檚 last unspoiled wilderness.

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