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Thursday, November 03, 2005

ANWR Update Again - But Then Again, Maybe Not

Well, the budget bill just took one step closer to law today as it passed the Senate 52-47 with the provision opening the Alaska National Wildlife Refuge for drilling still intact. Perhaps there is little hope after all of keeping ANWR closed to drilling. However, the bill didnt pass without a fight and was signed only after some interesting ammendment action.

First, an ammendment proposed by Senator Maria Cantwell (D- California) that would have cut the ANWR provision from the budget bill narrowly failed, according to a Reuters article. The ammendment was defeated by a vote of 48 to 51 with one abstention. Republicans voting to prevent drilling included: Linc Chafee, Norm Coleman, Suzie Collins, Mike DeWine, John McCain, Gordon Smith, and Olympia Snow. Dems voting to allow drilling were Dan Akaka, Dan Inouye, and Mary Landrieu.

After Cantwell's ammendment failed, the Senate overwhelmingly approved an ammendment offered by Senator Ron Wyden (D-Oregon) that prevents the export of any oil from ANWR. The ammendment, which had been proposed by Wyden previously and defeated while the bill was still in committee, passed 83 to 16, again with one abstention. Opposing the ammendment were Senators Lamar Alexander, Wayne Allard, George Allen, Bob Bennett, Sam Brownback, Jim Bunning, Richard Burr, John Cornyn, Larry Craig, Judd Gregg, James Inhofe, John Kyl, Mary Landrieu, John McCain, Jeff Sessions, and John Sununu.

The Senate also narrowly rejected another ammendment from Cantwell, 48-51. This ammendment would have stopped ANWR oil production if the Alaskan government sued to get a bigger share of the leasing revenue, which the drilling plan splits 50-50 with the federal government. According the the Reuters article, When Alaska became a state, it kept 90 percent of the lease revenue from oil production and the government received 10 percent. Alaska's legislature has indicated it may sue to maintain the 90-10 split with the ANWR revenue. This ammendment was considered by some, like Republican Pete Domenici of New Mexico, chairmen of the Senate Energy and Natural Resources Committee, as a "back door attempt to kill ANWR" drilling.

So, all of ANWR will likely be opened for drilling but at least all of ANWR's oil will be headed to the US which removes one of my main arguments against drilling in ANWR. I'm still not convinced that it is worth it and am saddened that Cantwell's ammendment narrowly failed. I am heartened however to see both of my senators active in opposing this provision with Senator Gorden Smith (R-Oregon) amidst those Republicans voting for the Cantwell Ammendment and with Ron Wyden, who also opposed the ANWR provision, as the author of the second ammendment preventing the export of ANWR oil.

Furthermore, the Reuters article speculates that the close vote in the Senate on striking the ANWR provision may make it difficult for the chamber to accept in a final budget bill the House's proposal to open offshore waters to drilling where energy exploration is now banned, another proposed aspect of the budget bill.

The budget has now passed both the Senate and the House and both versions include the ANWR provision. Under both Senate and House drilling plans, the refuge's 1.5 million-acre coastal plain would be opened for energy exploration, but no more than 2,000 acres of the surface area could be covered by production and support facilities, such as airstrips and piers to hold up pipelines.

However, the Senate version now has the Wyden Ammendment attached and the House version apparently contains some budget cuts to politically sensitive programs such as food stamps and Medicaid that the Senate may recoil at. The two bills are also about $15 billion apart with the House slashing $50 billion and the Senate only cutting $35 billion. The two bills now head to reconciliation in committee. If they emerge, they will be sent to the desk of the president who will most certainly sign it. President Bush has long been an avid supporter of opening ANWR for drilling - indeed there are very few places, I would imagine, that Bush wouldn't be inclined to drill if there might be a drop of oil or natural gas under it.


Jesse Jenkins said...

As a side note to Heiko who had mentioned earlier that the damage from the drilling platforms was similar to a wind farm and that it wasn't like oil spills were occuring, apparently they are and quite frequently: the Reuters article linked above quotes Maria Cantwell as refering to the 500 oils spills of varying sizes that occur on the nearby Alaskan North Slope every year. Let's not kid ourselves into thinking that drilling in ANWR will have no environmental consequences. It is, most certainly a death warrent for this pristine wilderness. It will never by quite the same again.

While it is doubtful there will be any significant longterm benefit from drilling in ANWR, it is certain that we will lose a lot. If you doubt it, just check out the photo collection of ANWR by Subhankar Banerjee.

Jesse Jenkins said...

Here's a quote from Margaret Murie that accompanies one of Banerjee's photographs:

"This is the value of this piece of wilderness—its absolutely untouched character. Not spectacular, no unique or strange features, but just the beautiful, wild country of a beautiful, wild free-running river.”

Never again will ANWR be a wild untouched place after we begin the process of oil exploration and drilling.

Heiko said...

"... if they can avoid big oil spills, and I think they should be able to ... then it seems to me, the environmental impact shouldn't be too different from a few wind turbines ... minor spillages from lubricating oil or diesel ..."

I think it should be possible to avoid major spills, with modern technology and at a price. However, you are right

"Each year, the oil industry spills tens of thousands of gallons of crude oil and other hazardous materials on the North Slope."

I guess it would take a very large number of wind turbines to add up to that much spillage from lubricating oil and diesel ;-) Whether this is down to old equipment and sloppy oil industry practises or is inherent, even with modern equipment and the right environmental safeguards, I don't know for sure, though I suspect, speaking as a chemical engineer, that this is not necessary;
I don't understand why they should not be able to do better.

It seems the plan isn't to allow drilling in all of ANWR's 19 million acres, but only in 1.5 million acres of it, known as area 1002 (most of the coastal plain). The USGS estimate of technically recoverable reserves in that subsection of ANWR is 7.7 billion barrels.

What's also interesting is that the USGS thinks that most of the oil is in the Eastern third of area 1002, so some 6 and a half billion barrels or thereabouts are concentrated in 0.5 million acres, namely the bit of ANWR closest to existing oil fields.

What I've got a problem with is giving away too much to the oil companies. Even with 7.7 billion barrels we are talking 460 billion Dollars and the average cost of recovering them should only be 10 to 20 Dollars (cost as in cost without allowing 12% return on investment for oil companies). So I ask why not put out fixed price contracts, with all the profit going to government?

On the other hand, I think it should be possible to get to the oil without having to disturb ANWR a great deal, and certainly based on the numbers over 95% of it could be left entirely undisturbed, and with development only in the Eastern part of the coastal plain, a majority of the oil could still be recovered.

I am not bothered about ANWR oil being sold to China, on the contrary I think it may make more sense, both environmentally and economically to do so.

Suppose, we've got a choice of moving ANWR oil to China plus moving Venezuelan oil to the Gulf coast, OR we move the Venezuelen oil to China and ANWR oil to the Gulf coast. I think the latter scenario would have higher emissions and costs, and so it would be much better for America to choose the first.

I think it's irrelevant for American consumers who uses ANWR's oil, what matters is that they maximise their income from ANWR's oil.

Heiko said...

If you look at the map, you'll see which bit is the 1002 area and where Prudhoe Bay is located. That gives a good idea of where the oil is.

It's a good map,

also the pictures of ANWR by Subhankar are great.

Heiko said...


I meant Western third, somehow I don't seem to be able to tell West from East anymore.

Jesse Jenkins said...

Suppose, we've got a choice of moving ANWR oil to China plus moving Venezuelan oil to the Gulf coast, OR we move the Venezuelen oil to China and ANWR oil to the Gulf coast.

Not to be too nitpicky but why can't that oil come to the West Coast i.e. refineries in Washington (there are a few north of Bellingham by the US/Canada boarder and more in Anacortes in the Puget Sound) or California (there are plenty near the Bay Area and probably elsewhere)? (There's no refineries in Oregon as far as I know). The Gulf isnt the only oil refining region in the US, just the largest and the oil from ANWR most certainly would not be headed there (that would be a rediculous waste). Also, there's plenty of demand for that oil in the West. Anyway, your scenario seems an unlikely one.

Finally, while the majority of the suspected oil reserves are in the 1002 area as you pointed out, the provision does not limit exploration to this region. Once ANWR is open, its open: all of it! The initial drilling will certainly occur in the 1002 region but there's nothing stopping exploration into the any other portions of the region and that means vehicles, roads to drive them on, exploration wells to be drilled etc. and that all means no more pristine wilderness.

The bill limits the footprint of the exploration and drilling to 2,000 acres, but that's just the physical footprint. This could cover millions of acres, just as a wind farm's actual footprint is only a small fraction of the total area. That means large swathes of this wilderness area will be affected.

There will certainly be an ecosystem left after drilling begins, but it won't be the same untouched and wild one that exists there now.

Heiko said...

You are right the scenario is a bit contrived as there are refineries on the West Coast, but the whole point of the no export provision is to prevent profitable exportation, and exportation will only be profitable, if there is a good reason to export ANWR oil and instead import oil from somewhere else. As long as California is the nearest market and they can use the oil in their refineries there, why would there be any need to prevent export to Japan or China?

I just fail to see the logic behind the provision. As long as the US is a net importer, what difference do ANWR exports make to US consumers? Wouldn't the net imports stay the same?

The oil should not belong to oil companies, but to the American people, and if they can make more money by selling the oil to China importing an equivalent amount from elsewhere than they could by using it directly in the US, what's wrong with that?

I don't think drilling should be allowed in all of ANWR, that's a very large, pristine area, most of which, in all likelihood, contains little oil. But in the Western section of the coastal plain I think at least some exploratory drilling should be done to confirm how much oil there really is there, and if it truely contains 5-10 billion barrels, I do still think it's worthwhile looking into (the looking into should include a detailed environmental impact study).

Finally, I was shocked at how sensitive the American public is to the price of gasoline, it made me wonder about the "no war for oil" mantra. I don't think Iraq was about oil, because I don't see any conceivable way how it could possibly have lowered gasoline prices in the US in time for the last Presidential election, but these kinds of opinion poll numbers have made me think that if a President did do something immoral and managed to lower gasoline prices in turn, maybe the US public would reward him for it?