ANWR Production Uncertainties

Significant areas of uncertainty regarding the impact on U.S. oil production and imports of opening ANWR are:

• The size of the underlying resource base. Because there has been little petroleum drilling or exploration in ANWR, there is little first-hand knowledge regarding the petroleum geology of this region. The USGS oil resource estimates are based largely on the geologic conditions that exist in the neighboring State lands. Consequently, there is considerable uncertainty regarding both the size and quality of the oil resources that exist in ANWR. Thus, the potential ultimate oil recovery and potential yearly production are uncertain.

• The underlying field structure. The size of reservoirs that are found in ANWR will determine the rate at which ANWR oil and gas resources are developed. If the reservoirs are larger than expected, then production will be greater in earlier years. Similarly, if the reservoirs are smaller than expected, then production will be less in the early years.

• The costs of developing oil resources in ANWR. This analysis assumes that the costs of developing ANWR are not significantly different than developing the Prudhoe Bay field. Oil field development costs depend upon the quality of oil found (e.g., light or heavy) and the field’s reservoir characteristics, such as permeability, faulting, and water saturation. If the ANWR oil field development costs are higher than those associated with the Prudhoe Bay field, the timing of ANWR production could be delayed.

• Timing of ANWR production. This analysis assumes that production in the ANWR coastal plain will begin in 2013. This analysis also assumes the size of the oil fields expected to be discovered in ANWR (based on USGS estimates) and their production rates (based on the industry’s experience in the State lands on the North Slope). The actual timing of ANWR production could vary significantly from the timing assumed in this study. In addition, in the high oil resource case, North Slope production is slightly below the throughput capacity of TAPS. Although the TAPS throughput capacity could be expanded through the construction of additional pumping stations and/or the use of surfactants, it might be more economic to restrict ANWR oil production to the level of TAPS throughput capacity.¹⁶

• Environmental considerations. Environmental restrictions could affect access for exploration and development.

Notes and Sources