Results

In the AEO2004 reference case, total U.S. crude oil production is projected to grow from 5.8 million barrels per day in 2002 to 6.1 million barrels per day in 2008 (Figure 2).¹⁴ After 2008, domestic oil production is projected to decline during the remainder of the forecast period, reaching 4.6 million barrels per day in 2025.

In the reference case, Alaska oil production is projected to continue at about 0.9 million barrels per day through 2016, with a projected drop in North Slope oil production offset by new oil production from the NPRA. After 2016, total Alaska oil production is projected to decline to 0.5 million barrels per day in 2025. The decline in Alaska oil production is expected to occur in all regions, including the State lands on the North Slope, the NPRA, and the southern Alaska oil fields of Cook Inlet.

In all three resource cases, ANWR coastal plain oil production begins in 2013 and grows during most of the forecast. In the mean oil resource case, ANWR oil production peaks at 876,000 barrels per day in 2024. The low resource case production peaks at 639,000 barrels per day in 2024, while the high resource case production peaks at 1,595,000 barrels per day in 2023.

The opening of ANWR to oil and gas development includes the following impacts:

• Reducing the U.S. dependence on imported foreign oil;
• Improving the U.S. balance of trade;
• Extending the life of TAPS for oil;
• Increasing U.S. jobs; and
• Reducing world oil prices.

The remainder of this section focuses primarily on the first three impacts, because the employment impacts are difficult to determine and are not within the realm of EIA’s expertise and because the impact on world oil prices is not expected to be significant. With respect to the world oil price impact, ANWR coastal plain oil production in 2025 is projected to constitute between 0.5 to 1.3 percent of total world oil consumption.¹⁵ It is expected that the price impact of ANWR coastal plain production might reduce world oil prices by as much as 30 to 50 cents per barrel, relative to a projected 2025 world oil price of $27 per barrel (2002 dollars) in the AEO2004 reference case. Assuming that world oil markets continue to work as they do today, the Organization of Petroleum Exporting Countries could countermand any potential price impact of ANWR coastal plain production by reducing its exports by an equal amount.

The leasing and development of ANWR oil resources potentially extends the life of TAPS. Currently, TAPS is believed to be uneconomic to operate once the oil throughput falls to between 200,000 to 400,000 barrels per day, depending on prevailing oil prices. Although the reference case projects North Slope production to be above this minimum level (i.e., 510,000 barrels per day in 2025), the development of ANWR coastal plain oil resources extends the life of this pipeline well beyond 2025. The retention of this oil pipeline infrastructure could prove crucial in the future, if and when other regions of North Alaska are leased and developed, such as the offshore Beaufort and Chukchi Seas.

ANWR coastal plain oil production is projected to reduce future petroleum imports on an equal barrel-to-barrel basis. In the AEO2004 reference case, 70 percent of U.S. oil consumption is projected to be satisfied by crude oil and petroleum product imports in 2025. The mean oil resource case reduces the percentage of petroleum imports to 66 percent, with an import range of 64 to 67 percent for the high and low oil resource cases, respectively (Table 2 and Figure 3).

The reduction in oil import volumes also reduces the level of expenditures on crude oil and petroleum product imports. In the AEO2004 reference case, expenditures in 2025 on foreign oil and petroleum products are projected to be $200 billion (2002 dollars). The mean oil resource case projects expenditures in 2025 of $192 billion, with a range of $185 to $194 billion for the high and low oil resource cases, respectively. So, the opening of ANWR is projected to improve the U.S. balance of trade by $6 to $15 billion in 2025.

Table 2
Notes and Sources