"Please God, give me one more oil boom. This time I promise not to piss it away." I heard that phrase several times when I was on a lecture tour in Alaska in the early 1990s. In 1979, just two years after crude had begun flowing down the Alaska pipeline from the North Slope, the real price of oil was nearly $100 per barrel. By the time of my visit, the price had fallen to under $25 per barrel. Back then about 1.5 million barrels per day were arriving at the marine shipping terminal in Valdez. Today the total is under 500,000 barrels per day.
The just-passed Tax Cut and Jobs Act authorizes the sale of oil and gas leases in a small section of the Arctic National Wildlife Refuge (ANWR), so Alaskans may get a shot at that extra oil boom. The region may contain as much as 10 billion barrels of technically recoverable petroleum. The Prudhoe Bay field next door was originally estimated to contain 25 billion barrels, of which nearly 13 billion have been produced.
Naturally, environmentalist are upset. Sen. Ed Markey (D-Mass.), for example, declared: "As if this tax bill were not terrible enough, it goes after one of the most beautiful places on Earth. This is the biological heart of the refuge and will drive a stake right through it."
Let's consider what's actually on the table. In 1980, Congress specifically set aside part of the ANWR coastal plain for future oil and natural gas exploration and production. The tax bill authorizes lease bids on just 2,000 more acres—about one-tenth of one percent of the 19 million acre refuge. While some may consider the mosquito-infested boggy coastal plain "beautiful," the fact is that the remote ANWR (including the more scenic mountain regions) receives between 1,200 and 1,500 visitors annually.
Environmentalists claim that hydrocarbon exploration and production will disrupt the caribou herds that roam the refuge. This same argument was made when the original production from Prudhoe Bay began. But as drilling, construction, and production ramped up around the Prudhoe Bay region in the 1970s, the Central Arctic Herd actually expanded from 3,000 animals in 1972 to nearly 70,000 caribou by 2010. Since then the herd size has fallen to 22,000. Researchers don't blame the herd's decline on oil and gas production—which, after all, has not been increasing. Instead they cite increased mortality due to the late arrival of spring in 2013 and 2014. In addition, some animals from Central Arctic Herd migrated to join the larger Porcupine Herd.
The Porcupine Herd, which roams areas of the ANWR where no oil or gas production or exploration has taken place, also experienced significant population ups and downs. In the 1970s, the herd contained an estimated 100,000 animals. That number rose to about 175,000 by 1990, then fell back to 125,000 or so by 2000. By 2013, the herd size had grown to 197,000.
A report from the Alaska Department of Fish and Game notes that number of caribou in Alaskan Arctic herds reached 700,000 in the first decade of the 21st century. This might have resulted in overgrazing, which is now contributing to the decline of some of the herds. In any case, it seems unlikely that oil and gas leasing in ANWR will drive a stake through its biological heart.
Even if oil companies are interested in oil production in the ANWR, it will likely take at least a decade before crude begins flowing from the refuge, due partly to the technical complications of working in the Arctic and partly, of course, to the inevitable lawsuits coming from environmental activist groups.
Disclosure: As part of my lecture fee, I extracted from my University of Alaska–Anchorage sponsors a visit to the Prudhoe Bay production facilities on the North Slope in February. It was around -50 degrees Fahrenheit (with a wind chill). The caribou were sensibly hiding out in the mountains far to the south.