Environmentalists Play Slick With Statistics About ANWR Oil Reserves

0 Comments | Insight on the News, June 11, 2001 | by Milton R. Copulos

English politician and author Benjamin Disraeli said, "There are three kinds of lies: lies, damn lies and statistics" Anyone who doubts this wisdom need only look to the current debate about oil development in Alaska's Arctic National Wildlife Refuge.(ANWR).

Ignoring the overwhelming geologic evidence of oil, ranging from satellite infrared photographs to the presence of oil and gas seeps, environmentalists have dismissed the ANWR's potential. They use a variety of statistical comparisons to suggest that only minimal amounts of oil would be produced there. These comparisons are a testament to the validity of Disraeli's statement.

Defenders of Wildlife, among other groups, say the ANWR only would provide about six months of oil supplies for the United States. That's hardly enough oil to bother with, right? Well, not exactly. Arriving at this figure took a feat of statistical legerdemain worthy of Harry Houdini.

First, environmentalists took the lowest possible estimate of the ANWR's potential recoverable oil reserves -- about 5.7 billion barrels--and cut it by roughly 40 percent to around 3.4 billion barrels. Then they assumed that the oil would be produced at roughly 19 million barrels per day (b/d).

But the most likely estimate places the ANWR's recoverable reserves at an estimated 10.3 billion barrels -- more than three times the amount these environmentalists claim.

Moreover, any geologist would tell you that the notion of producing oil from the North Slope at a rate of 19 million b/d is sheer nonsense for at least two reasons.

First, when an oil field is brought into production, it takes time to reach its optimum output. After it does, it begins to decline as the resource is exhausted.

In the case of the ANWR, it is expected that production would build to 2 million b/d and then decline. In practice, this means the ANWR would produce for at least 25 years -- not six months.

Second, producing at such an extraordinary rate would damage the field, preventing recovery of the bulk of the oil found there. U.S. oil companies abandoned such wasteful production practices in the 1930s, a fact that seems to have escaped the environmentalists.

The Natural Resources Defense Council claims that the ANWR only would contribute about 2 percent of U.S. energy needs. Again, it takes some extraordinary logical gymnastics to support that assertion. This claim, incidentally, assumes that the ANWR is producing at a rate of 2 million b/d, not the 19 million their other comparison requires. But this figure amounts to roughly 10 percent of total U.S. oil consumption, so how does it become 2 percent?

Simple -- they express the ANWR's potential as a proportion of all energy use-- electricity, natural gas and coal, as well as petroleum. This approach, however, ignores a critical fact. While oil only represents about 35 percent of total energy use, it accounts for 99 percent of transportation fuel.

So if you don't want to bicycle to work, the ANWR's production is pretty significant. It's also pretty significant if you're concerned about our growing dependence on foreign oil supplies.

Today, we import nearly 61 percent of our oil, with 12.1 percent coming from the Persian Gulf. And both figures continue to increase. The ANWR's 2 million b/d would roughly equal the amount the United States imports from Saudi Arabia and Kuwait combined -- no small step toward reducing our import dependence.

Environmentalists wail that we're wasteful, that we don't conserve. They complain that the United States is the world's largest energy consumer. While this is true, it also obscures a central point: The United States also is home to the world's largest economy, and energy consumption largely is a reflection of economic activity.

When we examine U.S. energy consumption as a factor of economic output, a truly amazing picture emerges. Since 1973, the United States has reduced the amount of energy consumed to produce $1 of gross national product (GNP) by an astounding 52.6 percent! This hardly is evidence of profligate use.

Environmentalists paint graphic pictures of the havoc oil development will wreak on Alaska's pristine North Slope: Caribou herds will die off, and vast expanses of tundra will be despoiled. Again, their grasp of the facts leaves a lot to be desired [see James V. Hansen, Symposium, p.42].

Only about 8 percent of the ANWR would be subject to exploration, and that's just where geologists will look. The actual drilling site will encompass only about 2,000 acres. So much for despoiling the wilderness.

Even environmentalists' most fundamental contention, that the ANWR is pristine, is untrue. It includes military installations and the town of Kaktovik.

So, before you put too much stock in environmentalists' statistical assertions, remember what Disraeli said.

Milton R. Copulos is president of the National Defense Council Foundation. He was a member of the National Petroleum Council from 1981 to 1993.