Introduction

On December 6, 2007, Senator Ted Stevens requested that the Energy Information Administration (EIA) provide an assessment of Federal oil and natural gas leasing in the coastal plain of the Arctic National Wildlife Refuge (ANWR) in Alaska (Appendix A).  In his request, Senator Stevens said that the analysis should develop “plausible scenarios for development of the Coast Plain consistent with the most recent USGS resource assessments and oil price situation.”  Senator Stevens also requested that the new EIA analysis be based on the approach developed in EIA’s 2000 Service Report entitled Potential Oil Production from the Coastal Plain of the Arctic National Wildlife Refuge.¹   This analysis assumes that the authorization for Federal oil and natural gas leasing occurs during 2008.

This analysis presents three ANWR cases that assess the potential impact of oil and natural gas leasing in the 1002 Area of ANWR.²  These ANWR cases represent the following potential oil resource levels:

• A mean oil resource case, which is based on the U.S. Geological Survey (USGS) mean probability estimate³ of technically recoverable oil resources in the 1002 Area of ANWR;
• A low oil resource case, which is based on the USGS 95-percent probability estimate of technically recoverable oil resources in the 1002 Area of ANWR; and
• A high oil resource case, which is based on the USGS 5-percent probability estimate of technically recoverable oil resources in the 1002 Area of ANWR.

These three ANWR scenarios are compared to the Annual Energy Outlook 2008 (AEO2008) reference case,⁴ which serves as the analytical baseline for this report. A similar analysis was requested by then-Chairman Richard W. Pombo in a February 23, 2004, letter to EIA.⁵

Summary

The opening of the ANWR 1002 Area to oil and natural gas development is projected to increase domestic crude oil production starting in 2018.  In the mean ANWR oil resource case, additional oil production resulting from the opening of ANWR reaches 780,000 barrels per day in 2027 and then declines to 710,000 barrels per day in 2030.  In the low and high ANWR oil resource cases, additional oil production resulting from the opening of ANWR peaks in 2028 at 510,000 and 1.45 million barrels per day, respectively.  Between 2018 and 2030, cumulative additional oil production is 2.6 billion barrels for the mean oil resource case, while the low and high resource cases project a cumulative additional oil production of 1.9 and 4.3 billion barrels, respectively.

Crude oil imports are projected to decline by about one barrel for every barrel of ANWR oil production.  Opening ANWR results in the lowest oil import dependency levels during the 2022 through 2026 time frame, when oil import dependency falls to the minimum values of 46 and 49 percent for the high and low oil resource cases, respectively.  During that timeframe, the mean resource case and AEO2008 reference case project an average oil import dependency of 48 and 51 percent, respectively.  Because ANWR oil production is declining after 2028, U.S. oil dependency rises to 51 percent in 2030 in the mean resource case, compared to 54 percent in the AEO2008 reference case.  The high and low resource cases project a 2030 oil import dependency of 48 percent and 52 percent, respectively.

Additional oil production resulting from the opening of ANWR improves the U.S. balance of trade.  Cumulative expenditures on foreign crude oil and liquid fuels between 2018 and 2030 are reduced by $202 billion dollars (2006 dollars) in the mean oil resource case and reduced by $135 and $327 billion dollars in the low and high oil resource cases, respectively.

Additional oil production resulting from the opening of ANWR would be only a small portion of total world oil production, and would likely be offset in part by somewhat lower production outside the United States.  The opening of ANWR is projected to have its largest oil price reduction impacts as follows: a reduction in low-sulfur, light crude oil prices of $0.41 per barrel (2006 dollars) in 2026 for the low oil resource case, $0.75 per barrel in 2025 for the mean oil resource case, and $1.44 per barrel in 2027 for the high oil resource case, relative to the reference case.

Notes