IT'S TIME TO DRILL ALASKA'S REFUGE America needs more domestic energy. The risks of exploring the Arctic wildlife preserve are far fewer -- and the potential rewards vastly greater -- than most people realize.
(FORTUNE Magazine) – THE ARCTIC National Wildlife Refuge is almost as big as Indiana. It begins as a phalanx of magnificent rocky peaks high in the Brooks Range in Alaska's northeast corner, from there tumbling down a broad expanse of rolling foothills to a tundra plain scored by streams and gullies beside the Beaufort Sea. In all: 30,000 square miles, or 19 million acres. With only about 210 permanent residents -- mostly Eskimo whalers in the coastal village of Kaktovik -- the Arctic refuge is as unaltered by man as any wilderness can be at a time when human footprints mark even the moon. Powerful forces may soon clash over whether the refuge stays that way. A small corner of it represents America's best chance of discovering major new oil reserves. Geology even hints that within the refuge lies a rare opportunity to uncover Saudi Arabia-size oil fields. The chance is minuscule, but a chance nonetheless. And the stakes are huge: If major reserves turn up, they could in the long run hobble OPEC, substantially improve America's balance of payments, and make the U.S. more energy independent. The most tantalizing oil-prospecting territory in the U.S. is a strip of the flat coastal plain about 80 miles long and 20 miles wide that runs along the Beaufort Sea and makes up 8% of the refuge. This region is known by its bureaucratic name -- the ''1002 area'' -- after the clause in a 1980 federal law that directed the Interior Department to study the geology, flora, and fauna of the area and then advise Congress whether it should be explored for oil and gas or designated a wilderness closed to development. After exhaustive study the Interior Department concluded in 1987 that the coastal plain was ''the Nation's best single opportunity to increase significantly oil production'' and recommended leasing it to oil companies. Some environmental groups, such as the Wilderness Society and the Sierra Club, would like to ban oil activity in the refuge permanently. Their cause has been aided mightily by the grounding in March 1989 of the tanker Exxon Valdez in Prince William Sound, which had the effect of sinking several bills in Congress that would have opened the 1002 area for exploration. But with U.S. oil production down 15% in the past two years, oil imports accounting for 55% of the foreign trade deficit and rising, and the oil-rich states of the Persian Gulf in danger of all-out war, the environmentalists' case for not exploring the coastal plain is being overwhelmed by economic and geopolitical imperatives. If a war in the Gulf damages Middle East oil fields or drives prices to the heavens -- or both -- then the debate over exploring the refuge, usually known as ANWR (pronounced AN-war), will get white hot. Even without war, this latest experience of Mideast turmoil will intensify concern about domestic energy sources -- although developing ANWR, if it does contain commercial amounts of oil, would take 15 or 20 years. Why not start drilling now? ''The refuge is the last Arctic ecosystem untouched by man,'' says Don Hellman of the Wilderness Society. ''To go in solely to satisfy our insatiable appetite for oil is a disgrace.'' Most environmentalists similarly focus on several emotionally compelling but inaccurate concepts, particularly that the coastal plain is unique and pristine. It is not quite either. The 1002 area is only two-thirds of the refuge's coastal plain, which itself is a small slice of the Arctic refuge. And the refuge is hardly America's only wilderness. The whole of ANWR makes up just 5% of Alaska's land area and 25% of the land in federal wildlife refuges in that state alone. The Interior Department estimates that oil production here, assuming oil is discovered, might require 12,700 acres of installations, or about 0.07% of ANWR's territory. Such facilities would look impressively large if you were standing in their midst, but in relation to all of ANWR they would be no more significant than a mosquito on a moose's rump. NOR IS the coastal plain virginal. The Eskimos travel in skimobiles and outboard motorboats, hunt with rifles, and watch television during the eight- month winters, when temperatures can reach -50 degrees F. and the sun doesn't rise for 65 days. In the brief summer season, which lasts as long as six weeks, about 150 adventurers show up annually to hunt musk oxen or grizzly bears or to ride the rivers in rubber rafts. As part of an electronic warning system against Soviet attack, the Department of Defense built three installations along the coast. Two are abandoned, their buildings empty shells. The third, a radar station and airstrip at Kaktovik, is still in use. The most important human artifact may turn out to be a steel pipe six inches in diameter and five feet tall that sticks out of the tundra about 15 miles east-southeast of Kaktovik. The pipe is almost impossible to find without an expert guide, but it is at the center of the biggest mystery in the petroleum industry: How much oil is in ANWR? The pipe marks a well, KIC-1, drilled in 1985 and 1986 by a joint venture of Chevron and British Petroleum, headed by Chevron, on land leased from the Eskimos. (The Eskimo land is inside ANWR and, like the refuge proper, cannot be drilled without permission from Congress.) KIC-1 is called a ''tight hole'' because Chevron won't reveal what was found in the well. No one else has much information, since the Chevron venture has leased all the available land in the area. Tom Cook, a geologist with Chevron in Alaska, will only say coyly: ''That's a pretty oily place around there.'' Arlen Ehm, an independent consulting geologist in Anchorage, says, ''The scuttlebutt is that it's a great well, but what's a rumor worth?'' Still, Chevron is lobbying hard to get the coastal plain opened for development, and the consortium recently renewed its leases with the Eskimos -- four years before the leases were due to expire. Why is this lonely stretch of tundra so alluring? The Geological Survey conducted seismic studies of the 1002 area in the early Eighties and found 26 geologic structures capable of trapping oil and gas. Not only is that a large number of traps for an area this size, but also two of the traps are bigger than the one in Prudhoe Bay that may eventually yield at least nine billion barrels of oil. ''These two structures have Middle East-size capacity,'' says Ozzie Girard of the U.S. Geological Survey, ''but they are probably dry as a bone.'' That's because oil may not have migrated into the traps. Many structures capable of capturing oil are empty or only partially full, or they may contain water. No one can be certain that the traps in ANWR have much, if any, oil. (They may hold natural gas, which at today's low prices would probably be uneconomic to develop, though it could be valuable in the future.) But they are also gargantuan and, in the extremely unlikely event that even one is full, it would alter history. Assuming conditions that are not unusual in the region, the bigger of the two, known only as No. 18, could yield 300 billion barrels of oil or more if it is full. That is more than Saudi Arabia's present proved reserves of about 254 billion barrels. The odds of a monster like No. 18 being full of oil are incalculably small. But if it were full, the U.S would once again be the world's greatest oil power, and OPEC would become moribund. Finding out is of little risk to the environment: Exploratory wells are drilled when the tundra is frozen and nearly immune to damage. And someone may already have taken a peek. KIC-1, Chevron's mystery well, was directly over structure No. 18. (At best, KIC-1 would be only a peek because a single well rarely tells the full story of how much oil is or isn't in a reservoir.) The history of oil exploration shows that even when prospects are as enticing as this, the odds are still against the explorer. In ANWR the odds are not good, but they are better than average. The Interior Department sees a 19% chance that the refuge holds commercial quantities of oil, compared with the norm of 5%. Turned around, that means the odds are 4 to 1 against finding anything exploitable at present prices, instead of the usual 19 to 1 against. If exploitable reserves are there, says Interior, they most likely will amount to 3.2 billion barrels, enough to provide 8% of U.S. production and reduce imports 9% by 2005. But oddsmakers don't create oil, nature does. Maybe ANWR holds untold riches, or maybe it holds nothing. The only way to find out is to drill. Alaskans are eager to begin. Oil accounts for 80% of the state's total revenue, and Prudhoe Bay, the state's golden goose, is in long, slow decline. All three gubernatorial candidates in the recent election, including winner Walter Hickel, who ran as an independent but had been a Republican governor of Alaska and Interior Secretary under Richard Nixon, favor exploring the coastal plain. They differed only on the question of who could drive the best bargain with Congress to split the royalties. William Noll, mayor of Seward, a fishing village on Prince William Sound, says, ''It's a tragedy, or comedy of a high order, to put ANWR on the back burner because of the accident in Prince William Sound.'' Noll believes the cleanup is progressing ''okay.'' (For the scientific community's assessment, see box.) The Arctic Slope Regional Corp., one of 13 Alaskan native regional corporations established by Congress to manage the resources of native lands, favors opening the 1002 area. ASRC holds title to most of the native lands on the north slope, including the site where Chevron drilled KIC-1. The president is Jacob Adams, 44, an Eskimo whaling captain who hunts bowhead whales with a crew of about six men and hand-held harpoons out of a 20-foot boat. His view: ''I love life in the Arctic. But it is harsh, expensive, and, for many, short. My people want decent homes, electricity, and education. We do not want to be undisturbed. Undisturbed means abandoned. It means sod huts and deprivation. We exist on nature, on the caribou and the whales. But we can take the measures required to protect the environment from the risks posed by oil development.'' HELLMAN of the Wilderness Society protests that ''it's been proven time and again that oil is an inherently messy business.'' Yet the environmental record of Prudhoe Bay is one reason Alaskans believe ANWR can be developed safely. ''It's a real marvel,'' says a manager with the U.S. Fish and Wildlife Service in Alaska. ''You could eat off the floors up there, but to say that publicly is heresy in the temple.'' When Prudhoe was being developed, the biggest environmental worry was that it might harm the wildlife, particularly the Central Arctic caribou herd that give birth to most of their young in calving grounds near the oil fields. But the caribou have adapted nicely to the fields. Seeking to escape the dense clouds of mosquitoes that infest the marshy tundra, the caribou often congregate on the raised gravel roads that connect the oil wells, industrial plants, and living quarters at Prudhoe Bay. And the Central Arctic herd has grown from about 3,000 in 1972 to roughly 15,000 now, perhaps because natural predators like bears and wolves that attack and eat young calves are more wary of man's works than are the caribou, even though the oilmen at Prudhoe Bay are forbidden to hunt or carry firearms. ANWR is seasonal home to the Porcupine herd of caribou, which numbers about 180,000. The herd migrates across the Porcupine River in Canada to ANWR in the brief spring and summer seasons to bear young and feed on tundra grasses. Again environmentalists are expressing concern for the herd's safety, but the Prudhoe experience suggests that in some ways the works of man offer more refuge than the wilderness. Technologies that the industry has developed in the Prudhoe region, partly in response to relentless pressure from environmentalists, would make producing oil in ANWR even more compatible with the environment. Using the latest drilling techniques, the industry can space wellheads ten feet instead of 100 feet apart, reducing the area needed for, say, a 50-well production complex from 60 acres to ten. ANWR will also pose new problems. Drilling uses a lot of fresh water, and the region's coastal plain has less of it than the Prudhoe area. An environmentally benign collection and storage system may be needed, or the pace of drilling could simply be restricted. With vigilance, such obstacles can be overcome. A tougher nut to crack may be the philosophical question of whether the industry should enhance the ecosystem wherever possible, as it may have done inadvertently for the Central Arctic herd of caribou. For instance, the industry built thick gravel roads and drilling pads because running vehicles directly over the tundra would melt the permafrost and create impassable bogs. These additions, permanently dry, have created a more diverse habitat in the Prudhoe area. Some gravel quarries, connected by channels to rivers, have filled with fresh water and become favorite wintering quarters for fish, like the arctic char, which take refuge from the ice in deep pools. Their numbers may be increasing. Birds such as the common eider that need dry land for nesting might multiply if gravel roads and pads are revegetated rather than removed when their usefulness has ended. Roger Herrera, an executive of BP in Alaska, asks, ''Is biological value or aesthetic value more important here? Should the gravel be put back in the - quarries to restore the environment or left to create new habitat?'' Merely to have that choice suggests that development in remote areas has progressed a long way and that humans need suffer little guilt about pursuing their own ends in a corner of this wilderness. |
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