The Arctic Divide

The Arctic Divide

March 27, 2009

Ken Silverstein
EnergyBiz Insider
Editor-in-Chief

It's part of the great ideological divide. And any bridge that would help close the gap will remain elusive. It's about the Arctic National Wildlife Refuge, which has been at the forefront of a national discussion over whether to allow more oil and gas drilling in areas that are now off limits to production.

Times have changed since the issue first gained prominence in 1980. While the nation has long professed a desire to wean itself from dependence on foreign energy sources, it had little reason to do so. Oil and gas prices have been relatively cheap until this century. But now such prices are gyrating with the cost of natural gas going up from about $2.50 per million BTUs in 2000 to -- at one point -- as much as $13 per million BTUs.

At the same time, Congress is moving toward a carbon constrained society and discussing cap-and-trade legislation that would limit greenhouse gas emissions. If this occurs, it will immediately increase the demand for natural gas. That's why proponents of drilling in the Arctic Refuge say that the Obama administration needs to consider that new drilling technologies would leave a minimal footprint while, at the same time, considerably bolster the nation's access to domestic sources of oil and gas.

"I realize (the Arctic) has become an icon to both sides of this debate, where ideological stands too often replace analytical analysis," says Sen. Lisa Murkowski, R-Alaska, who is the ranking member of the Senate Energy Committee. "I have trouble, though, understanding how a proposal with no surface presence can impair ecological values?"

Senator Murkowski, along with Senator Mark Begich, D-Alaska, introduced legislation that would maximize high-tech "directional drilling" methods to reach parts of the refuge. The senators' bill would allow the Arctic Refuge to be accessed remotely without leaving a physical footprint in the contentious areas.

Directional drilling is a way of exploring for oil and gas where drill pipes are guided to the horizontal underground to access pools or "plays" of oil and gas far away from the drill site. Effectively it allows producers to get at multiple plays from one location, which dramatically reduces the surface footprint. Murkowski has stated that 10 percent of the oil thought to exist in parts of refuge could be accessed this way.

The U.S. Department of the Interior estimates that more than one million barrels of oil exist within eight miles of the western side of the Arctic Refuge, all of which is within reach of directional drilling. The U.S. Geological Survey, furthermore, says that the area could hold 10.36 billion barrels of oil and 8.6 trillion cubic feet of natural gas, and possibly more. As the technology improves, more of the refuge's resource potential could be realized, say the Alaskan senators.

Front Burner

Alaska's congressional representatives have vowed to keep the issue on the front burner of American politics even though the current White House is less-than-friendly to the idea. President Obama has said that the nation must first work to build its green energy portfolio before it should expand oil and gas development -- particularly in light of the fact that he plans to introduce legislation to limit greenhouse gas emissions.

The senators' legislative push comes, though, just weeks before Interior Secretary Ken Salazar is to visit Alaska to see the site. But even before his arrival, the former senator from Colorado said that he was not convinced that directional drilling could avoid leaving an indelible mark in the land there -- a remark that elicited the dismay of Senator Murkowski, who said that Salazar has already made up his mind.

But environmentalists maintain that the Obama administration's approach is exactly right. They say that millions of acres around the country have already been leased to oil and gas developers and they have yet to explore in those regions. To ask for access to untouched pristine areas is not only unnecessary but also unproductive. That's because it would take at least a decade for such supplies to come online.

As for the Arctic Refuge, green groups emphasize that Congress acted twice in 2005 to prohibit drilling there. They add that the region should stay off-limits to production, noting that their friends will remain resolute. That's because the Arctic would become the tip of the iceberg and perhaps open up other national treasures to drilling.

Proponents of drilling in the Arctic Refuge say that the 1.5-million-acre coastal plain could be developed while only disturbing about 2,000 acres. But the National Resource Defense Council disagrees and says that is false. "Why? Because U.S. Geological Survey studies have found that oil in the refuge isn't concentrated in a single, large reservoir. Rather, it's spread across the coastal plain in more than 30 small deposits, which would require vast networks of roads and pipelines."

Advocates of additional drilling rights counter those arguments by saying that advances in technology and safety mean that exploration is less noticeable than ever before. They also say that natural gas in particular does not compete with renewable energy, noting that two are destined to grow in tandem. Wind and solar power are intermittent and must therefore have a back-up energy source.

Natural gas is a logical choice, given that its greenhouse gas emissions are half that of coal. As such, the U.S. Energy Department is predicting that the demand for natural gas will rise by 11 percent by 2020. It then becomes imperative that the nation receive its energy from domestic resources that include the Arctic Refuge, the industry says.

But the Obama administration is focused on making sustainable energy investments. And while philosophically it leans against greater drilling rights, the White House also does not want to get weighed down in this controversial matter during a time of economic despair. The Arctic Refuge will therefore remain a politically volatile subject that keeps developers at bay.