There's been a lot of talk lately about drilling in ANWR and opening up offshore areas for further development. In this article I will address only the issue surrounding ANWR, as I don't have enough info about the moratorium on coastal development.
The Myth:
Drilling in ANWR will increase domestic production and lower the price of gas at the pump (eventually) By increasing domestic production we will also be less reliant on foreign oil.
The Truth:
Drilling in ANWR will only maintain the status quo, because production from other fields in Alaska have been declining for years. Oil that gets pumped out of ANWR will only compensate for lost oil being pumped from fields that are in decline.
Companies like BP are indeed salivating at getting into ANWR as are many Alaskans. There is indeed a lot of oil there. USGS estimates put it somewhere between 6-16 billion barrels recoverable (so let's average it at 10 for discussions sake) So, those 10 billion barrels could theoretically supply the U.S with all the oil it needs for one year and 4 months, at 21 million barrel per day consumption approximately, only about 5-ish million barrels per day are produced domestically)
So in the big picture, yes, there is oil in ANWR. But there is a BIG piece of the puzzle that has been left out of the dialogue regarding this issue!
The real reason why there is such a big push to develop ANWR has very little to do with dropping the price of gas, and a lot with being able to maintain profitability for certain business interests. The piece of the puzzle that's missing is called Prudhoe Bay.
What's been so heavily under-publicized and under-reported, is that production from Prudhoe Bay has been falling for years now and there's not too much left. This is no dirty secret. All the oil companies publicly report the numbers, some of which actually end up in snippets in the news, but it's mostly been ignored in the major media dialogue.
Don't believe me? Let's look at a few facts about Prudhoe Bay-
Production peaked in 1979 at 1.5 million barrels per day production, and stayed relatively consistent up until the mid 80's when it started to decline. Today production has declined 70 % from it's peak 20 years ago to only 470,000 barrels per day.
Although various satellite fields have been turned up since 1998, collectively it is a pretty safe bet to say that Prudhoe Bay is indeed dying a slow death. All the big companies that are invested in Prudhoe know this. They've known it for years. And they know that they don't have too much longer before production drops off so much that the cost of maintaning operations there starts to become questionnable.
This leads us to the true heart of the matter:
The push to develop ANWR has very little to do with increasing domestic production and much to do with trying to maintain the status quo. From a business perspective, this make perfect sense. You already have massive infrastructure and development in the neighbourhood. Now that existing fields are declining, the push is to open up untapped fields nearby. The biggest and juiciest of those is ANWR.
At best, if all goes well this will help to keep domestic production from falling into further decline, but it is highly unlikely that it will increase it by any appreciable amount, therefore not dealing with dependency on foreign oil, OPEC, or market volatility.