93-774 ENR: The Arctic
National Wildlife Refuge

M. Lynne Corn

Specialist
Environment and Natural Resources Policy Division

Pamela Baldwin

Legislative Attorney
American Law Division

August 30, 1993

INTRODUCTION

The coastal plain of the Arctic National Wildlife Refuge (ANWR) is currently the most promising U.S. onshore oil and gas prospect. It could even contain as much oil as the giant field at Prudhoe Bay, which is on State land west of ANWR. On the other hand, the Refuge is home to a spectacular variety of plants and animals. The presence of caribou, polar bears, grizzly bears, wolves, quantities of migratory birds, and many other species in a nearly undisturbed state have led some to call the area "America's Serengeti." The conflict between oil potential and pristine nature creates a dilemma: should Congress open the area for oil and gas development or should the area's ecosystem be given permanent protection? What factors should determine whether to open the area? If the area is opened, how can damage be minimized? To what extent should Congress involve itself in the management of the area (if it is developed) and to what extent should Federal agencies be left to manage the area under existing law?

The Clinton Administration opposes development of the Refuge. Given the current situation of relatively stable world oil prices, and a relatively stable Middle East, there appears to be little likelihood of action to open the area to development. Conversely, because existing law forbids development without new legislation, permanent protection as wilderness also seems unlikely.

BACKGROUND AND ANALYSIS

Much of what is now the Arctic National Wildlife Refuge was set aside in December 1960 by Public Land Order 2214. Section 1003 of the Alaska National Interest Lands Conservation Act OF 1980 (ANILCA, P.L. 96-487) prohibited oil and gas development in the 19-million-acre Refuge unless authorized by Congress. Under Section 1002 of ANILCA, Congress required the Department of the Interior (DOI) to report on the plant and animal resources and the oil and gas potential in 1.5 million acres of the coastal plain of ANWR, now generally called the "1002 area." This information was presented in the Final Legislative Environmental Impact Statement (FLEIS), and submitted to Congress in April 1987. DOI described leasing alternatives and recommended that the area be fully leased. (For a history of the FLEIS, see CRS Archived Issue Brief 87026.)

In the 100th Congress, four committees held extensive hearings on ANWR development: House Merchant Marine and Fisheries, House Interior and Insular Affairs, Senate Energy and Natural Resources, and Senate Environment and Public Works. The hearings emphasized the FLEIS, the environmental effects of oil development in ANWR or at Prudhoe Bay, assessments of the need for additional sources of oil, the biological resources of the coastal plain, and a proposed exchange of lands with Native corporations. (For a description of the bills considered in the 100th Congress, see CRS Archived Issue Brief 87228 and CRS Report 88-380 ENR.)

In the 101st Congress, several ANWR bills were introduced, but none received floor consideration. (See CRS Archived Issue Brief 89058 for information on the 101st Congress.) On Mar. 24, 1989, the Exxon Valdez ran aground in Prince William Sound near Valdez, Alaska, the site of the southern terminus of the TransAlaska Pipeline System (TAPS). As a result, no action •was taken on ANWR development bills in the 101st Congress; rather. Congress passed oil spill legislation. (See CRS Archived Issue Brief 89082, and CRS Report 89-266 ENR.) The crisis in the Persian Gulf raised oil prices temporarily, and renewed calls for development in the Refuge. (See CRS Issue Brief 90116 regarding oil and the Persian Gulf crisis.)

Hearings were held in four congressional committees in the 102nd Congress. The Senate Energy and Natural Resources Committee reported S. 1220 (in lieu of S. 341), containing a title that would have opened the 1002 area to development. An amendment to strike the title was defeated in committee by a vote of 8 to II. On Nov. 1, 1991, after several days of debate on a motion to consider the bill,1 a cloture vote occurred on a filibuster organized by various opponents of the bill (including especially those opposed to ANWR development). The cloture motion failed, 50-44. (Sixty votes were needed to invoke cloture.) Later, S. 2166, a bill sponsored by Senator Johnston similar to S. 1220 but lacking titles containing car fuel economy standards and ANWR development, was passed. (For a full list of congressional actions on ANWR from the 99th through the 101st Congress, see CRS Report 91-325. For the 102nd Congress, see CRS Issue Brief 91011 (Archived).)

Legislative Choices

Congress has three basic choices for ANWR legislation. One option is designating the area as wilderness, thereby preventing energy development. This choice, like the failure to find oil, would add to pressures for alternative energy supplies and strategies. Supporters of this option argue that the entire, balanced ecosystem is most valuable in the aggregate and worth preserving intact.

A second option is passing legislation permitting energy leasing in the 1002 area. Supporters of development argue that the ANWR area is the best U.S. onshore prospect remaining and that its development is necessary for long-term national security and for improving the balance of trade. They also argue that effects on animals, especially caribou, would not be serious, but concede that wilderness values would be lost. Many observers feel that no ANWR development bill can pass unless it is linked to a broader energy policy which encourages conservation and alternative energy sources. If the development option is chosen, Congress could also decide the pace and conditions for any oil or gas development.

The third option, and the one chosen ever since the 99th Congress, is taking no action. Because current law prohibits development unless Congress acts, this option prevents onshore energy development. Those supporting delay often argue that not enough is known about either the probability of discoveries or about the environmental impact if development is permitted. Others argue that oil deposits should be saved for an unspecified "right time." Some argue that volatile oil markets during the Persian Gulf War demonstrate that now is just such a time.

A central question is whether the petroleum is needed at the possible expense of other values in ANWR. If oil is found in ANWR, it would not contribute to national security or the trade balance until 10 or 15 years from now - when any oil would first appear in quantity. But 10 to 15 years may be enough time to pursue other energy alternatives. Opponents of development point out that the oil estimate from even a large field is equivalent to one year or less of current national consumption. Proponents contend that because the TransAlaska Pipeline now delivers over one-fifth of U.S. oil production and because the 1002 area is the best prospect for keeping the pipeline flowing after 2000, ANWR must be developed. Proponents usually encourage pursuing energy alternatives (nuclear, renewable and solar power, and conservation) under any circumstances, believing that other options cannot be prudently ignored. Opponents counter that the national record at pursuing energy alternatives other than fossil fuels has been dismal, except in the face of high fuel prices.

For some issues (e.g., timing and pace of leasing), the debate could also include whether Congress should legislate at all, or should instead leave those issues to executive agencies.

Geological Variables and Development Options

The fundamental conflict of energy development versus wilderness protection is exacerbated by uncertainty over how much oil is present in the 1002 area. This uncertainty prompted some Members of Congress to consider proposals to clarify how much petroleum is at stake in ANWR. The oil industry was encouraged by the discovery in 1989 of an apparently new field only 2 miles from Prudhoe Bay. An initial test well produced 2,500 barrels per day; years ago, discovery wells at Prudhoe produced 10,000 barrels per day.2 Another, more recent well closer to ANWR initially flowed at 4,250 barrels per day.3

Few have challenged the DOI interpretation of the 1002 area geological data. Seismic studies and drilling outside the 1002 area strongly suggest a relatively high probability for significant recoverable oil. Estimates of undiscovered economically recoverable reserves range from less than I billion barrels to more than 9 billion barrels of petroleum. ANWR by itself would do little to reduce U.S. dependence on foreign oil, but it could reduce the trade imbalance due to importing oil over an extended period.

If the low range of DOI's estimate (one field of less than one billion barrels) is correct, then 30 years of production could begin about 10 years after drilling is authorized. More likely are several fields of varying sizes producing sequentially over 50 years or more. Any associated natural gas would not be immediately economic, but its later production could extend beyond 50 years. (Current and foreseeable prices for natural gas are too low to make any gas pipeline parallel to TAPS cost-effective.)

While the actual amount of recoverable crude oil in ANWR cannot be known without exploratory drilling, DOI estimates that if economically recoverable oil is found, the mean resource estimate is about 3.57 billion barrels. This estimate would translate to a production peak of about 600,000 barrels per day. The plateau of production would probably spread over 15 years, with lower production before and after that period.

Additional fuel was added to the debate on Feb. 6, 1991, when BLM announced that it had revised its estimate of the marginal probability of economic success (i.e., finding economically recoverable quantities of oil) from 19 percent to 46 percent. The latter figure is almost unprecedentedly high by industry standards. In addition, the minimum economic field size was newly estimated at 400 million barrels, down from 440 million barrels. The revision was due to new information concerning "four wells drilled near the coastal plain, 800 line miles of reprocessed geophysical data..., and additional seismic data from offshore areas near the coastal plain." Further explanation came in a BLM report of Apr. 8, 1991. Among other reasons provided for the large change were the fact that a small decrease in the minimum field size can have a substantial effect on the likelihood of finding such a minimum field; and that new data suggest more strongly than before that the fields inside the 1002 area are continuations of the oil-rich geological strata to the east and west, and not entirely different layers.

The 1987 FLEIS estimate of 19 percent was based on a price of$33/barrel in 1984 dollars. However, if prices remain low for a decade or so, the industry- may face the situation that it now has at the West Sak oil field near Prudhoe Bay: a marginal location and/or quality of the oil could require more money per barrel to produce than it could be sold for, given the competition from cheaper foreign oil. (In the case of the West Sak field, there has been no production, even though the field is estimated to be quite large.) In an analysis of the BLM estimate, the General Accounting Office (GAO) largely supported the conclusion of an unusually high probability of finding a substantial quantity of oil. However, GAO also noted that BLM failed to consider the effects of lower world oil prices, and of the likelihood of stiff environmental regulations that would drive up exploration and operation costs. Both factors would increase the minimum field size, and therefore reduce the likelihood that any oil, if it were found, would be economically recoverable.4

In 1990, U.S. net imports of petroleum averaged 7.1 million barrels per day (mbd) or 41.9 percent of total petroleum products supplied. Thus, an ANWR production of 0.6 mbd represents less than 10 percent of 1990 U.S. petroleum imports. According to projections of increased oil imports in 2000 by the Department of Energy, 0.6 mbd would be 5-6 percent of total imports.

From an economic standpoint, however, ANWR could contribute to the balance of trade. Replacing 600,000 barrels of oil imports per day at $16.80/barrel (a May 1993 price) would reduce the trade deficit by about $3.7 billion per year. For comparison, the 1992 trade deficit was $84 billion for merchandise. The projected trade deficit due only to imported oil in 2010 is about $95 billion. In addition, as other Alaskan resources decline from the current 2 mbd production, ANWR could help keep TAPS at capacity operation, thereby reducing the per-barrel cost of transporting Alaskan oil to market.

These factors raise questions about ANWR development as an energy security issue:

Conventional Federal leases permit exploration and, after discovery, usually extend until production ceases entirely. However, to reduce uncertainty about the presence of oil, Congress could permit industry to begin exploration without proceeding automatically to development. Such a strategy is widely opposed by both industry and environmental groups because all sides have something to lose. If oil is found, environmentalists fear that development would be virtually impossible to stop. Oil companies fear that if oil is known to be present at the sites of a handful of test wells, their bids for all areas could be forced unreasonably high. Moreover, they would not want to face the risk of supporting and perhaps funding exploration without the certainty of developing any commercial quantities of oil that might be found. On the other hand, the Federal Government would benefit if these payments were forced up.

If oil were not found at the test wells, bids for the entire area would likely be pushed down, and the Treasury would lose revenue. Oil companies would fear that negative findings at a few sites might unreasonably prevent any opening of the area, even though the industry might see opportunities in other parts of the huge 1002 area, away from the test wells. Environmentalists would welcome the absence of oil, but would oppose the presence of exploration rigs and attendant traffic and damage, even if activities were confined to winter. In sum, oil companies could lose regardless of outcome; environmentalists would lose if oil is found and, to some extent, even if it is not; and the Treasury would lose if it is not. Virtually no one, therefore, wants to take the risk of an exploration program.

DOI and the oil industry prefer that ANWR leasing follow the customary procedures. DOI accordingly wants the discretion to offer for sale any or all of the area. Industry could bid on all or part, and DOI could accept all to none of the bids. However, many prime prospects could be leased in one sale in a relatively small area.

Congress may wish to consider several of these issues in any ANWR development legislation:

Land, Plants, and Animals: Resources and Management Options

The main Federal law governing leasing and production of petroleum on Federal land is the 1920 Mineral Leasing Act. Congress has debated whether this law, other Federal environmental laws, and applicable Alaskan law are adequate for 1002 development. The hearing records of some congressional committees demonstrated a willingness of many Members, in various ways, to deviate from standard leasing practices. If so, Congress would have to weigh the existing management of the Refuge's resources, such as caribou, polar bears, grizzly bears, snow geese, and wildflowers against the various activities that would necessarily accompany development.

Under ANILCA, one of the purposes of ANWR is to "conserve fish and wildlife populations and habitats in their natural diversity." Opponents of development argue that the entire, balanced complex of caribou, polar and grizzly bears, wolves, falcons, wildflowers, and so on, is worth preserving intact, especially since it represents the least disturbed Arctic coastal area under U.S. ownership. Moreover, it is one of the "wildest" habitats of any type left in the United States. Resource development, in their view, would preclude conservation of the ecosystem's diversity generally, of certain species, and most particularly, of its wildness. Scientists and sport hunters both stress the importance of the summer habitats on the plain for migratory game birds taken in both Canada and the United States. Issues before Congress could include:

Section 1003 of ANILGA does not cover the role the 1002 area might play as a land base for State or Federal offshore activity. Both the United States and Alaska are proceeding with offshore leasing adjacent to the 1002 area. Even if Congress does not open ANWR (thus preventing development), it may consider controlling the use of the 1002 area as a support center) port, or pipeline corridor for offshore development. (See CRS Issue Brief 89028 for background on energy programs on the Outer Continental Shelf (OCS).) An oil find (the Kuvium area) in 1992 in the OCS off the western boundary of the 1002 area could increase interest in the areas off the Refuge, but industry officials do not anticipate any need for activities in the Refuge area even if the Kuvium field proves sufficient for economic development.

Activities of the independent support service industry in the Prudhoe Bay area, particularly at Deadhorse, have been widely criticized. (Firms in this industry are generally employed by, rather than part of, major oil companies.) At Deadhorse, the State leases land for these independent services (repair, cleaning, laundry, aircraft supply, etc.). Issues include:

For Congress, a key access issue could be the logistical conflict between the area's management as an industrial site versus management as a refuge devoted not only to wildlife conservation but also to recreation (including sport fishing and hunting) and subsistence uses, among other functions. This conflict would become more intense as human populations and road networks increased with development. In contrast to the current open but difficult access at ANWR, access to the State-owned Prudhoe Bay complex is strictly (if not always effectively) controlled. Visitors' and workers' belongings are searched for firearms, alcohol, and drugs, which are prohibited. (None of these requirements now applies to the 1002 area.) Moreover, hunting, even for subsistence, is forbidden at Prudhoe and limited in other developed areas. Similar restrictions are not found in the 1002 area, and may conflict with the Refuge's purposes as currently interpreted. The State of Alaska is debating opening the TAPS haul road (which is now closed to private vehicles north of the Brooks Range). Private vehicles could then drive as far as Deadhorse. Such an opening could pose new risks of poaching or wildlife disturbance and damage to pipelines, as well as risks of wider access — perhaps eventually to a 1002 road network. Specific access issues which Congress may address include:

The wildlife debate has focused mainly on the migratory Porcupine Caribou Herd (PCH). However, other species, such as polar bears, grizzly bears and wolves, may be at greater risk, in the view of some. Congress could consider special protection (e.g., wilderness designation, delayed exploration) or a special regulatory regime) of the most important habitats. The areas moat often mentioned for some special status include:

Environmental Quality Management

If ANWR were developed, Congress would face three kinds of environmental quality management issues: resource management, pollution, and waste disposal. Congress could choose to leave these matters to administrative agencies under authorities of existing laws. Alternatively, Congress could opt to impose a higher standard of environmental protection because the area is in a wildlife refuge or because of the fragility of the Arctic environment.

Gravel and water resources are essential for oil exploration and development in an Arctic setting. Potential legislative issues include protection of water resources necessary for animals, especially fish; regulation of water use and gravel extraction; and setting fees for and allocating any revenues from exploiting these resources. An issue not addressed in the FLEIS is the possibility of a rise in sea level due to global warming during the active phase of production. In the flat coastal plain, the coast line could change substantially, even with only a moderate rise in sea level; over the course of 50 years of production, developments once on land might need protection from shallow salt water or pack ice.

Air and water pollution primarily raise questions of subtle, long-term ecological effects. Potential legislative issues include the adequacy of existing standards, research needs, monitoring, and assurance that the standards are met. Waste disposal includes three major waste streams: drilling fluids, toxic wastes, and nontoxic bulk wastes. Legislative issues include the adequacy of current waste disposal requirements, the development of alternatives to landfills, and also liability concerns that can make consolidation of disposal facilities unattractive to oil companies. (See Archived Issue Brief 89058 for a history of the debate on this issue. For a presentation of a range of specific environmental quality issues, see CRS Videotape Arctic Oil, Arctic Refuge.)

Subsistence Use and Access

The Refuge has a small human population whose needs may be addressed specifically in ANWR legislation. The village of Kaktovik (over 200 people) and the lands of the Kaktovik Inupiat Corporation (KIC) lie along the coast within the Refuge and mostly adjacent to the 1002 area. There is also a U.S. military Distant Early Warning (DEW) station near Kaktovik, with dozens of employees. The DEW network also has several unoccupied sites of former or uncompleted developments scattered near the 1002 area. Together with Kaktovik, the DEW site operates a garbage dump and a runway. Natives of Kaktovik are the major users of the resources in the coastal plain, although they focus on marine resources. Kaktovik Natives support leasing generally but oppose both leasing in the primary caribou calving area in the east-central 1002 area and restrictions on discharging firearms.

Subsistence hunters in the interior of Alaska and Canada (including especially the Gwich'in people who hunt the herd in its winter range) and the Canadian government oppose leasing in the calving area of the herd and support wilderness designation. Congress may wish to consider the following issues regarding subsistence use:

Revenue Allocation

If oil is present, ANWR development revenues from bonuses, rents, and royalties, as well as from sales of gravel and water, could generate billions of dollars for the landowners. Peak annual royalties alone might range from $200 million to $2.5 billion, followed by declining revenues for 30-50 years. If Alaska owns submerged lands in the Refuge, it could receive substantial revenues directly. (See Legal Issues, below.) Whatever the Federal fraction of the income, Congress would need to decide:

Legal Issues

During the 100th Congress, DOI preliminarily negotiated land exchanges with some Alaskan Native groups, trading oil and gas rights in the 1002 area for land or surface rights belonging to the Natives within seven other refuges in Alaska. Controversy over whether DOI could proceed with the exchanges without congressional approval was resolved by P.L. 100-395. This act expressly requires congressional approval for exchanges or other conveyances involving lands in ANWR's coastal plain. Exchanges could be a part of the development alternatives considered by Congress.

The United States and Alaska dispute the ownership of submerged lands beneath waters within and offshore of ANWR. Depending on how the legal issues are decided, Alaska may own significant inholdings within ANWR. If these inholdings were opened to leasing, not only would management of the remaining Refuge lands be complicated, but substantial revenues from any oil on those inholdings would accrue to Alaska, rather than the United States. P.L. 100-395 addressed these issues in part, but significant issues remain. (For further information, see CRS Report 87-673A.)

A court has held that DOI must prepare a Supplemental Environmental Impact Statement (SEIS) encompassing new information about the 1002 area in connection with the Department's recommendation that Congress legislate to permit development. This was not done, but either an SEIS or a new EIS would undoubtedly have to precede development, unless Congress waives this requirement. Also, Alaska has indicated that the State will dispute any distribution of revenues from ANWR leases that deviates from the terms of Mineral Leasing Act.

Long-Term Cleanup

If Congress authorizes development, but no commercial quantity of oil is found, substantial recovery of the ecosystem from exploratory activities should take only a few years. If major quantities are found however, development (including natural gas extraction) would probably last for decades or even a century. Substantial recovery might then take further centuries in the harsh Arctic environment and could be problematic. Thus, Congress might be debating rehabilitation that would not begin until 2060 or 2090. Furthermore, some types of cleanup might not even be desirable or practical: deep gravel roads and drilling pads, for example, might be impossible to remove without creating further damage, and thus might necessarily become a permanent feature of the landscape. Few existing laws cover such long terms in planning for a cleanup whose cause may never occur, and the exact nature of which is unknown. Congress may consider various proposals on the long-term fate of the area:

REFERENCES

ARCO Alaska, Inc. NRDC/Trustees for Alaska/National Wildlife Federation report "Oil in the Arctic: The environmental record of oil development on Alaska's north slope" - comments and critique. 1988. 24 p.

Berliner, Jeff. "New Oil Field Discovered in Alaska." Washington Post, February 22, 1989, p. D3.

"Conoco gauges oil and gas strike between Prudhoe Bay and ANWR." Oil & Gas Journal. Aug. 5, 1991. p. 32.

Speer, Lisa and Sue Libenson. Oil in the Arctic: The environmental record of oil development on Alaska's north slope. Natural Resources Defense Council, Inc., 1988. 78 p.

Speer, Lisa. Tracking Arctic oil: The environmental price of drilling in the Arctic National Wildlife Refuge. Natural Resources Defense Council, National Wildlife Federation, and Trustees for Alaska. New York. 1991. 36 p.

U.S. Department of the Interior. Bureau of Land Management. Overview of the 1991 Arctic National Wildlife Refuge Recoverable Petroleum Resource Update. Washington, April 8, 1991. 8 p., 2 maps.

U.S. Department of the Interior. Fish and Wildlife Service, (geological Survey, and Bureau of Land Management. Arctic National Wildlife Refuge, Alaska, coastal plain resource assessment. Report and recommendation to Congress of the United States and Final Legislative Environmental Impact Statement. Washington, 1987. 208 p.

U.S. General Accounting Office. Arctic National Wildlife Refuge: An Assessment of Interior's Estimate of an Economically Viable Oil Field. Washington, DC. July, 1993. 31 p. GAO/RCED-93-130

U.S. Library of Congress. Congressional Research Service. After the Exxon Valdez spill: oil pollution liability and compensation legislation, by Martin R. Lee. [Washington] Apr. 24, 1989. 23 p. CRS Report 89-266 ENR

---- Arctic Oil, Arctic Refuge. Videotape by Lynne Corn, Bob Nickel, et al. 63 minutes. [Washington] 1991. (Available to congressional requestors only.)

---- Arctic National Wildlife Refuge: Congressional consideration since the 99th Congress, by M. Lynne Corn and Ted L. Burch. [Washington] 1991. 21 p. CRS Report 91.325 ENR

---- The Arctic National Wildlife Refuge: Major oil development or wilderness? edited by John E. Blodgett and John L. Moore. [Washington] 1988. 162 p. CRS Report 88-161 ENR

---- Legal issues related to the ownership of the submerged lands within and off the coast of the Arctic National Wildlife Refuge, by Pamela Baldwin. [Washington] 1987. 36 p. CRS Report 87-673 A

---- Outer Continental Shelf leasing and development, by Malcolm M. Simmons. [Washington] Updated regularly. CRS Issue Brief 89028.

---- Oil and Iraq's invasion of Kuwait, by Carl Behrens, Robert Bamberger, Marc Humphries, and Bernard A. Gelb. [Washington] Updated regularly. CRS Issue Brief 90116

---- The proposed St. Matthew Island land exchange: Authority of Secretary of the Interior to exchange lands under the Alaska National Interest Lands Conservation Act, by Pamela Baldwin. [Washington] June 21, 1982. 39 p.

---- Whether Congress unilaterally may amend a mineral lease revenue distribution formula that appeared in the Alaska Statehood Act, by Thomas J. Nicola. [Washington] 1987. 12 p. CRS Report 87-63 A

---- World oil and the ANWR potential, by Robert L. Bamberger and Carl E. Behrens. [Washington] 1987. 14 p. CRS Report 87-438 ENR

Footnotes

1 This type of motion in the Senate is usually very non-controversial. Defeat of such a motion prevents consideration of the bill.

2 Jeff Berliner. "New Oil Field Discovered in Alaska." Washington Post, February 22, 1989, p.D3.

3 "Conoco gauges oil and gas strike between Prudhoe Bay and ANWR." Oil & Gas Journal. Aug. 6, 1991. p. 32.

4 U.S. General Accounting Office. Arctic National Wildlife Refuge: An Assessment of Interior's Estimate of an Economically Viable Oil Field. GAO/RCED-93-130. Washington, DC. July, 1993. 31 p.