Thirty-nine years ago I dragged the California woman I met in the San Francisco Bay Area to Alaska. We joined the adventurous and independent people who preceded us to one of the most fascinating places on earth, and we maintain our primary home there to this day.
Alaska is a land of mystery, and a state that is the subject of as many misconceptions as there are people who have not spent a considerable amount of time there. Now people know something about Alaska’s governor, and a little about the oil industry in Alaska, because of the current focus on the Arctic National Wildlife Refuge, better known as ANWR.
In the last few years, I’ve spent several months of every year outside of Alaska. The things I hear from people I’ve encountered convince me that very few of them know the truth about either its governor or ANWR. Whether you are interested or not, both issues are, or may be, of national significance.
This is not a story about Alaska’s governor – I’ve already done that. This is a story about drilling for oil in Alaska. I worked in the oil industry in Alaska for thirty years. I went from the drill floor to the boardroom, and I did it during the dramatic growth of the oil industry in “The Last Frontier.”
Don’t expect this to be an article that preaches to you about supporting drilling in ANWR. This is a presentation of the truth as I know it. I simply would like for people to hear something other than blatantly distorted anti-development dogma. I worked in the oil industry, but I am an Alaskan who cares about responsible development of our natural resources.
Early on, I want to state that very few people in the world have any idea of how much oil there is in ANWR. Most estimates are generally in the neighborhood of 10 billion barrels, making it one of the last and biggest “elephant” oil fields (100 million barrels or more) left in the U.S.
With special permission from Congress, Chevron was permitted to drill the “KIC No. 1″ well south of the village of Kaktovik on land owned by a Native corporation in the winters of 1985 and 1986. 
It is the only well that has ever been drilled in ANWR and the results of that well are still a closely guarded secret. Because Chevron, in partnership with BP, owns the only leased acreage inside the 1002 Area of ANWR, and they have zealously (and legally) protected that information for over twenty years, oil insiders assume it is an elephant -a very big elephant.
In a light-hearted bar conversation, I once asked Tom Cook, Chevron’s longtime Alaska Exploration Manager, how much he had been offered for what he knows about ANWR over the years. He politely batted my question aside, and I quickly realized what a serious subject that would be to anyone in his position.
Have you bought a case of bottled water lately? The case I just bought had twenty-four sixteen ounce bottles of water in it (three gallons), and it cost me four dollars. That equates to fifty-six dollars per oilfield barrel for water – for water! An oilfield barrel equals forty-two gallons, and right now oil is trading for around fifty dollars per barrel.
From a barrel of oil, we get gasoline, diesel fuel, fuel oil, liquefied petroleum gas (LPG), naphtha, kerosene, jet fuel, asphalt, engine oil, other lubricants, plastics, synthetic fibers, synthetic rubbers, detergents, fertilizer, perfumes, insecticides, and up to four thousand other byproducts. From a bottle of water we get “water.” Okay, I agree that comparison is not exactly “apples to apples,” but it may mean something to you after you read what follows.
My first trip to Prudhoe Bay was on January 6th, 1975. When I arrived it was around fifty degrees below zero. I was a “worm,” an oilfield term for somebody brand new on a drilling location. The plane was unloaded using a Cat 980 front-end loader, and the pallets with our bags on them were set on the ground outside the terminal. The small space inside the terminal was crowded with serious looking men who were bundled up in heavy parkas and insulated coveralls. All of them were wearing bunny boots and insulated hats with ear flaps. It was a surreal scene to a nervous “worm” – and I knew I looked like one.
Not knowing any better, while waiting for someone to pick me up, I was there long enough that everything in my bag was frozen solid – even my toothpaste.
It takes big men and big iron to drill wells in a hostile environment like the one that exists on the Arctic North Slope of Alaska – and lots of money. It’s a fascinating industry, driven by extreme competition and extreme diversity. The possibilities for huge financial losses are every bit as real as are the possibilities for huge financial gains.
Beginning in 1975, I worked as a mud engineer on drilling rigs on the North Slope and all over Alaska – but that is another story for another time. By the time I retired, I was the manager of one of the largest oilfield service companies in Alaska, giving me a very broad look at the oil industry in Alaska.
I know we have to develop alternative sources of energy, and the quicker we do that the better. I also know that we will need oil for the foreseeable future, and we need to use it responsibly during the considerable length of time it will take to fully develop viable new sources of energy. I can’t visualize jet airplanes flying on something other than jet fuel for many years to come. It should concern everyone that we are doing tremendous damage to our economy by sending hundreds of billions of dollars to foreign countries for oil. Many of those countries are actively using our money to try to undermine our success and our way of life. We are also forcing U.S. oil companies to drill ultra-expensive deepwater wells while we neglect easily available onshore prospects like ANWR.
I know about drilling in the Arctic environment and I know about ANWR. Well funded environmentalists and anti-development activists have done a masterful job of portraying ANWR as a pristine place with beautiful mountains and trees and wild animals cavorting everywhere. There is a part of ANWR that actually looks like that, but it is a long way from the coastal plain, and 8 million acres of it have already been designated as a Wilderness Area.
The Arctic National Wildlife Refuge covers 19 million acres on the northern edge of Alaska. The area on the 1.5 million acre coastal plain where the oil companies want to drill is as flat and barren as a tabletop. There will never be vacationers visiting this part of ANWR. In the summer it is so mosquito infested that you can barely breathe, and in the winter the temperatures (during the fifty-six straight days of darkness) can often reach over 100 degrees below zero with the wind chill factor. There is nothing that a tourist would want to see, and there never will be.
Because of advanced technology in horizontal drilling, the oil industry is only interested in using four thousand surface acres on the coastal plain of the 19 million acre Arctic National Wildlife Refuge. That is like looking at a tiny dot on a sheet of letter-size paper. A very short pipeline could tie ANWR production into the Trans Alaska Pipeline easily.
Developing ANWR should be a no-brainer in today’s economy, but stubborn, anti-development factions often have their positions presented by famous people who have never visited ANWR. They are convincing the American public and politicians, including our new President, that developing ANWR is the wrong thing to do.
Some common arguments against developing ANWR are:
- “Drilling in ANWR cannot produce enough oil.” The idea that ANWR, or any other oil find in the U.S., is going to satisfy all of our energy requirements is ridiculous. On the other hand, potentially adding 1.5 million barrels a day to U.S. oil production speaks for itself.
- “It would harm the environment.” All resource developments impact the environment. The modern oil industry is probably the safest, most environmentally responsible, and most regulated industry in America. The impact of development on four thousand acres of the most remote, most barren land in America would be minimal.
The National Audubon Society has earned over $20 million by allowing the oil industry to safely drill wells in the Rainey Wildlife Sanctuary in Louisiana using many of the technologies that were developed on the North Slope of Alaska.
The population of the Central Arctic caribou herd near the Prudhoe Bay oilfield has increased sevenfold since development began in the mid-1970s.
- “It would not result in lower oil prices.” This is probably a valid argument because the price of oil is controlled by world supply and demand. Gaining a little more independence from foreign suppliers is the salient factor.
- “There are other places to drill.” With the exception of the recently discovered oilfield in North Dakota, other places to develop in and around the U.S., particularly deep-water locations, continue to become more challenging and more expensive to drill.
And when compared to the price of the water I bought. . . Just something for you to think about.
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Craig, I think you have hit a home run with this post. Very informative and as usual, very well-written. Why responsible network reporters are not informing the public of this important news, I cannot understand. I would also like to get your further insights into why you believe an opportunity like this is not being exploited.
I defer to Craig’s on-the-ground experience on many of his points. I do think it is also the ideal place to keep a strategic reserve of oil for future needs. There are more important uses for oil than burning it.
The real problem with ANWAR is that it has long been a political football, abused by both political parties. As long at those perceived political advantages remain, no constructive dialogue can occur. I will be curious to see how Alaska’s current governor approaches the issue in her quest for higher office.
This was another good article. I had no idea that the drilling of oil in Alaska was so contreversial. I think you did a good job explaining every thing so well. After all if the area is so remote and will never be visted or seen by any one except oil drillers and it doesn’t really hurt the animals there, why not! It was a very informative and I liked the videos also. I say let’s drill in that far away place and give us as much oil as we can get. Let’s tell the arabs to go to hell and they can go broke keeping their oil and leave it at the bottom of their sandy deserts. I think that they are using our money to pay for terrorists. At the same time I don’t think Exon should be making billions of profits every quarter when us taxpayers are giving them our money in subsidies. Let them drill the oil in Anwar and then pay more taxes to help us pay the tax deficits we have.
This is good information and a point well made by Mr. Bieber. I would to add that I was once informed by a lobbyist group called Arctic Power (pro drilling in ANWR) that the total surface area that will be disturbed by the actual drilling infastructure would be less than the surface area of NY’s LaGuardia Airport and that the ground contamination would be less than a single hard rain’s worth of oily, ethylene glycol (antifreeze) contaminated stormwater runoff from any major sports arena’s parking lot in the US.
I was also told that oil companys have to report a 8oz.cup size spill to certain agencies and they have to clean it up and ship out the contaminated gravel to a hazardous landfill outside of Alaska. A SINGLE CUP SHIPPED TO A LOWER 48 LANDFILL! NO WONDER GASOLINE SO DAMN EXPENSIVE.
With that being said, maybe we should just build a LaGuardia size airport in ANWR for the tourist and when nobdy shows up to tour the mosquito infested Summer or the -50 Winters we’ll have a infastructure already in place to drill from.
Just something to ponder.
Instigator58- I like your post. Unfortunately, the part about the spill is correct. What normally happens is the 8 ounces spilled and the soil around it is put in an expensive, sealed drum that is made just for “hazardous waste” disposal, and that is shipped out of Alaska to an approved waste disposal site. That whole process can easily cost thousands of dollars (site clean-up, drum cost, transportation out of Alaska, testing prior to disposal, and disposal cost). As stated, the oil industry is one of the most regulated industries in the US…and over-regulation applies in many cases.
Sebastian- I like your post as well. If more people can hear the truth about ANWR, maybe we will get closer to the responsible development of this resource. Everybody wants the products and by-products that come from oil, but not enough people realize that we have to make some small concessions to get there.
Mr Bieber,
Is it also true that whenever the Prudhoe Bay oilfields are no longer economically viable, that the oil companies are required to reclaim the surface area to its original natural condition, back to before any development was started? ie. roads, buildings and drill site locations?
If this is true, would you mind telling me what all is included in that requirement and what the possible cost of that would be? Is that an Alaska or US Government requirement? I’m not trying to interrogate you, I’m just trying to educate myself on the pros and cons of drilling in ANWR and the Arctic and what that would mean to me as a tax payer.
Thanks.
Hey Craig, it looks like you are stirring the pot again. First it was Palin and now ANWR. Maybe its time for you to come back up here to cool your jets and talk to the people that understand where you are coming from.
You know, you can preach to the masses but I don’t think you are going to convince anybody outside of Alaska that drilling in ANWR is the right thing to do.
But, let’s see how everybody reacts to your post this summer when gas prices are back to $4-$5 bucks a gallon. Maybe, July would have been a better time to post this story.
Randy, Everyone is listening to Craig, and most seem to agree with him. I do also, I just think we need to hold that oil in reserve for an emergency, or for the future when we need the oil more for important uses than burning. $5 gas doesn’t bother me. I just ride my bike more. I think high fuel prices are a great thing, and will force the U.S. auto industry to make reasonable vehicles so they can compete in the new world. I don’t like it that they are doing it with my money though. I wish we’d put a higher tax gasoline on it while it was low, to pay for the auto industry bailout.
Instigator58, Randy, Bob. Oil companies and their contractors are required by the entity (state or federal) that leases the property to put multi-million dollar bonds in place to ensure that the land is returned to it’s natural state when drilling and production is complete. I am sure that would be the case in ANWR as well. I recognize the futility in trying to counter the crap that anti-development groups put out there…but somebody has to. There may be some merit in holding reserves for future needs, but which reserves, and for how long? It takes years to put a new oilfield on line, even one as close to a pipeline as ANWR. We are still funding our enemies by sending them hundreds of billions of dollars for oil.
I agree with the idea of holding on to the reserve for a raining day but, remember, just because you drill it doesn’t necessarily mean you have to produce it. As stated, it takes years to bring a new oilfield on line. So what good is a reserve if you can’t use it when you need it? I say, Drill it now, produce it later, when its needed. Makes sense to me. Its kind of like preplanning or at least an operational strategy.
I would also be willing to bet that if the US oil companies were nationalized and the federal government held the ANWR leases, there would be a drilling boom unlike anything we have ever seen before and ANWR would probably be known as just another west Texas or Oklahoma with minimal regulartory control.
Craig, I keep rereading this post and I think, why is it that people can’t see it? I hope that the powers to be will see it someday and wake up to the reality. Don’t give up. Stick to your guns. And keep writing. You have a great story to tell in “Saylor’s Triangle” but an even better message in this post.
This story is from the Anchorage Daily News 4/18/09
Court ends Alaska offshore drilling
WASHINGTON — A federal appeals court ruled Friday that the Bush administration didn’t adequately study the environmental impact of expanding oil and gas drilling off the Alaska coast, a finding that many of Alaska’s leaders reacted to with dismay.
Halting leasing in the Beaufort, Bering and Chukchi seas will “cause a further delay in the development of the oil and gas resources that America still requires to fuel its economy,” said Sen. Lisa Murkowski, R-Alaska, the top Republican on the Senate Energy and Natural Resources Committee.
“Alaska’s outer continental shelf is America’s energy storehouse and it needs to be developed with sensitivity to climate change and marine life,” Murkowski said, “but I am troubled that the groups behind this litigation are engaging in the too-familiar tactic of suing on every possible issue, no matter the legal merits.”
But many environmental and fishing groups said Friday they’re relieved by the ruling, especially because of the unknown environmental consequences of drilling in the fishing waters of Bristol Bay.
“A permanent solution is ultimately needed that places the region’s water off limits for good,” said Kelly Harrell of the Alaska Marine Conservation Council. “We hope Congress will capitalize on the removal of the immediate threat of leasing and get to work on that solution.”
The appellate court in Washington on Friday found that the Bush-era Interior Department failed to consider the effect on the environment and marine life before it began in 2005 to expand an oil and gas leasing program in the Beaufort, Bering, and Chukchi seas.
The appeals court ordered the Interior Department, now run by President Barack Obama’s appointee Ken Salazar, to analyze the areas to determine environmental risks and potential damage before moving ahead.
The effect likely will be to postpone, possibly by years, oil and gas exploration in federal waters off Alaska’s northern coast.
Shell, Conoco Phillips and other oil companies last year paid more than $2 billion for leases in the Chukchi Sea off the northwest coast. The companies, and state officials, believe offshore waters hold gigantic reservoirs of oil and natural gas that could energize Alaska economy in coming decades.
But Natives along the northern coast worry that noisy oil development, and hard-to-cleanup oil spills in icy water, could chase away bowhead whales and other subsistence foods. And salmon fishermen in Bristol Bay fret that drilling in nearby waters could disrupt the flow of sockeye into their nets.
The village of Point Hope and three environmental groups brought the lawsuit. The court rejected most of their claims but upheld their argument that the Interior Department’s environmental analysis was weak.
The department issued a statement Friday saying that Salazar is reviewing the court decision.
One of Salazar’s first acts as Interior secretary this year was to delay scheduling future offshore lease sales nationwide; Salazar visited Anchorage and Dillingham this week to hear from the public on future leasing.
One environmental advocacy group on Friday urged Salazar to use the court ruling as a springboard for comprehensive energy and conservation planning in the Arctic.
“Secretary Salazar has the opportunity and perhaps an obligation to cease all oil and gas activity related to this plan, and instead develop a precautionary, science-based, comprehensive conservation and energy plan for the Arctic Ocean,” said Jim Ayers, vice president of Oceana.
A spokesman for Shell Oil did not return a call seeking the company’s comment.
Although the North Slope Borough is not a party to the lawsuit, it has long opposed offshore oil development in the Arctic.
“If they’re intent on allowing offshore development, they need to really analyze the impact of development on the marine mammals that sustain us, as well as their habitat,” said Edward Itta, borough mayor, of the federal agency. “Instead, MMS prefers to ignore risks to our marine mammals.”
The American Petroleum Institute, the industry’s trade association which joined the lawsuit to defend the leasing program, said Friday it’s reviewing the implications.
“It would be a disservice to all Americans — and a devastating blow to the economy — if this decision were to delay further the development of vital oil and natural gas resources,” the organization said. “Development in federal waters off the nation’s coast provides thousands of well-paying jobs, government revenues and the fuel needed to run America’s cars and factories, heat our homes and the feedstock needed to make the materials we use every day.”
NEW RULES FOR OIL FIRMS
It is “yet another disappointing decision as led by the extreme environmental groups looking to exploit the Alaskan people for their own gain,” said Rep. Don Young, R-Alaska. “They would rather have the United States receive handouts from Hugo Chavez than from its own country.”
Sen. Mark Begich, D-Alaska, called the ruling “a huge setback for Alaska” and blamed the decision on the Bush administration for rushing oil and gas leasing. “We will continue working with the Obama administration and the Interior Department to show the careful balance that must be achieved to prevent litigation and achieve positive results for the oil and gas industry in our state, to continue to produce good-paying jobs, and to achieve energy independence for our country,” Begich said.
Gov. Sarah Palin also objected to the ruling. “Ironically, putting the brakes on domestic energy production does not prevent global warming or threats to species, but actually increases the problem by shifting resource extraction to less environmentally preferred fuels and locations.” Joseph Stanislaw, an independent senior adviser to Deloitte LLP, said it’s becoming increasingly clear the rules are changing for oil and gas production under the Obama administration — changes that are likely to add time and cost to many drilling projects.
Obama’s priorities, Stanislaw said, place the environment and climate change ahead of energy security and domestic oil and gas supplies.
Let’s save the Salmon and the BowHead Whales so we can kill them and eat them.
This sounds like a double standard to me. Where’s PETA and the Seirra Club on this issue?
Randy- Unfortunately, as you know, opposition to any type of drilling in Alaska is the result of blind ambition by well-financed anti-development groups. OCS drilling has been going on safely in Alaska for thirty years…no spills, no whales impacted. In fact, drilling stops when whales are migrating. So now, I guess we are not only going to put ANWR on hold, we’ll put the huge opportunities offshore Alaska on hold as well. Bristol Bay is another situation entirely. Although a top geophysicist told me in Houston years ago that one of the largest apparent oil bearing structures he had ever seen was in Bristol Bay, it is a sensitive and vital fishing area. I can see leaving it alone long before I can understand staying out of ANWR or other OCS areas, It is interesting to me to see the North Slope Borough opposing OCS drilling. Their Native corporation has become the richest Native corporation in Alaska because of the drilling on the North Slope…maybe it’s because they don’t own any rights to the OCS oil.