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Business/Economy

Interactive tool shows what ANWR production might look like as oil prices rise or fall

The Arctic National Wildlife Refuge could one day produce a lot more oil than all of Alaska currently produces, but the first drops won't flow for 14 years, according to a new interactive forecasting tool.

Created by a state analyst, the model — available on the Alaska Division of Oil and Gas website — estimates 6.6 billion barrels will be produced over 40 years if oil prices are at current levels of roughly $70 a barrel or rise higher.

Prudhoe Bay, west of ANWR and the largest oil field ever discovered in North America, has produced about twice that amount since 1977.

However, if oil prices sink, say to $30 a barrel, there will be no ANWR production, the model shows.

Michael Redlinger, with the Alaska Division of Oil and Gas (Photo by Thomas Presley)

The tool was built to give people an idea of the potential value of oil development in the refuge, said creator Michael Redlinger, a commercial analyst in the state's Division of Oil and Gas.

In December, congressional Republicans agreed to allow development in the coastal plain of the 19-million-acre refuge, after 40 years of failed attempts. The first lease sale must be held within four years. The state would receive an 8.3 percent royalty share of oil produced, plus production taxes and other revenue.

During the debate, proponents for opening ANWR said it could be a boon for Alaska's economy. Conservationists argued the refuge would be worth little economically, with industry targeting cheaper, Lower 48 shale prospects.

Both sides agreed it would be a decade or longer before drilling occurred, if it happened at all.

The model suggests the refuge's economic value could be significant. It's based in part on past federal estimates of possible ANWR oil production and reserves.

"We see a lot of significant potential, but a lot of uncertainty," said Redlinger.

At today's oil prices, Alaska would make $35 billion in royalties over 40 years. Overall, Alaska would make $110 billion over that period, when other revenue, mainly production taxes, are added.

Significant ANWR production would start in 2032 at about 275,000 barrels daily. The model adjusts for the effects of inflation, so its future oil prices are portrayed in today's values.

But it would triple within a few years, to about 820,000 barrels daily for close to a decade. That's well beyond last year's statewide production level of roughly 540,000 barrels daily.

Redlinger said the timeline of first oil is based on federal data showing it would take about nine years to reach production after leases are sold.

Of course, like oil prices, the dates are subject to change.

"There are obviously plenty of unknowns," he said.

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