In an oped appearing in The Hill, ASP Senior Fellow Andrew Holland and Adjunct Junior Fellow Rob Gardner take a look at the costs and benefits of opening up the Arctic to energy production. The Arctic represents the last major region for energy resources that is so far undeveloped, holding an estimated 90 billion barrels of oil. Shell is planning to begin exploration in the Chukchi and Beaufort Seas this year (but has run into permitting delays), and the world is watching to see if they are successful. From the article:
The U.S. has the potential to claim a region of the Arctic which may hold up to 29.96 billion barrels of oil and 72 billion barrels of oil equivalent natural gas, according to the U.S. Geological Survey. In 2011, Alaskan oil sold for an average price of $109.86 a barrel. At those prices, projected U.S. Arctic oil reserves could be worth almost $3.3 trillion. Such a windfall from expanded Alaskan oil production would bring rewards to business, Alaskan citizens, and government coffers. Alaska has a huge stake in the production of Arctic resources, as oil already represents 90% of state tax revenue.
However, there are some drawbacks. They explain:
Although the benefits of extracting Arctic oil are large, the possible costs are substantial. A moderate-sized spill in the Arctic, an area where threatened species are concentrated, could have devastating effects on the Arctic ecosystem. The hazardous Arctic climate and the remoteness of drilling sites pose huge logistical challenges to containing oil spills. A recent GAO report expressed serious concerns that offshore oil operators in the Arctic lack the infrastructure and vessels needed to contain an oil spill.
To read the full article, click here.