A Risk Analysis of Oil Development in the Arctic National Wildlife Refuge

Abstract

The Arctic National Wildlife Refuge (ANWR) in Alaska is simultaneously the most promising onshore area for oil exploration and one of the wildest areas remaining in the USA. The conflict between the need to develop energy resources and the desire to preserve wild areas has led to a prolonged debate over the merits of programs to lease the region for oil exploration and development.

In this study we report on a risk analysis of the oil potential of the ANWR. We develop a comprehensive simulation model of the oil exploration, development and production process in the ANWR based on publicly available data on the oil geology of the region. Compared to existing models of the ANWR, this model is unique in that it simultaneously takes into account the essential geologic characteristics of the region and the dynamic nature of the development process. The model projects the volume of oil production over time, oil industry profits and net national economic benefits, all in probabilistic terms.

The model provides a unifying framework for evaluating the limitations of previous models. It also allows us to better assess the potential role of the ANWR in future U.S. oil production, to evaluate the effects of policies that would mitigate environmental damage and, in general, to better frame the debate between advocates and opponents of development.

Keywords

Oil exploration ANWR Alaska Risk analysis environmental protection

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