Report predicts windfall for Alaska if federal lands, water opened to drilling

Caribou graze on the coastal plain of the Arctic National Wildlife Refuge, with the Brooks Range as a backdrop. (USFWS)

Caribou graze on the coastal plain of the Arctic National Wildlife Refuge, with the Brooks Range as a backdrop. (USFWS)

A new report from an oil and gas trade association is predicting a windfall for Alaska if the government opened federally owned lands and water to drilling.

The Institute for Energy Research estimates as many as sixty-one-thousand new jobs could be created from opening the Arctic National Wildlife Refuge alone.

That’s a number that could catch the eyes of lawmakers who hold the fate of drilling in ANWR.

Tom Pyle is the president of IER. He says his group is counting spill over jobs too.

“In manufacturing, in health care, in real estate construction, arts and entertainment, food services. When you look at this stuff, you have to look at the big economic picture, not just the jobs created from drilling a well or from putting it in the Trans Alaska Pipeline,” Pyle says.

His group’s report looks beyond the added revenue from lease sales.

The nonpartisan Congressional Budget Office looked into potential lease sales in August. And the CBO estimated future royalties as high as fifty billion dollars from opening ANWR.

But IER did not want to stop with lease sales … so it introduced potential new jobs and increased wages. Pyle estimates opening ANWR would lead to an extra three million dollars in wages each year.

The report comes on the same day President Obama called on Congress to pass a small package of spending cuts and tax increases to stave off harsh, across-the-board cuts slated for March first.

“These modest reforms in our social insurance programs have to go hand in hand with a process of tax reform so that the wealthiest individuals and corporations can’t take advantage of loopholes that aren’t available to most Americans,” Pyle says.

The president did not single out preferable tax treatment for oil and gas companies this time … but he has in the past.

Pyle says federal leasing for the oil and gas industry is the strongest way to close the burgeoning deficit.

“The only bright spot in this economy has been energy production. And there’s no reason other than political will that we can’t see that benefit in other states like Alaska,” Pyle says.

While there have been huge increases in shale drilling in places like North Dakota, Pennsylvania and Texas, they all took time. Energy economist Ed Hirs cautions about rosy outlooks for a quick windfall if the federal government started leasing ANWR or the Outer Continental Shelf.

“It’s going to take seven to fifteen years to finish the seismic review, the geological review, and then begin to develop the technological aspects of building the play,” Hirs says.

Hirs, who is also the managing director of Hillhouse Resources, an independent oil and gas company in Houston, says Alaska should look to deepwater examples in the Gulf of Mexico.

“Thunder Horse from start to production was a 12 year run. And it wasn’t nearly as difficult as the conditions you’re going to find in off-shore Alaska,” Hirs says.

Tom Pyle concedes an ANWR bill is unlikely to make it through Congress this term. But that doesn’t mean you won’t hear many Republicans, and pro-oil Democrats, tout the new study.