Opinion ID: 3066130
Heading Depth: 4
Heading Rank: 1

Heading: The Selection of One Billion Barrels

Text: BOEM first announced it was developing an EIS in preparation for Lease Sale 193 in July 2005. According to internal BOEM emails, BOEM analyst Jim Craig was assigned to provide “resource estimates and a scenario” which other BOEM scientists would use to analyze environmental effects. Craig emailed his supervisor, Deborah Cranswick, stating that he believed that “[t]he reasonably foreseeable scenario” should include “oil production from the first field only, not the full economic potential.” Craig’s reason for focusing on the first field production was practical; he would have to wait for about two months to have information that would allow him to develop a scenario for the entire area covered by the lease sale. Craig stated in his email, “You realize that we won’t have the 2005 resource assessment numbers until Sept, so we must base the scenario on the ‘first development’ not the total economic potential.” Craig also indicated that this emphasis on the first oil field was a “departure from previous work.” Craig asked Cranswick whether the scenario should employ a single estimate of oil production from that first 22 NATIVE VILLAGE OF POINT HOPE V. JEWELL field, or whether it should employ a range. Cranswick responded by email that she preferred a range. Craig then suggested, in a July 29 email, a range from 500 million barrels to 1.5 billion barrels. Craig emphasized in his email that the scenario should assume “equal probability for any volume within the range” so that one billion barrels “does not become the de facto most-likely” outcome. Craig’s draft scenario also noted, with respect to recoverable oil in the Chukchi Sea, that “[o]ur current petroleum assessment indicates that recoverable oil resources could range from 3.6 to 11.8 billion barrels.” There is a gap in the email chain in our record, so we do not know Cranswick’s next response to Craig. But we do know that in a subsequent email from Craig to Cranswick on August 2, Craig proposed a single one billion barrel estimate as an alternative to using a range that was “too broad”: Attached is a table with E&D data. If this represents too broad of a range, then I think we should fall back to a single volume (1.0 Bbbl) for the EIS analysis with a corresponding set of single E&D numbers. It’s hard to have it both ways (very narrow range) when these figures are entirely speculative. There are two clear options: 1) 500-1500 MMbbl, as a uniform distribution (every point in range is equally likely). This will require a low and high case analysis. NATIVE VILLAGE OF POINT HOPE V. JEWELL 23 2) 1.0 Bbbl as a single point estimate with no confidence interval. This will require a mostly likely case analysis only. Although it would be nice to propose a recoverable oil volume of 932 MMbbl +/- 134 MMbbl in a 90% confidence interval, we don’t have any data to support it. Pick (1) or (2), but not (1) and (2). On August 3, Cranswick emailed Craig a data chart reflecting Craig’s second option. It contained only a single one billion barrel estimate. On that same day, Craig emailed to Cranswick a draft scenario relying on the one billion barrel estimate of oil production. This draft explained: The scenario assumed for environmental analysis involves the discovery, development, and production of the first oil field in the Chukchi sale area. Ultimately recoverable oil resources from this field are assumed to be 1 billion barrels (Bbbl). Smaller oil volumes are not likely to be economic to produce and single pools containing larger volumes are increasingly rare. If oil prices drop below $30.00 per barrel (they are above $50.00 when this scenario was written), exploration in the Chukchi OCS is expected to be minimal and oil discoveries may not be developed. 24 NATIVE VILLAGE OF POINT HOPE V. JEWELL The draft also pointed out that “the mean recoverable oil resource [in the Chukchi Sea] is 12 Bbbl with a 5% probability of 29 Bbbl.” Craig also prepared a chart for Cranswick comparing the numbers Craig had selected for the Lease Sale 193 EIS to an EIS prepared for the Chukchi Sea and Hope Sea Basin for the 2002–2007 Five Year Oil and Gas Leasing Program. That previous EIS had estimated a range for economical oil production from 0.96 billion barrels to 2.42 billion barrels. On August 10, Cranswick circulated the Lease Sale 193 EIS scenario to other BOEM scientists who would be working on the EIS. The scenario contained the one billion barrel estimate. Cranswick explained in an email that [t]he scenario is based on a one mid-range economic resource number (note - this is not necessarily the most likely. A lower volume is more likely to occur but less likely to be developed from an economic standpoint; a higher volume is less likely to occur but more likely to be developed). Several BOEM employees expressed concern with the agency’s proposed scenario. For example, one NEPA analyst employed by BOEM, Dee Williams, wrote, “I don’t understand why [the agency] doesn’t use their sophisticated assessment indices to impose a more definitive likely scenario. Clearly, it is impossible to predict ‘with certainty’, but the narrative needs to inspire greater public confidence by explaining the parameters of reasonable expectations.” Williams further stated: NATIVE VILLAGE OF POINT HOPE V. JEWELL 25 If it becomes economical to build one platform to produce an estimated 1 billion barrels, and there is between 12 and 29 billion barrels that are recoverable, why is the scenario not compelled to imagine more than one platform (i.e. is a single platform always the initial scenario, in which case maybe we should just explain that)? Cranswick responded that “the initial scenario is one platform because we can’t have only a partial platform if that is all that the resource estimate support[s].” At the same time, Cranswick suggested that smaller oil developments would be associated with the first oil platform. “Once the first platform goes in, it is likely that additional satellite subsea completions would be developed before another host platform would be considered.” Once the draft EIS was completed, BOEM sought comments from other agencies and from the public. Numerous outside commentators expressed concern about the scenario BOEM had developed. For example, the Environmental Protection Agency wrote that the hypothetical development scenario that is used in the document add[s] additional layers of uncertainty regarding the probabilities of exploration, production and development activities and the risks associated with those activities. . . . EPA is concerned that, overall, the depth and diversity of uncertainties presented in the document resulted in the lack of adequate support for many of the document’s conclusions. 26 NATIVE VILLAGE OF POINT HOPE V. JEWELL The Division of Migratory Bird Management at the U.S. Fish and Wildlife Service (“FWS”) similarly challenged the one billion barrel estimate as inaccurate: The basic assumptions used in the analysis of effects are flawed with regards to the size of development scenarios. The [Draft EIS (“DEIS”)] states that the current petroleum assessment indicates a mean recoverable oil resource of 12 billion barrels; yet all environmental analyses reported in the DEIS are based on a development of 1 billion barrels, thereby significantly underestimating likely scenarios. The Division recommended that BOEM not proceed with the lease sale until problems with the EIS were corrected. Public commentators similarly pointed to flaws in employing a one billion barrel production estimate, including that such an estimate was “based on a price of oil at half the current market value,” that the estimate “severely understates the true cumulative impacts” of oil production, and that it was “nowhere . . . justified with scientific analysis.” Despite these criticisms, BOEM continued to rely on its one billion barrel estimate. The one billion barrel estimate was the basis for the entire FEIS, including its analysis of the risk of a large oil spill. For example, BOEM instructed the FWS to rely on that estimate in that agency’s analysis of whether the lease sale would jeopardize listed threatened species such as the spectacled and Steller’s eiders. Had FWS made a jeopardy finding, BOEM either would not have been able to proceed with the Lease Sale under the ESA or would have had to obtain an exemption from the “no jeopardy” rule. 16 U.S.C. § 1536(a)(2). NATIVE VILLAGE OF POINT HOPE V. JEWELL 27