Trans-Alaska Pipeline

The Department of Energy (DOE) asserts that Congress will have to authorize the leasing of the coastal plain of Alaska's Arctic National Wildlife Refuge--an area of high oil and gas potential--by 1997 to keep the Trans-Alaska Pipeline operating. DOE concludes that because of the projected rate of decline in oil production from Alaska's North Slope, the pipeline will likely be forced to shut down by the year 2009. The possible shutdown of the pipeline could be a consideration in reaching a policy decision on whether to open the refuge to oil and gas development or whether to designate the coastal plain as wilderness, thereby precluding future development. In assessing DOE's conclusion that 2009 is the most likely year that the pipeline will be forced to shut down, GAO evaluated the reasonableness of (1) the minimum operating level that DOE assumed for the pipeline and (2) the model and the key economic, geologic, engineering, and cost assumptions that DOE used to estimate oil production at the North Slope. GAO also looked at the reasonableness of DOE's belief that it will take 10 to 12 years to develop new oil fields in the refuge.

GAO found that: (1) DOE could not precisely estimate the TAPS minimum operating level, shut-down level, or future oil production levels because it used an inappropriate economic model and failed to account for uncertainties involving key economic, geologic, engineering, and cost assumptions; (2) DOE reasonably estimated that development of a new North Slope oil field would take 10 to 12 years and that Congress would have to enact legislation before 1997 to keep TAPS operational; and (3) DOE plans to implement ANWR development in four phases, however, it needs to overcome federal, state, and local approval, permit requirements, litigation, varying weather conditions, engineering or construction challenges, and oil company responsiveness to develop these oil fields.