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Providing coverage of Alaska and northern Canada's oil and gas industry
April 2008

Vol. 13, No. 14 Week of April 06, 2008

Change means dual hit for oil industry

Alaska Climate Impact Assessment Commission report says Arctic warming likely to impact state’s oil industry head-on, indirectly

Eric Lidji

Petroleum News

The impacts of a changing climate are expected to be wide-reaching, but for the oil industry in Alaska, those impacts could come in two directions.

That’s the view of the future put forth in the final report of the Alaska Climate Impact Assessment Commission, a two-year look at how climate change will impact every state department and major industry.

Changes from two directions

Climate change will likely impact the oil industry head-on and indirectly, according to the report.

Head-on, a warming Arctic will change the traditional map and calendar for winter exploration, both for better and for worse.

Over the past 30 years, the travel season across North Slope tundra, based on ground temperatures and snow cover, has already been cut in half, according to the state Department of Natural Resources. That means companies have nearly 100 fewer days to explore for oil and gas on the North Slope during the winter.

But a warmer Arctic could also increase access, as more ice-free months in the Arctic Ocean would almost certainly create a popular northern shipping route connecting Asia, North America and Europe.

On the other hand, as permafrost thaws on the North Slope, existing infrastructure would need to be reinforced or moved, and construction techniques on new infrastructure would have to be rethought.

Indirectly, though, climate change could have a longer-term impact on the industry, as local, state and federal governments respond to environmental changes by altering the permitting and regulatory landscape.

Few firm recommendations

While the final report lays out some of the changes already affecting the industry and some of the likely changes to come, it doesn’t spend much time investigating the causes of climate change and offers only vague outlines for how the state should proceed in dealing with the oil industry in the face of those changes, making few firm recommendations.

“At this point, no near term changes to statute or regulations have been identified as crucial for adaptation measures in oil and gas and mining development in the state,” the final report said. “In the longer term, as the natural resource extraction industries identify trends requiring adaptive measures, state agencies should remain flexible in their approach to regulation of the industry.”

Some of those flexible approaches could mean new oil spill prevention standards in the Arctic and northwest Arctic, as offshore exploration in the Beaufort and Chukchi Seas grows in importance.

“A variety of new regulatory regimes will be needed to address cultural, environmental, marine safety, law enforcement, and other interests on a local, state, and federal level,” the report said.

But the regulatory changes won’t entirely restrict the business of traditional fossil fuels, the report concludes, as federal emissions standards could possibly create new markets for Alaska natural gas and cleaner coal products across the country and renewable fuels here in Alaska.

The commission recommended that the state create a “designated liaison” to connect the resource-based industries and the federal government. The liaison would work toward expanded and improved mapping, monitoring and engineering to better respond to changes in the Arctic.

The report also put forth several questions to be answered by the state and the industry over the coming years, like whether new species of marine wildlife in the Beaufort Sea would impact oil and gas development and how increased coastal operations would impact local communities.






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