The Explorers 2009: Developing resources off Alaska’s northern coast reduces reliance on foreign energy

Carl Portman

Deputy Director Resource Development Council

The Resource Development Council (RDC) has been at the forefront of efforts to convince the Obama administration to provide for a seamless transition to new oil and gas leasing programs in the future that will expand access to the nation’s Outer Continental Shelf (OCS).

RDC strongly supports access to the OCS, especially in the Chukchi and Beaufort seas, and the North Aleutian Basin. The responsible development of potentially immense oil and gas deposits in Alaska would significantly boost the state’s economy, extend the life of the trans-Alaska oil pipeline, improve the economic viability of the proposed natural gas pipeline from the North Slope to the Lower 48 and reduce America’s reliance on foreign energy.

Development of energy resources off Alaska’s northern coast is the natural evolution of the oil and gas industry in Alaska, especially given the potentially enormous reserves offshore and the lack of support in Congress for exploration of America’s most promising onshore prospect – the Coastal Plain of the Arctic National Wildlife Refuge.

The Alaska OCS is an important future source of U.S. energy supply with an estimated 27 billion barrels of oil and 132 trillion cubic feet of natural gas potentially in place. By comparison, total production from the North Slope over the past 32 years has been approximately 16 billion barrels.

Many Alaskans share President Obama’s view that America needs to conserve more and put new emphasis on renewable and alternative energy. By doing so, the nation can ultimately break its reliance on foreign oil. Yet America still needs to pursue new oil and gas production, given the fact it will take decades before renewables become a dominant energy source.

In the meantime, where will our oil come from to meet demand? If not the OCS, then where? For every barrel of oil not developed domestically, the nation will have little choice but to import another from overseas. Given economic and geopolitical concerns, that barrel should be produced here in the U.S. – under American laws, regulations and oversight, and by American workers.

RDC supports offshore exploration because it is confident operations can occur safely. Offshore development has an outstanding record in Alaska and elsewhere. Energy development is subject to in-depth analysis by federal law, a stringent permitting process and oversight by state and federal agencies. In every instance, development is preceded by extensive studies.

RDC recognizes that subsistence whaling is vitally important, both economically and culturally to North Slope villages, and that commercial fishing historically has been the primary industry in the North Aleutian Basin. RDC believes that seasonal restrictions as necessary and/or deferral of specific tracts, should be considered to avoid potential conflicts with subsistence whaling in the Arctic and fishing in the Bering Sea, as opposed to outright cancellation or indefinite deferral of entire lease sales. Strong regulatory oversight, combined with other mitigation measures, can be employed to protect all resource and subsistence users.

To help address local socio-economic impacts, RDC strongly supports sharing federal royalty payments from production in federal waters with coastal states and local communities. Such a measure is critical to local Alaska communities in the Arctic and the North Aleutian Basin.

The Alaska OCS should be opened to responsible development. It has the potential to sharply increase throughput in the oil pipeline, which is currently operating at one-third of its peak capacity reached in the late 1980s. Without new significant discoveries of oil, the pipeline could be uneconomic to operate at some point after 2025. Moreover, OCS gas reserves would significantly improve the long-term economic viability of the proposed gas pipeline from the North Slope to the Lower 48 – a clean energy priority project of the Obama administration. To become a reality, the pipeline requires additional gas reserves beyond what have already been discovered.

With its enormous potential reserves, the OCS can sustain Alaska’s economy for generations, creating tens of thousands of jobs and generating hundreds of billions of dollars in federal, state and local government revenues.

Given demand for energy will rise as the economy recovers, America must continue to pursue new oil and gas development, even as the nation slowly transitions to the new energy sources of the future. Increased emphasis on renewable energy should not preclude or require less oil and gas development. America needs more of both to reduce its reliance on foreign oil.

Development of OCS resources will buy America the time it needs to develop the alternative and renewable energy resources that will someday assist in the nation achieving energy independence.