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Vol. 14, No. 16 Week of April 19, 2009
Providing coverage of Alaska and northern Canada's oil and gas industry

In listening mode

Salazar hears Alaska perspectives on offshore oil and gas development

Alan Bailey

Petroleum News

Hailed by the Resource Development Council as “perhaps the most important public hearing to be held in Alaska in years,” preceded by a “march for jobs” involving a chanting assortment of helmet-wearing and placard-waving oil industry personnel, and attended by people from all sectors of the community, including rural villagers, state politicians, oil workers and environmental activists, Interior Secretary Ken Salazar’s outer continental shelf meeting in Anchorage on April 14 captured all of the complex issues surrounding potential oil and gas leasing on the Alaska OCS.

And at the end of the meeting’s morning session, having opened the meeting by expressing a desire for an “open and honest conversation” and then listened to a wide variety of views, Salazar summed up what he had heard so far.

“I understand the passion that I feel in this room today,” Salazar said. “I understand it from the point of view of the people who have subsisted in the fishing industry from time immemorial and (I understand) the importance of wanting to maintain that way of life. I understand also the sense that I received from many of the people here who say we need to have economic development; we need to have jobs. … I also hear the voices of many of you who have spoken today about the same kind of values and policies that drive Barrack Obama and that drive me. And I hear loud and clear the importance of us developing resources so that we can become energy independent. I heard from some that we can develop renewable energy as part of what we do. I’ve heard from others that we can also do oil and gas development, and there are others who say we ought not to do any development out in the OCS.”

Public comments

Salazar had convened the meeting, one of a set of four similar events being held at different U.S. venues, to glean public comments on a proposed U.S. Minerals Management Service outer continental shelf oil and gas leasing program for the years 2010 to 2015. MMS had published a draft of the leasing program at the end of the Bush administration but, under President Obama, the Department of the Interior has extended the public review period for the program, had MMS and the U.S. Geological Survey prepare a report on energy resource data relating to the OCS, and convened the four regional meetings.

“We are at a point where we are having to make and will make some decisions that will move us forward, as part of President Obama’s comprehensive energy plan,” Salazar said in his introductory remarks at the Anchorage meeting. “… We are at the point where we have to address the issue of energy. And climate change is a signature issue of our time.”

The United States has slept itself into an increasing dependence on foreign oil and the time has come for a comprehensive energy program that addresses national security, creates economic opportunities in the United States and addresses climate change, Salazar said.

No single solution

However, Salazar emphasized that an energy plan cannot consist of just a single solution. Energy efficiency, energy savings and renewable energy sources can all play a part, he said. And the use of new technologies such as hybrid plug-in cars will prove important in the energy future. New nuclear power generation may even play a role.

But, noting that the Alaska OCS likely holds one-third of the total U.S. OCS oil resources, Salazar also said that traditional energy sources such as coal and oil need to be part of the future energy mix.

“Development has to be a part of a broad energy portfolio, and that means that our traditional sources of fuel will continue,” Salazar said. “… Obviously the contribution that Alaska makes to the oil and gas needs of the country is something that is very, very important.”

And later, during a press conference, Salazar commented on the importance of a future Alaska gas pipeline.

“The Alaska gas pipeline is an important priority for President Obama,” Salazar said. “… We hope to be able to work with the people of Alaska and the Alaska Congressional delegation to figure out a way of getting it done.”

Palin cautions

As the first of a series of Alaska elected officials to testify at the meeting, Gov. Sarah Palin said that she concurred with the general principle of an energy policy that encompasses energy conservation and the use of renewable energy, as well as the use of traditional fossil fuels.

“(But) implementing a national energy strategy is tougher than planning one,” she cautioned.

Even with energy conservation, and given the environmental challenges associated with both existing fuel production and renewable energy development, energy independence will required dramatic increases in gas production and increased domestic oil production.

“Keeping Alaska’s OCS lease sale, exploration and development programs on schedule, especially in the Beaufort and Chukchi seas, is critically important to that effort,” Palin said.

And OCS oil from the Beaufort and Chukchi Seas will prove critical to the continued viability of the trans-Alaska oil pipeline and, with it, the viability of the North Slope oil industry, Palin said.

“By some estimates the TAPS pipeline will fall below its carrying capacity within the next decade,” Palin said. “Once that line shuts down, it will mean the end of oil production from the North Slope.”

Gas line

Palin said that development on the OCS would also support the future viability of the proposed North Slope gas line, a line that could deliver natural gas to the Lower 48 states as a transition fuel into a low-carbon energy future.

And, although there are certain areas that should be exempted from leasing, or have seasonal drilling restrictions to protect whale migrations, advanced technologies coupled with a mature regulatory regime can ensure safe and environmentally responsible oil and gas development, Palin said.

In addition, the Alaska OCS enjoys substantial renewable energy potential.

“Alaska’s OCS has received little analysis of its potential to provide renewable energy resources, such as wind and tidal power,” Palin said.

Palin also put in a plea for a state share of federal revenues from OCS development.

Murkowski confident

Sen. Lisa Murkowski thanked Salazar for visiting Alaska and said that people in the state often feel that their voices are not heard elsewhere.

“I’m confident that after this series of meetings there will be some general agreement that we want to see development of our resources proceed, but proceed in a safe and in a timely manner,” Murkowski said.

And Murkowski cited President Obama’s stated desire to reduce U.S. dependence on foreign oil.

“I say let Alaska help meet that worthy goal. Accomplishing our shared goals of responsible development and greater energy independence will require all of us working together cooperatively,” Murkowski said. “… This is not a choice between producing energy and protecting the environment. I am confident that we can and we will do both.”

“Alaskans know how to develop, and develop the right way, and we are proud of the cutting-edge technologies we have developed and employed to produce energy for our state and our nation,” said Sen. Mark Begich.

Challenge for DOI

Begich said that Alaskans cherish the spectacular country in which they live and that the state’s Native people have depended on the marine ecosystem for thousands of years. The challenge for DOI is to maintain a careful balance between the economic importance of energy development and the environmental importance of protecting the natural setting.

“I applaud the Obama administration for its focus on renewable energy sources and conservation, but oil and gas will continue to supply the majority of this nation’s energy for a long time,” Begich said.

But long-term policies for the OCS need to take into account the impact of climate change, while being based on sound science rather than politics. At the same time, local people must have a voice in developments on the OCS near their communities, and a portion of the revenues from OCS development must accrue to the state, Begich said.

Support from Legislature

State Sen. Lesil McGuire, chair of the Senate Energy Committee, and Rep. Charisse Millett both expressed support for OCS oil and gas development.

“In our committee this year we’ve spent a lot of time talking about renewable energy and the promise that we think it brings, not only to our nation and to our environment, but to the State of Alaska,” McGuire said. “… But we still believe that fossil fuel development responsibly in our state is a very important part of our future.”

And Millett, a lifelong Alaskan and Inupiat, who fishes commercially in Bristol Bay, commented on the stewardship of the ocean, rivers and lands by Alaska villages.

“We are concerned about the environment,” Millett said. “We are one of the users of the environment. We subsist; we fish; we hunt. And we all appreciate keeping that environment healthy and safe.”

McGuire said that, although a majority of the Senate Energy Committee favors OCS oil and gas development, some members of the state Senate, especially those from the North Slope, are concerned about the potential impact of offshore industrial activities on whale migration patterns.

Itta: not on OCS

Although North Slope communities have long been vehement in their worries about the possible impact of offshore industry on subsistence whale hunting, North Slope Borough Mayor Edward Itta, representing the Inupiat people of the North Slope and expressing the concerns of a number of rural communities, particularly focused on the possibility of an offshore oil spill.

“Like all Alaskans, the people of the North Slope depend on the economic engine of oil and gas development. We acknowledge that freely,” Itta said. “We have supported onshore oil production for well over 30 years now. … But the risks and the rewards do not balance each other offshore. That’s because oil spill response is virtually impossible in Arctic waters. I oppose OCS development because of this imbalance, and if it does go forward I ask that agencies and industry fess up to the extreme risks and acknowledge those extreme risks and commit to the toughest possible precautions to balance these risks. This has not been done so far.”

Itta requested that the United States should emulate what the Norwegians have done in imposing offshore environmental protections such as a zero discharge requirement. And, like Norway, the United States should perhaps allow industry to test oil spill response technologies offshore, using small amounts of oil, to demonstrate whether oil can really be recovered from broken ice, he said.

Itta also emphasized the importance of baseline environmental studies before the onset of any offshore industrial activity, to enable the measurement of industrial impacts.

And, introducing a young hunter and up-and-coming whaler from the North Slope to the meeting, Itta appealed for the recognition of the importance of preserving the traditional values of the Arctic communities.

Aleutians and Bristol Bay

Stanley Mack, mayor of the Aleutians East Borough, the borough that borders the North Aleutian basin where one of the OCS lease sales may take place, said that communities in his borough are totally dependent on commercial and subsistence fishing, but that a sharp decline in the viability of fishing in recent years, as fish prices have plummeted and fuel prices soared, has caused people to leave the region.

Consequently, the borough wants to see OCS oil and gas development go ahead — people from the borough have travelled to the Shetland Islands and Norway, to see how the fishing industries there coexist with the oil and gas industry, Mack said.

However, when Salazar visited the Bristol Bay city of Dillingham on April 13 he encountered vehement opposition to offshore oil and gas development. Commercial fishermen there worry that oil and gas development in the North Aleutian basin could disrupt the major sockeye salmon fishery in the Bristol Bay region. Major pollock and crab fisheries in the Bering Sea also overlap the proposed North Aleutian basin lease sale area.



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