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MMS director sees potential in Alaska outer continental shelf Cooperation between state, Native communities and federal government important in development of Alaska’s energy, Burton says, as is bringing in more industry Kristen Nelson PNA Editor-in-Chief
Department of the Interior officials have made a lot of trips to Alaska in the last year, Minerals Management Service Director Johnnie Burton among them.
There is a reason for this, Burton told PNA in a Sept. 11 interview: a good energy policy is high on the president’s list and lands managed by the Department of the Interior, “public lands onshore and offshore, provide close to 30 percent of total domestic production of energy.”
While Alaska’s contribution of energy production from public lands has been from onshore so far, “we think the outer continental shelf, for which MMS is directly responsible … offers tremendous opportunities,” Burton said.
“We also know it has tremendous challenges … probably tougher than any of the other OCS environments.”
But, she said, we know the resources are here.
“And that’s a big thing. They’re not easy to extract, they’re even more difficult to get to the point where they can be used … and yet this is where we need to focus big effort because the resource is here.” Kuvlum, Sandpiper in 2003 sale Alaska is a big player in national energy policy, Burton said, “so we need to focus here in Alaska. And we hope we can tell industry to try us again, come back.”
Current projects in the Alaska OCS include Northstar, already in production, McCovey which is scheduled for drilling this winter and Liberty which is being reevaluated by its operator, said John Goll, MMS Alaska region manager.
There are known discoveries at Kuvlum, Hammerhead and Sandpiper, he said. The leases have been relinquished but those prospects will be available in next year’s Beaufort Sea lease sale.
The development challenge for those prospects remains, he said, but there are opportunities “and part of our role is making it available — to offer the access.” What next? Communication is going to be essential to get Alaska’s energy produced, Burton said.
“I think that the key to all this happening is getting the state, all the Native communities and the federal government to agree and understand the role Alaska has to play.”
That requires exploration of the state’s natural resources “in an environmentally sensitive way,” Burton said.
The role of the federal agencies — both MMS and the Bureau of Land Management — is “to bring all these people to the table and get them to agree on how to do things.”
Another role, maybe more essential, is attracting industry back to Alaska, she said. Industry left Alaska a long time ago, she said, and while it has come back to some extent and some good things have happened recently, government needs to do more to make us competitive with other areas in the world.
One of those things is predictability.
“Industry wants to know that once it commits to coming here to explore, that they can produce, once they’ve explored and discovered.” The role of government — state, federal and local — is to give industry “that assurance that if they invest lots of money in getting a lease, they’ll be able to explore it, develop it, produce it.”
Streamlining permitting in Alaska a goal While documentation won’t go away, Burton said, “we need to streamline that as much as we can.” Where several federal agencies are involved, “we need to take a good look at that. Where can we avoid duplication? Where can we streamline a function so everybody’s satisfied in their need for documentation — but yet we don’t have industry do it four times. They do it once and we hare it.”
That’s the kind of thing government can do, she said.
Burton said Goll is going to work on streamlining permitting in Alaska.
In Washington, she said, Interior is putting together work groups from different agencies to meet monthly, keep each other advised of what the problems are and how to get problems and needs reconciled among the agencies. Sometimes, she said, that may involve higher management — “maybe assistant secretary level, to reconcile policy differences that may surface at the lower level of staff. It’s going to be one step at a time. You don’t change the world in one day.”
Goll said they may find some things that require changes in regulations.
“Part of it’s a matter of will of the different agencies and especially among the federal agencies, sort of marching in the same direction, since we all work for the same boss,” he said. Gulf made a come back Burton told the Alaska Support Industry Alliance Sept. 12 that while Alaska’s is described as a “mature province and in industry’s lingo, a mature province means everything’s declining. And you’re on the down slope.
“I’m not sure that’s true,” she said.
“Look at the Gulf of Mexico 10 years ago — it was considered a mature province. Today, thanks to some industry foresight, thanks to technology and thanks to government trying to work with industry to make this happen, today in the gulf we have 4,000 active facilities… We have 25,000 miles of pipeline and in the last 10 years we have seen about 100 new discoveries with 35 already on production.”
Technology, Burton said, “has allowed companies to invest in real deepwater and that has given a rebirth to that region.
“I contend that you have the same situation in Alaska,” she said. “It is — at this point — an untapped resource.”
In addition to a technology role in developing Alaska’s OCS, industry will also have to come back, she said.
The other thing the Gulf of Mexico has going for it, she said, is “cooperation between agencies at their level, at their regional level. And hopefully we’re getting there in Alaska,” she said. MMS looking at incentives In addition to streamlining permitting, Burton said MMS is also looking at possible incentives for Alaska OCS lease sales. She said she hopes to have a menu of possible incentives to choose from later this year.
The incentives would appear as part of sale notices and would have to do with royalty rate and the volume of production that could be free of royalties. This is the type of thing that has been used to encourage deepwater exploration and development in the Gulf of Mexico, Burton said.
Goll said there are a number of things that could be done under the OCS Lands Act.
“We’re shooting for Thanksgiving,” he said, to have a list of possible incentives for the approval of the secretary.
In addition to royalties, which only apply once production begins, Goll said MMS is also looking for possible up-front incentives. “Right now, “ he said, “the law works that a company would have to be in production before they get some of these things — or a brand new lease.” MMS might have to get authority from Congress for incentives on existing leases, he said.
“When the staff comes back with a menu of options,” Burton said, “then it’s my job to get the secretary to approve them.”
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