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Griles blasts the ‘cell phone naturalist’ Alaska development decisions should be made with local input, deputy Interior secretary tells annual RDC conference Steve Sutherlin PNA Managing Editor
Steven Griles, deputy secretary of the U.S. Department of the Interior, says Alaska development decisions should be made by Alaskans rather than outside forces.
To illustrate, he posed a riddle, describing a visitor to Alaska who is wearing a parka with double rip-stop nylon, polyurethane seams and clothing with various pieces made from micro fibers, micro fleece and other fibers, carrying a cell phone, using a high-tech watch, and using a laptop to stay connected with the Internet. His canoe is made of Dupont-patented Kevlar, on the top of the largest, dirtiest SUV he can find.
“Why is he here?” Giles asked. “To protest mining and oil and gas drilling in Alaska.
“The cell phone naturalist sees no conflicts in terms of the products he uses that are made from petroleum products and mined ores,” Griles said in remarks to the annual conference of the Resource Development Council Nov 22 in Anchorage. “The more energy he uses to run his high tech gadgets, the more we need.”
Domestic energy supply-demand imbalance A North Slope natural gas line is essential to help meet domestic demand, Griles said.
Over next 20 years, he said, U.S. natural gas consumption will increase by 50 percent while domestic production will increase by only 14 percent.
Construction of an Alaska natural gas pipeline and new unconventional natural gas production are the only significant new future sources for domestic gas, according to the Department of Energy’s Energy Information Administration, he said, adding that figures suggest short-term spikes in natural gas prices are coming, particularly if economic recovery continues or there is a shock of weather in the Midwest.
There is less natural gas drilling in the United States than two years ago, with less success, and in successful wells, well decline is greater, he said.
Oil will face reductions in domestic production also. If domestic oil production follows the pattern of the last ten years, it will decline by one and one-half million barrels per day in the next 20 years, but demand will increase by 6 million bpd, Griles said.
Energy bill delay may be good thing Griles said that delay in passage of the energy bill might prove to be a good thing, now that Republican control of the Senate is a reality.
“Despite the lack of the energy bill getting passed, in hindsight, I think we’re going to get a much better energy bill than we would have if we had accepted what had been negotiated,” he said.
The nation needs a national energy bill which includes exploration and development of the Arctic National Wildlife Refuge, Griles said, adding that the president and the secretary of the Interior both have demonstrated their commitment to drilling in the refuge. Griles said the position of Interior would continue to reflect that of Interior Secretary Gale Norton as evidenced by her remark, “An energy bill that does not have ANWR is not a true energy bill.”
The Bureau of Land Management, the Minerals Management Service and the Office of Surface Mining are undertaking significant incentives to comply with the request of the president’s the president’s national energy bill, and Alaska is a very important player in the plan, he said.
“BLM and MMS have authority to offer lands under their jurisdiction to produce minerals and natural resources, both on and offshore, in an environmentally sustainable manner,” Griles said. “That’s what we’re going to do.”
Accelerated land conveyances, lease sales “We need to quickly and aggressively convey lands to Natives, and to the state of Alaska,” Griles said, adding that as a result of meetings between chief executive officers of several Native corporations and the Interior Secretary several weeks ago, BLM is working on a radical proposal to significantly expedite the conveyance of the lands.
“For those lands that are retained in federal ownership, we need land use planning to include considerations of minerals potential: BLM currently is developing an activity plan to consider potential oil and gas development in NPR-A,” Griles said.
BLM is talking to ConocoPhillips Alaska Inc. about a proposal to develop National Petroleum Reserve-Alaska oil and gas discoveries announced in 2001, he said.
MMS has proposed eight offshore sales between 2002 and 2007, Griles said. The sales will open up areas with proven reserves, such as the Beaufort Sea, Cook Inlet, and the frontier areas like Chukchi, Hope Basin and Norton Sound.
Interior’s duty to keep the sales on schedule and offer ample notice for planning on the part of bidders, he said. Interior will also expedite the leasing process by insuring that industry interest exists before putting acreage on the market. He said that would save all parties from arguing about development in areas for which no interest exists, as has happened in the past. First MMS will see if those in industry have an interest, then it will design a sale that reflects that area of interest.
“Next year, MMS regional director Jon Goll will take a road show to the headquarters of the major developers that have expressed an interest in doing business in Alaska, to start that special interest evaluation,” he said. MMS working on incentives MMS is also developing incentives to spur Alaska offshore drilling, including modified lease terms, rental rates, bonus bids, and royalty rates, Griles said.
“We know that Alaska offshore is not the cheapest place to do business,” he said.
MMS has developed an incentive package to promote offshore drilling similar to programs that have worked well in the Gulf of Mexico, creating a thriving deepwater exploration and development program there, Griles said. MMS will coordinate federal lease sales with those of the state, and will offer lands near the edge of federal state boundaries.
Northstar is in both state and federal waters, and it is a successful example of the kind of federal and state cooperation that can exist, he said. Northstar produced the first oil from Alaska’s outer continental shelf program and now accounts for 7 percent of the oil flowing through the trans-Alaska oil pipeline. The department is also pleased with results at McCovey, another state and federal project that brought in a new player, EnCana. No new delays Griles said Interior is committed to provide timely access to federal lands for the purpose of development.
“We can take your money for leases, which we have historically done, but that does not do any good if you cannot get a permit to operate,” he said.
He said the department is also committed to an atmosphere of certainty, with clear standards, so industry has a clear idea of costs.
“Too many projects in the past have been nibbled to death with requests for information, and regulations that are on the fly,” he said.
The Department of the Interior is seeking ways to create a high potential rate of return for offerings in Alaska, to compete with opportunities worldwide, Griles said, adding that all levels of the department have the talent and a directive to partner with the state for development on federal lands.
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