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THE EXPLORERS 2005: Accessing Alaska’s oil and gas future
Mark Myers Director, Alaska Division of Oil and Gas
Access: Webster defines it as “freedom or ability to obtain or make use of,” or alternatively “permission, liberty or ability to enter, approach, communicate with, or pass to and from.”
With respect to energy our country has long taken access to reasonably priced and abundant oil and natural gas for granted. Recent increased worldwide demand, combined with decreasing North American production and the recent supply disruptions caused by the hurricanes has revealed that Americans have been living with a very false sense of security. It is clearer now than it has ever been that we need a better long-term energy policy that includes significant increased and diversified supply base. Where should that supply come from? Alaska is clearly the best domestic choice.
Access to prospective lands in Alaska Using the best available technology we need to access new areas such as the ANWR coastal plain, Chukchi Sea, the Alaska Peninsula, our Interior basins as well our traditional areas on the North Slope, Beaufort Sea, and Cook Inlet. I believe that we are winning the battle over access to prospective land. The evidence is for this includes the strong support that the Department of Natural Resources received from the residents of the Alaska Peninsula for the Oct. 26 lease sale in that region. The support came in no small part by the positive working relationship that developed between DNR staff and the local governments, Native corporations and Native organizations within the region. Access to land occurs where and when trust develops and the local communities see potential benefit.Access to investment capital One of DNR’s highest priorities over the past three years has been to attract more exploration and production investment into the state. Early efforts have been extremely successful in no small part due to the favorable geology, higher commodity prices, early exploration successes by companies such as Armstrong, Pioneer, and Kerr-McGee, and the political and economic instability in many of the worlds other prospective provinces. The state’s programs to make new and existing data easily available, fiscal incentives and improved permitting have also helped. The state has attracted a substantial group of new explorers who I believe will largely shape the economic future of the state. If you don’t believe me, just observe who will be drilling the exploration wells in 2006.Access to existing pipelines and facilities at a fair and reasonable cost However, the news isn’t all good. These new explorers need one important element not yet available to them: Access to existing North Slope processing facilities and pipelines at a fair and reasonable cost. The explorer’s inability or uncertainty in obtaining access to unregulated facilities through commercial agreements has dramatically slowed the pace of exploration on the North Slope. High fees on regulated oil pipelines have forced explorers to seek relief before the Federal Energy Regulatory Commission and the Regulatory Commission of Alaska. While these high fees clearly benefit the pipeline owners, they dramatically increase cost and risk to explorers and lower the North Slope’s overall worldwide competitiveness. A near term solution for improved access is paramount or statewide production will continue to decline.
Access to the North Slope gas line Hopefully, the state will bring a Stranded Gas Agreement Contract forward to the Legislature for approval in the relatively near future. Hopefully, that contract will be the catalyst that leads to rapid construction of the pipeline. One of the most critical elements of that contract should be enhanced access for both instate users and explorers. Enhanced access at fair and reasonable cost, particularly with regard to expansion capacity, is a must have. Without it there may be no room for explorer’s gas for 25 years or more. Under this scenario, exploration for gas on the North Slope and in several of the Interior basins wouldn’t be very viable for a generation. Some will suggest that we all should just trust FERC to solve this problem for the state, explorers, federal government and consumers. Clearly that isn’t enough. Governor Murkowski’s six gasline principles include the need for Alaskans to have access to the gas and future explorers to have access to the gasline. Both the public and the legislature should reject any contract without enhanced access.
Access is the critical needed element for Alaska’s energy and economic future.
Editor’s note: Myers wrote this prior to the dismissal of DNR Commissioner Tom Irwin and Myers’ resignation in October 2005.
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