Resource Development Council

RDC Comment Letter:
Five-Year OCS Leasing Program

July 23, 2014

Ms. Kelly Hammerle
Five-Year Program Manager
BOEM (HM-3120)
381 Eiden Street
Herndon, VA 20170

Dear Ms. Hammerle:

The Resource Development Council (RDC) is writing to express its support for including all 26 Outer Continental Shelf (OCS) planning areas in the development of the federal government’s 2017-2022 offshore oil and gas leasing program. RDC urges the Bureau of Ocean Energy Management (BOEM) to refrain from prematurely excluding any region from leasing consideration in the absence of a thorough environmental analysis.

RDC is a statewide organization made up of all resource sectors, business associations, labor unions, Native corporations, tourism providers, local governments and individuals. RDC’s purpose is to encourage a strong, diversified private sector in Alaska and expand the state’s economic base through the responsible development of our natural resources.

Most of the nation’s oil and gas resources are located offshore, including an estimated 86 billion barrels of oil and 420 trillion cubic feet of natural gas. Yet approximately 87 percent of the OCS is off limits to development while America continues to import oil from abroad. Domestic energy production has increased over the past five years, but the U.S. still imported 40 percent of the oil it consumed last year at a cost of $820 million a day (Energy Information Administration). Expanded development of offshore oil and gas resources would further reduce our reliance on foreign sources, reduce the trade deficit and bring America closer to energy independence.

Allowing expanded access to offshore resources is in our national interest as a means of improving energy security, diversifying supply, enhancing economic development and generating local, state and federal revenue. OCS production would provide many benefits, including new jobs in rural and urban areas, additional tax and royalty income to the federal treasury and the states, new local sources of fuel and energy, and improved search and rescue operations.

While other nations, including Canada, are expanding energy development offshore, the U.S. is standing still. If America is to remain a leader in oil and gas development and increase its overall energy production, it must expand access into the OCS, including the energy-rich Chukchi and Beaufort seas. The Alaska OCS is an especially important future source of U.S. energy supply. The potential reserves offshore Alaska could reach as high as 27 billion barrels of oil and 132 trillion cubic feet of natural gas.

Development of these resources would create 54,000 new jobs and $145 billion in payroll across the U.S., and would generate $193 billion in government revenue, according to a study by Northern Economics and the University of Alaska. Development of vast offshore oil deposits in Alaska’s Arctic is vital in stemming the throughput decline in the Trans-Alaska Oil Pipeline System (TAPS), which for 37 years has stood as a critical component of America’s energy infrastructure. TAPS is now operating at less than one-quarter its original capacity and will face serious operational challenges without additional supply.

RDC believes that development of oil and gas resources in the Chukchi and Beaufort seas would bolster America’s influence in the strategically important Arctic and advance our nation’s energy and economic interests in the region. Development of an offshore oil and gas industry would lead to the establishment of a vitally important Arctic port and a robust emergency response capability in the region. An offshore industry presence in the Arctic is absolutely necessary to respond to future emergencies, including a potential oil spill drifting into Alaska from the Russian Arctic, maritime shipping incidents, and other emergencies. If there is no offshore industry in the region, a major port would not be economically feasible and the necessary equipment, material and personnel to respond to a major offshore emergency would be unavailable.

Given industry requires regulatory certainty before making major investment decisions, it is important that BOEM release its Arctic-specific regulations as soon as possible. Key decisions on future drilling activity on current and future leases in the Chukchi and Beaufort seas cannot occur until the industry has had an opportunity to thoroughly review the new regulations and provide the agency input on them.

A new Five-Year Plan which would expand offshore development and subsequent energy production in energy rich basins is a sensible step toward the development of a comprehensive energy policy that utilizes a broad range of sources to secure our energy future. Such an energy policy must be based on reality – one that recognizes new oil and gas production will continue to be absolutely necessary in the foreseeable future to meet energy demand until alternatives and renewable sources become available on a broad scale.

While renewable energy will make up a growing part of the U.S. energy portfolio, it will not significantly reduce our reliance on foreign sources of oil in the near term, given renewables are projected to account for a small percentage of our energy by 2030. The health of our economy and our national security will require utilization of both conventional and unconventional energy sources. No single approach is enough as we cannot drill our way to energy independence, nor can we conserve our way. America needs to pursue various strategies to secure its future energy requirements. New domestic oil and gas production is actually the bridge to new energy sources. New production will buy us the time we need to develop alternative and renewable energy sources that will eventually break our reliance on foreign oil – forever.

Any new Five-Year Plan must include revenue-sharing from the OCS with local communities in Alaska and elsewhere to help address local impacts. Early consultation and conflict avoidance mechanisms should also be included in the plan. Any leasing plan should require state-of-the-art oil spill response and consider mitigation measures to minimize impacts to other resource industries, traditional lifestyles and the environment.

In closing, RDC urges BOEM to move forward with a new five year plan, which expands access to offshore resources, especially the energy-rich Alaska Arctic. Thank you for the opportunity to share our views on the new plan.

Resource Development Council for Alaska, Inc.