RDC’s 23rd Annual Conference Presentations
Steven Griles, Deputy Secretary, U.S. Department of the Interior, Washington, D.C.
Thank you Governor Knowles, it is a pleasure to be here. I congratulate you on your eight years of being Governor.
In looking at the program, I was glad to see that I am speaking just before the Grand Raffle Drawing. I figure everyone has to stay around to listen to me or they won’t know if they won anything in the raffle.
I love coming to Alaska. It is truly one of our last frontiers and everyone wants to see it, to visit its natural wonders and spectacular beauty. (Story about fishing with the bears in the Brooks River.)
There are many visitors to Alaska. Some come seeking a pristine wilderness experience. Let me describe my favorite example for you.
He is wearing a parka with double-rip-stop nylon supplemented with ceramic particles and polyurethane coat-welded seams. The rest of his clothing includes various pieces made from micro filaments, micro fleece and gore tex.
He is carrying a cell phone, wearing a high-tech watch and using a laptop to stay connected to the internet. The canoe he chose is made from DuPont’s patented Kevlar. All of this goes into or on top of the largest sturdiest sports utility vehicle he can find and it includes a global positioning system.
And why is he here? He is in Alaska to protest mining and oil and gas drilling.
A broadcaster for National Public Radio called this person a cell-phone naturalist. The cell-phone naturalist sees no contradiction in terms for the products he uses that are made from petroleum products and mined ores-- and his cause against the source of those products.
Gov. elect Frank Murkowski explains often that there are 92 environmental groups with offices in Alaska. That is astounding when you realize there are far less than a million people in the entire state. All of the groups seem to want to make decisions for Alaskans.
Their decisions seem to lead to having Alaskans carry their luggage and canoes, guide them through the wilderness and make their stay comfortable and rewarding, while they make sure Alaskans have no resource-development jobs.
Not that there is anything wrong with the tourist industry. Except that tourism flourishes in Alaska a short three months out of the year.
But back to our cell-phone naturalist. The more energy he uses with his high-tech gadgets, the more we need.
You all know the figures that came out of the President’s National Energy Plan. Over the next 20 years, U. S. natural gas consumption is expected to grow by more than 50 percent, while domestic production will increase only 14 percent.
Newer figures just released Wednesday by the Energy Information Administration show natural gas demand projected to grow 54 % by the year 2025. The report says:
“Growth in domestic natural gas supplies will primarily depend on two sources: increased unconventional natural gas production, much of it out of the Rocky Mountain region, and construction of an Alaskan natural gas pipeline that delivers gas supplies to the lower-48 States starting in 2021.” From Alaska–by the way.
If domestic oil production follows the pattern of the last 10 years, it will decline by 1.5 million barrels per day in the next 20 years. But demand will increase by six million barrels a day.
Over the last several weeks, I have read a number of publications that indicated natural gas demand in the immediate future could be quite high. We are having less drilling this year with less success and those wells in which we are finding gas are experiencing a quicker level of decline than in the past.
If the economic recovery continues and if we have a severe winter in the Midwest or the East, we will have spikes in gas prices–and it is not good to have that kind of instability.
As always occurs when there is growth of demand because of fewer refineries, outages, pipeline capacity–we end up with prices that spike also. And politicians and the public will demand an investigation. But the results generally are the same as reported on today’s front page of the Anchorage Daily News where the Attorney General says there is “insufficient evidence of price fixing.”
The conclusion is that the market works, that market volatility results in price spikes.
Our nation’s energy situation today is defined by a fundamental and alarming imbalance between supply and demand.
We needed an energy bill. We needed it to include exploration and development of ANWR. The President and Secretary Norton have demonstrated their commitment to ANWR and that will continue. As Sec. Norton indicated in her last visit to Alaska this month–an energy bill without ANWR is not a true energy bill.
I am quite sure that ANWR will be a top priority for whoever Murkowski appoints to the remaining years of his U.S. Senate term.
There is one other move being considered by the next Senate Energy and Natural Resources Committee chairman, Pete Dominici, that would attach ANWR language to reconciliation legislation.
This was done once before --and President Clinton vetoed it. With support from Budget Chairman Don Nickles and your Senator–Ted Stevens–it has some chance of succeeding. But I learned that you never predict what the United States Congress will do. But with the elections this month–predictions will be easier.
BLM & MMS
Despite the lack of an energy bill in this session, Interior has other significant commitments under the President’s National Energy Policy.
The Bureau of Land Management, the Minerals Management Service (MMS) and the Office of Surface Mining are undertaking significant initiatives to comply with requests in the President’s plan.
Alaska is a very important player in the President’s Energy Plan. When I met with the President in the oval office before the Congress adjourned in October –to discuss energy legislation, the President made it perfectly clear he wanted ANWR to be in the legislation if at all possible. But the odds did not look good.
Who would have recommended that the President in September of 2000 while campaigning in New Hampshire would raise ANWR as a campaign issue.
This President does what is right based on principles not on polls. At that same meeting, the President said, “Isn’t there another area in Alaska where we are trying to develop? Doesn’t it start with NP?”
“Yes sir, NPR-A,” I answered.
This President cares about energy and he does know what we are attempting to do to find domestic energy production.
The Secretary has charged the new Alaska BLM Director–Henri Bisson, with focusing on several issues related to development of Alaska’s energy resources.
The BLM and MMS both have authority to offer lands under their jurisdiction, to produce mineral and energy resources both on and offshore in an environmentally sustainable manner.
One of the first things that needs to happen-- is we need to move quickly and aggressively in the conveyance of lands to Natives and the state of Alaska. These proposals will significantly increase Native-to-Native and Government-to-Government relationships with the State of Alaska, BLM and Alaska Natives.
As a result of meetings between the CEO’s of several Native Corporations and the Interior Secretary, BLM is working on radical proposals to substantially expedite the conveyance of lands.
For those lands that are retained in federal ownership, we need land-use planning including considerations for mineral potential. BLM currently is developing an activity plan to consider potential oil and gas leasing in the National Petroleum Reserve Alaska northwest (NPR-A). And as the BLM State Director indicated to you yesterday, he is directing the old stipulations be reviewed to determine if they reflect today’s needs and abilities of exploring and developing.
BLM is talking to Conoco/Phillips about a proposal to develop the oil and gas discoveries announced in 2001 in the NPR-A. Those conversations will continue while Conoco/Phillips determines the feasibility of development.
I understand yesterday you were told of several independents who now are looking at NPR-A. What a great change from the last 10 years–let’s hope they too can be successful.
MMS is proposing eight sales during the 2002-2007 five-year program. The proposed sales open up areas with proven reserves such as the Beaufort Sea and Cook Inlet and frontier areas like the Chukchi Sea-Hope Basin and Norton Sound.
Industry’s top request is for us to keep sales on a predictable schedule and provide them ample time for planning. We are committed to do this.
In fact, to help with that predictable schedule, we are preparing only one Environmental Impact Statement for the three sales in the Beaufort Sea and one EIS for the two sales in Cook Inlet.
For frontier areas like Chukchi, Hope and Norton we are following a “special interest” process to first see if industry is interested and then design a sale around their area of interest–rather than requiring environmental groups, native groups, fishermen and the state to respond to proposals that no one has an interest in!
There is a plan afoot early next year to have MMS regional director, John Goll, take a “road show” to the headquarters of the major developers who have expressed an interest in doing business in Alaska.
His show would include the geological prospects in the Beaufort Sea, Cook Inlet and Chukchi, and would highlight the incentive programs for respective sales.
We know that the Alaska offshore is not the cheapest place to do business. As mentioned yesterday by Rance Wall, MMS is developing an incentive package to encourage exploration and development off Alaska. We are still reviewing several approaches, but are considering such things as varied lease terms, rental rates, bonus bids and royalty rates, and other incentives and mitigating measures.
Such incentives worked well in the Gulf of Mexico to jumpstart the now thriving deepwater exploration and development we have there.
We see our sales in NPR-A and the frontier areas as complements to the State’s annual sales in those and adjacent onshore areas.
Governor-elect Murkowski ran on a theme of “growing Alaska’s economy” and increasing the development of your State’s abundant resources. At Interior we are looking forward to working with him and his staff to accomplish this.
All Bureaus of the Interior Department will contribute to this growth.
Specifically-- because it has been more challenging to develop in the OCS, all the current and likely near-future projects in which MMS is involved are right along the State-federal boundary. MMS and the State work together managing several projects and I would like to mention two of them:
NORTHSTAR
The first is the Northstar Project–about 170 million barrels of oil–located in both State and federal waters in the Beaufort Sea. It is producing the first oil from the Alaska outer continental shelf and that started in January. Northstar will provide about 7 percent of the oil flowing through the pipeline or about 70,000 barrels of oil per day. The federal share of that is 16 %.
McCOVEY
The second project is the McCovey Prospect. This is a state/federal exploration unit located about 12 miles north of Prudhoe Bay in the Beaufort Sea. MMS approved the exploration plan in February and the State concurred with the applicant’s Coastal Zone Consistency certification in April.
We are all excited about the McCovey Prospect. We are very pleased that a new player in Alaska, EnCana, is the operator, co-owned with ConocoPhillips and ChevronTexaco.
EnCana may be the new model for how companies should approach development. They have been proactive in addressing all the technical and regulatory requirements that MMS has in place to ensure safe operations, and they have worked closely with the North Slope Borough and communities on the North Slope. This prospect may be a “legacy quality” size and opportunity.
PERMITTING
One final point of emphasis on helping develop Alaska’s economy. As Governor Knowles indicated in his remarks, we too are attempting to do something to expedite and streamline the permitting requirements.
We can provide access to federal lands, we can take your money for leases, but that does no one any good if you cannot get a permit to operate. Industry needs for the government, both State and Federal, to provide certainty to our governmental efforts.
You need to plan ahead and get approvals for budgets that are competing nation-wide and often world-wide. Regrettably too often in the past that has not happened.
We, in the federal government, and you, who work or will be working in State government, must get control of the permitting situation. Too many projects have been nibbled to death by requests for more information or by regulation “on the fly”–adding requirements that are not clearly founded in the law or regulations–or by those who simply do not want the project to go forward.
You, the operators, need to know what the requirements are, and we, the government, need to be very clear what they are so we can provide you with that certainty.
I have made it clear to the heads of the bureaus at the Department that we will work together on energy projects to get them reviewed and permitted on time. We have laws we must follow, and must ensure that our energy projects are done safely for people and for the environment. And we will do that. But we will do that in a reasonable way and avoid delays.
TAPS
Let me switch gears for a moment to say that BLM is moving ahead to reach a decision on renewal for the right-of-way for the Trans Alaskan pipeline. The final EIS has been approved by EPA and is on its way to the Federal Register. The preferred alternative is 30 years. The decision record is on schedule and should be completed early next year.
In the same vein, the Department stands ready to proceed in whatever role is appropriate if a decision is made to proceed with a gas pipeline.
Interior has a strong connection to Alaska and we have made sure that those ties remain in force through the strong players Sec. Norton has put in place. The names of those players are well known to you and they do a great job of representing Alaska’s interests with the Department.
You know Drue Pearce, senior advisor to Sec. Norton for Alaska affairs. Every day, nothing goes to the Secretary on Alaska without Drue’s input Drue’s deputy is Cam Toohey, a veteran of the ANWR wars. I have mentioned Henri Bisson and John Goll-- but there is also Rob Arnberger the National Park Service regional director, who I have gotten to know and for whom I have the highest regard, David Allen of the Fish and Wildlife Service, who has a tough job, and Niles Caesar, regional BIA director, who has assisted in Indian Trusts.
This entire team is here to help you with difficult issues that plague the state.
I’ll touch briefly on a few of those issues.
MINING
With the support of BLM’s Resource Advisory Council, BLM is aggressively pursuing pilot efforts to unravel the many selections and withdrawals that currently are keeping public lands in Alaska closed to new federal mining claims. The pilot projects will focus on areas with the highest potential for mineral development.
They may include areas of State or Native over-selections, and the end result could be that lands remain closed to mining.
However, BLM is determined to closely examine these areas to make certain that economic development opportunities in Alaska are not foregone simply because no one asked the question.
Just mentioning the word mining brings us to the bonding problem. As you know, surety bonds, insurance, or other financial guarantee alternatives are not commercially available for mining on BLM lands in the State.
Three major problems preclude most bonding companies from issuing surety bonds for mine reclamation under the 3809 regulations:
1). Uncertainty of amount–the regulation allows the BLM to
change the amount of the required bond;
2). Uncertainty of duration–surety bonds typically are written for
short periods;
3). Uncertainty regarding criteria for bond release–the
regulation allows the BLM to hold the financial assurance
for an indefinite period of time after the reclamation has
been approved.
There currently are no financial guarantees available in Alaska to assure reclamation except the State of Alaska bond pool.
That bond pool was designed to be a remedy of last resort. Direct access to the State bond pool without first pursuing civil action is not allowed.
We in Interior are sitting down with the BLM-Alaska state director and his staff, and the Solicitor’s office to map a path to get the 3809 regulations to accept the State Bond Pool as meeting the financial guarantee requirements.
This may require an extension of the Cooperative Agreement between the BLM and the State that currently extends through January 2004. It allows miners on BLM lands to continue using the State bond pool.
However, I am hopeful that before that date, we can successfully modify the 3809 regulations to satisfy our collective goal.
NAVIGABLE WATERS
There are more than 22,000 rivers, streams and lakes in Alaska that may be navigable under applicable federal standards. It is time that we in the federal government quit acting like those waterways belong to us!
Back in 1992, the State notified the Interior Secretary that it intended to initiate quiet title proceedings on nearly two hundred rivers, streams and lakes. It filed a suit in Federal Court in Anchorage to quiet title to the beds of the Nation, Kandik and Black Rivers. In January 2000, the Ninth Circuit issued an opinion in this case that frustrates the State’s efforts.
The Court said that the federal court has no jurisdiction to hear quiet title actions against it unless the federal government actively and expressly asserts an interest in the lands. Since the navigable waters issues is about the state asserting its ownership, Alaska has been caught up in a unique “catch 22".
Your legislature passed SB219 this past session to create a navigable waters commission. Gov. elect Murkowski sponsored like federal legislation, which , unfortunately, did not pass.
I’m here today to promise you that Interior won’t wait for Federal legislation to begin dealing with this issue.
FLPMA allows a recordable disclaimer of interest to act like a quit claim deed. A small rule change is needed in the federal regulations to allow us to use this methodology to transfer the ownership of Alaska’s waterways to the state. The rulemaking is in final draft and will be published soon.
We stand ready to work with Gov.-elect Murkowski as soon as he takes office to begin the transfer of the first 200-plus rivers, lakes and streams and to identify priorities and methodologies for the remaining 21,000 plus.
RS 2477
Another issue very important to the state of Alaska is RS 2477. I want to thank Governor Knowles for his leadership in working with the Western Governors to send a letter to the Secretary asking her to adopt a new policy to replace the Babbitt policy on RS 2477.
The Department is poised to bring finality to this issue that has created unnecessary conflict between federal land managers and state and local governments. Sec. Norton will be issuing a memorandum to establish uniform policy guidance with identifiable criteria, consistent with historic regulation prior to 1976, for any analysis of RS 2477 rights of way.
We plan to recognize those Rights of Way in Alaska that have languished since Gov. Hickel’s second administration.
SUBSISTENCE
The Secretary looks forward to working with your new Governor to find a sensible solution to the subsistence debate. We believe that the best option for management of subsistence uses of your fish and game resources lies with state primacy.
Sec. Norton is willing to enter the debate and work with Alaskans to find a way to transfer management authority.
WILDERNESS
Wilderness reviews and the establishment of Wilderness Study Areas–with the wilderness management schemes that follow–have a profound affect on Alaska and your ability to access public lands.
Sec. Norton and I are very aware of the access provisions of ANILCA and the “no more” clause. I can tell you that Sen. Stevens, Rep. Young and Sen. Murkowski never miss an opportunity to lecture on the meaning of the “no more” clause.
While the Department is presently reviewing its wilderness policies agency wide, Alaska is getting extra attention as we review the policies in place for BLM land use plans and the Fish and Wildlife Service’s revisions to their Comprehensive Conservation Plans for each Alaska Refuge.
That brings me back to the cell-phone naturalist I talked about several minutes ago, who was coming to Alaska for the wilderness experience and to stop development.
I have this recurring nightmare that individuals and groups have complete success in stopping all energy and resource development everywhere.
The cell-phone naturalist loses all his high-tech equipment and clothes, watch, computer, SUV. He is reduced to items of clothing made from cotton or wool.
The wilderness experience in Alaska can be pretty cold in those circumstances. That is why the Natives turned to animal furs and skins.
But that isn’t an option in our politically correct atmosphere.
Have you ever wondered why people object to little old ladies wearing fur but not big mean bikers wearing leather? They are both wearing animal skins.
I’ll leave that subject for another speech at another time.
Thank you for now and good luck in the raffle.
