Resource Development Council

State urges feds to lift drilling ban

Governor Sean Parnell and Senator Mark Begich expressed their disappointment last month to the Obama administration when Interior Secretary Ken Salazar lifted the suspension on deepwater exploration in the Gulf of Mexico, but said the decision would not apply to offshore drilling in Alaska.

“If Secretary Salazar can lift the moratorium for wells in 5,000 feet of water, he should be able to do so for a shallow water well in the Beaufort Sea,” Parnell said. “While this is a step in the right direction, the 2011 drilling season in Alaska remains at stake. The industry needs regulatory certainty and predictability. Without certainty, it is very difficult for the industry to plan or invest, to the detriment of Alaska and the nation.”

“Giving the green light to continued oil and gas development in the Gulf of Mexico is a positive sign for America’s energy industry and for American energy consumers,” said Begich. “This country imports far too much of our oil and gas from abroad while we have the technology to safely develop these resources at home and put thousands of Americans to work. Still, I’m frustrated the Secretary’s announcement didn’t mention Alaska, where clear guidelines about offshore development in our Arctic waters remain unsettled. Because of our short drilling season and the complexity of getting equipment in place, Alaska operators need certainty about what development they can do when.”

Begich sent a letter to President Obama requesting that reasonable timelines for responsibly developing the plentiful oil and gas resources in the Outer Continental Shelf (OCS) off Alaska’s Arctic coasts be provided within 60 days. He said Shell’s recent announcement to scale back its Alaska 2011 exploration plans underscores the need for the federal government to provide clear directions to energy companies operating in Alaska.

The Department of the Interior (DOI) has not set any deadline on deciding whether to allow future offshore drilling in the Arctic. Shell’s plans to apply for a Beaufort Sea drilling permit for 2011 assumes that DOI will lift its Arctic ban by the end of the year.

Parnell also noted the decision to end the Gulf moratorium offers no clear guidelines that pertain to Alaska. “The Arctic moratorium violates federal law and our lawsuit against Secretary Salazar will proceed,” the Governor said.

The State of Alaska in September filed a lawsuit against Salazar in U.S. District Court in Alaska to overturn the federal moratorium on offshore drilling in Alaska’s OCS. The suit seeks to block the moratorium on the grounds that the Obama administration violated federal law and acted in an arbitrary and capricious manner.

“It is a cruel irony for Alaska to have been improperly bootstrapped into a moratorium that stemmed from deepwater activities in the Gulf, and then have the Gulf moratorium lifted without similar relief for Alaska’s Arctic exploration activities, which occur in much shallower waters,” said Alaska Attorney General Dan Sullivan.

The state’s filings lay out the facts of the Arctic moratorium and the numerous instances in which Salazar has stated, including in testimony before Congress, that the agency has instituted a “moratorium” or “pause” on Arctic OCS exploration activities. Under the OCS Lands Act, the governors of affected states must be given notice of and an opportunity to participate in such an agency action. The state is seeking expedited review of its lawsuit so that planned 2011 drilling projects can advance. The court has granted the state’s request for an expedited review.

In comments submitted at a September hearing in Anchorage hosted by BOEM Director Michael Bromwich, Parnell noted the operating conditions in the relatively shallow waters of Alaska’s OCS are categorically different from those encountered in the extreme deep waters of the Gulf of Mexico.

“Drilling in an Arctic climate holds unique challenges but offers distinct advantages compared to what is needed for deepwater offshore oil and gas exploration and development,” according to Parnell. “There are also differences between state and federal oversight and regulatory frameworks, as well as fundamental contrasts in the geology of the regions, all of which merit consideration while making policy decisions.”

The governor also said concerns regarding blowout prevention are very important. “Alaska has a long and proud record of safe oil and gas drilling,” Parnell said. “In large part, this is because of a regulatory framework based on an extensive and specialized knowledge of the Alaska drilling environment and the proactive assistance provided by regulators to explorers and developers to manage risk.”

Larry Hartig, Commissioner of the Department of Environmental Conservation, testified at the Anchorage meeting.

“Alaska’s OCS is an important part of our nation’s energy future,” Commissioner Hartig said. “Alaska is committed to responsible development of the oil and gas potential of our state. As tragic as the events in the Gulf are, the BOEM must assess the risks and opportunities in Alaska based on conditions and resources present here. We believe this assessment should lead to the conclusion the processes and safeguards are in place to allow leasing and exploration activity to resume on the Alaska OCS.”

RDC attended the hearing and submitted comments supporting the state’s position.

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