Resource Development Council

From the Executive Director - Rick Rogers

The time to explore the Arctic is now

In spite of the naysayers, the time to explore the Arctic Outer Continental Shelf (OCS) is now.

It’s been more than seven years since the federal Bureau of Energy and Ocean Management (BOEM) auctioned off federal off shore oil and gas leases in the Chukchi Sea, generating over $2.6 billion in federal revenue. After appeals and lawsuits of every imaginable kind, it appears we may be on track to see the first exploration drilling this season. BOEM has revaluated its lease sale as mandated by the courts, and now Shell, the leading leaseholder in the basin, has filed its exploration plan for 2015 drilling.

The naysayers are many including Greenpeace, an organization willing to commit acts of piracy, risk human lives and environment with silly publicity stunts simply to make national and international headlines. For many observers, the hypocrisy of these actions is hard to miss. Consider the carbon footprint of the round trip commute to work by air of a Greenpeace senior executive as reported last June in the London Telegraph, 250 miles from Luxembourg to Amsterdam at 142Kg CO2 per round trip. Or how the defacing of the World Heritage Site in Peru, the Nazca Lines, again merely for media attention. The 72-meter long Greenpeace Vessel MV Esperanza certainly leaves a large carbon footprint as it shadows Shell’s every move as the company mobilizes for Arctic exploration.

But it’s not just extreme environmental activists outspoken against Arctic drilling. Washington Governor Jay Inslee and the Seattle City Council are outspoken critics of Arctic OCS drilling and are upset that the Port of Seattle is serving as a staging area for the Shell armada. The hypocrisy of this was not lost on the Alaska Legislature, which recently passed SJR18, which among other things urges the Washington leaders to “first consider closing the Boeing production facilities in the State of Washington if they are truly concerned about the eff ects of emissions of carbon dioxide from commercial activity.”

I don’t consider Greenpeace and Washington state politicians credible sources of insightful perspective on the risks and rewards of exploring for and developing oil and gas in the Alaska Arctic OCS. When the U.S. Department of Energy needs a thoughtful and in depth evaluation of such thorny questions, it often asks the National Petroleum Council (NPC), an oil and gas advisory council to the U.S. Secretary of Energy.

Last month the NPC released a report requested by Energy Secretary Ernest Moniz that blows arguments against Alaska Arctic exploration and development out of the water. The report, entitled Arctic Potential, involved participation of over 250 participants from government, academia, industry, Alaska Native organizations, and nongovernmental organizations. In other words, this was a diverse group, not Greenpeace law-breakers or Washington state populist politicians.

The report is timely given that the draft regulations for exploration and development in the Arctic, as well as Shell’s exploration plan for the Chukchi are currently under review. To quote the transmittal letter from NPC chairman Charles Davidson to Secretary Moniz:

“Other nations, such as Russia and China, are moving forward with Arctic development. Facilitating exploration and development in the U.S. Arctic would enhance national, economic, and energy security, benefit the people of the north and the U.S. as a whole, and position the U.S. to exercise global leadership.”

Enhanced national and economic security, benefiting people, positioning the U.S. to exercise global leadership – this preamble sounds encouraging. Key findings from the NPC are far more useful than publicity stunts and political rhetoric in evaluating the risks and rewards of Arctic development. Consider the following key findings on the NPC report:

  • There have been substantial recent technology and regulatory advancements to reduce the potential for and consequences of a spill.
  • The oil and gas industry has a long history of successful operations in Arctic conditions enabled by continuing technology and operational advances.
  • Arctic oil and gas resources are large and can contribute significantly to meeting future U.S. and global energy needs. If development starts now, the long lead times necessary to bring new crude oil production from Alaska would coincide with a long-term expected decline of U.S. Lower 48 production.
  • Most of the U.S. Arctic off shore conventional oil and gas potential can be developed using existing field-proven technology.
  • The Arctic environment poses some diff erent challenges relative to other oil and gas production areas, but is generally well understood.

Of all Arctic nations, the U.S. and Russia have the greatest Arctic conventional oil potential at 34 and 36 billion barrels respectively. The U.S. is poised to be a leader in responsibly developing these resources using the highest standards and leading edge technology. With or without the U.S., the Russian Arctic resources will be exploited. U.S. infrastructure and spill response capacity will be greatly enhanced if we are a player in Arctic development rather than a bystander.

As the U.S. has assumed chairmanship of the Arctic Council, we should lead by example in moving forward in carefully developing the resources. The NPC report shows how the benefits far outweigh the risks. That said, we have to get it right, and this report recommends advancing technology, using best practices and leading the other Arctic nations by example.

I encourage a look at the report’s 53 page executive summary. View the summary at npcexecutivesummary.pdf

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