July 8, 2011
Mr. James Kendall, Regional Director
Bureau of Ocean Energy Management, Regulation, and Enforcement
Alaska OCS Region
3801 Centerpoint Drive, Suite 500
Anchorage, AK 99503-5820
Re: Comments on Revised Draft SEIS, Lease Sale 193 Chukchi Sea
Dear Mr. Kendall:
The Resource Development Council (RDC) is writing to urge the Bureau of Ocean Energy Management to affirm Lease Sale 193 as held in 2008. The Supplemental Environmental Impact Statement (SEIS) provides sufficient information and analysis to support a decision affirming the sale.
OCS oil and gas development is absolutely critical to Alaska’s future economy. With the Trans-Alaska Pipeline System now running at one-third capacity, exploration blocked in ANWR, and non-development activists working toward Wilderness designations in the National Petroleum Reserve, nothing less than Alaska’s future economy is at stake.
The responsible development of potentially immense oil and gas deposits in the Chukchi Sea would significantly boost the economy and extend the life of the oil pipeline. Without new federal oil production, TAPS could be uneconomic to operate at some point in the next decade.
If there is no oil and gas development in ANWR and the OCS, and the best prospects in NPR-A are taken off the table, the federal government must then accept the consequences, including heavier reliance on foreign oil, soaring trade deficits, a weaker national economy, and compromised national security. For Alaskans, our future will be bleak with the state losing much of its economic base.
Not developing federal oil in Alaska makes no sense from an economic and energy security standpoint, especially given the fact that America imports over 50 percent of its oil, and at a great cost.
With its enormous potential reserves, the OCS can sustain Alaska’s economy for generations. The public interest should compel the Obama administration to move forward with policy that encourages job creation, supports national energy security while growing the economy, and providing the nation with much needed domestic energy supplies.
RDC has a high level of confidence that exploration and development can occur safely in the Arctic and that mitigation measures can be put in place to address most concerns. Development can and does occur without harm to polar bears, caribou and other species.
Since the 2010 oil spill in the Gulf of Mexico, opponents of offshore drilling are calling for an indefinite ban on new exploration and development in Alaska. RDC sharply disagrees. Operating conditions in these waters are categorically different than those in the deep waters of the Gulf of Mexico and pose much lower risk. Moreover, the processes and safeguards in place today in Alaska should allow leasing and exploration activity to resume in the Alaska OCS.
Drilling in the Arctic offers distinct difference than deepwater exploration and development in the Gulf of Mexico. The pressure encountered in deepwater drilling is multiple times greater than in Alaska, where wells would be in very shallow water. In addition, the relatively shallow water depth in the Chukchi Sea would allow blowout preventers to close much more rapidly than those in deep water. The blowout preventers would also be directly accessible to dive teams, unlike the Gulf where any maintenance or repairs had to be accomplished by remote control vehicles. Another distinction is that many Alaskan offshore operations are seasonal in nature. For example, Shell has proposed conducting its exploratory drilling during the summer and fall open water season. Ice management vessels will be positioned on site to deflect any ice flows that could potentially approach a rig. There are also major differences between state and federal oversight and regulatory frameworks, as well as fundamental differences in the geology of the regions. All of these contrasts warrant special consideration in public policy decisions and should lead the BOEMRE to conclude that exploration should move forward in the area covered by Lease Sale 193.
Advances in technology provide an additional measure of confidence in Alaska drilling. Energy development in Alaska is subject to in-depth analysis by federal law, a stringent permitting process, and oversight by state and federal agencies. In every instance, development is preceded by extensive studies.
RDC recognizes that subsistence whaling is vitally important, both economically and culturally to North Slope villages. Industry and government working together have the ability to protect subsistence resources while producing needed domestic energy for the nation. Strong regulatory oversight, combined with other mitigation measures, can be employed to protect all resource and subsistence users.
While the Chukchi and Beaufort Seas are considered frontier areas, exploration activity has occurred there before. In fact, thirty wells have been drilled in the Beaufort and five in the Chukchi – all without incident. These wells were drilled in the 1980s, utilizing older technology compared to what exists today. Moreover, there has never been a blowout in the Alaska or the Canadian Arctic that has resulted in an oil spill.
Opponents of oil exploration have cited the lack of infrastructure in the Arctic as a reason not to drill in the region. However, it is important to note that additional infrastructure will be built to accommodate future needs once exploration and development activities move forward. The lack of infrastructure today is due directly to the fact that there has been virtually no ongoing development or commercial activity of any kind offshore in the Arctic.
The SEIS concludes that the probability of a very large oil spill is very minimal and Shell has defended its ability to quickly cap blowouts and to contain and clean up spilled oil. Shell has committed to stage extensive resources onsite to immediately respond to any incident. The company has also committed to building and staging in the region a pre-fabricated dome to place over a troubled well. Moreover, virtually all functions of Shell’s operations will be monitored at remote sites off the rig, giving industry and government critical “real-time” data and allowing for early detection of potential problems. In addition, the Alaska Clean Seas consortium has substantial resources and experience in the Arctic and has done extensive mapping to identify sensitive areas. The consortium has also conducted extensive safety and oil spill drills in the Arctic and has active research programs dating back into the early 1980s.
Some groups opposing offshore development will insist that all scientific and research data gaps be eliminated before exploration is even considered. In our view, this is unreasonable. A significant scientific record exists in the Arctic and industry and others are well positioned to add to it with new studies, while exploration moves forward in a cautious and responsible manner. The North Slope and the offshore are now perhaps the most studied energy basins in America. The federal government has spent more than $500 million on studies in Alaska and in the past decade the agency has funded hundreds of studies here, with the majority of those focused on the Beaufort and Chukchi Seas. Rather than wait for all the questions to be answered, drilling should proceed as research continues to advance our knowledge of the Arctic.
Those who oppose exploration in the Arctic would study this issue indefinitely and use any data gaps as an excuse for inaction. There will always be gaps and unanswered questions, no matter where exploration and development occur. In fact, significant gaps existed before and during development of the North Slope’s most prolific oil fields. Despite these gaps, development moved forward in a responsible manner while at the same time our knowledge and understanding of the Arctic advanced. But not all questions and concerns regarding oil and gas exploration and development can be answered and met. Not all risks can be eliminated. If we wait until we have all the answers, drilling will never occur. That may be the goal of some, but that ignores the nation’s need for domestic sources of oil. If the federal government insists that every risk be eliminated, then it must be prepared to significantly increase foreign imports to meet future needs. It must then also accept the consequences of a heavier reliance on foreign oil, including higher trade deficits, a weaker and more vulnerable economy, and compromised national security. Put another way, failure to move forward with OCS development in Alaska will put the state economy at risk, as well as the nation’s security.
Between ANWR, NPR-A and the Alaska OCS, there could be nearly 40 billion barrels of oil in place. By comparison, 16 billion barrels of oil have been produced on state lands across the North Slope in 33 years. The sustainability of TAPS and Alaska’s economy will largely depend on some combination of oil production from these federal areas, which represent the nation’s best onshore and offshore prospects for major discoveries.
New production in the Alaska OCS would reduce America’s reliance on foreign energy. The Alaska OCS is an important future source of U.S. energy supply with up to 29 billion barrels and over 235 trillion cubic feet of natural gas potentially in place. The potential recoverable reserves offshore Alaska is more than all the current total proven U.S. oil reserves of approximately 21 billion barrels. Alaska could have the ninth largest oil resources in the world ahead of Nigeria and Libya – if access is granted to these potential reserves. Moreover, OCS gas reserves would significantly improve the long-term economic viability of the proposed gas pipeline from the North Slope to the Lower 48 – a clean energy priority of the Obama administration. To become a reality, the pipeline requires additional gas reserves beyond what has already been discovered onshore.
Given its potential for immense recoverable reserves and enormous economic benefits to the state and nation, the Alaska OCS should be opened to responsible development. OCS development would generate hundreds of billions of dollars in royalty and tax revenues to the state and federal governments and aid the nation’s economic recovery by reducing the trade deficit and creating tens of thousands of new jobs. Indeed, OCS leases off Alaska’s coast have already generated billions of dollars to the federal treasury.
The OCS can sustain Alaska’s economy for generations. Currently there are more than 108,000 Alaskan jobs tied to the discovery, production and shipment of Alaskan oil and natural gas, accounting for more than 15 percent of Alaska’s population. According to a University of Alaska study, OCS production could provide an annual average of 54,700 jobs nationwide with an estimated cumulative payroll of $145 billion over the next 50 years. Moreover, revenues generated from OCS development in the Arctic could amount to $193 billion in revenues to federal, state and local governments over a 50-year period.
RDC and many Alaskans share President Obama’s view that America needs to conserve more and put new emphasis on renewable and alternative energy. By doing so, the nation can ultimately break its reliance on foreign oil. Yet while America must conserve more and move toward renewable energy, it still needs to pursue new domestic oil and gas production, given the fact it will take decades before renewable energy becomes a dominant energy source. Even with the Obama administration’s goal to decrease dependence on oil, it is projected that fossil fuels will still account for two-thirds of this nation’s energy consumption in 2025. Meanwhile, every barrel of oil that is not produced in the U.S. will be imported from abroad to meet our needs. Given economic, environmental and geopolitical concerns, America must produce more of the oil it consumes – under American laws, regulations and oversight, and by American workers.
It is vital that our nation’s abundant energy resources be fully utilized for compelling economic and energy security reasons. RDC encourages BOEMRE to re-affirm Lease Sale 193 as held in 2008. Thank you for the opportunity to provide comments.
Resource Development Council for Alaska, Inc.
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