Oil, gas to be part of US Arctic policy, White House official says

The US government’s Arctic policy will include responsible development of oil and natural gas resources in Alaska that meets the highest environmental and safety standards including global climate goals, a White House official said. But other speakers at the Atlantic Council’s Oct. 25 conference suggested that producing this oil and gas could help the federal government finance port construction and other projects to handle tourism and commercial shipping growth as sea ice melts and year-round maritime routes open.

“We commit to world-class safety and environmental standards that guide development decisions,” Amy Pope, vice-chair of the White House Arctic Executive Steering Committee, said in her keynote address. “We continue to take steps that reflect the bicameral and multicameral commitments of the US, Canada, and the Nordic states to conduct commercial activities, including oil and gas development, only when the highest safety and environmental standards are met, including national global climate and environmental goals.”

When it comes to energy security, the Obama administration’s Arctic strategy recognizes that the region holds oil and gas resources that will likely continue to provide valuable supplies to meet US energy needs into the future, she said during the event, which was cosponsored by the Arctic Energy Center.

“Responsibly developing Arctic oil and gas resources aligns with the US all-of-the-above approach to developing domestic energy resources, whether it’s renewables, expanding oil and gas production, increasing efficiency and conservation efforts to reduce our reliance on imported oil, and strengthening our nation’s energy security,” Pope said.

“As part of this broader energy security strategy, we are committed to working with stakeholders in other Arctic states to explore energy resource development best practices and share experiences to make sure that we are producing oil and gas in environmentally responsible ways,” she said.

‘Unprecedented opportunity’

Other speakers agreed with Pope’s statement that close consultations and cooperation with Alaska’s government, native and indigenous populations, and other stakeholders will be essential if the state’s still considerable oil and gas potential is to be realized.

“The US has an unprecedented opportunity as an Arctic nation, a global economic superpower, and the world’s leading producer of oil and gas to have a major impact,” said Donald P. Loren, a retired US Navy rear admiral and a former Deputy US Assistant Secretary of Defense.

“Each of us understands that national security strategy is not only military, but economic, development, cyber, and more,” Loren said. “We recognize the geostrategic importance of the Arctic and its energy resource. The vast untapped stores of oil and gas in those areas could generate investments in ports and personnel for a strong military presence.”

Developing oil and gas resources in Alaska not only would send a signal to the rest of the world that the US intends to maintain its Arctic energy leadership position, but also continue to fill the Trans-Alaska Pipeline System and supply crude to US West Coast refineries and provide high-paying jobs to military veterans, Loren said.

“The Department of Defense is the largest US energy consumer,” he said. “Our leaders could demonstrate that American is serious about its position as a global Arctic energy leader, or they could adopt policies that move away from or slow Arctic energy development. Arctic oil and gas is critical to maintaining America’s energy security.”

Another speaker, retired US Navy Rear-Adm. David Titley, who now directs Pennsylvania State University’s Center for Solutions to Weather & Climate Risk, said, “We understand where the future of climate is in the Arctic better than we understand our future security situation. We know that the trend will be to open up the Arctic to more human activity. How we manage this will matter. The Navy estimates that the over-the-pole route could open within a decade. Paradoxically, as it opens, it becomes harder to operate with more open water, bigger waves, and more storms.”

The fact that nonrated junior naval officers are being called on to use mallets to break sea ice there shows that US Arctic maritime technology and equipment are still relatively primitive, Titley said. “If this is a marathon, we’re on about the 200-yard line,” he said.

TAPS throughput is down

Alyeska Pipeline Service Co. Pres. Thomas J. Barrett, who previously directed the US Pipeline & Hazardous Materials Safety Administration, said that TAPS “is good, sound infrastructure that is challenged because there’s less crude in it and more water and wax.”

Asked why throughput has fallen so far, he replied, “It’s a combination of limited access to production up north, very difficult permitting, and falling prices. It’s never going to be an even path.” The pipeline sends crude not only to West Coast refineries in the Lower 48 states, but also to two refineries in Alaska, which supply fuel for military operations there, Barrett said. “The oil is there, along with the gas, onshore and near-shore. We have the expertise to explore, produce, and move it safely.”

Citing surveys that show 75% of Alaskans support developing oil and gas resources in the state, Barrett said, “I don’t want to be presumptive about speaking for Alaska Natives, but I hope we will listen to what they say. They’re fighting with the save-the-whales movement to protect their ways of life. Five Native corporations are invested in energy development. They had to fight environmentalists to get TAPS built, and it’s been a transformational development in their lives.”

TAPS is the nation’s single largest pipeline investment “and it would be tragic not to keep it running,” added another speaker, former Alaska Lt. Gov. Mead Treadwell, who now is president of Pt Capital in Anchorage. “We have a number of exciting discoveries onshore, and a treasure trove of natural gas that might not be produced until 2033. [Federal policymakers and regulators] keep moving the finishing line, but we need to keep our eye on the goal.”

The US has made some difficult offshore oil and gas policy decisions in the last 12 years, Treadwell said. “But we’ve also made some progress. The six coastal states in the Arctic are doing some form of offshore development, and the US should be in the lead. Extending our coastal territory beyond 200 miles is important because the shelf is so shallow. Other nations are going ahead,” he said.

Alaska’s state government was looking seriously at Royal Dutch Shell PLC’s Beaufort and Chukchi Sea leases providing revenue to construct more ports before the company shut operations down, he said. “The most difficult phrase I heard in Amy Pope’s speech today was that the US leasing decisions will be consistent with its climate policy,” said Treadwell. “I don’t think it makes any sense for the US to retreat from oil and gas in the Arctic. We should be engaging instead of resisting that potential.”

Contact Nick Snow at nicks@pennwell.com.

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