The International Energy Agency released a new report last week finding global oil discoveries are at an all-time low, a result of subdued investment following the recent decline in commodity prices. While U.S. shale development continues to be a rare bright spot in terms of production, the full ripple effect of IEA’s finding on US energy security is difficult to measure in the long-term. What we do know, however, is that President Trump’s recently signed Executive Orders overturning of the Obama Administration’s Arctic offshore development ban presents the US with a tremendous opportunity to ensure our future energy security with the region’s wealth of resources.
IEA predicts that U.S. energy consumption will grow by about 0.4% per year through 2040, while global demand is expected to increase by 1.2 million barrels per day a year in the next five years. Couple this increasing need with the supply challenges caused by falling global oil discoveries, the need for developments, stable sources of energy are important to meet America’s future energy mandate. This is where our Arctic resources can play a vital role. As the National Petroleum Counsel’s report “Arctic Potential” states,
“If development starts now, the long lead times necessary to bring on new crude oil production from Alaska would coincide with a long-term expected decline of U.S. Lower 48 production. Alaskan opportunities can play an important role in extending U.S. energy security in the decades of the 2030s and 2040s.
The American Arctic is estimated to have 28 billion barrels of oil and 181 trillion cubic feet of natural gas, respectively. When unconventional development inevitably declines – which analysts suggest could take place in the 2030s and 2040s – the Arctic is an abundant source of domestic oil and gas that will serve to strengthen the United States’ security and economy. Arctic nations such as Russia and Norway have clearly acknowledged the Arctic’s vast potential.
Russia is enthusiastically embracing Arctic development – despite crippling economic sanctions – acknowledging the massive economic and strategic potential of the region. The United States needs to embrace the Arctic with the same level of enthusiasm if we wish to further bolster our national security. President Trump’s executive order is an important first step to achieve these goals, as it assures producers that investment in the region’s infrastructure is justified. Critical infrastructure projects such as roads and deepwater ports which sat idle under the Obama Administration’s ban now have renewed support under Trump’s order. That said, continued support in the region is still needed for development to happen.
Offshore Arctic oil and gas may be years from production, but this new executive order once again makes developing the region’s massive resources an option to supplement domestic supplies in the coming decades when we need it most. The Arctic offshore provides a solution to future energy shortages, but the exploration must begin in earnest now.