Brookings Fellow: The U.S. Still Needs Alaskan Resources

September 21, 2015 in Blog

A recent article by Dr. Charles K. Ebinger, a senior fellow at Brookings Institution, emphasizes two important reasons why the United States needs Alaska’s oil and gas resources – and why now is the time to encourage exploration and development:

First, U.S. presence in the Arctic region is significantly outmatched by both Arctic and non-Arctic countries. Second, Alaska’s untapped reserves represent a golden opportunity for America to bolster its future energy security.

The Arctic’s Geopolitical Significance 

As Arctic Energy Center has previously highlighted, American energy development in the Arctic is central to U.S. national security and America’s role as a leader in the region, not least because other countries have been pushing an aggressive Arctic policy agenda. When juxtaposing U.S. Arctic strategy with that of other countries’, Dr. Ebinger writes,

“…America has regrettably been on the sidelines of Arctic resource and infrastructure investment while [its] economic competitors—Russia and China included—have moved forward.”

Over the last few years, while U.S. Arctic policy remained an issue of secondary importance in Washington, Russia has reopened Soviet-era military bases in the Arctic, amassed a fleet of 41 icebreakers, and conducted military exercises – including one this past March that, with 45,000 troops involved, was among the largest ever in the far north. Russia’s oil and gas policies are equally aggressive: It is not only drilling new exploration wells in the Kara and Pechora Seas, but it is also attempting to extend its stake in the Arctic, which would entitle the country to at least 5 billion tons of new oil and gas reserves.

Even non-Arctic countries far, far away from the Arctic are becoming increasingly active in the region. China, India, Italy, Japan, Singapore, and South Korea became Arctic Council observer states in 2013, and the Department of Defense remarked,

“Arctic and non-Arctic nations are establishing their strategies and positions on the future of the   Arctic in a variety of international forums.”

China, in particular, has identified the Arctic as a region of strategic significance – so much so that Chinese officials reportedly call the country a “near-Arctic state” with goals to become a “polar expedition power.” According to a report by the National Petroleum Council (NPC), an advisory group chartered by the U.S. Secretary of Energy, China has invested millions in Arctic research, infrastructure, and natural resource development. It even has an official icebreaker, to be joined later this year by another brand new$300 million addition to its fleet.

By contrast, the U.S. only has two icebreakers, including one that is intended for scientific research, despite bipartisan calls – and appeals by the U.S. Coast Guard – to commission more icebreakers. Equally concerning is the U.S. Navy’s acknowledgment that its operational experience in the Arctic is limited.

Given the policy and budgetary challenges to increasing U.S. presence in the Arctic, American Arctic energy development presents a unique opportunity to position America as a leader in the region.

Boosting Energy Security

In his piece, Dr. Ebinger pays homage to the shale revolution that has made America the world’s biggest producer of oil and natural gas – and “more energy self-sufficient than it has ever been” – but recognizes that Arctic development is central to America’s ongoing and future energy security.

Even though shale development marks the “beginning of decades of United States dominance in the oil markets,” the U.S. Energy Information Administration projects that U.S. oil production will begin declining in the 2020s – and with it, America’s energy security.

But with new Arctic development, that doesn’t have to be the case. The NPC report explains that if significant Arctic development began this decade, the longer time frame required – for reasons ranging from a shorter exploration season to a more complex regulatory regime – means that new oil and gas resources will materialize around the time that production from the Lower 48 is expected to fall.  As the NPC reports 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 benefits of Arctic energy development are boundless. But, as Dr. Ebinger warns, foregoing this opportunity will be immensely costly:

“…[I]f we effect no policy changes on an urgent basis we will not stay ahead of or even keep pace with our foreign rivals, remain globally competitive, or provide global leadership and influence in this critical region. […][I]f we fail to develop the enormous trove of resources in Arctic waters off Alaska, the U.S. risks a renewed reliance on overseas energy in the future and will have missed a prime opportunity to keep domestic production high and imports and consumer costs low.”