New Report: Offshore Oil and Gas Activities Critical to U.S. Arctic Infrastructure

February 14, 2017 in Blog, Featured

According to a new study released yesterday by the Alliance for Innovation and Infrastructure (Aii), the Obama Administration’s decision to ban offshore oil and gas development is depriving the Arctic of $6.3 billion in necessary infrastructure projects. The report, titled Arctic Promise: Challenges and Opportunities in Realizing the Next Generation of U.S. Arctic Infrastructure, focuses on four necessary infrastructure projects that it predicts will likely not be developed without offshore oil and gas exploration and production.

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Offshore oil and natural gas production undoubtedly plays a significant role in the Arctic economy. Along with tourism, commercial fishing and cargo shipment, it’s a key driver of economic growth providing not only increased investment but also substantial tax revenue. As the report states:

“Arctic offshore oil and gas activity – if allowed – would bring sufficient physical and financial resources to the region to support these major infrastructure investments, plus an estimated $19 billion in state and local revenues.”

The study continues by outlining the detrimental effect the Obama administration’s offshore leasing ban has had, and will continue to have, on Arctic development while it is still in place,

“The Obama administration’s decisions to first remove the Arctic from the 2017 – 2022 Outer Continental Shelf leasing program and then ban energy development in 115 miles of the resource rich Beaufort and Chukchi seas, is likely to create a chilling effect on capital investment, significantly threatening the viability of critical infrastructure projects.”

The four projects outlined in the report that risk not becoming realized without increased development in the Arctic are:

  • A deep draft expansion at Port of Nome, allowing for larger ships to dock.
  • Development of Port Clarence into a Maritime Support Base, which would improve safety and shipping activities.
  • Creation of a new dock at Cape Blossom, helping lower shipping costs and facilitating community expansion.
  • Enhanced Arctic military and maritime infrastructure, such as new icebreakers.

These projects would touch all facets of the Arctic economy, helping to enhance our national security – not just locally, but in the United States as a whole. As Aii Chairman Brigham McCown said:

“Infrastructure development in Alaska’s Arctic region is critical to the United States’ national security and geopolitical interests and will improve the health, safety and economic well-being of Alaska’s Native population.”

But with the ban on offshore energy production still in place, the Arctic is unable to reap these benefits and the United States risks falling further behind Russia, which has an ever increasing presence in the region, threatening both national security and the well being of the local population. As McCown states,

“The Obama Administration’s decision to ban offshore oil and gas production in the Arctic will sideline the most potent source of capital investment needed for infrastructure projects and will ensure listless economic conditions for Alaska, increasing barriers to modern healthcare services and driving up the cost of living for every Alaskan.”

The study concludes that the extent to which Arctic development will be realized depends on how the Trump Administration prioritizes Arctic issues, the most notable being whether it decides to overturn the existing ban on offshore development. As the report states:

“The prospects of offshore oil and gas development serving as a catalyst for the creation of new infrastructure in the Arctic in the near term, therefore rests on whether or not the Trump administration, and to a lesser extent the 115th Congress, chooses to prioritize the issue. This is likely the single biggest issue in determining whether and how extensively the next generation of infrastructure in the U.S. Arctic can be realized.”

Let’s all hope, for both the economic well-being of local Alaskans and the national security of our nation, that the Trump Administration does all it can to overturn the ban on offshore oil and gas activity in order to facilitate necessary Arctic development.