If the concept of drilling in the Arctic sounds dangerous or untested to you, you are not alone. Amid the cacophony of misinformation surrounding Arctic drilling that is designed to scare and mislead, it can be easy to lose sight of the fact that industry has safely and successfully drilled in the Arctic for many decades. Our understanding of the Arctic is informed by a significant and growing body of research on the Arctic environment and an appreciation of the tremendous opportunity for new energy resources.
Here, we take a look at some of the questions that you may have about Arctic drilling:
In Alaska the history of safe, responsible, and successful oil and gas exploration and development began in 1896, when Alaska Petroleum Co. started leasing land for drilling. 1900 saw the first exploratory well drilled in the Alaskan Arctic, and the first commercial oil well in the Arctic was drilled in Canada at Norman Wells in 1920 and began producing in 1932. In the American Arctic, even though serious exploration did not begin until the mid-1950s, a well drilled in 1936 in the Cook Inlet produced enough gas to run a power plant. The Prudhoe Bay field, the largest oil field in North America, was discovered in 1968 and began producing in 1969, and the Endicott field in the Alaskan Beaufort Sea, the first offshore Arctic oil field, began continuously producing in 1986. The long history of Arctic drilling has facilitated technological innovations that have reduced the surface footprint – 65-acre well pads in the 1970s are now drilled on 13-acre pads that can access more than ten times the subsurface area – and reduced potential impacts on the marine environment and wildlife.
Oil and gas companies have pioneered Arctic exploration and production ventures in the global Arctic for decades now, with the first commercial Arctic well drilled in the Canadian Arctic in 1920 and with Russia currently taking the lead in Arctic offshore oil production. Even as activists continue their efforts to ban energy development in the Arctic, there is a strong case to be made for Arctic exploration: The Arctic represents an opportunity to extend global energy security, build up Arctic infrastructure, boost the economy, help sustain the Native community’s way of life, and facilitate international cooperation.
Even though technological advances such as hydraulic fracturing and horizontal drilling have unlocked previously inaccessible shale resources and catapulted America to the coveted spot of the world’s top oil and gas producer in recent years, the Energy Information Administration (EIA) expects U.S. oil production to begin falling in the 2020s and continue declining through 2040 – while net oil imports rise. That’s where the untapped energy reserves in the Arctic become a critical energy source.
The U.S. Geological Survey estimates that there are 90 billion barrels of oil and 1,670 trillion cubic feet of natural gas that remain to be found in the Arctic. This resource potential represents 13 percent and 20 percent of the world’s undiscovered oil and natural gas, respectively. The U.S. Arctic holds 34 billion of barrels of oil equivalent (BBOE) of oil – about 15 years of U.S. net oil imports at 2015 levels – and 60 BBOE of gas.
But in order for these resources to be available to meet the growing demand for energy around the world when they are needed most, development has to begin now. Because of factors ranging from a shorter drilling season to a more rigorous permitting process, the development of offshore Arctic resources requires much longer lead times: at least 10 years, and possibly more than 30 years. Therefore, even if the U.S. Arctic saw a significant ramp-up in offshore drilling during this decade, the new supply of crude oil would not become available until the 2030s and 2040s – which is precisely when the EIA expects production from the Lower 48 states to decline, as a report by the National Petroleum Council (NPC), an advisory committee established by the Secretary of the Interior and chartered by the Secretary of Energy, concluded:
“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.”
Even as receding sea ice affords greater access to the Arctic than ever before, the infrastructure currently in place is dangerously inadequate, leaving the U.S. Coast Guard, local law enforcement, and communities alarmingly unprepared to respond to emergencies. Coast Guard Commandant Adm. Paul Zukunft has said, “In order for us to be relevant, to sustain mission effectiveness in the Arctic, I cannot make the claim that I am semper paratus [always ready] with the fleet I have at my disposal today.” Given the state of American infrastructure in the Arctic, Adm. Zukunft warned, there is “great potential for a significant loss of life in the event of a mishap up there.”
Arctic drilling has an important role to play in bolstering Arctic infrastructure: By operating in the Arctic, oil and gas companies bring with them equipment, resources, and capabilities to the Arctic – all which benefit local communities and search-and-rescue efforts. For example, Shell’s Arctic fleet in 2015 consisted of about 30 vessels, and the company even overhauled a helicopter hangar for search-and-rescue purposes in Barrow, Alaska. The NPC report described the opportunities this way:
“There are many synergies between the types of infrastructure that would facilitate Arctic oil and gas exploration and development and the infrastructure needs of local communities, the state of Alaska, and elements of the U.S. Forces such as the Coast Guard and Navy…The Coast Guard and Navy, which play key roles in areas of safety, search and rescue, and national defense, are subject to many of the same resupply and support requirements in the Arctic as the oil and gas industry.”
For Alaskans: As Alaskan labor and business organizations describe it, “Alaska depends on the responsible development of its natural resources to expand and support its economy.” Similarly, Alaska Natives across the North Slope have said, “Other than oil and gas, there’s really nothing else here. There’s no agriculture, no timber, no commercial fishing.”
When oil and gas taxes provide about 90 percent of Alaska’s general revenue, production levels play a large role in determining the state’s economic health. These economic resources from offshore development alone could come in the form of an annual average of 35,000 jobs in Alaska, $72 billion in total payroll, and $4 billion in property taxes for local governments over a 50-year period (in 2007 dollars).
For Americans across the country: Americans outside of Alaska also benefit from Arctic energy development: U.S. Arctic offshore development is estimated to generate, over a 50-year period, an annual average of 54,700 jobs nationwide, $145 billion in total payroll, $193 billion in government revenues, $97 billion in federal lease revenues, and $51 billion in federal corporate income tax revenue (in 2010 dollars). Because these numbers might seem intangible in the aggregate, here’s an example of a local economy benefiting from Arctic drilling two thousand miles away: The Puget Sound area in the Pacific Northwest, a hub of maritime and industrial activity that has supported resource development in Alaska for more than 100 years, received $313 million in direct investment from just Shell alone from 2006 to 2014.
As you can imagine, life 300 miles north of the Arctic Circle can be challenging. But as Alaska Natives have explained before, their hardships “have been tempered by revenues generated from oil development activities both onshore and in Alaska state waters.” These revenues fund everything from running water, sewer systems, flush toilets, and local landfills, to roads, health clinics and K-12 schools. As members of the Alaskan community explain,
“The development of Arctic oil and gas resources provides our communities with the means to preserve our traditional way of life and culture while also allowing our residents to enjoy a greater quality of life. Put another way, our communities cannot survive without continued resource development in our region.”
But the ability of Alaskan communities to continue providing these basic services is threatened by lower oil and gas production levels, as well as efforts by outside activist groups to hamper production.
Energy development in the Arctic also signifies a historic opportunity for the Arctic countries – Canada, Denmark, Finland, Iceland, Norway, Sweden, Russia, and the United States – to work together on priorities such as advancing Arctic scientific research and improving search-and-rescue capabilities in the region, as former Coast Guard icebreaker captain Lawson Brigham observed:
“Today’s Arctic is governed by eight developed states that arguably cooperate more than they have at any other period in history. International collaboration in scientific research, for instance, is at record levels in the Arctic today.”
Even though the Arctic has been romanticized as an unexplored frontier in popular culture and the media, the physical environment and biological inhabitants of the Arctic have been observed and studied for thousands of years – notably by Alaska Natives, who have called the Arctic home since 6000 B.C. to 2000 B.C. America’s formal contribution to this body of knowledge began in 1898, when the U.S. Geological Survey started collecting geological and botanical information in the Arctic, followed by the Outer Continental Shelf Assessment Program in 1975, which provided a crucial basis for predicting and mitigating potential impacts of offshore development. Studies that specifically investigated the effects of offshore oil and gas activities on marine and coastal birds and marine mammals have been conducted in northern Alaskan waters since the mid-1970s, and the Bureau of Ocean Management (BOEM) develops and manages ongoing scientific research on the Arctic environment to inform the federal offshore leasing program. Additionally, the oil and gas industry has funded much of the effort behind refining and expanding our understanding of the Arctic environment over the past few decades.
Our understanding of the life history, distribution, and behavior of Arctic animals – enriched by the traditional knowledge of Natives who have lived in company with these animals for thousands of years – helps inform operational practices that avoid or minimize potential impacts on animals in the area.
The mitigation and monitoring measures required to conduct oil and gas activities in the offshore Arctic are designed to prevent harming animals and disturbing habitats, and these measures are reviewed and overseen by an extensive regulatory apparatus made up of at least 12 federal agencies, 19 state agencies, and four local Alaskan agencies (pg. 4-4) governing every step of the Arctic energy development process.
As stipulated by the 1970 National Environmental Policy Act (NEPA), all federal agencies are required to consider environmental impacts in their decision-making processes, in what is commonly referred to as the “NEPA review process.” NEPA review is required at every stage (pg. 4-5) of Arctic oil and gas development, from holding lease sales, to selecting sites, to preparing production plans.
For example, the Department of the Interior’s (DOI) Bureau of Ocean Energy Management, before holding the 2008 Chukchi Sea oil and gas lease sale, had to weigh the potential environmental impacts of oil and gas development on resources like fish, birds, and marine and terrestrial mammals. DOI’s decision to hold and subsequently affirm the lease sale reflects its determination that the environmental risks of Arctic drilling are manageable, and that the appropriate mitigation measures would be sufficient.
Below are a few examples – by no means a comprehensive survey – of other regulatory agencies charged with protecting animals and wildlife in the Arctic:
On the federal level, U.S. Fish & Wildlife Service’s (USFWS) NEPA review process evaluates whether proposed projects would impact fish, wildlife, and natural habitats and determines whether mitigation measures are adequately developed.
As another example, the Department of Commerce’s National Marine Fisheries Service (NMFS), as stipulated by the 1972 Marine Mammal Protection Act (MMPA), evaluates any action that “has the potential to disturb a marine mammal” and its behavioral patterns, including breathing and feeding. The NMFS is also in charge of certifying Protected Species Observers, who are required by the MMPA to be “aboard the drilling unit(s) and all transiting support vessels” to watch for the presence of marine mammals and advise on shut down requirements if the animals approach within a set distance of activities.
On the state level, Alaska’s Department of Fish and Game (ADF&G), which protects Alaska’s fish and wildlife resources, works with Alaska’s Department of Environmental Conservation’s Division of Spill Prevention and Response on reviewing oil spill contingency plans and participating in spill drills and spill response.
On the local level, the Alaska Eskimo Whaling Commission (AEWC), which has represented whaling communities since 1977, has worked successfully with the oil and gas industry for decades to coordinate their subsistence hunting with oil and gas activities, and to develop mitigation measures that would avoid adverse impacts to bowhead whales, habitat, and migratory patterns.
The Native communities have lived among oil and gas development across the North Slope for many decades. For these communities, energy development is not new, and there is a broad understanding that oil and gas development has improved their living standards:
“Thanks to the property taxes we collect from the oil industry, villages on the North Slope have gone from basically Third World status to modern communities where we enjoy the pleasure of flushing a toilet.”
In fact, many view oil and gas development as critical to their way of life:
“Every day our communities face decisions that will determine what life will be like for future generations of Iñupiat. The fact is, without responsible development they won’t have an economy or the many benefits our resources provide.”
For those who understand the challenges of bringing North Slope energy projects online, they believe that Arctic oil and gas development is over-regulated:
“The federal regulatory environment has proven to be a burden for any development, whether onshore or offshore. With this type of uncertainty, we will continue to see good opportunities slip away because no one wants to do business in Alaska.”
These communities do not appreciate efforts by outside activist groups to shut down Arctic development:
“When it comes to energy development, many outsiders try to speak for Alaskans, but most know little about our communities or our way of life, and they certainly don’t know how vital Arctic resource development is for thousands of Alaskans.”
Frankly, many are concerned that these groups are “trying to save the world” at their expense:
“We’re concerned that the environmentalists are trying to save the world at the expense of the Inupiat people of the Arctic Slope. … That’s our real concern.”
The industry recognizes that the best guard against oil spills is through prevention, which begins with proper well design that contains at least two barriers – and typically more – for any possible hazard. Wells are designed and constructed in accordance with regulations and industry best practices as codified in American Petroleum Institute/International Organization for Standardization (API/ISO) standards.
Since 2010, regulators have instituted new safeguards to “protect the environment beyond what has ever existed before,” including adopting new standards for well design, casing, and cementing, and requiring professional certification that each flow path is guarded by at least two independently tested barriers.
One key safeguard is the blowout preventer (BOP), which is designed to monitor, seal, and control the well and to prevent an uncontrolled event. BOPs contain multiple response mechanisms and backups – three or more for a surface BOP and five or more for a subsea BOP; ensuring redundant capabilities. Bureau of Safety and Environment Enforcement (BSEE) regulations stipulate weekly function tests for the BOP stacks and pressure tests every 14 days for subsea BOPs and every 21 days for surface BOPs.
Federal regulators also play a role in ensuring that operators are prepared to respond to oil spills. The BSEE is responsible for reviewing and approving operators’ Oil Spill Response Plans (OSRP), which include the Worst Case Discharge (WCD) scenario that takes into account proximity to sensitive resources, estimated discharge volume, oil characteristics, and containment methods. This plan establishes a multifaceted response and rehabilitation strategy that could demonstrably contain an uncontrolled well event.
BSEE officials are also on site 24/7 to oversee drilling operations and conduct inspections of drilling rigs and production platforms to ensure compliance with federal regulations and safety standards.
In the highly unlikely event of an oil spill, the industry has at its disposal an array of containment options that have been successfully implemented around the world under a variety of conditions. These options include mechanical containment and recovery equipment such as skimmers and booms designed to remove oil from the surface of water; dispersants, which enhance the biodegradation of oil by Arctic microorganisms; and controlled in-situ burning, a technique of burning oil on the sea surface that has been safely and successfully used over the past 40 years.
The industry is prepared to respond to Arctic oil spills because of significant advances in the research on oil spills in Arctic environments made over the past 45 years, grounded in key field experiments that were backed up by laboratory and basin studies in the U.S., Canada, Norway, and the Baltic countries. Research initiatives include the Arctic Response Technology Joint Industry Program (ART JIP), the SINTEF Oil in Ice Joint Industry Project (JIP) in 2006-2007, as well as research sponsored by BSEE.
Federal regulators have emphasized that large oil spills are unlikely. In fact, BOEM went to great lengths to dispel the misinformation surrounding the potential for spills, explaining in a factsheet,
“Even in BOEM’s hypothetical scenario, the data suggest that a large spill in the exploration phase is very unlikely.”
Keeping in mind that BOEM’s definition of “large” oil spills are spills that exceed 1,000 barrels, the agency emphasized,
“[T]he spills modeled by BOEM are very unlikely to be the catastrophic historical events one might think of when we think of oil spills. For historical perspective, the 1989 Exxon Valdez spill is estimated to have been from 257,000 to 750,000 barrels; the 2010 Deepwater Horizon spill is thought to have been 3.19 million barrels.”