Sen. Murkowski: “To Forsake Arctic Oil and Gas Would Be to Forsake America’s Energy”

July 5, 2016 in Blog

Last week, the Arctic Energy Center, in conjunction with CQ Roll Call, hosted a policy discussion exploring the opportunities and challenges of including the Arctic in the U.S. Department of the Interior’s forthcoming five-year offshore leasing program. At the event, titled “Arctic Offshore Investment: Perspectives on the Development of Alaska’s Outer Continental Shelf,” Sen. Lisa Murkowski (R-AK) underscored the “clear need to allow the production of our Arctic resources to go forward” and explained how energy development could “occur successfully for the benefit of those who live there as well as the benefit of the country.” Her remarks are transcribed below, with emphasis added.

Remarks:

 

I do appreciate all of you being part of this discussion, and I really appreciate what has been brought together with this program as we focus attention to the Arctic portion of the Outer Continental Shelf, and I appreciate the willingness to look north to a region that is only part of America because of the state of Alaska. I welcome the inclusion of not just my voice in this conversation this morning, but many Alaskan voices, to help explain and really underscore the significance here.

Your emphasis on making sure that Alaskans are heard here in our nation’s capital is one reason that I willingly said yes to be part of this discussion, to make the case for responsible resource development in the Arctic.

It was just a few weeks back, maybe a month or so ago, when I had the opportunity to hear directly from one of our Arctic leaders. This is John Hopson Jr., he’s the mayor of a community named Wainwright on Alaska’s North Coast. … Mayor Hopson came back to Washington, D.C. to testify before the Senate Energy and Natural Resources Committee. He is a whaling captain. He captains his boat not to make a profit but to really sustain his family, to sustain his neighbors. Harvesting whales is a tradition; it’s an ancient tradition that requires the captains to supply their crew with food and equipment. It’s an expensive undertaking. It is an expensive undertaking, to be that whaling captain. It requires cold, hard cash, basically.

So Mayor Hopson made the 3,500-mile trip from Wainwright to Washington to testify before the committee, and he told the committee how different, how different life is in Wainwright, and he explained it this way.

He says, “We don’t have Costcos or Safeways or Ford dealerships. We’re not connected to an electric grid or a road system, and our heating fuel and gasoline cost upwards of 5 dollars and 55 cents a gallon.  Like many remote communities in Alaska, Wainwright relies on a subsistence way of life. We hunt bowhead whales, caribou, polar bear and seals. It’s a way of life that we have fought hard to protect.”

And he was not complaining. He was stating the reality of the world that they live in.

And he said, “Though our communities are remote and our way of life is unique, neither our culture nor our communities are static. We invest in modern public services: water, sewer, health, and education. And like any other community in America, our community’s health largely depends on the availability of well-paying jobs that support families.”

And the reason that Mayor Hopson came before our committee that day was to register his concerns about the federal government’s wavering commitment to Arctic oil and gas development. And he told us that those activities provide the only revenue to be able to live back home, and he told us that without measured responsible development of Alaska’s offshore resources, our communities would face a grim economic future.

That was the mayor of Wainwright, and he’s not wrong.

To a large degree, the future of Mayor Hopson’s community and many other remote Alaskan communities depends on an offshore leasing program that’s now being prepared by the Department of Interior. That program should be complete at the end of the year; it will determine which offshore areas are open through 2022, whether for leasing, for exploration, and ultimately for production. And the process also determines which areas then will be closed.

 

The problem is, right now, Interior has just two Arctic leases in the next five-year program: One in 2020 for the Beaufort, and one in 2022 for the Chukchi. Now, that’s bare minimum effort, and it’s a far cry from the area-wide sales that Alaskans have been asking for. And this also comes after Interior has repeatedly delayed and now canceled sales in the Arctic OCS in recent years, even though it’s probably the most prospective offshore region in the country.

So let me speak just for a moment about the resources within the region because they are prolific.

The Beaufort and the Chukchi hold an estimated 22.6 billion barrels of oil and a 104.4 trillion cubic feet of natural gas. You put that into perspective here, in terms of what it would do, what it would power, it’s enough oil to supply Oregon’s current demands for oil for 371 years and natural gas for 474 years. Lots of stuff.

Beyond that, there are three good questions that argue in favor of allowing our Arctic resources to be produced. So the first question that needs to be asked is, is there a need for production within the region? Second, can the resources be produced safely? And third, where do Alaskans fall with this? What do they think when we talk about offshore because they have the most at stake?

So let’s just speak of these things quickly.

To begin with, there is a clear need to allow the production of our Arctic resources to go forward.

Oil consumption is projected to grow, not decline, on a domestic basis, even with all of our current policies and the emergence of new technologies. By 2020, the price of oil is projected to be close to $80 a barrel – we’ll see if we get there; by 2040, EIA projects that it may be close to twice that high and we all know the consequences of that will hold for job creation and growth. The U.S. is also projected to continue importing oil through 2040 despite an abundance of resources right beneath our feet and our waters.

Without Arctic production, we risk the shutdown of the Trans-Alaska Pipeline System. I talk about this all the time: The fact that we are less than half full. The line’s already built, it’s already operating, but it’s, again, it’s less than half full.

And while some may believe that we may no longer need pipelines, think about it: If you are on the West Coast, if you are Washington, Oregon, California, all depend heavily on Alaska crude. A shutdown of the TAPS is not where you want to be.

Another perhaps less publicized benefit to Alaska OCS development is that the investment that it requires will deliver a world-class oil spill response system. Without development, the system that we have today, which is, let’s face it, it’s virtually nothing, is the one that we have to respond to possible accidents that may happen, when Russia develops, when someone else develops, as we see ever increasing ship traffic. This is our opportunity, again, to put those investments in place.

 

To forsake Arctic oil and gas would be to forsake America’s energy security in a world that is using more energy, not less. It will leave us at an economic and an environmental disadvantage. It will benefit the likes of nations like Iran and Saudi Arabia. It will result in fewer jobs created here at home, fewer dollars staying within our economy, less affordable energy for our families and businesses, and less influence for our nation on the world stage.

 

So the second question then is whether or not these resources can be produced safely. This has already been answered. It’s not as if the Beaufort and Chukchi have never, ever, ever been touched. Dozens of wells were safely drilled in both the Beaufort and Chukchi in 80s and the 90s using equipment and technologies that really are grossly outdated by today’s higher standards.

The conclusions of a recent National Petroleum Council report confirm this: It found that the Arctic environment poses some challenges relative to other production areas but is generally well understood. And it noted that industry has a long history of successful operation in Arctic conditions enabled by continuing technological advances and it determined there that had been substantial regulatory advances to reduce the potential for and the consequences of a spill.

And I would also remind you this will be taking place offshore Alaska, which has a long history of successful environmental stewardship. For decades now, we have worked to ensure that development does not impact our subsistence traditions, the commercial fishing, and the all-important pristine allure of our state. And we are very good at the development that we do. You’ll hear from Rosetta Alcantra, who will speak in the panel after this, which will speak to the high standards that we hold in Alaska.

 

Now, the third question that I think again is an important one to raise today is: How do Alaskans feel about this? Well, I told you how Mayor Hopson from Wainwright feels, but his voice is hardly alone.

The vast majority of Alaskans support OCS development. Groups like the Voice of the Arctic Inupiat, representing 20 of the 28 tribal and community entities on the North Slope, plus the clear majority of Native groups who submitted comments to the Department of Interior, support Arctic OCS development. There was a 2014 survey that also noted that 73 percent of Alaskans favor Arctic offshore development, making it roughly as popular as new production in the non-wilderness portion of ANWR and within the NPRA.

I will tell you the one thing that Alaskans are afraid of, quite honestly: We’ve already seen what Interior has done with the Atlantic OCS removed from consideration in the next five-year plan despite strong support from residents and elected officials. So we’re worried, we are worried, that Interior now plans to hit this delete button on both the Beaufort and the Chukchi sales, even though such a decision would have serious consequences for North Slope communities, for the State of Alaska, and I believe for the rest of the country.

Alaskans don’t want to be left out, left hanging. They don’t want the “keep it in the ground” mindset to prevail, which would deprive us of the chance to produce our resources at a time when our country needs them. We recognize that we should be producing here for as long as we need to produce here. If we refuse to do that, we only renew our dependence on foreign producers. We give away the gains that we have made in recent years. And we can do better than that. We need to be listening to the vast majority of Alaskans who support development in the Arctic OCS.

I mentioned Mayor Hopson, but we have other mayors up there who have spoken out before our committees. We had the former mayor of the North Slope Borough Charlotte Brower: She testified that after the discovery of oil at Prudhoe Bay, she says, “In a period of roughly 30 years, we experienced over 200 years’ worth of development and advancement. We formed a local home rule government and built roads, airports, schools, hospitals, houses and utilities. We provided fire, police, first responder and search-and-rescue services. Our people went from burning whale oil to keeping warm to having natural gas heaters.” And they did that in three decades.

And again, listening to Mayor Hopson, who registered his disappointment with the way that many in the Lower 48 view those who live in the Arctic, he said, “I think many Americans would prefer that America’s Arctic communities somehow reflect the image one might see in an oil painting of the 19th century Arctic, and I see landscapes dotted with undeveloped Inuit villages that is neither realistic, nor is it appropriate.”

 

I’ve said before the Arctic is not an oil painting. It is not a snow globe that is to be left up on the shelf and not disturbed. It is a place where people live and work and raise their families – and where we believe strongly that resource development can occur successfully for the benefit of those who live there as well as the benefit of the country.

So I appreciate the opportunity to stand before you and be yet one more Alaskan voice that believes strongly that we need this opportunity in the Arctic OCS.

Q&A:

Q: You said the Alaskans are worried about the Beaufort and Chukchi being taken out of the five-year plan. How worried are you given that they have included the sales starting in 2020, it’s a little bit different situation than the Atlantic, where there were some military concerns at least and some coastal community concerns. How worried are you, and would a Trump Administration take a different tack on this than a Clinton Administration?

Sen. Murkowski:

Far be it for me to try to project what the next administration, whoever that may be, is going to take. My hope would be that there would be a recognition that producing America’s energy is good for the country, whether it is within the NPRA or the Arctic OCS or ANWR. It is good for Alaskans, it is good for the country when we produce more of our resources. It benefits our economy, it benefits our environment, it benefits all around.

So am I concerned about the possibility that the Beaufort and the Chukchi will be taken offline? Absolutely. One of the things that we’ve been hearing a little bit of a buzz about and Secretary Jewell has said it several times, maybe many times, “Well, maybe there’s not an interest up there because you’ve seen Shell give back their leases, you’ve seen others give back their leases, so there’s no interest, so we don’t need to schedule it.” Wow, that will be a self-fulfilling prophecy then, because if you take it off the table, there can be nothing going forward. So part of what we’ve been dealing with is regulatory uncertainty. There are a lot of unknowns, and we certainly saw that play out when Shell was trying to figure out what the lay of the land was in moving forward, and the difficulties, and with those regulatory difficulties, then the costs that come with it. But to suggest that somehow or another that there is no interest up there so we don’t have to move forward with it, concerns me a great deal.