Senate Committee Hears Testimonies Supporting Arctic Oil and Gas Leasing

May 20, 2016 in Blog

Yesterday, the Senate Energy and Natural Resources Committee held a hearing to examine the Bureau of Ocean Energy Management’s (BOEM) 2017-2022 Outer Continental Shelf Oil and Gas Leasing Program, during which the Committee Chairwoman Lisa Murkowski (R-AK) and several of the witnesses affirmed the significance of Arctic oil and gas development – and why the Program ought to include lease sales in the Arctic.

In her opening statement, Sen. Murkowski said she was “disappointed” by the proposed Five-Year Program, and that the Department of the Interior’s (DOI) “bare minimum” plan for Alaska was “unacceptable”:

  • “We have…mineral and energy deposits that underpin the international financial system and supply a global economic system.”
  • “Over the past seven years, however, I have also watched the Department’s slow, but steady abrogation of duty to manage this endowment properly. It pains me to say this, but we now effectively have a Gulf of Mexico leasing program, and the shadow of a program for three major planning areas in Alaska.”
  • “By choosing not to produce here, we are telling other countries – some of them rather nefarious – that we would rather buy from them. And we are giving away the jobs, the revenues, the growth, and the security that would all come with that energy development.”
  • “The economic activity that we are sending overseas due to lack of proper Alaska OCS management means Alaska Native communities that have survived for thousands of years in the harshest environment on earth, may have to choose between schools, health clinics, or home heat. And this is happening just as our oil pipeline – infrastructure of national significance, and vital to the entire West Coast – is at risk of becoming uneconomic, and per law, dismantled.”

The Committee heard from experts well versed in the subject at hand, including John Hopson, Mayor of the City of Wainwright, Alaska, who gave a testimony of the importance of oil and gas development to his community based on his insight as a mayor, a whaling captain and a commissioner on the Alaska Whaling Commission, a member of the North Slope Borough Assembly, and a shareholder of Olgoonik Corporation and of the Arctic Slope Regional Corporation:

  • “In reviewing the Proposed Program, I am deeply concerned – and I speak for many many people in our communities – that BOEM appears to be wavering in its commitment to continuing Arctic OCS leasing and exploration.”
  • “We appreciate BOEM’s interest in protecting our communities, but we urge BOEM to take seriously its responsibility to provide for development in a way that will support our communities.”
  • “Today, taxes levied on onshore oil and gas infrastructure, including the TransAlaska Pipeline System (TAPS), support jobs in our region and allow our communities to have modern water and sewer, health, heating and housing infrastructure. The oil and gas industry is also the source of many jobs for the Native shareholders of our Alaska Native corporations, including oil field contracting, regulatory permitting, engineering, pipeline design and maintenance, property leasing, and spill prevention and response. We need those jobs to truly sustain our communities. To put it simply, though we work hard to protect our subsistence way of life, we cannot hunt without bullets and fuel, and we cannot buy bullets and fuel without jobs that provide income.”
  • “But our community also is empowered by oil and gas development. The North Slope Borough employs the largest number of people on the North Slope; maintains its own Department of Wildlife Management, which invests heavily in protecting our subsistence resources; and maintains stringent permitting requirements for oil and gas companies that operate within our region.”
  • When Sen. Murkowski asked Mayor Hopson about his experiences working with BOEM on developing the leasing program and whether or not he encountered much opposition in his communities to drilling, he said that it was clear that everyone supported drilling, and that it was “very clear that we need development.” He also said that each one of the eight communities on the North Slope is “surviving based on oil revenue,” that “we need revenue to be able to live at home,” that “we need development; it just amounts to that.” He concluded his remarks saying, “We are the endangered species, not the animals. The people are.”

Dr. Donald F. Boesch, Professor of Marine Science and President of the University of Maryland Center for Environmental Sciences, discussed the “many steps” the oil and gas industry has taken to reduce the risks of offshore oil and gas exploration and production:

  • “The oil and gas industry also has undertaken many steps to reduce the risks of offshore oil and gas exploration and production. The shutdown of deepwater operations in 2010 was a bitter lesson for many companies beyond BP and Anadarko. In general, most companies have since improved their safety culture and procedures. In response to the Department of the Interior requirement for deepwater well containment, companies worked together to form the Marine Well Containment Company and Helix Well Containment Group. These two rapid deepwater containment response systems are now deployed in the Gulf of Mexico, similar systems are now also deployed around the world wherever deepwater drilling occurs.”

Dr. Joseph Mason of the Louisiana State University’s Ourso College of Business discussed how low oil prices are not a reason to forgo leasing, and how restricting leasing would actually increase greenhouse gas emissions:

  • “It is important to recognize that low prices are not the problem here. Because the first barrel of oil from these projects will not be sold until 2022-2027, today’s prices are much less relevant. In fact, what is far more relevant is today’s interest rates. Today’s rates are important because – with low inflation expectations – firms can still borrow cheaply to develop the new leases.”
  • “But potentially even more important is the effect that the BOEM’s decisions are having on CO2 and global warming. A recent research project out of Stanford University and the University of Calgary, funded by the Carnegie Endowment, is showing convincingly that every barrel of oil’s carbon footprint is not equal. In fact, oil from the Gulf of Mexico has among the lowest carbon footprint of that produced from 30 different regions around the world. Thus, restricting output in the Gulf will only increase output in many of those dirtier oil fields elsewhere around the globe. We need a smart energy policy that can tail off the dirtiest production, not encourage it.”

Wrapping up the hearing, Sen. Murkowski commented on the “beauty” of the significant exploration work that was conducted in Alaska decades ago – that “we’ve forgotten all about it because we didn’t have any problems.” With that in mind, she cautioned against suggesting that the Arctic would be “so special and unique” that lease sales there should warrant any special treatment. And that’s why the Department of the Interior ought to include the Arctic in its upcoming offshore leasing plan, as Sen. Murkowski, Mayor Hopson, Dr. Boesch, Dr. Mason – and many others – have urged.