The coming months are a critical time for communities in America’s Arctic. The administration, through the Bureau of Ocean Energy Management (BOEM), will soon finalize the next five-year plan for the Outer Continental Shelf (OCS) and determine if lease sales will be included in the U.S. Chukchi and Beaufort seas.
While the Arctic region often is forgotten when Americans picture their nation’s energy landscape, its importance shouldn’t be undermined. The offshore Arctic contains an estimated 30% of America’s conventional hydrocarbon resources, and the industry has been active there since the first onshore exploratory well was drilled in 1900. The U.S. should not allow these massive reserves to go unused.
Unfortunately, banning all development by whatever means possible is the goal of many anti-energy activists. As a part of that effort, some groups claim that Arctic resources should be kept in the ground by using the commodity price as justification. The argument attempts to justify current price as a reason to forgo future exploration, erroneously assuming economic conditions will never change.
Offshore Arctic projects take decades to reach development, and with the next lease sales not expected until 2019, it is unlikely that any offshore resource will begin producing until 2030 or beyond. There is simply no way to predict what kind of price environment will exist at that point. The only certainty in today’s price environment is that cutting the Arctic leases now will needlessly limit future options.
Similarly, anti-energy activist groups’ second contention that the industry isn’t interested in developing Arctic resources also is a flawed argument. A quick review of the public consultation on the forthcoming leasing program shows that numerous companies submitted comments emphasizing that the Arctic must be included.
Indeed, among all the noise about Shell’s decision not to continue exploring in the Chukchi last year, an important point has been lost: Seven companies still retain more than 40 leases in the Beaufort Sea, sites they have no apparent indication of giving up. The industry remains interested in the region, even if it’s not active today.
As Shell stated in its submitted comments, “We continue to believe offshore Alaska and the broader Arctic have strong exploration potential and that these areas could ultimately be important sources of energy to the State of Alaska, the United States and its global strategic allies.”
Importantly, the energy industry isn’t alone in emphasizing its commitment to the Arctic. The majority of the Native communities that live on Alaska’s North Slope and that will likely be most impacted by any development have repeatedly traveled to Washington, D.C., to show their support.
Testifying before the Senate Energy and Natural Resources Committee this summer, the mayor of Wainwright, John Hopson Junior, said that he is “deeply concerned that BOEM appears to be wavering in its commitment to continuing Arctic OCS leasing and exploration.”
Native Alaskans also have made it clear that they are tired of outsiders speaking on their behalf when it comes to energy development and the needs of their communities. Rex Rock, head of Arctic Iñupiat Offshore and the Arctic Slope Regional Corp., said that many activists groups that claim to speak for Alaskans are “shockingly out of touch with the economic realities in our region and our state.”
The industry and the broad Alaskan public have stated they are interested in Arctic offshore energy development. The government should keep that option on the table.
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