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Cutting Arctic leases will hang a ‘Closed for Business’ sign on Alaska’s door

Written and Sponsored By Arctic Energy Center

Icebreakers are crucial for every aspect of maritime Arctic operations
Icebreakers are crucial for every aspect of maritime Arctic operations

Later today, CQ Roll Call will host an event to explore the impact of developing oil and gas reserves in Alaska’s Outer Continental Shelf. It comes at a critical juncture for the future of the Arctic. The effects of the downturn in global energy prices on Alaska’s budget have been well documented. The forum is not intended to add to that discussion. But it is informed by it.  

A decision by the Administration to exclude the Arctic from the final Five Year Offshore Oil and Gas Leasing program currently under consideration, just as the Atlantic was previously removed, will come with significant economic repercussions for the state. In effect it will mean that the very first time that industry would even be able to begin exploring for offshore energy reserves will be 2023. With the long lead-in needed to produce Arctic resources, that means production will be pushed back well into the 2030’s, if ever.  

Alaska depends on the oil and gas industry for roughly 90 percent of its revenues. Effectively banning new offshore production for the next 20 years would clearly have a huge impact on the state. It’s exactly for that reason that Alaska’s Congressional delegation unanimously supports the inclusion of Arctic leases in the forthcoming plan, arguing that the “production of resources in the Beaufort and Chukchi Seas will create thousands of jobs at a time of high unemployment and generate billions of dollars in new revenues at a time of steep deficits .”  

The event will include a presentation by the leader of that delegation, Senator Lisa Murkowski. As the Chair of the Senate Energy and Natural Resources Committee, Senator Murkowski, is ideally placed to not just provide her views on the importance of offshore Arctic resources to Alaska, but to the rest of the country as well.  

That perspective will be supplemented by another speaker. General Joseph Ralston is an Alaskan resident and was previously, Vice-Chair of the Joint Chiefs of Staff and Supreme Allied Commander for NATO Europe. During the Department of Interior’s recent public consultation on its proposed leasing program, he and fifteen other senior military experts, including a former Secretary of Defense, submitted comments which stressed the vital role that the private sector plays in underpinning our national security.  

As they noted, the “White House, Defense Department and Coast Guard strategies for the Arctic depend on government and private sector cooperation, including private investments in Arctic infrastructure to provide presence and to share costs, resources and expertise .”  

The development of this infrastructure is crucial, and not just for national security purposes. It can also materially improve the quality of life for native people across the state. These communities have thought long and hard about whether the benefits of offshore oil and gas development outweigh any potential consequences.  

Ultimately a majority, including the Voice of the Arctic Iñupiat which represents 20 of the 28 entities across the North Slope, the Bering Straits Native Corporation, the Aleut Corporation, the Olgoonik Corporation, the Arctic Slope Regional Corporation and the Ahtna Corporation, have decided they do.  

Of course their support has not stopped environmentalists, too few of whom are actually from Alaska, from attempting to “save” the Arctic on their behalf. Efforts to ban offshore oil and gas development in order to protect the environment ignore the fact that the region is not a pristine museum suitable only for eco-tourism. It is a vibrant and diverse region which deserves the right to build its own fully-functioning, self-sustaining economy, just as the rest of the Lower 48 states have.  

Another of the speakers at the event, Rosetta Alcantra will be able to provide testimony to that necessity. As a lifelong Alaskan who has lived in communities across the state, Ms. Alcantra provides a unique perspective on both the costs and opportunities that offshore oil and gas development offers native Alaskans.  

Other opponents of developing Arctic resources cite the current lack of offshore oil and gas activity as justification for a decision to exclude the region from the next leasing round. The argument appears to be that if industry is not interested now, it will never be again.  

Such a position seems misguided. The long periods required to develop Arctic resources, mean that this is not a short or even medium-term conversation. By the time offshore oil and gas leases come online in 10 or 15 years, the domestic and global energy landscape could have fundamentally shifted; just as it did with the hydraulic fracturing revolution some eight years ago.  

The argument is one of optionality. If you include it now, they will at least one day have the option to come. Excluding the Arctic irreversibly eliminates that possibility, precluding forthcoming Administrations from even considering a lease sale, regardless of the challenges they face.  

Crucially, it will also impact efforts to improve the region’s infrastructure. By including the Arctic in the final leasing program, the Administration can pave the way for another five years of investment by public and private sectors across every part of the economy. Cutting it will kill that process stone-dead, derailing Alaska’s economy and symbolically hanging a “Closed for Business” sign on the door.  

Oliver Williams is a spokesperson for the Arctic Energy Center.

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