The oil and gas industry is the economic engine of Alaska. When exploration leads to production, all Alaskans benefit, regardless of where they live in the state. All of us share in the success that comes with developing Alaska's resources. Which is why it is so important that we are actively involved in the decisions that are being made by the federal government that will impact our future for decades to come.
For good reason, many of us have been focused on the proposed wilderness designation of the 1002 Area of the Arctic National Wildlife Refuge. Yet, our due diligence is needed on other far-reaching decisions being made by this administration that will have unprecedented impacts on our state's economy. Over the last several weeks, the Bureau of Ocean Energy Management has been holding listening sessions throughout Alaska on the proposed Outer Continental Shelf Oil and Gas Leasing Program for 2017-2022. The draft program proposes 14 lease sales including three in Alaska. Specifically, lease sales are proposed in the Beaufort Sea, Cook Inlet, and Chukchi Sea in 2020, 2021 and 2022, respectively. While these sales seem encouraging, they were originally set to occur 10 years prior under the Bush administration's proposed five-year plan.
Predictable and consistent lease sales are essential for the industry, yet the Obama administration canceled two Arctic lease sales outright and delayed another two until 2016 and 2017. They've imposed numerous obstacles and regulatory challenges, creating economic uncertainty for exploration and production companies. The Bureau of Ocean Energy Management also intends to use a tract nomination process of targeted leasing in the Arctic instead of an areawide leasing approach. Areawide leasing has consistently yielded higher revenue for the government and provides greater flexibility for industry.
The proposed 2017-2022 OCS leasing program removes certain areas from any activity, creating logistical challenges for staging equipment and personnel. The recently introduced Arctic rule establishing requirements for industry activity was due over a year ago and includes requirements that most companies will not be able to meet. Two major Arctic OCS leaseholders have yet to conduct any exploratory work because of the uncertainty created by this administration, despite spending hundreds of millions in bonus bids and subsequent rental payments. One international, integrated company spent $2.7 billion on a single bonus bid in 2008, with billions more from the private sector spent since that time, all without a single dollar in return for their investment.
That company is preparing once again to explore this summer and its success or failure will ultimately determine the course of Alaska's future. If unsuccessful, will future lease sales come and go with little interest from industry?
The U.S. Department of the Interior estimates that the Arctic OCS holds approximately 27 billion barrels of oil and 132 trillion cubic feet of natural gas. Development of the region would create 35,000 jobs in Alaska and provide $70 billion in payroll to the state economy. If revenue sharing legislation is passed by Congress, the economic impact on Alaska will be even more significant. Further development could bring nearly $200 billion in funding to federal, state, and local governments.
Oil and gas development is happening across the globe. Yet we are falling behind while Russia, Canada, and other Arctic nations are moving forward. We should be leading the world in developing the Arctic because of the United States' strong environmental standards.
The oil and gas industry -- independents, majors, producers, refiners, and suppliers, are like businesses in any other industry in that they thrive under free market policies and flounder when burdened with excessive regulation, litigation, and economic uncertainty. The federal government is making choices that will determine our future. We have an opportunity to make our voice heard by submitting comments by March 30 at www.regulations.gov. Let these agency officials know what Arctic oil and gas exploration and production will mean to you and Alaska's future.
Jeremy Price is the state director of Americans for Prosperity-Alaska. He was born and raised in Salcha, served as legislative assistant to Sen. Lisa Murkowski, legislative director to Congressman Don Young, and federal relations manager for the American Petroleum Institute.
The views expressed here are the writer's own and are not necessarily endorsed by Alaska Dispatch News, which welcomes a broad range of viewpoints. To submit a piece for consideration, e-mail commentary(at)alaskadispatch.com