In recent weeks and months, a number of positive developments have taken place at the federal level that have provided glimmers of hope to the overwhelming number of citizens in Alaska and the country at large that support development of offshore energy resources in the U.S. Arctic.
First, the Interior Department decided in early April to affirm a 2008 Chukchi Sea oil and gas lease sale that originally took place in 2008, but which was subsequently held up by the litigation efforts of anti-development groups. In May, the department took another important step forward when it approved Shell's plan to explore its Chukchi Sea leases this summer.
Then, in defending his administration's decision to approve the exploration plan, President Barack Obama noted that "I would rather us -- with all the safeguards and standards that we have -- be producing our oil and gas, rather than importing it, which is bad for our people, but is also potentially purchased from places that have much lower environmental standards than we do."
Taken together, and assuming that the remaining federal approvals and permits are granted in time for exploration activity to recommence in the Chukchi this summer, these actions represent tangible and critical milestones that could help reinvigorate the Alaska and U.S. economies while strengthening our energy and national security.
To illustrate, in addition to the U.S. Arctic offshore holding an estimated undiscovered technically recoverable 23.6 billion barrels of oil and more than 104 trillion cubic feet of natural gas, as highlighted by a Northern Economics, Inc. and University of Alaska Anchorage Institute of Social and Economic Research report, over a 50-year period development, the Alaska Arctic's Beaufort and Chukchi Seas could contribute an annual average of 54,700 jobs nationwide with $145 billion in cumulative payroll and $193 billion in public revenue.
Recognizing the energy security and economic benefits associated with the development of these crucial resources, the National Petroleum Council -- an advisory body to the U.S. Energy secretary comprising individuals representing academia, government, industry, and NGOs -- recently issued a report to the secretary concluding that the United States should facilitate Arctic offshore exploration now to "remain globally competitive and to be positioned to provide global leadership and influence in the Arctic."
As the NPC also made clear in its report, an efficient regulatory framework is a key component in determining the feasibility of U.S. Arctic offshore development. To that end, while the resumption of Arctic exploration in the Chukchi this summer would be a significant advancement, the Interior department's proposed regulations applicable to Arctic offshore exploration drilling could deal a serious setback to long-term efforts to responsibly explore and produce energy in this vital region.
Unfortunately, the regulations proposed to apply to Arctic offshore exploration drilling are redundant, overly prescriptive and excessive, and may in fact increase safety and environmental risks.
While DOI's proposed rule would impose a same season relief well requirement, for example, the recent report prepared at the request of the U.S. Energy secretary highlighted two alternate technologies that could double the drilling season length and offer "superior protection with shorter implementation time."
In addition, the prescriptive rules being proposed by DOI would add unnecessary redundancy and deviate from requirements for offshore drilling in other U.S. regions. For example, the DOI proposal would necessitate blowout preventer pressure testing every seven days for drilling operations, rather than every 14 days under current regulations. As DOI notes in the proposed regulation, concerns have previously been raised that requiring such frequent pressure testing could harm equipment reliability and raise the likelihood of an incident.
Rather than specify the particular parameters and operational details under which companies must comply, DOI and the public interest would be far better served by heeding the advice of the NPC and encouraging innovation through performance-based measures. Unlike prescriptive regulations, outcome-based rules would not conspire to hinder the development of newer and safer technologies. In addition, legally questionable and redundant and impractical requirements related to discharge and the submittal of an integrated operations plan should be removed or, at a minimum, clarified.
Lastly, the analysis underlying DOI's estimate of the costs and benefits of the proposed rules is grounded in faulty reasoning that understates the true compliance costs involved. Just as importantly, in calculating the benefits of the proposed rule, the analysis overstates the size and probability of a spill and presumes that older technology required under the proposed regulations would successfully prevent or reduce the duration of the spill.
The necessary path forward is clear: rather than finalize the proposed Arctic exploration drilling regulations, DOI must go back to the drawing board to lay out a revised and thoughtful proposal. Our Arctic clock is ticking away fast, and if we proceed otherwise, this incredible and long-term opportunity just might pass us by.
Sen. Cathy Giessel represents District N in the Alaska Senate. She is chair of the Senate Resources Committee.
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