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Cutting Arctic leases will eliminate opportunities in Alaska, rest of America

By
Randall Luthi
New offshore oil sources would help refill the trans-Alaska pipeline, which is vital to Alaskans and the U.S. energy market. File Photo by Heather Snow/Shutterstock
New offshore oil sources would help refill the trans-Alaska pipeline, which is vital to Alaskans and the U.S. energy market. File Photo by Heather Snow/Shutterstock

The United States' Outer Continental Shelf is the source of huge opportunity for our country, supporting thousands of well-paying jobs and offering a supply of reasonably priced, reliable energy, which could meet our needs for decades. Despite this potential, the federal government has restricted access to more than 85 percent of America's offshore areas to oil and gas exploration and worse, is now rumored to be cutting one of the few remaining areas.

Smoke signals from Washington, D.C., suggest the administration is considering removing all or part of the Arctic from the next five-year offshore oil and gas leasing program. That decision would mean there will be no prospect of even exploring for reserves until 2023 at the earliest, and with long lead in times, production could be delayed until well into the 2030s, or beyond.

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Clearly, this decision would have a huge impact on the state. Alaska relies on the oil and gas industry for roughly 90 percent of its income, especially Alaskan Native communities of the North Slope which depend hugely on revenues generated by offshore drilling projects. In fact, 72 percent of Alaskans support offshore development, knowing that it is the economic foundation of the state. Effectively banning new offshore production for the next 20 years would deal a body blow to the entire state economy.

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But it will also come with major ramifications for the rest of the country. The U.S. Arctic is estimated to hold 34 billion barrels of oil, enough to cover about 15 years of domestic imports at 2015 levels. That resource can play a sizable role in ensuring our future energy security. In addition, new offshore oil sources would help refill the trans-Alaska pipeline, which is vital to Alaskans and the U.S. energy market.

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According to the National Petroleum Council's Arctic Potential report, "If development starts now, the long lead times necessary to bring on new crude oil production from Alaska would coincide with a long-term expected decline of U.S. Lower 48 production. Alaskan opportunities can play an important role in extending U.S. energy security in the decades of the 2030s and 2040s."

Arctic development is not just about natural resources. In June, a collection of senior military and security experts that included former Secretary of Defense William Cohen and 15 three- and four-star generals and admirals, highlighted the close synergies between our energy security and 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."

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The point about private investment is a crucial one. Including the Arctic in the final leasing program will help to safeguard the region's future, facilitating investments by government and private sector alike.

Having operated in the Arctic for over 100 years, the oil and gas sector plays a fundamental role in local economies, providing the foundation for numerous other industries. The relationship is not mutually exclusive as environmentalists claim, it is symbiotic.

This same point is true for oil spill preparedness and environmental research. Dozens of wells were safely drilled in the Beaufort and Chukchi Seas in the 1980s and 1990s; using equipment and technology that are nowhere near as sophisticated as what is available today. Oil and natural gas companies have poured millions into research and monitoring in the Arctic, providing new information about environmental conditions, wildlife and species vital to the people of northern Alaska. Cutting the leases would entirely remove the stream of funding that facilitates these important scientific advances.

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Development of our nation's Arctic energy resources will bring an abundance of benefits for Alaskans, the rest of the United States and for people living in the region around the world. Not only will it fulfill the president's "all of the above" energy approach, it will also foster a diverse and dynamic energy portfolio that provides stability, economic security and revenue for states and the federal government.

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It is critical that the administration does not ignore these tremendous benefits by excluding the Arctic from the final leasing program in the name of environmental expediency. If it does, Alaska's prospects will be bleak, left to face a future focused largely on eco-tourism, rather than as a vibrant and fully functioning economy, able to thrive in its own right.

Randall Luthi is President of the National Ocean Industries Association.

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