Oil & Gas Production in the Coastal Plain Could Generate Billions for Federal Government
By MARY KAUFFMAN
November 02, 2017
The Senate Amendment to H. Con. Res. 71 established the federal budget for fiscal year 2018 and the budget levels for fiscal years 2019-2027. The amendment also includedreconciliation instructions for the Senate Energy and Natural Resources Committee and the House Natural Resources Committee to achieve $1 billion in savings over the Fiscal Year 2018 to 2027 period.
According to the House Committee on Resources, opening less than 3% of the Arctic National Wildlife Refuge (ANWR) in Alaska for responsible energy production could create thousands of jobs, and generate approximately $150 billion to $296 billion in new federal revenue. And according to Alaska Governor Bill Walker, over the potential 40-plus year life of the basin, $175 billion dollars in royalty and tax revenues could be generated for Alaska.
Murkowski opened the hearing by emphasizing that the 1002 Area is not federal wilderness, and separate from the wilderness in ANWR. In 1980, Congress specifically designated the 1002 Area for consideration for oil and gas exploration. Today, Alaskans are asking to develop just 2,000 federal acres within it – about one ten-thousandth of all of ANWR. Murkowski explained that limited, responsible development would generate new wealth and prosperity for Alaska and the nation, among many other substantial economic benefits.
“Opening the 1002 Area to responsible oil and gas development will create thousands of new jobs, and those jobs will pay the types of wages that support families and put our kids through college,”said Murkowski. “It will also generate tens of billions of dollars in revenues over the life of the fields for every level of government.”
Murkowski also explained how the environmental footprint of development on Alaska’s North Slope has shrunken dramatically since Prudhoe Bay began operations in the 1970s, and the stringent standards that Alaskans have put in place to protect local wildlife.
“The Central Arctic caribou herd, which lives year-round in and around Prudhoe Bay, is now more than seven times larger than when development began,” said Murkowski. “For over 40 years now, Alaskans have repeatedly proven that we can develop safely and responsibly, and development in the 1002 Area will be no different. We will not harm the caribou; or the polar bears, whose dens can be protected; or the snow geese, whose nesting areas can be safeguarded; or any of the other birds and wildlife that visit the Coastal Plain in the summer.”
Between the 1970s and today, the surface footprint of Arctic development decreased by about 80 percent. What was once a 65-acre pad now takes up 12 acres or less. Below ground, extended reach drilling from a single pad will grow to an area of 125 square miles by 2020—an increase of more than 4,000 percent from the 1970s.
U.S. Senator Dan Sullivan (R-AK), Congressman Don Young (R-AK), and Alaska Gov. Bill Walker provided opening statements about the economic and national security benefits of opening the 1002 Area to responsible development.
“Opening the small section of the 1002 area in ANWR for development will strengthen our national security,” said Sullivan, who has been a Marine for 24 years, a former U.S. Assistant Secretary of State, and sits on the Senate Armed Services Committee. “When we don’t have to import energy from countries that don’t like us, or better yet, when we can export American energy to our allies like Japan and Korea, or even a country like China, this helps our national security and foreign policy.”
In a move that caught the attention of lawmakers and attendees, Young drew a dot on the tip of his nose to illustrate the size of surface impact in comparison to the greater ANWR area.
“You see anything different on my nose right now,” Young asked the panel.“I am Alaska. One tenth of one tenth percent is what we’re talking about in disturbance…This little dot on my nose – I weigh 225 lbs. – this little dot is what we’re talking about in surface impact in the 1002 Area. That’s a potential for approximately – early estimates were 10 billion barrels – and now estimates are probably around 20 billion barrels of oil.”
“Using the Energy Information Administration’s projections for the price of oil and USGS’s resource estimate for ANWR, the Alaska Department of Natural Resources (DNR) estimates that oil production from federal lands in the 1002 Area will generate $175 billion dollars in royalty and tax revenues for Alaska over the potential 40-plus year life of the basin,” said Governor Bill Walker.
“Alaska’s economic future should not be a partisan issue,” said Governor Walker, the nation’s only independent governor. “Nine in 10 of Alaska’s legislators—on both sides of the aisle—support oil and gas exploration and development of the 1002. The trans-Alaska pipeline is three-quarters empty, and the state is suffering the largest fiscal crisis in our history. When Alaska became a state, we had a promise from the federal government in our statehood compact: we need to live off the resources in our land. Much like midwestern states harvest the resources that grow on the ground, like wheat and corn, Alaska must harvest the resources in our ground. As Interior Secretary Ryan Zinke has so aptly said: Alaska is key to the nation’s energy dominance. We must have access to our resources,” said Walker.
The committee also received testimony from Alaskans who strongly oppose opening the 1002 Area: Lois Epstein PE (PDF), Arctic Program Director, The Wilderness Society; and Sam Alexander (PDF), speaking on behalf of the Gwich’in Nation.
The Gwich’in are the northernmost Indian Nation, living in fifteen small villages scattered across an area extending from northeast Alaska in the United States into the northern Yukon and Northwest Territories in Canada. These communities include Arctic Village, Venetie, Fort Yukon, Beaver, Chalkyitsik, Birch Creek, Stevens Village, Circle, and Eagle Village in Alaska, and Old Crow, Fort McPherson, Tsiigehtchic, Aklavik, and Inuvik in Canada. The home of the Gwich’in People follows the migratory route of the Porcupine Caribou Herd which sustains their way of life.
Speaking to the committee Alexander said, "Today I am here to talk with you about why my people, the Gwich’in Nation, adamantly oppose the opening of the Arctic National Wildlife refuge. As a graduate of West Point and as a prior US Army Special Forces Officer, my people have asked me to speak because I have walked in two worlds: Your world, and the Gwich’in world."
Alexander said, "The Gwich’in are the caribou people. The Gwich’in have lived in this area and relied on the Porcupine Caribou Herd since time immemorial. Caribou are how we survive and are integral to who we are and how we define ourselves. Caribou are our stories, our soul, the food on our table, our clothes, and our tools."
"The opening of the Refuge to oil development and subsequent decline of the Porcupine Caribou herd will limit our access to healthy traditional food and push us from food security into the realm of food insecurity," said Alexander. "No amount of money can replicate our healthy traditional diet. Tell me how replacing Caribou with highly processed foods is going to be better for us. It will not. If we had to rely on our stores for food, we’d be looking at a steady diet of SPAM, macaroni and cheese, and other shelf-stable delicacies, often at 4 or 5 times the price of what you find in the Lower 48."
Alexander said, "And to what end are you opening up the Refuge? To what end will you destroy our way of life? You aren’t addressing climate change, which has been stressing our other food sources as well as stressing the caribou. You aren’t addressing our nation’s growing deficit; in fact, opening the Refuge represents a drop in the bucket of our budget ills. You aren’t even addressing energy security; As a former Special Forces Officer I fail to see how opening the Refuge at a time when we are already a net exporter of energy provides us any geopolitical advantage. We are hard pressed to understand your reasoning behind opening the Refuge."
Arctic Program Director for The Wilderness Society Lois Epstein said, "The Arctic Refuge’s coastal plain region is, for all intents and purposes, one of the wildest and among the most beautiful landscapes in the country. It is as important to our nation’s natural heritage as Yellowstone and the Grand Canyon."
"Opening the Arctic Refuge coastal plain to oil leasing, exploration, and production unacceptably threatens the Arctic Refuge’s globally significant wilderness and wildlife values," said Epstein. "Allowing oil development in this region should not be a budget issue, but instead is a complex policy issue that should be decided by Congress through “regular order.”
Epstein said, "Oil exploration and production activities – even with directional drilling as one component – would substantially undermine the Arctic Refuge’s fundamental purposes: to protect wilderness, wildlife, and subsistence, and thus these activities are unacceptable."
The committee also received testimony from a number of Alaskans who strongly support opening the 1002 Area: Alaska Lt. Gov. Byron Mallott (PDF), State of Alaska; Richard Glenn (PDF), executive vice president for land and natural resources of the Arctic Slope Regional Corporation; Matthew Rexford (PDF), tribal administrator of the Native Village of Kaktovik; and Aaron Schutt (PDF), president and CEO of Doyon, Ltd. Each highlighted the broad support of Alaskans.
“As Congress originally considered in ANCSA and ANILCA, it must be determined whether these economic benefits can be pursued in a safe manner that protects the wildlife of the Alaska North Slope. I believe the State’s longstanding success shows that it definitively can, and thus should be done,” said Mallott.
“We live in a petroleum era,” said Lt. Governor Mallott. “That is reality. Alaska is also ground-zero for climate change. The development of non-renewable resources and the development of response to combatting the effects of climate change are not mutually exclusive in our state. That’s why the climate change administrative order the governor signed just two days ago is a plan of action tailored to uniquely to Alaska. The oil must come from somewhere; why not here, in the United States, where we control the environmental rules? Most importantly it’s in our national security interest to develop our own oil to build energy independence.”
“The reality is that the survival of our region and the development of our communities today depend on continued exploration and production,” said Glenn. “Without this economic driver, our communities will need access to greater government subsidies and programs in order to be sustained.”
“As Iñupiat, we stand to be unarguably the most affected by oil and gas activity in the Arctic. Therefore, we have the greatest stake in seeing that any and all development keeps our land and subsistence resources safe,” said Rexford. “We know it can be done, because it’s being done.”
“The official environmental impact statement for ANWR development from the U.S. Department of the Interior, now three decades old, showed that ANWR’s total potential oil reserves could be developed while only affecting about 2,000 acres of the surface of the coastal plain,” said Schutt. “The technology available to oil and gas companies today supports that assessment. Development will not physically touch 99.99 percent of the refuge, and it would leave untouched all of the refuge’s current 7.16 million acres of formal wilderness.”
Murkowski is chairman of the Senate Committee on Energy and Natural Resources.
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