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Friday, February 24, 2017

For Alaska, Offshore Energy is Key to a Better Future

Posted to Arctic Energy (by on February 6, 2017

Opening up the Arctic to offshore energy is the key to opening the door to a better future for Alaska.

In the twilight hours of 2016, President Obama signed off on an executive ruling that will do far more damage to the Alaskan economy than the temporary downturn of global oil prices. The President issued a memorandum declaring an “indefinite” ban on oil & gas development in the Chukchi and Beaufort Seas, by making use of a little-known (and used) clause in the Outer Continental Shelf Lands Act (OCSLA) that allows the White House to prohibit leasing of federal waters under certain conditions. 

Importantly, the restriction on energy development in Arctic waters does not fit the guidelines laid out in OCSLA. All leasing decisions – bans or otherwise – must aim to balance environmental, social and economic results, as best as possible. The White House’s moratorium fails to do so and instead is solely intended to appease those that oppose all oil and gas development. The President’s decision leaves the Arctic economy in the cold – especially its infrastructure and maritime sectors – and most damagingly of all, ignores the needs and desires of local communities. 

According to a recent poll commissioned by the Arctic Energy Center, approximately 70% of Alaskans including Native groups across the state, support offshore energy development. Given the importance of oil and gas to the state’s economy, local support should have been given greater consideration in Washington. In particular the Administration pledged to prioritize the views of North Slope communities, those most impacted by development. Clearly, its actions failed to live up to the rhetoric.

By banning offshore oil and gas development, the White House has tossed aside the best tool for stimulating the growth of new regional infrastructure. Without the possibility of energy development, neither the government nor the private sector has adequate incentive to support the highways, ports and pipelines that spur much needed job development. 

The ruling also casts doubt on the future of maritime projects that are critical for America’s commercial and security presence in the region. Port expansion and the enhancement of Coast Guard capabilities in the Arctic should be top priorities in DC. But shorn of the energy industry’s investment into new infrastructure, it is hard to make the financial case for either. 

The most immediate victim of President Obama’s decision will be the Port of Nome, on Alaska’s west coast. Last year, the U.S. Army Corps of Engineers proposed expanding the port, but with the White House’s midnight ban, the proposal is effectively dead in the water. Nome’s expansion would have made it significantly easier to operate in Arctic waters and would have created a deep-water base for the Coast Guard’s icebreaker fleet. 

But there is still hope that Alaska’s economy will survive the worst of this political ice storm. Contrary to the prevailing media narrative that the ban is “permanent,” OCSLA does not authorize a President to declare an unbreakable moratorium. Instead, the next Administration can assign an expiration date on the bans – just as George W. Bush did previously... By leaving the ban open-ended, President Obama has effectively left the decision up to the Trump administration to set an expiration date. 

The Obama administration has also arguably overstepped the intent of the law. As stated in its text, OCSLA was explicitly designed to ensure the “expeditious and orderly development” of offshore natural resources. Previous presidential restrictions have targeted specific and discrete areas of the continental shelf with extraordinary conservation needs. The Arctic ban is not focused exclusively on specific endangered waters and covers 125 million acres of the Beaufort and Chukchi Seas. 

Similarly, the OCSLA also requires that the federal government ask for guidance from the Governor of any state where it is determining a leasing decision for offshore lands. Alaskan public officials have vehemently protested the decision and claims that they were not consulted in accordance with the law. Governor Walker made a fiery public comment, saying that Obama’s decision “marginalizes the voices of those who call the Arctic home.” 

Clearly it would be detrimental for Alaska’s economy and society if the bans on offshore development are held in place. Alaska’s local community leaders, representatives of maritime, energy and infrastructure industries, elected officials and policy experts need to work together to ensure that the new administration removes the OCSLA offshore development restrictions in its first 100 days. Opening offshore waters to energy development is the key to opening the door to a better future for Alaska. 


Lucas Frances is a spokesman for the Arctic Energy Center, a joint initiative of the Alaska Oil and Gas Association and the Independent Petroleum Association of America, founded to further public understanding of the science, technology and opportunity associated with Arctic energy exploration and development.

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