Commentary: Arctic drilling has vital role in energy, national security

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By Erik Milito

They’re calling it “mega,” “massive,” “major.” A new oil discovery in shallow waters off Alaska’s North Slope could contain 6 billion barrels of crude oil – singlehandedly increasing Alaska’s oil reserves by 80 percent and potentially producing 200,000 barrels per day.

Erik Milito is upstream director at the American Petroleum Institute.
Erik Milito is upstream director at the American Petroleum Institute, the oil industry trade group.

The lesson is simple: When you’re allowed to explore for energy, historic oil and natural gas discoveries can follow. But there’s a caveat. Given the long lead time for development – which, in this case, requires construction of a new pipeline segment — it could be some years before we reap the benefits.

It’s a perfect case study to illustrate the importance of the upcoming leasing plan for 2017 – 2022, which will determine where energy development will be allowed on the U.S. Outer Continental Shelf (OCS), including in the Arctic. Under development at the Interior Department’s Bureau of Ocean Energy Management (BOEM) for several months and expected by the end of the year, it’s not an exaggeration to say the next five-year plan will dictate U.S. energy security for at least the next decade.

Even before the North Slope discovery, maintaining energy exploration options in the Arctic OCS was critical.

The Beaufort and Chukchi seas off the coast of Alaska contain more technically recoverable oil and natural gas than the Atlantic and Pacific coasts combined, according to estimates. The Chukchi Sea alone could contain 29 billion barrels of oil equivalent. Access to the world’s largest remaining conventional, undiscovered oil and natural gas reserves – 13 percent of recoverable oil and 30 percent of recoverable natural gas resources – is at stake. Voluntarily walking away from that level of future energy security – not to mention economic growth and as many as 50,000 nationwide jobs – would be incredibly short-sighted.

The geopolitical stakes are no less consequential. Former Clinton administration Defense Department Secretary William Cohen, along with 14 other military experts, wrote the Department of Interior earlier this year to express the urgency of maintaining Arctic leasing options. While Russia and China have significantly increased their presence and activity in the area, withdrawing from the Arctic would “signal retreat, needlessly reducing U.S. flexibility for promoting our national interests and our ability to ensure international cooperation,” the military leaders wrote.

Building a secure energy future is certainly in our national interest, but you wouldn’t know it from current government policy, which keeps 87 percent of federally controlled offshore acreage off limits to energy development. Opening areas in the Atlantic, Eastern Gulf of Mexico and Pacific could lead to production of more than 3.5 million barrels of oil equivalent per day and generate 840,000 jobs. BOEM took a welcome step in the right direction with a draft proposal in 2015 to lift exploration restrictions for the Atlantic, only to backtrack months later, despite strong voter support in adjacent states on the southeast Atlantic coast.

Dedicated efforts to improve safety systems and capabilities ensure offshore development is safer than ever. We also know that energy production and environmental progress are not incompatible; the United States leads the world in both oil and natural gas production and in reduction of carbon emissions, which clean-burning natural gas has driven to 20-year lows.

With national average gasoline prices hovering around $2.00 per gallon, adding production capacity may not seem urgent now. But we didn’t get here overnight. Today’s low prices are the result of abundant oil supplies only developed after many long years of exploration and application of technologies like hydraulic fracturing. Given the long lead time for development and the cyclical nature of world energy markets, the last thing the Obama administration should do is to take future production opportunities off the table.

The U.S. needs more energy to meet future demands, specifically oil and natural gas, which will supply 60 percent of U.S. energy needs by 2040, even under optimistic scenarios for renewable energy growth, according to the federal Energy Information Administration.

We can’t predict where world energy markets will be by the time the next leasing plan rolls around in 2023, but there’s no doubt U.S. energy security now and in the future will be in better shape with more access to oil and natural gas resources than with less.

 

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