Editors’ Note: America has fallen behind its economic competitors—namely Russia and China—in Arctic resource and infrastructure investment. Charles Ebinger argues that the United States must better define its resource development policies and priorities in order to ensure U.S. leadership in the Arctic. This piece was originally published on Forbes.
The recent decision by the United States to allow energy exploration drilling to re-commence in the Alaskan Arctic’s Chukchi Sea this summer is a welcome development. Here’s why: Federal waters in offshore Alaska are estimated to hold roughly 27 billion barrels of oil and 132 trillion cubic feet of natural gas, the vast majority of which is located in the Arctic. Experts believe that the Chukchi in particular, which holds more resources than any other undeveloped U.S. energy basin, may represent one of the world’s largest sources of untapped oil and gas.
Until now America has regrettably been on the sidelines of Arctic resource and infrastructure investment while our economic competitors—Russia and China included—have moved forward. This policy vacuum was highlighted in a recent National Petroleum Council (NPC) report to the U.S. Secretary of Energy in which I participated and which warned that if we effect no policy changes on an urgent basis we will not stay ahead of or even keep pace with our foreign rivals, remain globally competitive, or provide global leadership and influence in this critical region.
America is more energy self-sufficient than it has ever been
The report comes at a time when the U.S. has cut imports, drastically transforming our nation into the biggest producer of oil and natural gas by tapping huge reserves in shale rock formations across the country. As such, America is more energy self-sufficient than it has ever been. Even so, as evidenced by strong public support for Arctic offshore development in states ranging from Alaska to Iowa, South Carolina and New Hampshire, the American people recognize that we cannot rely solely on shale oil and gas to meet our energy needs.
To that point, as the NPC noted, if we fail to develop the enormous trove of reserves in Arctic waters off Alaska, the U.S. risks a renewed reliance on overseas energy in the future and will have missed a prime opportunity to keep domestic production high and imports and consumer costs low.
As President Obama rightly stated shortly after the Chukchi drilling plan was conditionally approved in May, “When it can be done safely and appropriately, U.S. production of oil and natural gas is important. 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.
We have to take actions that allow exploration to commence now
Indeed, given the long lead time necessary to develop resources in this region, the NPC study stressed that it is vital for the U.S. to take actions now that allow exploration in Alaskan Arctic waters to commence. In that regard, the recent approval for Arctic offshore drilling to occur this summer was a win for both Alaska, which is dependent on the petroleum industry to fund approximately 90 percent of its coffers, and the country at large, which leans on Alaskan energy to meet our daily needs, especially on the West Coast.
To ensure the long-term feasibility of offshore development in the region, Interior Department regulations for the U.S. Arctic in part must facilitate the use of proven technologies and also encourage innovation by providing the flexibility to incorporate future technologies as advances occur and their capacities are demonstrated. In addition, and all the more significant given our accession to chairmanship of the Arctic Council in May, U.S. policies governing natural resource development in the Arctic must be defined and streamlined.
Questions Washington has to answer if the U.S. wants to ensure its leadership in the Arctic
For example, what is the country’s official position on the development of oil, gas, mineral and fishery resources in the Arctic? Does it align with Alaska’s policies? How will resource development affect standards of living for those residing in the region?
In addition to resource development policies, other important questions must be addressed to ensure U.S. leadership in the Arctic. With Prudhoe Bay production in serious decline and the Trans-Alaska Pipeline System running at historically low throughput levels, how will the U.S. ensure access to new sources like Alaska’s Arctic offshore that can help all Americans? With just one heavy icebreaker in operation, and the cost of another tallying at least $700 million, what actions are we prepared to take to build a fleet capable of meeting the demands in an increasingly active region?
These are just a few of the questions and concerns that Washington, D.C. will have to answer soon if the U.S. stands a chance of catching up to or surpassing other nations that have so far leapt ahead to the front of the Arctic line. Will President Obama rise to the occasion and make the right decisions?