By Michael Conathan
November 7, 2016 at 5:00 am ET
The Interior Department is expected to soon announce whether it will offer new offshore oil leases in the Arctic Ocean, which could launch another round of exploratory drilling in this remote and unforgiving region. Broad-based concerns shared by more than 100 coastal communities nixed proposals to open the Atlantic to oil and gas developers, and it is clear that Interior will continue its extensive oil and gas leasing program in the Gulf of Mexico. But the one question remaining on the table is whether Interior Secretary Sally Jewell will schedule new lease sales in Arctic waters that would then have to be carried out by her successor. She shouldn’t.
The oil industry has almost entirely given up on offshore drilling activities in the federal waters of the Alaskan Arctic. After spending billions of dollars on Arctic offshore tracts offered for lease by the Bush Administration and billions more to conduct exploratory drilling, Shell and several other oil companies have largely thrown in the towel. In the past year alone, Shell, ConocoPhillips, Statoil and others have voluntarily relinquished hundreds of offshore Arctic leases covering millions of acres.
Industry is pulling out because the economics of drilling in the Alaskan Arctic make no sense for the foreseeable future. Oil prices are low, the Arctic drilling season is short, and the costs and risks of drilling in the Arctic Ocean’s outer continental shelf are astronomical. With no deepwater ports in the Arctic and no infrastructure within hundreds of miles to provide an adequate response to a major spill or blowout, a drilling accident could be devastating to the extraordinary marine resources critical to Alaska Natives’ culture and subsistence, such as walrus, bowhead whales, and other ocean wildlife.
Shell learned of these risks and expenses the hard way. Its failed 2012 drilling season culminated with the loss, grounding and eventual scrapping of its drill rig, the Kulluk. When Shell at last returned to the Chukchi Sea to complete exploratory drilling in its top offshore prospect in 2015, it found little oil. Shell has since shut down its Alaskan drilling program, writing off its failed $7 billion investment.
However, even if Shell’s gambit had hit a big strike, the company would have needed to spend billions more dealing with the enormous engineering and environmental challenges of getting the isolated offshore oil to market. Specifically, Shell would have needed approvals to construct a 70-mile subsea pipeline below waters that are icebound most of the year, followed by an overland pipeline more than 250 miles long and traveling through some of the world’s most untouched, wild lands to reach the Trans-Alaskan Pipeline System.
Rather than encouraging other oil companies to engage in uneconomic and risky offshore oil exploration in the Alaskan Arctic, the U.S. government should back more sensible and broadly supported investments there. Federal agencies and Congress should work vigorously with state and tribal authorities to seize opportunities that hold more potential to yield both economic and environmental upside — particularly in light of the rapid changes that are underway in the Arctic due to global warming.
Investing in a deepwater port along the Arctic coast should be a priority to deal with the inevitable growth in shipping and tourism in an increasingly accessible ocean. The Arctic is also ripe for investments in communications infrastructure, renewable energy and micro-grid technology, and community relocations necessitated by climate change-caused coastal erosion. Millions of dollars for coordinated scientific research also should flow into the Arctic, to better understand both the challenges and opportunities presented by climate change. And scientists should work in close partnership with Native communities, in order to tap their centuries of accumulated traditional knowledge, and ensure that new discoveries benefit them.
Alaska’s Arctic coast would also be well served if Congress would appropriate the funds needed to build new heavy icebreakers for the U.S. Coast Guard. These ships are essential for America to exercise sovereignty over its Arctic maritime territory, ensure the safety of Arctic navigation, and conduct polar science. Failing to replace the Coast Guard’s decades-old ships essentially cedes Arctic waters to countries that are investing in Arctic-capable vessels, such as Russia and China.
A decision not to pursue oil drilling in the Arctic Ocean at this time is not a decision to turn our back on the Arctic, or Alaska. To the contrary, it reminds us not to over-promise and, instead, to insist that our federal, state, and tribal governments work together with Alaska Natives and other residents of the Alaskan Arctic to chart an economically bright, diverse, and sustainable future.
Michael Conathan is the Director of Ocean Policy at the Center for American Progress and a former Republican staff member of the U.S. Senate Subcommittee on Oceans, Atmosphere, Fisheries, and Coast Guard.
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