Palin’s DOI Comments

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Alaska Governor Sarah Palin – Comments
Alaska’s OCS – Secretary Salazar’s April 14, 2009 visit to Alaska

Good Morning! Secretary Salazar, Senator Murkowski, Senator Begich, Representative
Young and honored guests – Secretary, welcome to our great State and thank you for
making your first visit to Alaska as Secretary of the Interior.  During the next four years
we look forward to working together in many areas, including the reason that brought
you to Alaska today, the OCS five year leasing program.
I would like to start with the statement that you made following your confirmation, “A
national energy policy that includes conservation, expanded renewable sources and
wise, responsible use of conventional fuels such as coal, oil and natural gas will create
jobs here in America, protect our national security by reducing America’s dangerous
dependence on foreign oil, and confront the dangers of global warming. (DOI, 2009)”
I completely concur with your statement and want to emphasize its importance.    As
you are well aware, implementing a successful national energy strategy is much harder
than planning one.  You have called President Obama’s energy imperative “our moon
shot” for energy independence (DOI, 2009).  The scale of the challenge will require a
strong and steady commitment toward maximizing our national production of energy,
both petroleum based and renewable, along with enhanced conservation.
Even with enhanced efforts of conservation, the amount of new energy needed for this
country increases dramatically as our population grows and our economy expands.
Environmental challenges from the existing fuel mix and from the many renewable
energy alternatives, coupled with dependence on foreign oil and foreign natural gas,
means that there is no way to achieve these goals in the next few decades without a
dramatic increase in domestic natural gas and a strong effort to modestly increase
domestic oil production.  Keeping Alaska’s OCS lease sales, exploration, and
development programs on schedule, especially in the Beaufort Sea and Chukchi Sea, is
critically important to this effort.  The resource numbers and the amount of energy
needed in the next several decades speak for themselves.
In order to achieve these goals within the next twenty years, environmentally
responsible energy production from the Alaska OCS and State, Federal and Native
onshore lands will be necessary.  Recent assessments by the Department of Interior
show that within the United States, Alaska is second only to the entire Gulf of Mexico in
petroleum potential (MMS, 2009).  The world-class potential of Arctic Alaska was
verified in the recently released Circum-Arctic Oil and Gas Assessment (CARA) by the
USGS which highlighted that Arctic Alaska was second only to the West Siberian Basin
in total Arctic petroleum potential and the highest Arctic potential for oil.  The
assessment estimates that Arctic Alaska’s mean technically recoverable resources of
approximately 30 billion barrels of oil, 6 Billion barrels of natural gas liquids and 221
trillion cubic feet of conventional natural gas (USGS, 2008).
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Of tremendous importance to the nation is a little appreciated fact; exploration for and
production of oil and gas from the Beaufort Sea and Chukchi Basins is critical for
maintaining both the viability and longevity of the Trans-Alaskan Pipeline (TAPS) and
the existing producing oil fields on the North Slope.
North Slope oil production is down to about one-third of peak production. At the peak
TAPS transported 2.1 million barrels of oil a day, or approximately 24 percent of the
nation’s crude oil production.  In February of this year the pipeline averaged 739, 523
barrels a day, now 14 percent of the nation’s crude oil production (Pipeline Facts:
Pipeline Operations, 2008; Pipeline Facts: Throughput, 2008; U.S. Crude Oil Supply &
Disposition, 2009).  And, North Slope production continues to fall.   By some estimates,
without new production from the OCS, the TAPS pipeline will fall below its carrying
capacity in the next decade.
Once the pipeline shuts down it will mean the end of oil production from the North
Slope.  Because of the long lead time between leasing and production it can be more
than a decade from first discovery to production.  Delaying or restricting the OCS
program in Alaska will lead to premature shutdown of TAPS, thereby denying America
access to its large Arctic oil resource.  This is neither in the State nor National interest.
Of equal importance are the steps Alaska has taken to connect Lower-48 markets to
Alaska’s huge natural gas potential. I have committed to and am moving forward the
Alaska gas pipeline project under the Alaska Gasline Inducement Act (AGIA).  As we
meet here today, field parties are gathering geotechnical data and the applicant (TC
Alaska) is preparing for an open season in 2010.   The State of Alaska has committed
$500 million in order to make this long-sought after project a reality – rapidly and
successfully!
AGIA’s most significant elements are critical to the nation, as AGIA’s requirements
pertaining to pipeline expansion, open access opportunities, and low pipeline tariffs will
provide the opportunity to bring new and additional produced gas to market
economically.   The gas potential of the OCS will help to backstop the economic viability
and longevity of the pipeline.
Critical to the long-term success of the pipeline is access to the large gas potential in
the OCS in the Beaufort Sea and Chukchi Basins.  It is estimated that the Arctic Alaska
holds over 220 trillion cubic feet of proven and undiscovered, mean, conventional,
technically recoverable natural gas resource (USGS, 2008; MMS, 2009).  Also to date,
over 100 trillion cubic feet of undiscovered, mean, unconventional, technically
recoverable natural gas has been identified by the USGS (USGS, 2008).
Getting Alaska’s natural gas to market will not only provide a preferred produced fuel, it
should also lower energy and electricity costs to consumers in the Lower-48 states.  In
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its 2009 Energy Outlook, the Energy Information Agency (EIA) estimates that Alaska
gas delivered to the marketplace will lower the cost to consumers by 63 cents per
thousand cubic feet in 2022 (reducing Henry Hub spot prices by 63 cents per thousand
cubic feet) (EIA, 2009).
Some would have you delay exploration and development in the federal offshore of
Alaska over concerns related to global warming and its effects in the Arctic.  First of all
let me make it clear that the State of Alaska understands the effects of climate change
in the cryosphere.  We Alaskans are living with the changes that you are observing in
Washington.  The dramatic decreases in the extent of summer sea ice, increased
coastal erosion, melting of permafrost, decrease in alpine glaciers and overall
ecosystem changes are very real to us.
Many believe that in order to mitigate these long term and systematic changes it will
require a national and global effort to decrease the release of human produced
greenhouse gases into the atmosphere. However, simply waiting for low carbon emitting
renewable capacity to be large enough will mean that it will be too late to meet the
mitigation goals for reducing CO2 that will be required under most credible climate
change models, including the International Panel on Climate Change (IPCC) modeled
scenarios.  Meeting these goals will require a dramatic increase, in the very near term,
to preferred available fuels – including natural gas – that have a very low carbon
footprint and that can be used within the existing energy infrastructure.  These available
fuels are required to supply the nation’s energy needs during the transition to green
energy alternatives.
In the meantime, our nation cannot afford to wait for the capacity of renewable fuel
sources to be large enough to meet our growing energy demands.  So in a very real
way delaying production in the Alaskan OCS will lead to less available natural gas for
our nation meaning higher greenhouse gas concentrations.
Furthermore, Alaska’s OCS has received little analysis of its potential to provide
renewable energy resources, such as the wind or tidal power.  As we transition to green
energy alternatives, we cannot afford to foreclose opportunities in our OCS.
Some will tell you that responsible oil and gas development is not compatible with
protection of species, such as the polar bear.  However, the peer reviewed science
conducted by the US Geologic Survey (USGS) that supported the listing of the polar
bear as a threatened species, identified the loss of sea ice, not oil and gas
development, as the reason (USFWS, 2008).  It is ironic that efforts to restrict the
development of Alaska’s energy resources in the OCS would have us dependent on the
production of energy from less environmentally preferred fuels and locations.  Stopping
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domestic energy production of preferred fuels does not solve the issues associated with
global warming and threatened or endangered species, but it can make them worse.
It is not well understood in much of the nation that Alaska has decades of experience in
safely extracting oil & gas from our resource basins throughout the state, including
Arctic Alaska.  Over this history the technology in the industry has become extremely
sophisticated, allowing for directional drilling from a single surface location for miles in
all directions.  Additionally, the footprints left by drilling activities have shrunk from
around 65 acres in 1977 to as little as 9 acres (API, 2008).
During this same period the federal and state of Alaska regulatory processes have
matured and now subject oil and gas activities to an in-depth analysis under the federal
National Environmental Policy Act (NEPA) and stringent permitting requirements and
oversight.  As Alaskans, we love our land and we have every incentive to ensure that
development is done right!
One aspect of the OCS that may not be discussed as often as the technical
development issues, are the socio-economic effects.  Alaska is one of the states that
does not receive a portion of revenues generated in the OCS.  While Alaskans strongly
support offshore oil and gas development (77% support it in a 2009 poll by Dave
Dittman), we also recognize the impact to the state and local governments whose
institutions and communities are affected by OCS development (AOGA, 2009).
Therefore I strongly support changes to federal law to provide states and coastal
communities with a fair percentage of direct revenues from royalties, bonus bids, and
rental fees derived from all OCS activities off their coast.
As I’ve discussed, the Alaskan OCS will play a very significant role in the nations’
energy and economic future.  The same can be said of its importance to the state of
Alaska.  And related to this is the potential the North Aleutian Basin will provide to
Alaska’s Bristol Bay Region.  In recent years this region of the state has seen significant
decline in the fisheries that have supported its economic base throughout our history.
The changing economy in this region has led to support from the regions’ local
government and some native organizations, as well as the state of Alaska, for continued
lease sales in the Lease Sale 92 area.  The North Aleutian Basin may provide this
region its only viable economic opportunity, if development there is allowed to mature.
Alaska has consistently supported oil and gas development in our OCS.  We have done
so recognizing that certain areas should be exempted from leasing, or have seasonal
drilling restrictions imposed to protect whale migrations.  We have done so because we
recognize the significance OCS development will have on the nation’s and the state’s
economic and energy future.  We have done so because we know oil and gas
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development can occur appropriately, while protecting the environment, the species and
the people impacted.  We have proven this can be done.
In summary, the fact that Alaska’s OCS potential to produce oil and gas is world class is
supported by the best peer reviewed scientific estimates. (by the Minerals Management
Service and the USGS).  Alaska’s oil and gas resources can and should be a major part
of the implementation of any creditable energy plan for our nation.  Alaska has proven
that these resources can be developed safely, but Arctic exploration and development is
a slow demanding process.  Delays or major restrictions in accessing these resources
for environmentally responsible development are not in the national interest or the
interests of the State of Alaska.
Again, Secretary Salazar, we appreciate your visit to Alaska so quickly after taking
office.  I would like to reiterate my belief that our interests surrounding the Alaska OCS
are closely aligned, and my hope that we can work together and be consulted as policy
issues are considered by the Department of the Interior.

Thank you!

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References:
AOGA. (2009, January). Straight Talk Special Edition – Offshore Drilling . Alaska Oil and
Gas Association.
API. (2008). Examples of Technology at Work in the Arctic. Retrieved April 8, 2009,
from American Petroleum Institute: www.api.org
DOI. (2009, January 20). Ken Salazar Confirmed as 50th Secretary of the Interior. U.S.
Department of the Interior.
EIA. (2009). Annual Energy Outlook 2009. U.S. Energy Information Administration.
MMS. (2009). Report to the Secretary, U.S. Department of the Interior: Survey of
Available Data on OCS Resources and Identification of Data Gaps. Minerals
Management Service.
Pipeline Facts: Pipeline Operations. (2008). Retrieved April 8, 2009, from Alyeska
Pipeline Service Company: http://www.alyeska-
pipe.com/Pipelinefacts/PipelineOperations.html
Pipeline Facts: Throughput. (2008). Retrieved April 8, 2009, from Alyeska Pipeline
Service Company: http://www.alyeska-pipe.com/PipelineFacts/Throughput.html
U.S. Crude Oil Supply & Disposition. (2009, April 1). Retrieved April 8, 2009, from
Energy Information Administration:
http://tonto.eia.doe.gov/dnav/pet/pet_sum_crdsnd_adc_mbbl_m.htm
USFWS. (2008). Endangered and Threatened Wildlife and Plants; Determination of
Threatened Status for the Polar Bear (Ursus maritimus) Throughout Its Range. U.S.
Department of the Interior.
USGS. (2008). Circum-Arctic Resource Appraisal: Estimates of Undiscovered Oil and
Gas North of the Arctic Circle. U.S. Geologic Survey.

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