White House Issues Memorandum Withdrawing Bulk of Alaska’s Arctic OCS and Portions of Atlantic OCS from Oil and Gas Drilling
Today the White House pulled the plug on offshore drilling leases in the bulk of the Arctic offshore Alaska and portions of the Atlantic outer continental shelf (OCS).
“The United States is designating the vast majority of U.S. waters in the Chukchi and Beaufort Seas as indefinitely off limits to offshore oil and gas leasing, and Canada will designate all Arctic Canadian waters as indefinitely off limits to future offshore Arctic oil and gas licensing, to be reviewed every five years through a climate and marine science-based life-cycle assessment,” the White House said in a joint statement with Canada.
The Arctic withdrawal encompasses the entire U.S. Chukchi Sea and significant portions of the U.S. Beaufort Sea, according to a simultaneous statement put out by the Department of Interior.
The withdrawal areas announced today encompass 3.8 million acres in the north and mid-Atlantic Ocean off the East Coast and 115 million acres in the U.S. Arctic Ocean. Including previous presidential withdrawals, today’s action protects nearly 125 million acres in the offshore Arctic from future oil and gas activity, the DOI statement said.
The withdrawal does not affect existing leases in these federal offshore waters and would not affect a nearshore area of the Beaufort Sea, totaling about 2.8 million acres, that has high oil and gas potential and is adjacent to existing state oil and gas activity and infrastructure.
“While there are significant concerns about oil and gas activity occurring in this area, it will be subject to additional evaluation and study to determine if new leasing could be appropriate at some point in the future,” the DOI said. The Department of Interior’s five year offshore leasing program for 2017-2022 does not include lease sales in this area or in the withdrawn areas.
Canada’s part
The White House statement said: “Today, for its part, Canada is committing to co-develop a new Arctic Policy Framework, with Northerners, Territorial and Provincial governments, and First Nations, Inuit, and Métis People that will replace Canada’s Northern Strategy. The Framework will include priority areas identified by the Minister of Indigenous and Northern Affairs’ Special Representative, such as education, infrastructure, and economic development. The Framework will include an Inuit-specific component, created in partnership with Inuit, as Inuit Nunangat comprises over a third of Canada’s land mass and over half of Canada’s coast line, and as Inuit modern treaties govern this jurisdictional space. In parallel, Canada is reducing the reliance of Northern communities on diesel, by deploying energy efficiency and renewable power. Canada will also, with Indigenous and Northern partners, explore how to support and protect the future of the Arctic Ocean’s “last ice area” where summer ice remains each year.”
“With respect to areas of the Beaufort Sea where the U.S.-Canada maritime boundary has not yet been agreed, these practical arrangements are without prejudice to either side’s position and demonstrate self-restraint, taking into account the principle of making every effort not to jeopardize or hamper reaching a final maritime boundary agreement,” the White House said.
Legal basis
In today’s memorandum, President Obama cited section 12(a) of the Outer Continental Shelf Lands Act, 43 U.S.C. 1341(a) as the legal basis for his action. Bloomberg said it is sure to draw a legal challenge, “and there is scant legal precedent on the matter. Trump may rescind Obama’s order, but the statute doesn’t include a provision for reversal and that action may take years to work its way through court,” Bloomberg reported.
The Obama administration recently closed Arctic OCS to drilling for the coming five years by excluding the Chukchi Sea and the Beaufort Sea in Alaska from the 2017-2022 lease sales. Today’s presidential action goes much further, creating an indefinite ban.
President-elect Donald Trump could counter Obama’s plan with his own five-year plan, but even so it would be years before drilling could start, Bloomberg said. “The president-elect’s authority to undo a permanent prohibition is unclear. But Congress, controlled by Republicans, could move to rescind the withdrawal of federal lands from oil and gas exploration.”
Alaskans want to benefit from energy development, but the White House ignored that fact: AEC
“This is a deeply frustrating development and one that will mean a bleak economic future for Alaska,” the Arctic Energy Center said in a statement.
“After the White House cited a lack of industry interest in the Arctic for removing the region from the offshore leasing program, we then saw lease sales in the Beaufort Sea and North Slope which generated $18 million in revenue.
Public opinion research commissioned by the Arctic Energy Center showed strong support by Alaskans (76%) and Native groups (79%) for Arctic offshore energy development:
- Alaskans overwhelmingly support offshore energy development in the Arctic, with more than three quarters (76%) supportive.
- Over two third (66%) believe that the opinion of local residents should matter most on the decision of whether to keep Arctic offshore acreage in the government’s five-year leasing plan (66%).
- Among self-identified Native respondents, 72% support offshore resource development. 79% believe that local opinions should matter most.
- A consistent two-thirds of Alaskans favor offshore development when questioned about the economic impact (68% support), national security implications (67% support), or environmental consequences (64% support).
- Alaskans want to keep all options open when it comes to the Arctic (64% support) rather than making decisions that will reduce the United States’ future choices.
“The Arctic Energy Center’s research has shown that a significant majority of Native and Alaskan people support offshore energy development in the Arctic, in a large measure because of the essential role the industry plays in the region’s economy,” the AEC said. “By designating Arctic waters off limits for energy development, the President has prioritized environmental concerns over the well-being of the American people.
The administration previously said that the views of Native groups should take priority in the Arctic. But the AEC survey results of Alaskans would say that the wishes of Native groups were ignored by the administration in making this decision.
“Taken with last week’s news that sales of Beaufort Sea and North Slope leases generated $18 million, it is hard to avoid the conclusion that the Obama Administration is playing politics with the future of Alaska,” AEC spokesperson Lucas Frances said in a statement.
Industry reaction
“We are extremely disappointed in President Obama’s eleventh hour decision to shut down economic development and lock away America’s true energy potential for communities that need it most – and the real jobs, royalty dollars, and national energy security that come along with it,” Independent Petroleum Association of America SVP Dan Naatz said in a statement.
“President Obama’s puzzling actions fly in the face of what his own Energy Information Administration and international data analysts confirmed: the demand for oil and natural gas will continue to grow until 2040, if not beyond.
“Instead of building on our nation’s position as a global energy leader, today’s unilateral mandate could put America back on a path of energy dependence for decades to come. We disagree with this last-minute political rhetoric coming from the Obama Administration and contest this decision by the outgoing administration as disingenuous. With exactly one month left in office, President Obama chose to succumb to environmental extremists demands to keep our nation’s affordable and abundant energy supplies away from those who need it the most by keeping them in the ground.”
Oil and gas is the economic lifeline for Barrow
A 2012 article in Fortune entitled “Why Shell is Betting Billions to Drill for Oil in Alaska” tells the economic tale of what oil and gas development means to residents in Alaska.
“Prior to 1970, Barrow was literally off the grid, with no electricity system, no water and sewer service, and no high school for local teens. Oil money has transformed life in the city, paying not only for electricity, running water, and a modern high school (with an Olympic-size pool, no less), but also a new airport, hospital, library, community center, roller-skating rink, and community college.
“’It’s not looking good’, [Edward Itta, mayor of the North Slope Borough from 2005 to 2011] says of the production declines. ‘And if there’s no oil going through the pipeline, that oil infrastructure becomes worthless, and our tax base goes down’. All of Barrow’s infrastructure was built by oil money, and all of it is now maintained by oil money. ‘I started realizing’, Itta continues, ‘that my biggest responsibility was maintaining the economic well-being of the borough, and that largely has to do with maintaining oil in the pipeline’.”
Up next: Trump
“IPAA looks forward to working with the Trump Administration on new job-creating solutions that will balance thoughtful, environmental protections with safe, responsible energy production and the tremendous economic and consumer benefits that come along with it,” the IPAA said in its statement after the Obama announcement today.
