Huge Alaska oil discovery will require infrastructure spending to get it to market

Fuel Fix:
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.

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.
You can expect the "keep it in the ground" anti-energy left to do everything within their power to drive up the cost of the infrastructure for getting this oil to market.  They will also try to make further exploration which is already expensive in that are even more so.  The industry needs to find a better way to deal with environmental extortionists.  It may take aggressive counter suit strategies.

These resources are a key ingredient in the growth of Alaska and the state has an interest in the success of these drilling ventures and infrastructure projects.


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