Arctic Oil and Gas: Development and Concerns : Development and Concerns [1 ed.] 9781614700173, 9781613248621

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Copyright © 2011. Nova Science Publishers, Incorporated. All rights reserved. Arctic Oil and Gas: Development and Concerns : Development and Concerns, edited by Roman Shumenko, Nova Science

Copyright © 2011. Nova Science Publishers, Incorporated. All rights reserved. Arctic Oil and Gas: Development and Concerns : Development and Concerns, edited by Roman Shumenko, Nova Science

ENERGY SCIENCE, ENGINEERING AND TECHNOLOGY

Copyright © 2011. Nova Science Publishers, Incorporated. All rights reserved.

ARCTIC OIL AND GAS DEVELOPMENT AND CONCERNS

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Arctic Oil and Gas: Development and Concerns : Development and Concerns, edited by Roman Shumenko, Nova Science

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ENVIRONMENTAL SCIENCE, ENGINEERING AND TECHNOLOGY

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Additional books in this series can be found on Nova‘s website under the Series tab.

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Arctic Oil and Gas: Development and Concerns : Development and Concerns, edited by Roman Shumenko, Nova Science

ENERGY SCIENCE, ENGINEERING AND TECHNOLOGY

Copyright © 2011. Nova Science Publishers, Incorporated. All rights reserved.

ARCTIC OIL AND GAS DEVELOPMENT AND CONCERNS

ROMAN SHUMENKO EDITOR

Nova Science Publishers, Inc. New York

Arctic Oil and Gas: Development and Concerns : Development and Concerns, edited by Roman Shumenko, Nova Science

Copyright © 2011 by Nova Science Publishers, Inc. All rights reserved. No part of this book may be reproduced, stored in a retrieval system or transmitted in any form or by any means: electronic, electrostatic, magnetic, tape, mechanical photocopying, recording or otherwise without the written permission of the Publisher. For permission to use material from this book please contact us: Telephone 631-231-7269; Fax 631-231-8175 Web Site: http://www.novapublishers.com

NOTICE TO THE READER The Publisher has taken reasonable care in the preparation of this book, but makes no expressed or implied warranty of any kind and assumes no responsibility for any errors or omissions. No liability is assumed for incidental or consequential damages in connection with or arising out of information contained in this book. The Publisher shall not be liable for any special, consequential, or exemplary damages resulting, in whole or in part, from the readers‘ use of, or reliance upon, this material. Any parts of this book based on government reports are so indicated and copyright is claimed for those parts to the extent applicable to compilations of such works.

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Independent verification should be sought for any data, advice or recommendations contained in this book. In addition, no responsibility is assumed by the publisher for any injury and/or damage to persons or property arising from any methods, products, instructions, ideas or otherwise contained in this publication. This publication is designed to provide accurate and authoritative information with regard to the subject matter covered herein. It is sold with the clear understanding that the Publisher is not engaged in rendering legal or any other professional services. If legal or any other expert assistance is required, the services of a competent person should be sought. FROM A DECLARATION OF PARTICIPANTS JOINTLY ADOPTED BY A COMMITTEE OF THE AMERICAN BAR ASSOCIATION AND A COMMITTEE OF PUBLISHERS. Additional color graphics may be available in the e-book version of this book.

Library of Congress Cataloging-in-Publication Data Arctic oil and gas : development and concerns / [edited by] Roman Shumenko. p. cm. Includes bibliographical references and index. ISBN  (HERRN) 1. Offshore oil well drilling--Arctic regions. 2. Offshore gas well drilling--Arctic regions. 3. Offshore oil well drilling--Environmental aspects--Alaska--Arctic National Wildlife Refuge. 4. Offshore gas well drilling--Environmental aspects--Alaska--Arctic National Wildlife Refuge. 5. Arctic National Wildlife Refuge (Alaska) I. Shumenko, Roman. TN872.A7A825 2011 333.8'2309113--dc23 2011018563

Published by Nova Science Publishers, Inc. † New York Arctic Oil and Gas: Development and Concerns : Development and Concerns, edited by Roman Shumenko, Nova Science

CONTENTS Preface

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Chapter 1

Chapter 2

Chapter 3

Chapter 4

Chapter 5

vii Offshore Drilling in the Arctic: Background and Issues for the Future Consideration of Oil and Gas Activities National Commission on the BP Deepwater Horizon Oil Spill and Offshore Drilling The Challenges of Oil Spill Response in the Arctic National Commission on the BP Deepwater Horizon Oil Spill and Offshore Drilling

1

35

Analysis of Crude Oil Production in the Arctic National Wildlife Refuge Energy Information Administration

65

Possible Federal Revenue from Oil Development of ANWR and Nearby Areas Salvatore Lazzari

87

Potential Impacts of Proposed Oil and Gas Development on the Arctic Refuge's Coastal Plain: Historical Overview and Issues of Concern United States Fish and Wildlife Service

Index

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PREFACE This book provides an overview of the many issues relevant to offshore oil and gas development in the Arctic. Topics covered in this book include a brief historical background of Arctic oil and gas development; a discussion of the economic importance of oil in Alaska; challenges of Arctic oil spill response; Arctic subsistence resource issues; an overview of important ecological resources in the Arctic; data gaps relevant to future oil and gas decisionmaking; an analysis of crude oil production in the Arctic National Wildlife Refuge and potential impacts of proposed oil and gas development on the Arctic Refuge's coastal plain. Chapter 1- This working paper synthesizes staff research and provides an overview of many issues relevant to offshore oil and gas development in the Arctic.Topics covered by the paper include a brief historical background of Arctic oil and gas development, a discussion of the economic importance of oil in Alaska, challenges of Arctic oil spill response, Arctic subsistence resource issues, an overview of important ecological resources in the Arctic, and data gaps relevant to future oil and gas decision-making. The paper concludes with a summary of staff findings relevant to the future of offshore oil and gas development in the Arctic. Chapter 2- This staff working paper describes some of the difficulties of spill response in the Arctic. In the staff‘s view, response challenges in the Arctic are important for the Commission to consider in its recommendations for the future of offshore drilling. This paper provides background information regarding the status of offshore drilling in Arctic waters, identifies problems with responding to oil spills in Arctic waters, and highlights areas for further Commission inquiry with respect to Arctic drilling.

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Roman Shumenko

Chapter 3- The opening of the ANWR 1002 Area to oil and natural gas development is projected to increase domestic crude oil production starting in 2018. In the mean ANWR oil resource case, additional oil production resulting from the opening of ANWR reaches 780,000 barrels per day in 2027 and then declines to 710,000 barrels per day in 2030. In the low and high ANWR oil resource cases, additional oil production resulting from the opening of ANWR peaks in 2028 at 510,000 and 1.45 million barrels per day, respectively. Between 2018 and 2030, cumulative additional oil production is 2.6 billion barrels for the mean oil resource case, while the low and high resource cases project a cumulative additional oil production of 1.9 and 4.3 billion barrels, respectively. Chapter 4- Recent high petroleum prices, and the related economic burden on consumers and energy-intensive industries, has raised the issue of stimulating domestic supplies of crude oil. One possible source is the coastal plain of the Arctic National Wildlife Refuge (ANWR), which is estimated to contain significant quantities of oil and gas. Interest in developing the ANWR oil resources has also focused on the revenues that the federal government could collect should exploration and development be successful. Some observers have suggested using such revenues for purposes such as providing relief to petroleum consumers, further subsidizing energy conservation measures, or reducing federal budget deficits. However, current federal law prohibits the production of oil and gas in ANWR. Chapter 5-Interest in the oil resources of northern Alaska began with reports in the early 1900s of surface oil seeps along the arctic coast east of Point Barrow. In 1923, the 23-million acre Naval Petroleum Reserve No. 4 was established in northwestern Alaska to secure a supply of oil for future national security needs. That area was later renamed the National Petroleum Reserve-Alaska (NPR-A). Extensive government-sponsored exploration for oil and gas occurred in the NPR-A during the 1940-1950s. During World War II, the entire North Slope of Alaska - 48.8 million acres - was withdrawn from entry under the public land laws and thus held for exclusive use by the U.S. government for military purposes.

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In: Arctic Oil and Gas Editor: Roman Shumenko

ISBN:  © 2011 Nova Science Publishers, Inc.

Chapter 1

OFFSHORE DRILLING IN THE ARCTIC: BACKGROUND AND ISSUES FOR THE FUTURE CONSIDERATION OF OIL AND GAS ACTIVITIES *

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National Commission on the BP Deepwater Horizon Oil Spill and Offshore Drilling STAFF WORKING PAPER NO. 13 Staff Working Papers are written by the staff of the National Commission on the BP Deepwater Horizon Oil Spill and Offshore Drilling for the use of members of the Commission. They do not necessarily reflect the views either of the Commission as a whole or of any of its members. In addition, they may be based in part on confidential interviews with government and non-government personnel. This working paper synthesizes staff research and provides an overview of many issues relevant to offshore oil and gas development in the Arctic.i Topics covered by the paper include a brief historical background of Arctic oil and gas development, a discussion of the economic importance of oil in Alaska, challenges of Arctic oil spill response, Arctic subsistence resource issues, an *

This is an edited, reformatted and augmented version of a National Commission on the BP Deepwater Horizon Oil Spill and Offshore Drilling publication.

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National Commission on the BP Deepwater Horizon Oil Spill…

overview of important ecological resources in the Arctic, and data gaps relevant to future oil and gas decision-making. The paper concludes with a summary of staff findings relevant to the future of offshore oil and gas development in the Arctic.

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I. OIL AND GAS DEVELOPMENT IN ALASKA AND THE ARCTIC The Beginnings of Oil and Gas Development in Alaska In 1867, when U.S. Secretary of State William Seward purchased Alaska from the Russian Empire, the United States gained over 586,000 square miles of territory for less than 2¢ per acre.1 At the time, some Americans referred to the area as ‗Seward‘s Icebox‘ and viewed it as too expensive, too far away, and lacking in valuable resources. Those beliefs changed two years later when massive gold deposits were found in the Klondike. The recognized value of Alaska‘s economic, ecological, and cultural resources to the United States has continued to increase ever since. Although the early Russians noted land-based oil seepages during their 125-year occupation of Alaska, they did not make any attempts to explore or develop the finds; similarly, the Americans did not conduct any petroleum exploration or development in the early years following the 1867 purchase.2 The first Alaskan wells were drilled in 1898 on the Iniskin Peninsula, but they were not particularly successful. However, by 1911, significant amounts of oil were being produced at Katalla on the Gulf of Alaska.3 This production not only demonstrated the feasibility, but also the high cost of producing and transporting Alaskan oil. The first major commercial discoveries in Alaska followed in 1957 at the Swanson River oil field on the Kenai Peninsula and at Middle Ground Shoal oil field in Cook Inlet in 1962.4 In 1968, America‘s largest oil field was discovered on state land at Prudhoe Bay, along the Alaska North Slope (see Figure 1 below for the location of the North Slope).ii This discovery was initially estimated at 9.6 billion barrels of oil,iii which was nearly double the size of the largest field known to exist in North America at that time.5 With this discovery, large amounts of money began to flow into Alaska through construction of the Trans-Alaska Pipeline (began in 1974), and production in the Prudhoe Bay field (began in 1977).6

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Offshore Drilling in the Arctic

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Figure 1. Map of the Alaska Boroughs. This map shows the location of the Alaska North Slope Borough, or ―North Slope.‖ Map from Digital Topo Maps (http://www.digital-topo-maps.com/county-map/alaska.shtml).

Exploration and Development in the Beaufort Sea While development and production on the North Slope increased, Arctic nearshore and offshore areas in the Beaufort and Chukchi Seas were also being considered for development. In 1979, the Department of the Interior conducted a lease sale that included portions of state and federal waters of the Beaufort Sea. This sale led to the first major venture into Arctic offshore exploration for oil and gas.7 Drilling in the Beaufort began in 1981 – a total of 20 wells were drilled by 1989, and an additional ten wells were drilled between 1990 and 2003. Most of the early wells drilled in the Beaufort were non-producible, iv with only a few being further developed. Since the 1979 lease sale, an additional nine lease sales have occurred in the Beaufort Sea Outer Continental Shelf Planning Area – three each decade between the 1980s and 2010. The 2003, 2005, and 2007 sales had a combined total of almost $98 million in high bids.8 Figure 2 (below) depicts the current lease ownership in the Beaufort Sea.

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Figure 2. Map of the Bureau of Ocean Energy Management, Regulation, and Enforcement (BOEMRE)v Beaufort Sea Outer Continental Shelf Planning Area. This map depicts current lease ownership in the Beaufort Sea by company. Map from BOEMRE.

The nearshore fields in the Beaufort Sea (located within approximately 10 miles of the shoreline) are either fully or partially based on artificial offshore islands.9 Artificial gravel islands have been historically used for oil and gas production in areas of the Beaufort that are close to shore and shallow – they are less expensive to design and construct than ice-capable platforms, and they are able to withstand surging ice. Future wells proposed further offshore in the Beaufort Sea are expected to use floating drilling rigs, similar to those used in the Gulf of Mexico, for exploratory drilling.10,vi Operation of the associated offshore production wells is expected to be conducted from fixed year-round structures constructed to withstand the forces of sea ice. BP is operating two nearshore fields in the Beaufort Sea: Endicott and Northstar, both of which are currently producing. They also have development plans at a site called Liberty. All three of the BP sites are or will be constructed on man-made gravel islands. Figure 3 (below) shows a map of the North Slope that includes all three of the BP sites.

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Figure 3. Map of North Slope oil and gas fields. BP‘s Northstar, Endicott, and Liberty fields are all visible in the map. Map from: BP in Alaska.

Endicott is located about eight miles east of Prudhoe Bay in 14 feet of water. ExxonMobil is a co-venturer in the field with BP. Production from the field began in 1987 – it was the first producer in the Beaufort Sea (nearshore or offshore).11 Endicott was built as a self-contained community with production and living facilities, including a power generation facility, a desalination plant for drinking water, a sewage treatment plant, oil processing facilities, a medical facility, and a fitness center.12 Northstar was discovered by Shell Oil in 1983, but was undeveloped until purchased by BP in 1995. The field is six miles north of Prudhoe Bay, in a water depth of 39 feet. Production began in 2001. It was the first production facility in Alaskan Arctic waters that did not have a causeway connecting it to the mainland, delivering its oil via a subsea pipeline.13 BP‘s Liberty field is located about four miles from the coastline. It is planned to be drilled from the Endicott Satellite Drilling Island, and is of particular note because it would be an ultra-extended reach well. The Liberty wells are planned to follow a vertical path beneath the drilling rig, turn to a horizontal position in the direction of the field, then bend again into a vertical position to penetrate into the field reservoir.14 They are expected to extend laterally for up to eight miles from the surface location of the drilling rig.15 BP planned to begin development drilling and production at Liberty in summer 2010. In light of the Gulf of Mexico oil spill, federal regulators decided to re-examine BP‘s Liberty plans before allowing BP permission to drill.16 The Alaska Oil and Gas Conservation Commission also gave notice that it intended to seek public comment and potentially reconsider state regulations that govern ―drilling, rig workover and well control in offshore and ultra-extended reach wells.‖17 In November 2010, BP announced that they had

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suspended construction work on the drill rig for Liberty in order to conduct engineering evaluations on ―safety critical systems, power systems, and high pressure mud pumps.‖18 BP did not announce a new target date for drilling or production start-up. Oooguruk is another Beaufort Sea field, located approximately five miles offshore from Harrison Bay in about five feet of water.19 Production began at Oooguruk in 2008. The field is a partnership between Texas-based Pioneer Natural Resources and the Italian oil company, Eni. Finally, Shell is also seeking to drill exploratory wells in the Beaufort Sea. In October 2010, the company submitted an application to drill to BOEMRE. Drilling would occur from a floating drill rig at the Sivulliq Prospect (formerly Hammerhead). Sivulliq is located approximately 16 miles from the coastline (north of Point Thomson in Camden Bay), and has an average water depth of 102 feet across the site.20 Shell based its 2011 Sivulliq drilling plans on previously approved 2010 exploration plans for the Beaufort and Chukchi seas; MMS approvals of the 2010 exploration plans withstood appeals in the U.S. Court of Appeals for the 9th Circuit.21 Shell also submitted a revised Beaufort Sea exploration plan to BOEMRE that was based on the previously approved 2010 exploration plan. However, the 2011 exploration plan does include a new and more environmentally protective provision to collect and transfer waste, such as drilling cuttings and sanitary waste, out of the Arctic, rather than discharging it at sea.22 The Department of the Interior has noted that if the 2011 permit were approved, BOEMRE would ―have safety personnel on site throughout the drilling operation to monitor the operation and hold [Shell] accountable for compliance with BOEMRE‘s drilling safety and environmental regulations.‖23 Environmental reviews related to the application are also being conducted, including a review of the air quality permits for emissions from the Shell drillship and support fleet. On December 30, 2010, the Environmental Appeals Boardvii returned the Shell air quality permits back to the Environmental Protection Agency (EPA) for revision, based on an appeal from the Native Village of Point Hope and eight environmental organizations.24

Exploration and Development in the Chukchi Sea The first lease sale in the Chukchi Sea Outer Continental Shelf Planning Area occurred in 1988. Between 1989 and 1991, industry drilled five Chukchi Sea wells in approximately 150 feet of water that ranged in distance from 67 to 170 miles offshore.25 The 1988 lease sale was followed by sales in 1991 and 2008. The 2008 Chukchi Sea lease sale (Lease Sale 193) was the most

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lucrative of all the sales in the Arctic, resulting in over $2.6 billion in high bids for almost 2.8 million acres of leases.26 Shell made over $2.1 billion in high bids.27 Figure 4 (next page) is a map of the current lease ownership in the BOEMRE Chukchi Sea Outer Continental Shelf Planning Area.

Figure 4. Map of the BOEMRE Chukchi Sea Outer Continental Shelf Planning Area. This map depicts current lease ownership in the Chukchi Sea by company. Shell leases are marked with the light green color. Map from BOEMRE.

Although Shell, ConocoPhillips, and Statoil all hold leases in the Chukchi Sea, Shell is the only company that has presented formal plans to BOEMRE to drill. The area where Shell has proposed to drill has an approximate water

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depth of 150 feet, expected drilling depth of approximately 7,000 to 10,000 feet, and an expected pressure of no more than 4,000 psi. 28 This can be contrasted with the Macondo well, which had an approximate water depth of 5,000 feet, approximate drilling depth of 18,000 feet, 29 and pressures of almost 12,000 psi.30 Shell received preliminary approval from MMS and the State of Alaska to drill up to three Chukchi Sea exploratory wells during the summer of 2010, which was confirmed upon judicial review by the 9th Circuit Court. However, a coalition of Alaska Native and environmental groups challenged the adequacy of the environmental review of Lease Sale 193, arguing violations under the National Environmental Policy Act, the Endangered Species Act, and the Administrative Procedures Act.viii On July 21, 2010, the Federal District Court for the District of Alaska found that BOEMRE had failed to comply with NEPA in certain circumstances. The court enjoined all activity under Lease Sale 193, and remanded to BOEMRE to address concerns with the environmental impact analysis.31 The issues to be addressed by remand included: a failure to analyze the environmental impact of natural gas development, a failure to determine whether missing information from the environmental impact statement was ―relevant or essential,‖ and whether the costs of obtaining that information would be exorbitant or means for doing so unknown.32 On August 2, 2010, the court amended its ruling, clarifying that that scientific studies that had already been approved or were pending approval by BOEMRE for the summer of 2010 could proceed.33 This decision allowed Shell and Statoil to move forward with seismic tests in the Chukchi Sea during the remainder of 2010.34 Separate from the court activities, Secretary Salazar announced on May 27, 2010, that the Interior Department would postpone consideration of Shell‘s proposal to drill exploratory wells in the Chukchi Sea during 2010. According to the Department of the Interior, the decision was based on the need for further information about spill risks and spill response capabilities in the Arctic.

II. THE ECONOMICS OF OIL IN ALASKA Oil is extremely important to the economy of Alaska. One model of the Alaskan economy calculated that about one-third of the jobs and personal income in 2005 depended on the petroleum industry.35 In fiscal year 2009, the state of Alaska collected $5.2 billion in revenues from the oil industry – this

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accounted for more than 88 percent of Alaska‘s unrestricted general fund revenues.36 Oil production in Alaska (primarily from the onshore field at Prudhoe Bay) peaked in 1988 at slightly more than 2 million barrels per day.37 By 2009, it had fallen to approximately 645,000 barrels per day, a decline of more than two thirds.38 During this period of declining production, the potential economic losses to the state have been mitigated by higher oil prices, including record state revenues from oil and gas production in fiscal year 2008, and the need for workers to maintain aging equipment. However, the Energy Information Administration projects that Alaska‘s production will continue to decline to 420,000 barrels per day by the end of this decade.39 Depending on oil prices, the economic reliance on oil production in Alaska could eventually become a liability for the state economy if production does continue to decrease. In addition to causing direct fiscal problems, a significant decline in North Slope production could also threaten the viability of the Trans-Alaska Pipeline System, which transports oil eight hundred miles from the reserves in Prudhoe Bay to the port of Valdez on Alaska's southern coast. The pipeline is the only means of delivery of North Slope oil for transport to markets. Challenges caused by lower oil volumes in the pipeline include lower pipeline temperatures, water separation and holdup, increased wax deposition, and ice formation. Alyeska Pipeline Service Company has stated that these problems could occur as early as 2013 (when they estimate that throughput may drop below 550,000 barrels per day and oil temperature in the pipeline will fall below 32ºF).40 Some operators estimate that by 2022, the flow could be down to 350,000 barrels a day, at which point ―frost heaves could cause the underground portions of the pipeline to dangerously wrinkle and kink.‖41 Offshore oil in the Arctic is seen by some as an important source for replacing the projected decrease in onshore production. In 2008, the U.S. Geological Survey estimated that approximately 84 percent of the undiscovered oil and gas in the Arctic is expected to occur in offshore areas.42 One scenario developed in a study by Northern Economics for Shell Exploration and Development in 2009 projected production from multiple Alaska offshore sites beginning in 2018, and eventually peaking at 1.8 million barrels of oil per day.43 If Arctic offshore production did significantly increase and new pipelines were built to connect the oil to the Trans-Alaskan Pipeline, the State of Alaska could expect to receive additional economic benefits in the forms of jobs and tax revenue.ix However, two points should be noted regarding this scenario. First, an assumption is made that capital investments will suffice to keep the

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33-year-old Trans-Alaska Pipeline System maintained and safely operating over time. This strategy has been somewhat successful to date, with Alyeska Pipeline Service Company, acting on behalf of the pipeline‘s owners, investing hundreds of millions of dollars over the last decade into various upgrades and improvements.44 However, issues surrounding the aging infrastructure include findings of major corrosion and an associated shut down in August 2006; an oil spill in May 2010 due to the failure of a relief valve control circuit; and a shut down due to an oil spill at a pump station in January 2011.45 Second, it should be noted that the State of Alaska does not reap as much oil and gas revenue from offshore federal leases as it does from onshore state lands under the current revenue system. The state does not receive any royalties, production tax, or property tax for activities on offshore federal leases beyond six miles from shore.46

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III. CHALLENGES OF OIL SPILL RESPONSE IN THE ARCTICX The Alaskan Arctic is characterized by extreme cold, varying forms and amounts of sea ice, seasonal darkness, high winds, extended periods of heavy fog, and week-long storms that approach hurricane strength. The winter season generally lasts nine months – temperatures are usually below 0°F and can reach minus 58°F.47 In the North Slope, the sun does not rise above the horizon from mid-November to late January, creating a prolonged period of winter darkness.48 The Chukchi and Beaufort Seas are also covered by varying forms of ice for eight to nine months of the year. Early forming ice is weak and easily displaces to create pileups and ridges; by late winter, land-fast ice exists that is typically about 2 meters thick and often extends from the shoreline to a depth of about 15 meters.49 Offshore, there is a pack ice zone that moves with ocean circulations, consisting of first-year ice, multi-year ice floes, and ice islands. Sea ice begins to retreat northward around June, creating an open water season between (approximately) July and October that is conducive to oil and gas activities, including exploratory seismic work and drilling.50 The demanding physical conditions of the Arctic can both heighten the risk of an oil spill and limit the effectiveness of oil spill response operations.51 Due to the seasonality of these variables, a key factor affecting spill response would be the time of year that the spill occurred. The techniques available for

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oil spill response and their effectiveness are expected to be significantly different during summer or open water conditions, versus late fall through spring when ice and more extreme weather conditions exist. If an oil spill occurred late in the open water season or during the fall freeze-up, oil could become encapsulated within the ice for multiple months and would not likely be accessible for clean-up efforts until the spring. BOEMRE has stated that the greatest needs for oil spill research and development include operational tools to detect and map oil in a variety of ice types, as well as effective response options for spilled oil in moving broken pack ice.52 Oil is difficult to locate if it moves under ice floes or becomes encapsulated into surrounding ice. Rather than relying on visual observation, responders to spills in icy conditions may have to rely on airborne remote sensing techniques and ground penetrating radar to detect oil, each of which have limiting factors.53 According to research conducted by SINTEF,xi aerial sensing has a high potential for detecting spills in very open drift ice, but a limited potential for spills in close pack ice.54 Ground penetrating radar units have been found to be capable of detecting thin oil layers beneath ice or snow,55 but their use could raise human safety concerns in real-world Arctic conditions because they are either used by personnel walking on the ice or are mounted on helicopters flying over the ice at a very low altitude. Ice conditions can make mechanical containment and response efforts more difficult and dangerous. Sea ice can ―reduce the effectiveness of containment booms by interfering with boom position, allowing oil to entrain or travel under the boom, or causing the boom to tear or separate.‖56 High waves, strong winds, and currents will also decrease the effectiveness of booms to contain oil. In terms of recovery, mechanical recovery methods are generally developed for open water conditions: their effectiveness will depend greatly on the amount and type of ice on the water. Other potential containment and recovery challenges in ice conditions include: icing and freezing of equipment, clogging of equipment, limited access to oil, limited flow of oil to skimmers, separating oil from ice and water, forces in the ice field, and increased oil viscosity.57 On the positive side, ice could potentially trap large quantities of oil to allow for more efficient mechanical recovery of oil in certain pockets between larger ice floes.58 Based on research conducted by the State of Alaska and MMS in 2000, ice management strategies, like the use of ice breakers, would likely need to be employed to improve the effectiveness of mechanical containment and collection methods in Arctic ice conditions.59

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Under optimal conditions, the response strategy with the best potential in the Arctic may be in situ burning, where the oil is burned off the surface of the water. Cold water temperatures and ice can enhance the effectiveness of in situ burning by limiting the spread of oil, herding the oil into thicker slicks, as well as slowing the weathering process.60 However, some Arctic conditions could also complicate in situ burning: certain ice conditions could reduce burn effectiveness or make it difficult to deploy fire boom; high winds and cold temperatures could make ignition difficult; and limited visibility due to winter darkness or fog could prevent burns from occurring or limit aerial operations.61 Laboratory and field experiments conducted by SINTEF and others have demonstrated that dispersants, which are chemicals applied to oil slicks to accelerate the dispersion of oil into the water column, have the potential to be effective in cold water and ice conditions.62 Similar to in situ burning, dispersant use is more effective before oil has a chance to emulsify and become weathered. As a result of expected slower weathering of spilled oil in the Arctic, there may be a longer initial window to effectively deploy dispersants. Application of dispersants is expected to be limited by both environmental conditions, including ice barriers limiting access to spilled oil, and harsh weather, which can limit aerial applications of dispersants.63 Additionally, energy may need to be put into the system in higher ice coverage areas in order for dispersants to be effective – SINTEF field experiments used boat thrusters to create enough energy for the dispersant to mix with spilled oil in high ice coverage areas.64 Regardless of their effectiveness, questions remain regarding the potential toxicity and impacts of dispersants on Arctic ecosystems.xii There are also logistical issues related to oil spill response in the Arctic. The response to any spill in Arctic waters would be overseen by the Coast Guard under the requirements of the National Contingency Plan. However, Coast Guard officials have noted over the past few years that they are illprepared to adequately respond.65 The Coast Guard lacks sufficient ice-class vehicles capable of responding to a spill under Arctic conditions: two of the three Coast Guard polar icebreakers are non-operational and have exceeded their service lives.66 Distance is another major hurdle, even in open water and good weather conditions. The nearest Coast Guard operations base to the Chukchi region is on Kodiak Island – approximately 1,000 miles from the offshore lease sites. The Coast Guard is currently completing a High Latitudes Study, with the goal of producing mission analyses related to: (1) polar ice breaking needs; (2) Coast Guard missions in the Arctic region; and (3) Coast Guard missions in the Antarctic region.67 These analyses are expected to refine

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future operational requirements and identify the mix of personnel resources and assets needed to carry out response efforts in the area.68 The study is being supplemented with information gained by the Coast Guard from establishing temporary, seasonal operating locations in the Arctic, and conducting periodic Arctic overflights. The geographic isolation of the North Slope from the rest of Alaska also complicates Arctic oil spill response: the eight main North Slope communities are not connected to each other or the rest of the state by road, and the few major airstrips that could handle cargo aircraft in the area are not connected to highways or docks.69 The North Slope communities have limited infrastructure to support a potential influx of oil spill responders and equipment. Although the infrastructure at Prudhoe Bay could likely handle such an influx, it is not located within close proximity to many of the offshore areas where drilling is being proposed in the Chukchi Sea.

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IV. ALASKAN NATIVE SUBSISTENCE RESOURCE ISSUES IN THE ARCTIC Understanding the importance of Alaskan Native subsistence resource uses is vital to any discussion of offshore drilling in the Arctic. Inupiat Eskimos are the dominant population in Alaska‘s Arctic region. They have survived in this isolated environment via subsistence hunting and fishing for thousands of years.70 Subsistence species include bowhead whales, beluga whales, walruses, ice seals, bearded seals, arctic char, and caribou. However, the bowhead whale is of particular importance due to its size and food potential. Bowhead whales can reach 60 feet in length and weigh more than 120,000 pounds. The Bering–Chukchi–Beaufort stock of bowhead whales migrate into the Bering and Beaufort seas in late spring and early summer, spend the summer feeding primarily in the Canadian Beaufort, and then begin their westward migration back out of the Beaufort through the Alaskan Arctic in late August and early September.71 They are the most important subsistence animal for the coastal communities of northwest and northern Alaska.72 Although bowhead whales are not present in the Arctic year-round, whale hunting and the customs surrounding it are an important part of the cultural heritage of the Inupiat. According to the Mayor of the North Slope Borough: ―There are people here, [t]he Inupiat Eskimos have inhabited this land for thousands of years. Our health and our survival have always Arctic Oil and Gas: Development and Concerns : Development and Concerns, edited by Roman Shumenko, Nova Science

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As a result of this direct connection to the ocean and its resources, BOEMRE has noted that many Inupiat are concerned about offshore ―industrial activities that may directly or indirectly affect hunting success or the habitats of the species important to subsistence.‖74 Much of this unease is related to seismic activities, but the threat of oil spills is also a serious potential hazard. In case of a spill, whales may pass through the oil, exposing their bodies to harmful hydrocarbons. No research has studied the toxic effects of inhaled or ingested oil on bowhead whales, but scientists believe the consequences would be similar to those for polar bears and seals, which are both seriously affected by oiling.75 Spills could also impact the food sources for the whales.

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V. ARCTIC ECOLOGICAL RESOURCES Arctic wildlife makes a substantial contribution to global biodiversity, with the region supporting globally significant populations of birds, mammals and fish.76 More than 100 phytoplankton species have been identified from the Beaufort Sea; a variety of zooplankton, jellyfish, kelp communities, and benthic invertebrates are also important components of Arctic marine ecosystems.77 In the Chukchi Sea, the melting and retreating ice edge during the spring leads to a highly productive and estuary-like nearshore corridor that serves as the base of the food chain for coastal and marine Arctic species. The Chukchi Sea's shallow and highly productive sea floor also allows benthic or bottom-dwelling prey, like crustaceans and mollusks, to flourish and create an important food source for wildlife specialized to feed at the ocean floor, such as walrus, seals, gray whales, and deep-diving sea birds.78 The marine mammal fauna of the northern Bering, Chukchi, and Beaufort Seas are some of the most diverse in the world.79 Marine mammals found in this portion of the Arctic include four species of ice seals (bearded, ringed, spotted, and ribbon; bearded seals and ringed seals have recently been proposed for listing as threatened under the Endangered Species Act); multiple cetaceans, including bowhead (listed as endangered under the Endangered Species Act), beluga, gray, and killer whales, and harbor porpoise; walruses;

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and polar bears.80 The Chukchi Sea is ―home to roughly half of America's polar bears, approximately 2,000 animals, or one-tenth of the world's population.‖81 Humpback and fin whales (listed as endangered under the Endangered Species Act), and minke whales have been sighted recently in the Arctic as their range expands due to the effects of climate change; there have also been recent reports of narwhals.82 The distribution, movements, and life history events of many of these marine mammal species are closely linked with the presence or absence of sea ice.83 Seven marine mammal species ―are present in the Arctic year-round and are often associated with the presence of sea ice: bowhead whale, beluga whale, narwhal, ringed seal, bearded seal, walrus, and polar bear.‖84 Those species are also important top predators within Arctic marine ecosystems. Bordered by the Beaufort and Chukchi seas, the North Slope of Alaska is very important to migratory birds. For many of these species, the concentration in the Arctic represents a substantial portion of their North American or world population. 85 Shorebirds, seabirds and waterfowl concentrate in particular areas, such as the bays, lagoons, and river deltas lining the coast, where they can number into the tens of thousands. These areas are used by birds to rest, molt, and also acquire the necessary resources to successfully migrate. Inland tundra areas do not harbor such large aggregations but collectively may contain millions of nesting birds. Other birds, primarily waterfowl, sea ducks and seabirds, use the near and offshore areas for feeding and migration. The Chukchi Sea and areas to the south (Bering Sea and Bering Strait) support some of the largest colonies of marine birds in the northern hemisphere, with some colonies consisting of more than one million birds.86 Bird species in this area include two threatened (Spectacled and Steller‘s Eider) and two candidate (Yellow-billed Loon, Kittlitz‘s Murrelet) species on the Endangered Species list, as well as many other birds of conservation concern. 87 Information regarding fish and fisheries in the Beaufort and Chukchi Seas is much more limited than what exists for marine mammals and birds. Studies in the early 1990s reported 72 species of fish in the northeastern Chukchi Sea, and 62 species in the Alaskan Beaufort Sea.88 Marine fish species in the Beaufort Sea include: arctic char, rainbow smelt, arctic cod, saffron cod, sculpins, eelpouts, ciscoes, and whitefishes; in the Chukchi, the fish assemblage is similar, but also includes salmon and char.89 Snow crabs are also found in both seas.90 There are currently no commercial fisheries in the Arctic, except for small fisheries – mostly for salmon – that occur solely in state waters and are managed by the State of Alaska. As previously discussed,

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subsistence fishing is critical to local communities and occurs throughout the Arctic.91 In August 2009, the North Pacific Fishery Management Council took the proactive measure of completing a fishery management plan for the Arctic. This plan was conducted in recognition that the decrease of sea ice in the Arctic could eventually lead to commercial fishery interest in the area, as well as the fact that very little information exists that would be needed for commercial fishery management. The fishery management plan governs commercial fishing for all stocks of fish in the Arctic, including all finfish, shellfish, or other living marine resources (except Pacific salmon and Pacific halibut). The plan prohibits all commercial harvest of the previously listed fish species ―until sufficient information is available to support sustainable management of a commercial fishery.‖92 The unique and fragile ecosystems of the Arctic are under a great deal of pressure due to the impacts of climate change and associated decreases in sea ice. Scientists have determined that the Arctic is experiencing the impacts of a ―prolonged and amplified warming trend, highlighted with many recordsetting events,‖ in particular the dramatic losses of sea ice cover that define the marine region.93 Recent Arctic annual temperature increases are more than double those found at lower latitudes – the Arctic‘s 2008 annual mean air temperature over land was the fourth warmest on record, continuing a longterm upward warming trend.94 The four smallest September ice extents have occurred in the past four years (the September 2010 sea ice extent was the third smallest in the past 30 years), and eight of the ten lowest summer ice minimums have occurred in the last decade.95 Presence of thicker multi-year sea ice has also decreased 35 percent in the last five years.96 These climatic changes are relevant to the discussion of oil and gas in the Arctic because the impacts of warmer temperatures and decreasing sea ice could weaken the natural ability of the Arctic ecosystems and/or individual species to recover from an oil spill.

VI. FILLING SCIENTIFIC DATA AND OIL SPILL RESPONSE RESEARCH GAPS IN THE ARCTIC As a result of the harsh weather and ice conditions in the Arctic, as well as the remoteness of the area, the Beaufort and Chukchi Seas have presented a serious challenge to researchers. Research in the Arctic tends to require high-

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priced assets (like ships, ice-breakers, and airplanes), is often limited to a short season due to ice or weather conditions, and can be very expensive to execute. Despite this, many useful scientific studies have or are being conducted in the Arctic by federal, state, and local government agencies, as well as native groups, universities, independent researchers, and the oil and gas industry. Traditional knowledge also plays an important role in understanding the Arctic and its resources. A large portion of the studies under the BOEMRE Alaska Environmental Studies Program are conducted on a collaborative basis with federal, state, tribal, academic, private, and other partners. For example, BOEMRE has collaborated with NOAA to conduct surveys to understand seasonal marine mammal and fish distribution in certain areas of the Arctic. A partnership with the University of Alaska Coastal Marine Institute (CMI) was created in 1993 through a cooperative agreement between the University of Alaska and MMS Alaska Region. Research under the agreement focuses on coastal topics associated with the development of natural gas, oil and minerals in Alaska‘s OCS. According to BOEMRE, matching research funds have come from more than ―50 different organizations and [have] leveraged over $15 million of MMS funds into $30 million worth of relevant marine-based research.‖97 The BOEMRE Alaska Environmental Studies Program also conducts cooperative research with universities through Cooperative Ecosystem Studies Units. The Northwest Alaska Cooperative Ecosystem Studies Unit is hosted by the University of Alaska, with the University of New Hampshire and the Alaska SeaLife Center serving as partners.98 The oil and gas industry is also conducting research in the Arctic in support of potential exploration and development of offshore oil and gas resources. Following the 2005 lease sale in the Beaufort Sea, Shell restarted its Arctic science program. Research topics include ice, oceanography, meteorology, marine mammals, sediment chemistry, benthic organisms, onshore hydrology, cultural resources, and marine ecosystem-based studies.99 In 2008, a multidisciplinary program to develop baseline science was also established jointly between Shell, ConocoPhilips, and Statoil in the areas of their Chukchi Sea lease sites. Intensive sampling throughout a 30 by 30 nautical mile grid is collecting a variety of data (fish, birds, marine mammals, plankton, benthic invertebrates, physical and chemical oceanography, etc) that are focused on better understanding ecosystem processes; seasonal and interannual variability; and the relationship to sea ice dynamics.100 Although the insights derived from these diverse studies and traditional knowledge have made contributions to our current understanding of the Arctic,

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additional research in other geographic and topical areas is needed. This is particularly important as oil and gas development and other anthropogenic activities increase (such as commercial fishing, shipping, tourism, and Navy activities). Broad baseline data across the Arctic are critical to understand the potential ecological sensitivities of areas that may be leased for oil and gas activities, especially with respect to the potential impacts to individual species and the larger ecosystem once those activities begin. In addition, significant research is needed related to oil spill response in Arctic conditions. BOEMRE has recognized this need in its FY11 Annual Studies Plan for Alaska: ―In consideration of these recent events and dynamic circumstances, our studies planning process faces administrative and budgetary challenges for which we are adjusting our research priorities. Our FY11 priorities now include: updates and improvements in our oil spill risk analysis models; lab research on biological effects of oil/gas and dispersants in cold water; planned workshops to document Gulf spill ―lessons learned‖ for spill planning and response in arctic waters, as well as multilateral preparation for damage assessment fieldwork protocols; improved baseline for monitoring shorezone habitat and bioremediation; and efforts to enhance oil spill detection technologies and ―nowcast‖ oceanographic instrumentation. Additional efforts to update and improve data collection for catastrophic event analysis in the arctic will undoubtedly follow in FY12.‖101

Other federal efforts underway related to the Arctic resources include preparation of an Arctic Management Plan and a science gaps analysis. In July 2010, President Obama signed Executive Order 13547, adopting the Final Recommendations of the Interagency Ocean Policy Task Force as the National Policy for the Stewardship of the Oceans, Our Coasts and the Great Lakes.102 This Policy established a National Ocean Council and nine Priority Objectives for implementation, including a priority objective for Changing Conditions in the Arctic. The Policy requires the National Ocean Council to develop National Strategic Action Plans for all of the priority objectives. In preparing its plan for the Arctic, the National Ocean Council is instructed to work with all stakeholders, including indigenous communities, to develop a proactive and science-based plan to manage and encourage use, while protecting the fragile Arctic environment.103 Separately, the Department of the Interior has directed an evaluation of existing Arctic science information, which is being led by the U.S. Geological Survey and is expected to be completed in spring 2011. This report will synthesize what is known about the Beaufort and Chukchi Seas. According to

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the Department of the Interior, ―the report will examine the effects of exploration activities on marine mammals; determine what research is needed for an effective and reliable oil spill response in ice-covered regions; evaluate what is known about the cumulative effects of energy extraction on ecosystems and other resources of interest; and review how future changes in climate conditions may either mitigate or compound the impacts from Arctic energy development.‖104 A number of high profile and high priority data gaps for the Arctic are discussed below. This is in no way meant to be an exhaustive list of topics or data gaps (for example, it does not cover birds or oceanographic data), but it does provide a sense of the types of studies that are needed to provide a broader understanding of the Arctic. Without this broad understanding, it is difficult to put the more detailed and site-specific environmental studies being conducted by the industry at lease sites into context. Implementing these studies would help managers better understand the potential scope and severity of anthropogenic impacts to key components of the entire Arctic ecosystem. They will also be important in the case of an oil spill, because the scientific data is needed to inform the Natural Resource Damage Assessment process.xiii

Marine Mammals Data Gaps The BOEMRE Alaska Environmental Studies Program has funded a significant amount of marine mammal research, mostly focused on a few marine mammal species that are both listed under the Endangered Species Act and that are important for the Alaska Native subsistence harvest. Four major multi-year studies of bowhead whales and cetaceans in the Arctic are currently being conducted under an interagency agreement between BOEMRE and NOAA: •

•

The Bowhead Whale Aerial Survey Project (BWASP) has been conducting surveys of bowhead whales during their fall migration through the western Beaufort Sea since 1979 in order to characterize the general fall migration pattern. These surveys are conducted between Barrow, AK and the Canadian border and occur from late August to mid-October. The Chukchi Offshore Monitoring in Drilling Area (COMIDA) study seeks to increase scientific knowledge about broad patterns of seasonal distribution and abundance of cetaceans. COMIDA surveys are conducted in BOEMRE‘s Chukchi Sea Planning Area in the

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•

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•

northeastern section of the Chukchi Sea from mid-June to late October. The Bowhead Whale Feeding Ecology Study (BOWFEST) is a multiyear study that started in 2007. It focuses on late summer oceanography and prey densities relative to bowhead whale distribution in offshore waters within 100 miles north and east of Point Barrow, Alaska.105 The Chukchi Sea Acoustics, Oceanography and Zooplankton (CHAOZ) study employs a multidisciplinary approach to combine information on cetacean distribution with oceanography to provide an integrated look at how changing regional and local conditions are affecting cetaceans.106

Despite these studies, basic stock assessments and baseline data on Arctic marine mammal abundance, trends in abundance, stock structure, and distribution are inadequate. NOAA does not have funding for regular Arctic marine mammal stock assessments. As a result, reliable abundance estimates are not available for most Arctic marine mammal species, and trends in abundance are unknown for nearly all species.107 To establish current baselines for assessment purposes and to allow for Natural Resource Damage Assessment in case of an oil spill, the following areas of Arctic marine mammal research should be considered a high priority: • • • •

•

Improvements in techniques to assess the abundance, stock structure, and trends in abundance of Arctic marine mammals. Local, regional, and seasonal distributions of Arctic marine mammals. Understanding and predicting how climate change will impact marine mammals. Acoustics research, focused on impacts of anthropogenic sound on marine mammals, how marine mammals use sound, and how sound can be used to assess marine mammal populations. General health and effects of contaminant loads and disease on marine mammals.

Marine Fisheries and Habitat Data Gaps Because of the lack of commercial fishing and the difficult research conditions, NOAA has not conducted regular marine fish stock assessments in the Arctic. The BOEMRE Alaska Environmental Studies Program has also not

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placed a strong emphasis on marine fisheries. As a result, only a handful of major marine fish surveys have ever been conducted in the Arctic: •

•

•

•

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•

In 1959 and 1976, two dedicated marine fish and invertebrate surveys using bottom trawls and other gears were conducted in the southeastern Chukchi Sea. In 1976 and 1977, the Beaufort Sea and a small portion of the northeastern Chukchi Sea were sampled opportunistically with a bottom trawl during a marine mammal survey. In 1990 and 1991, a multidisciplinary study of the northeastern Chukchi Sea was conducted by the University of Alaska Fairbanks, including a comprehensive bottom trawl survey. Joint Russian-American surveys have occurred several times since 2004. In 2008, with support from BOEMRE, the NOAA Alaska Fisheries Science Center conducted a detailed survey of the western part of the Beaufort Sea using bottom trawls, hydroacoustics, and other gears.108

BOEMRE has stated that the fisheries data that exist in the Arctic focus ―mostly on adult fish in the nearshore environment during the open-water season,‖ and ―tend to address general distribution and abundance – very limited information regarding discrete populations, migration, offshore occurrence, and life history‖ are available at this time.109 Because of the difficulty in conducting fisheries surveys in ice conditions, data regarding marine fish during pack ice and fast ice conditions are also extremely rare. Many of the Arctic research needs that were identified by the National Research Council in 1993 appear to still be applicable in 2010, including trophic ecology, life history (migration patterns, growth rates, feeding habits, and reproduction), and offshore distribution.110 In addition, the following research would be important to understand the recovery rates of sensitive benthic habitats, determine the specific location and productivity of fish habitats, and understand the impacts of climate change – all of which are relevant to understanding and measuring the impacts of oil and gas activities in the Arctic and providing baseline data for Natural Resource Damage Assessment in case of a spill: •

Forecasting distribution and abundance of managed species based on decreasing sea ice levels.

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• • •

Assessing whether spatial shifts are creating new biological communities, thus altering food webs and migrations. Characterizing habitat utilization and productivity for living marine resources. Assessing sensitivity, impact, and recovery of disturbed benthic habitats. Developing seafloor maps for Arctic waters. Understanding the current subsistence use of marine fish. Understanding the reliance of Arctic marine mammals on marine fish species, so that potential conflicts with new commercial fisheries can be highlighted and mitigated early in the planning process.

Oil Spill Response Research Gaps The Oil Pollution Act of 1990 established the Interagency Coordinating Committee on Oil Pollution Research.xiv The purpose of the committee is to: ―(1) prepare a comprehensive, coordinated federal oil pollution research and development plan; and (2) to promote cooperation with industry, universities, research institutions, state governments, and other nations through information sharing, coordinated planning, and joint funding of projects.‖111 The work of the committee includes Arctic components, but is more broadly focused to cover all areas of oil pollution research. In its December 2009 Biennial Report to Congress, the committee recognized the complex issues associated with oil spill response in the Arctic, and noted a commitment to continue ―to coordinate and remain cognizant of cold-water response research and development studies.‖112 As part of this group, MMS/BOEMRE has operated an Oil Spill Response Research Program that includes an Arctic component. Between 1997 and 2008, MMS conducted 31 research projects that were ―directly related to improving equipment and processes for the prompt identification and removal of oil from harsh Arctic environments.‖113 Many of these projects were conducted with partners from state and federal government agencies, academia, private industry, and other countries. A large amount of BOEMRE funded oil spill response research is conducted at Ohmsett – The National Oil Spill Response Research & Renewable Energy Test Facility. This New Jersey facility is managed by BOEMRE and contains one of the largest outdoor saltwater tanks in North America: it measures 667 feet long by 65 feet wide, and holds 2.6 million gallons of water.114 The tank is designed to test oil spill response techniques and full-scale response equipment with oil under controlled environmental

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conditions. It is able to simulate both cold water and broken ice conditions. Both Ohmsett and the Oil Spill Response and Research Programs receive funding appropriated under the Oil Spill Liability Trust Fund.xv Important research has also been conducted by the industry in partnership with various governments and research institutions. SINTEF undertook significant Arctic oil spill research through the three-year Joint Industry Program on oil spill contingency for Arctic and ice-covered waters, which was established in 2006 and ended in 2009. The program completed multiple research projects specific to oil spill response in cold water and ice conditions, including: fate and behavior of spilled oil; in situ burning; mechanical recovery; remote sensing; and oil distribution and bioavailability. As part of the program, laboratory and medium-scale experiments were taken one step further and tested in ice conditions in the Barents Sea during two large-scale field experiments that focused on mechanical recovery methods, in situ burning, and dispersant application. According to SINTEF, ―a significant data set has been collected that will aid in understanding more about oil in ice, including such issues as: oil weathering; the window of opportunity for various oil spill countermeasures; the interaction between ice and water; the bio availability of released oil in ice; and information on oil-ice drift.‖115 As the potential for oil and gas activity increases in the Arctic, it is critical for the U.S. to develop better science and protocols related to oil spill response in the unique weather, water, and ice conditions of the Arctic. Despite all of the research that has already been conducted, there are still many significant data gaps related to oil spill response in Arctic conditions. According to the U.S. Arctic Research Commission, ―the promise of a rigorous and coordinated national research program on oil spills, made in the Oil Pollution Act of 1990, after the Exxon Valdez disaster, has fallen short.‖116 Despite advances in field research made by SINTEF and its partners, Arctic oil spill response technologies remain ―largely untested and unproven in the harsh real-world conditions‖ that exist in the Arctic.117 In addition to the need for a higher level of consistent, long-term funding for Arctic oil spill response research, there are a number of areas that would benefit from additional research, particularly field testing in harsh Arctic conditions: • • • •

Detecting oil trapped under ice. Removing or cleaning oil spilled under ice. The operability of oil spill response equipment in Arctic conditions. The effectiveness of dispersants, in situ burning, and herding agents in Arctic conditions.

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The environmental impacts of using dispersants, in situ burning, and herding agents in Arctic conditions. Oil spill trajectories in the Arctic. The economic, environmental, and societal impacts oil spills may have on Alaskan communities. This would encompass incorporating the knowledge of Arctic communities into preparedness, response, assessment, and restoration activities to address the human dimensions of spills.

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VII. SUMMARY AND FINDINGS The topic of offshore oil and gas development in the Arctic is controversial and tends to elicit strong responses. Research by the Commission staff has revealed a broad range of views related to Arctic oil and gas. The issues explored include potential environmental impacts; economic benefits and economic beneficiaries of activities; potential impacts on Alaskan Native subsistence harvest; effectiveness of oil spill response methods in the unique weather and ice conditions of the Arctic; and industry‘s ability to respond to an oil spill in the Arctic. Commission staff has found that there are many areas related to oil and gas development in the Arctic that warrant targeted research and strengthening of infrastructure on an expedited time frame. Some of these activities could be conducted concurrently with exploratory drilling by current lease holders, while others are urgent enough to require at least partial solutions before further drilling occurs. The following findings should be taken into consideration by the Department of the Interior as the Department considers whether oil and gas development in the Arctic should be allowed to move forward, and at what pace: 1) The Arctic is home to a number of unique, diverse, and fragile ecosystems that are under stress from the impacts of climate change. There are currently large gaps in the ecological information available in the Arctic Ocean, including the Beaufort and Chukchi Seas. Although some research has been completed for a handful of species during certain times of the year, a better understanding of more components of the marine ecosystem throughout the entire year is needed. Without these data, it will be extremely difficult to predict and monitor the impacts of offshore oil and gas activities, or conduct damage assessments in the event of an oil spill.

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2) The Inupiat Eskimos of Alaska‘s remote arctic and subarctic communities rely heavily on subsistence resources of the marine environment, particularly bowhead whales. Whale hunting and the customs surrounding it are also an important part of the cultural heritage of the Inupiat. Oil and gas development has the potential to directly or indirectly affect hunting success or the habitats of species important to subsistence, which in-turn would have a negative impact on native communities. However, offshore oil and gas development could also provide some level of increased economic opportunity to the communities. 3) There is currently a large gap in knowledge related to oil spill response in the Arctic. Arctic conditions can be very dangerous to humans, and include extremely cold air and water temperatures, strong winds, multiple forms of ice, and fog. As a result, successful oil spill response methods from the Gulf of Mexico cannot simply be transferred to the Arctic and expected to work in exactly the same way. Although industry, government, and research institutions have partnered to conduct important research on this topic, much more information is needed related to the effectiveness and safety of Arctic oil spill response methods. 4) There could be a large difference in the effectiveness of Arctic oil spill preparedness, response, and containment efforts related to exploratory drilling versus year-round oil and gas production. Exploratory drilling would likely be confined to a relatively short time period during open water conditions, which should facilitate oil spill response and containment operations. As a result, a different scale or type of information and response capabilities are needed for the two activities. There are outstanding questions regarding what both government and industry need to demonstrate in terms of information and capabilities in advance of each type of activity. An evaluation of these outstanding requirements is important to providing regulatory transparency and certainty to the industry. 5) There is a large deficiency in federal capabilities related to oversight of oil spill response in the Arctic. The response to any spill in Arctic waters would be managed by the Coast Guard under the requirements of the National Contingency Plan. The distance from the nearest Coast Guard base to the Arctic is a major hurdle, even in open water and good weather conditions. Additionally, two of the three Coast Guard polar icebreakers are non-operational and have exceeded their service

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National Commission on the BP Deepwater Horizon Oil Spill… lives. Even though industry is required to be capable of carrying out oil spill response, the Coast Guard may not be able to provide required oil spill oversight, or search and rescue support. The Coast Guard is currently carrying out a High Latitudes Mission Analysis to understand its needs for future operations, personnel, and assets in the Arctic. 6) The Arctic is shared by multiple countries, many of which are considering or conducting oil and gas exploration and development. The extreme weather conditions and infrastructure difficulties are not unique to the U.S. portion of the Arctic – they exist throughout the entire region. The damages caused by an oil spill in one part of the Arctic may not be limited to the waters of the country where it occurred. As a result, international cooperation and standards for Arctic oil and gas activities are very important. The Arctic Council has begun work in this direction, updating its voluntary Arctic Offshore Oil and Gas Operation Guidelines in 2009. The International Standards Organization is also in the process of developing international standards for Arctic offshore structures that would apply to the activities of petroleum and natural gas industries in Arctic and cold regions. These guidelines are expected to specify requirements and provide recommendations and guidance for the design, construction, transportation, installation, and removal of offshore structures in the Arctic. 7) Oil from the Arctic OCS can serve as a source to replace declining production on land in Alaska. Although the level of economic stimulus provided by the activities can be debated, it is expected to have an economic benefit for the State of Alaska. If production is transported via the Trans-Alaska Pipeline (after being transported from the production site to the pipeline), it could help deal with the range of problems related to decreasing flow in the pipeline. Additional oil from the Alaska OCS will also provide energy, economic, and national security benefits to the United States. The federal government would obtain substantial revenues from any further lease sales and from royalties on any future production. Offshore Arctic oil could also help to reduce U.S. imports of oil and the country‘s negative balance of trade in energy.

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End Notes

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i

Different parties define the ―Arctic‖ in different ways. In this paper, the term ―Arctic‖ will refer to the U.S. portion of the Arctic in the area north of the Arctic Circle. This definition of Arctic includes portions of the Chukchi Sea and Beaufort Sea within the U.S. exclusive economic zone, but does not include the Bering Sea. ii In this paper, the ―North Slope‖ will refer to the North Slope Borough (see map above). iii The North Slope estimate was eventually revised to approximately 23 billion barrels. [National Research Council, Cumulative Environmental Effects of Oil and Gas Activities on Alaska's North Slope (Washington, D.C.: National Academy Press, 2003), 12.] iv According to Shell, many of the wells had proven hydrocarbons, but were not produced because of low oil prices and a lack of volume available for shipping oil from the Arctic (the Trans-Alaska Pipeline was full at that time with Prudhoe Bay oil). [Peter Slaiby, letter to Commission Chairmen, November 5, 2010.] v On June 18, 2010, Secretary of the Interior Ken Salazar signed a Secretarial Order (No. 3302) to reorganize the Minerals Management Service (MMS) into to the Bureau of Ocean Energy Management, Regulation, and Enforcement (BOEMRE). This document will refer to MMS when discussing specific events that occurred or documents that were created before MMS was reorganized and renamed (to BOEMRE) in 2010. vi All nine of the exploration wells that have already been drilled in the Beaufort in water deeper than 50 feet were drilled from floating vessels. vii According to the EPA (http://www.epa.gov/eab/), ―The Appeals Board is the final Agency decisionmaker on administrative appeals under all major environmental statutes that the Agency administers. It is an impartial body independent of all Agency components outside the immediate Office of the Administrator. The Board typically sits in panels of three judges and makes decisions by majority vote. Currently, nine experienced attorneys serve as counsel to the Board.‖ viii Specifically, the Plaintiffs alleged that the Final Environmental Impact Statement: (1) did not adequately analyze and present the impacts of Lease Sale 193 on the environment and human communities; (2) failed to include essential missing information about the Chukchi Sea and the potential impacts of the lease sale, or explain why excluding this information is justified; (3) failed to adequately analyze the impact of the lease sale in the context of a warming climate; (4) understated the potential impacts of oil and gas development pursuant to the leases by analyzing a limited development scenario; (5) understated the risks of an oil spill; (6) failed to fully analyze the cumulative impacts to threatened eiders of the lease sale and other oil and gas development in threatened eiders‘ Arctic habitat; and (7) provided a misleading analysis of the effects of seismic surveying. [Native Village of Point Hope, et al v. Salazar, et al, 2010 WL 2943120 (D. Alaska July 21, 2010).] ix The same 2009 study by Northern Economics concluded: ―OCS development could generate an annual average of 35,000 jobs over the next 50 years – a six percent increase compared to total statewide employment without OCS development.‖ [Northern Economics, Economic Analysis of Future Offshore Oil and Gas Development: Beaufort Sea, Chukchi Sea, North Aleutian Basin, ES-1.] x A detailed review of the challenges of oil spill response in the Arctic can be found in Oil Spill Commission Staff Working Paper No. 5. xi SINTEF is a Norwegian research institute. xii It should also be noted that there is no pre-approval for dispersant use in the U.S. Arctic Ocean, so the Alaska Regional Response Team would need to provide approval before the

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Federal On-Scene Coordinator could permit dispersant use in response to a spill. [Nuka Research and Planning Group, Oil Spill Prevention and Response in the U.S. Arctic Ocean: Unexamined Risks, Unacceptable Consequences, 80.] xiii The Oil Pollution Act of 1990 requires that a Natural Resource Damage Assessment (NRDA) be conducted after a release of oil into the environment. The goal of the process is to compensate the public for damages to natural resources, as well as adverse impacts on the public use and enjoyment of those resources. Trustees carry out this assessment through three steps: (1) identification of an adverse impacts on natural resources and/or human use of the resources; (2) quantification of the impacts; and (3) implementation of publiclyvetted compensatory restoration. A spill in the Alaskan Arctic would pose multiple challenges for the logistics of the NRDA process. The remoteness of the region would significantly impede the collection of time-sensitive data because scientists would not be able to quickly reach the affected site due to the lack of roads and weather-dependent air transportation. Additionally, the prolonged periods of darkness and storms would make meaningful data collection extremely difficult. The NRDA would also have to address damages to the human use of resources, such as the bowhead whale population and other marine mammals used for subsistence by the native communities along the Chukchi and Beaufort Sea coastlines. xiv Members of the Committee include: Department of Commerce (NOAA, and National Institute of Standards and Technology); Department of Energy; Department of the Interior (BOEMRE and U.S. Fish and Wildlife Service); Department of Transportation (Maritime Administration, and Pipeline and Hazardous Materials Safety Administration); Department of Defense (U.S. Army Corps of Engineers, and U.S. Navy); Environmental Protection Agency; National Aeronautics and Space Administration; Department of Homeland Security (U.S. Coast Guard, Federal Emergency Management Agency, and U.S. Fire Administration). xv The Oil Spill Liability Trust Fund receives funds from a $0.08 tax on each barrel of oil produced or imported into or out of the United States. [26 U.S.C. § 4611.] Note: In October 2008, Congress raised the tax per barrel from $0.05 to $0.08 until January 1, 2017, and to $0.09 from January 1, 2017 to December 31, 2017.

References 1 ‖Purchase of Alaska,‖ Library of Congress, http://www.americaslibrary.gov/jb/recon/ jb_recon_alaska_1.html; ―Alaska Purchase,‖ Britannica Concise Encyclopedia, http://www. answers.com/topic/alaska-purchase. 2 ―Modern Alaska: Oil Discovery and Development in Alaska,‖ Alaska Humanities Forum, http://www.akhistorycourse.org/articles/article.php?artID=140. 3 Ibid. 4 Ibid. 5 ―History of Northern Alaska Petroleum Development,‖ American Petroleum Institute, March 10, 2009, http://www.api.org/aboutoilgas/sectors/explore/historyofnorthalaska.cfm. 6 ―Modern Alaska: Oil Discovery and Development in Alaska,‖ Alaska Humanities Forum, http://www.akhistorycourse.org/articles/article.php?artID=140. 7 Charles Thomas, Walter North, Tom Doughty, and David Hite, Alaska North Slope Oil and Gas: A Promising Future or an Area in Decline? (April 8, 2009), 2-26.

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Bureau of Ocean Energy Management, ―Lease Sales,‖ January 3, 2011, http://alaska. boemre.gov/lease/hlease/LeasingTables/lease_sales.pdf. 9 J.D. Hall, ―Oooguruk Project Offshore Alaska,‖ Offshore, August 1, 2008; BP, BP in Alaska (2004), 34, 38. 10 Peter Slaiby, letter to Commission Chairmen, November 5, 2010. 11 ―Beaufort Sea,‖ ExxonMobil, http://www.exxonmobil.com/corporate/energy BP, BP in Alaska, 34. 12 BP, BP in Alaska, 34. 13 Ibid, 38. 14 ―Liberty Project, Alaska, USA,‖ Offshore Technology, http://www.offshore-technology. 15 Ibid. 16 Jim Efstathiou Jr., ―BP‘s Liberty Oil Well in Alaska to Face New Safety Rules,‖ Bloomberg, June 24, 2010. 17 Patty Epler, ―BP Slows Down Plans for Liberty Oil Field,‖ Alaska Dispatch, July 6, 2010. 18 Yereth Rosen, ―BP suspends construction work on Alaska Liberty rig,‖ Reuters, November 30, 2010; Samantha Zee, ―BP Suspends Construction of Liberty Rig in Alaska,‖ Bloomberg Businessweek, November 30, 2010. 19 ―Oooguruk, USA,‖ Offshore Technology, http://www.offshore-technology 20 Shell Offshore Inc, Sivulliq Location N: Camden Bay Exploration Plan, Beaufort Sea OCS Region, Alaska: Executive Summary, (October 2010), 1; Susan Childs, letter to Jeff Walker, October 5, 2010. 21 Alan Bailey, ―Going for the Beaufort; Shell applies for Sivulliq well in ‘11,‖ Petroleum News, October 10, 2010. 22 Alan Bailey, ―Shell to eliminate mud discharge in Beaufort,‖ Petroleum News, December 19, 2010. 23 Press Release, Department of the Interior, Salazar Announces Revised OCS Leasing Program, December 1, 2010. 24 Alan Baily, ―New Shell Hurdle: Environmental Appeals Board returns air quality permits to EPA for rework,‖ Petroleum News, January 9, 2011. 25 Peter Slaiby, letter to Commission Chairmen, November 5, 2010. 26 Bureau of Ocean Energy Management, ―Lease Sales,‖ January 3, 2011, http://alaska.boemre. gov/lease/hlease/LeasingTables/lease_sales.pdf. . 27 Minerals Management Service, Alaska OCS Region, ―Summary of Company Bids,‖ February 7, 2008. 28 Peter Slaiby, letter to Commission Chairmen, November 5, 2010. 29 ―Offshore Field Development Projects – Macondo,‖ Subsea IQ, http://www.subseaiq. com/data/Project.aspx?project 30 BP, Deepwater Horizon Accident Investigation Report (September 8, 2010), 22. 31 Native Village of Point Hope, et al v. Salazar, et al, 2010 WL 2943120 (D. Alaska July 21, 2010). 32 Native Village of Point Hope, et al v. Salazar, et al, 2010 WL 2943120 (D. Alaska July 21, 2010). 33 Native Village of Point Hope, et al v. Salazar, et al, 2010 WL 3025163 (D. Alaska August 2, 2010). 34 Yereth Rosen, ―Shell, Statoil get OK to do Chukchi Oil Surveys,‖ Reuters, August 6, 2010.

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Scott Goldsmith, ―The Importance of Petroleum to the Alaska Economy: A Gedanken Experiment‖ (paper, Annual Meeting of the North American Regional Science Association, San Francisco, CA, November, 2009), 20. 36 Resource Development Council, ―Alaska‘s Oil and Gas Industry,‖ http://www.akrdc.org/issues 37 Energy Information Administration, ―Annual Alaska Field Production of Crude Oil,‖ July 29, 2010, http://www.eia.doe.gov/dnav/pet/hist/LeafHandler.ashx?n=PET 38 Ibid. 39 Energy Information Administration, Annual Energy Outlook 2011, Table A14. 40 Greg Jones, letter to Commission Chairmen, November 1, 2010. 41 Kim Murphy, ―The flow has slowed through the trans-Alaska oil pipeline,‖ Los Angeles Times, August 10, 2010. 42 U.S. Geological Survey, Circum-Arctic Resource Appraisal: Estimates of Undiscovered Oil and Gas North of the Arctic Circle (2008). 43 Northern Economics, Economic Analysis of Future Offshore Oil and Gas Development: Beaufort Sea, Chukchi Sea, North Aleutian Basin (March 2009), ES-7. 44 Rose Ragsdale, ―Big Risk, Bigger Rewards: Life expectancy climbs as pipeline ages,‖ Petroleum News, February 15, 2010. 45 Associated Press, ―North Slope Shutdown to Cut U.S. Oil Output,‖ Los Angeles Times, August 7, 2006; Tim Bradner, ―5,000 barrels spilled at Alyeska pump station,‖ Alaska Journal of Commerce, June 4, 2010; Mary Milliken and Bill Rigby, ―Alaska Pipeline Shut Down After Leak Discovered,‖ Reuters, January 9, 2010. 46 Interview with government official, November 7, 2010. 47 National Research Council, Cumulative Environmental Effects of Oil and Gas Activities on Alaska's North Slope (Washington, D.C.: National Academy Press, 2003), 2, 24. 48 Ibid, 2. 49 Ibid, 27. 50 Ibid. 51 Written testimony of Dennis Kelso, Ocean Conservancy, Hearing before the National Commission, submitted September 22, 2010, 2. 52 BOEMRE, ―Technology Assessment and Research Project Categories – Arctic Oil Spill Response Research,‖ December 1, 2010, http://www.boemre.gov/tarprojectcategories/ArcticOilSpillResponseResearch.htm; MAR, Inc. et al., Empirical Weathering Properties of Oil in Ice and Snow Project Number 143501-04-RP-34501 Final Report U.S. Department of the Interior Minerals Management Service Alaska Outer Continental Shelf Region (October 2008). 53 U.S. Department of the Interior, Minerals Management Service, Arctic Oil Spill Response Research and Development Program: A Decade of Achievement (2009). 54 SINTEF, Joint industry program on oil spill contingency for Arctic and ice-covered waters – Summary Report (April 10, 2010), 30. 55 SINTEF, Joint industry program on oil spill contingency for Arctic and ice-covered waters – Summary Report , 30. 56 Written testimony of Dennis Kelso, 4. 57 SINTEF, Joint industry program on oil spill contingency for Arctic and ice-covered waters – Summary Report, 9. 58 Ibid. 59 National Research Council, Cumulative Environmental Effects of Oil and Gas Activities on Alaska's North Slope, 218.

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SINTEF, Joint industry program on oil spill contingency for Arctic and ice-covered waters – Summary Report , 17. 61 Nuka Research and Planning Group, LLC (commissioned by the Pew Environment Group), Oil Spill Prevention and Response in the U.S. Arctic Ocean: Unexamined Risks, Unacceptable Consequences (November 2010), 65-66. 62 SINTEF, Joint industry program on oil spill contingency for Arctic and ice-covered waters – Summary Report , 21. 63 Nuka Research and Planning Group, Oil Spill Prevention and Response in the U.S. Arctic Ocean: Unexamined Risks, Unacceptable Consequences, 80-81. 64 SINTEF, Joint industry program on oil spill contingency for Arctic and ice-covered waters – Summary Report, 21- 23. 65 Captain J.J. Fisher, ―Policy & Cooperation in the Arctic‖ (presentation, Capitol Hill Ocean Week, June 10, 2010); Captain J.J. Fisher ―Oil Spill Response in the U.S. Arctic: A U.S. Coast Guard Perspective‖ (presentation, Environmental Law Institute, March 11, 2010). 66 Ronald O‘Rourke, Coast Guard Polar Icebreaker Modernization: Background, Issues, and Options for Congress (Congressional Research Service, July 2, 2010), 1. 67 U.S. Government Accountability Office, Coast Guard Efforts to Identify Arctic Requirements are Ongoing, but More Communication about Agency Planning Efforts Would be Beneficial (September 2010), 24. 68 Testimony of Captain Caplis, U.S. Coast Guard, Hearing before the National Commission, September 27, 2010, 349. 69 Written testimony of Dennis Kelso, 8. 70 National Research Council, Cumulative Environmental Effects of Oil and Gas Activities on Alaska's North Slope, 19, 135. 71 R. Schick and D. Urban, ―Spatial components of bowhead whale distribution in the Alaskan Beaufort Sea,‖ Can. J. Fish. Aquat. Sci. 57: 2193–2200, 2000. 72 Lori Quakenbush, ―Bowhead Whale,‖ Alaska Department of Fish & Game, September 22, 2010. 73 Testimony of Mayor Edward Itta, North Slope Borough, Hearing before the National Commission, September 27, 2010, 351. 74 BOEMRE, Alaska OCS Region, Alaska Annual Studies Plan – Final FY 2011 (October 2010), 5. 75 National Research Council, Cumulative Environmental Effects of Oil and Gas Activities on Alaska's North Slope, 101. 76 Michael Gill, Arctic Report Card 2010: Biology (NOAA, October 15, 2010), 65. 77 National Research Council, Cumulative Environmental Effects of Oil and Gas Activities on Alaska's North Slope, 4. 78 Audubon Alaska, ―Chukchi Sea,” http://ak.audubon.org/issues 79 National Research Council, Environmental Information for Outer Continental Shelf Oil and Gas Decisions in Alaska (Washington, D.C.: National Academy Press, 1994), 88. 80 Interview with government official, November 2, 2010. 81 Audubon Alaska, ―Chukchi Sea,‖ http://ak.audubon.org/issues 82 Interview with government official, November 2, 2010. 83 National Research Council, Environmental Information for Outer Continental Shelf Oil and Gas Decisions in Alaska, 88. 84 M. Simpkins, Arctic Report Card 2010: Marine Mammals (NOAA, October 19, 2010), 68. 85 National Research Council, Environmental Information for Outer Continental Shelf Oil and Gas Decisions in Alaska, 97.

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Ibid, 98. M. A. Smith, Arctic Marine Synthesis: Atlas of the Chukchi and Beaufort Seas (Anchorage: Audubon Alaska and Oceana, 2010). 88 National Research Council, Environmental Information for Outer Continental Shelf Oil and Gas Decisions in Alaska, 106. 89 Ibid, 107-8. 90 North Pacific Fishery Management Council, Fishery Management Plan for Fish Resources of the Arctic Management Area (August 2009), 13. 91 Shawn Booth, Dirk Zeller, and Daniel Pauly, Baseline Study of Marine Fisheries Catches from Arctic Alaska: 1950- 2006 (November 2008). 92 North Pacific Fishery Management Council, Fishery Management Plan for Fish Resources of the Arctic Management Area (August 2009), ES-1. 93 J. Richter-Menge and J.E. Overland, eds., Arctic Report Card 2010 (NOAA, October 2010), 6. 94 NOAA, Arctic Vision and Strategy (April 2010), 1; J. Overland, M. Wang, and J. Walsh, Arctic Report Card 2010: Atmosphere (NOAA, October 14, 2010), 8-9. 95 J. Richter-Menge and J.E. Overland, eds., Arctic Report Card 2010, 7. 96 NOAA, Arctic Vision and Strategy, 1. 97 BOEMRE, Alaska OCS Region, Alaska Annual Studies Plan – Final FY 2011, 4. 98 Ibid, 4-5. 99 Shell, Science of the U.S. Arctic Outer Continental Shelf, vol. 1 (November 2010), 25. 100 Shell, Science of the U.S. Arctic Outer Continental Shelf, vol. 1 (November 2010), 26. 101 BOEMRE, Alaska OCS Region, Alaska Annual Studies Plan – Final FY 2011, x. 102 ―The Interagency Ocean Policy Task Force,‖ Council on Environmental Quality, http://www.whitehouse.gov/administration/eop/ceq/initiatives/oceans 103 White House Council on Environmental Quality, Final Recommendations of the Interagency Ocean Policy Task Force (July 19, 2010), 39. 104 Press Release, Department of the Interior, Secretary Salazar Unveils Arctic Studies Initiative that will Inform Oil and Gas Decisions for Beaufort and Chukchi Seas, April 13, 2010. 105 ―NOAA National Marine Mammal Lab: Cetacean Assessment & Ecology Program: Bowhead Whale Aerial Surveys: Preliminary Data,‖ Alaska Fisheries Science Center, http://www.afsc.noaa.gov/nmml/cetacean 106 Interview with government official, January 3, 2011. 107 M. Simpkins, Arctic Report Card 2010: Marine Mammals, 68. 108 North Pacific Fishery Management Council, Fishery Management Plan for Fish Resources of the Arctic Management Area, 9. 109 Office of Leasing and Environment, Alaska OCS Region, MMS 2010-022 Environmental Assessment: Beaufort Sea Planning Area, Shell Exploration & Production: Ancillary Activities, Marine Surveys (July 2010), 17. 110 National Research Council, Environmental Information for Outer Continental Shelf Oil and Gas Decisions in Alaska, 107-9. 111 Interagency Coordinating Committee on Oil Pollution Research, Biennial Report for Fiscal Years 2008 and 2009 (December 2009), 4. 112 Interagency Coordinating Committee on Oil Pollution Research, Biennial Report for Fiscal Years 2008 and 2009 (December 2009), 10. 113 U.S. Department of the Interior, Minerals Managament Service, Arctic Oil Spill Response Research and Development Program: A Decade of Achievement, 2. 114 ―Ohmsett,‖ http://www.ohmsett.com/.

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SINTEF, Joint industry program on oil spill contingency for Arctic and ice-covered waters – Summary Report, 23. 116 U.S. Arctic Research Commission, White Paper: U.S. Arctic Commission Recommends Steps to Expand U.S. Funding for Arctic/Subarctic Oil Spill Research (May 26, 2010), 1. 117 Written testimony of Dennis Kelso, 4.

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In: Arctic Oil and Gas Editor: Roman Shumenko

ISBN: 978-1-61324-862-1 © 2011 Nova Science Publishers, Inc.

Chapter 2

THE CHALLENGES OF OIL SPILL RESPONSE IN THE ARCTIC*

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National Commission on the BP Deepwater Horizon Oil Spill and Offshore Drilling STAFF WORKING PAPER NO. 5 Staff working papers are written by the staff of the National Commission on the BP Deepwater Horizon Oil Spill and Offshore Drilling for the use of members of the Commission. They do not necessarily reflect the views of the Commission or of any of its members. In addition, they may be based in part on confidential interviews with government and non-government personnel. This staff working paper describes some of the difficulties of spill response in the Arctic.1 In the staff‘s view, response challenges in the Arctic are important for the Commission to consider in its recommendations for the future of offshore drilling. This paper provides background information regarding the status of offshore drilling in Arctic waters, identifies problems with responding to oil spills in Arctic waters, and highlights areas for further Commission inquiry with respect to Arctic drilling.

*

This is an edited, reformatted and augmented version of a National Commission on the BP Deepwater Horizon Oil Spill and Offshore Drilling publication, Originally Released October 6, 2010 Updated January 11, 2011.

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National Commission on the BP Deepwater Horizon Oil Spill…

I. BACKGROUND

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A. The Region at Issue The two locations of offshore drilling in the Arctic, the Beaufort Sea and the Chukchi Sea, present different drilling conditions and response issues. The existing Beaufort Sea drilling sites are situated on man-made gravel islands located two to fifteen miles offshore, in water depths up to approximately 39 feet.2 They are often linked to onshore facilities and are close to land and shoreline resources. The majority of the construction of the offshore gravel islands, however, needs to be completed during the winter ice season when an ice road exists between the site and the mainland.3 The locations of drilling interest in the Chukchi Sea are much further offshore and, consequently, much less accessible. This area had until recently generated less interest from industry as a result of its lack of shoreline infrastructure and the consequent heightened cost of drilling.4 The current applications from the Shell Oil Company and Statoil are for seismic exploration and exploratory drilling at least 60 miles off the coast that would take place during the open water season from July to October.5 These differences in environmental conditions and drilling proposals mean that spill response for the nearshore drilling sites in the Beaufort Sea would potentially be more straightforward than spill response for the proposed sites in the Chukchi. The nearshore Beaufort region has more developed and proximate infrastructure, so access to a spill area might be easier. However, the existing Beaufort drilling sites are closer to both the sensitive shoreline and the areas traversed by bowhead whales and whale hunters.6 A spill or blowout in the Chukchi Sea area would be more difficult to access, let alone contain and clean up. Although Shell has pre-positioned assets dedicated to potential spill response in the Chukchi Sea,7 bringing any assets, both the pre-staged equipment and any additional resources brought from elsewhere, to bear on a spill in the Arctic would be more difficult than in the Gulf of Mexico. And once the winter freeze occurs, any spill would be impossible to access for purposes of response. On the other hand, any spill in the Chukchi Sea would be far from coastal resources, and oil trapped beneath sea ice would be unlikely to spread into marine ecosystems until the ice began to melt. The Arctic areas also stand in contrast with the Gulf of Mexico in terms of the issues posed by deepwater drilling. The Deepwater Horizon containment efforts were complicated immensely by the depth of the wellhead and the high

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well pressures encountered at the Macondo well. Wells in both the Chukchi and the Beaufort Seas would be in far shallower water, which could make it easier to contain a blowout or riser leak. Shell asserts that well pressures in the Chukchi and Beaufort Seas would be approximately one-third to one-half of the pressures faced by BP at the Macondo well.8 Finally, although wells in the Chukchi would be similar to the Macondo well in terms of distance from shore, the human uses of the shoreline of the Gulf Coast are much more expansive than the human uses of the North Slope Coast.9 The contrasts between these regions and between open water and ice conditions affect the nature of spill response and spill response planning. Many of the issues highlighted in this paper apply to both the Beaufort and the Chukchi Seas, but the different conditions should be kept in mind.

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B. Industry Interest Although interest in exploring Alaska‘s North Slope for oil began in the early 20th century, the region‘s remoteness and lack of land availability prevented serious private investment, leaving most exploration to the U.S. Navy. It was the discovery of the Prudhoe Bay and Kuparuk River fields from 1967 to 1969 that spurred the industry to explore the Arctic region of Alaska.10 In 1979, the government conducted a leasing sale that included state and federal waters of the Beaufort Sea, resulting in the first major venture into Arctic offshore exploration.11 Drilling in the Beaufort began in 1981, with a total of 20 wells drilled by 1989. Only a few of the wells were further developed, including those in the Northstar and Liberty fields. Most of the wells drilled in the Beaufort came up dry. Among the dry wells was the Mukluk well, which, at a cost of $120 million, is considered the most expensive dry well ever drilled.12 In the Chukchi, remoteness and harsh conditions continued to discourage industry activity. The first lease sale in the area was not held until 1988. In the 1990s, industry‘s interest decreased in both the Chukchi and the Beaufort, in part because of the failure of Mukluk. But more recently, interest—in particular, by Shell—has begun to grow once again. Several factors have contributed to renewed oil industry interest in drilling in the Beaufort and Chukchi Seas. Improved technology has made remote locations more economically viable to explore. Additionally, the then-Minerals Management Service (MMS)13 issued new information for the Burger field in the Chukchi Sea in advance of the lease sales held in 2008, which detailed

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National Commission on the BP Deepwater Horizon Oil Spill…

significant untapped oil and gas resources and made the region much more attractive for exploration and investment.14 The U.S. Geological Survey, also in 2008, released a reevaluation of Arctic potential resources, estimating that ―90 billion barrels of oil, 1,669 trillion cubic feet of natural gas, and 44 billion barrels of natural gas liquids may remain to be found in the Arctic, of which approximately 84 percent is expected to occur in offshore areas.‖15 Shell estimates that there are 25 billion barrels of oil in the Alaskan Arctic, with the majority in the Chukchi Sea; the data from BOEMRE, which accounts only for oil that is economically recoverable with current technology, is 0.15 to 12 billion barrels of oil in the Chukchi.16 Shell acquired leases in the Beaufort during Lease Sale 195 in 2005 and in the Chukchi during Lease Sale 193 in 2008, and it has announced plans to drill in both regions. Shell‘s proposal for drilling exploratory wells in the Chukchi Sea envisions operations taking place from approximately July 15 to October 31. Drilling will occur from a floating drillship. If Shell begins production at some time in the future, production drilling will occur year-round, though access to the drilling operations by boat will be easier during open water season. The shrinking Arctic ice cap is also a factor. A smaller ice cap creates longer open water seasons and increased open water areas, while diminishing risk of ice collisions.17 The Arctic Ocean is subject to regular freezing and melting in the winter and summer months. The ice seasons consist of: ―open water‖ in the summer, ―freeze up‖ as the ice forms through the fall, ―over winter‖ as the solid floating ice attaches to the shelf, and ―break up‖ as the ice melts and cracks into floes and other large pieces through the spring. As the temperatures in the Arctic increase, both the extent of ice cover overall and the length of time that ice blocks the sea decreases. Estimates vary as to how soon the Arctic Ocean will be ice-free in the summer months, but most projections place the event sometime between 2030 and 2100.18

C. Status of Exploration and Leasing The Beaufort and Chukchi Seas sit in different positions with regard to where, how, and when exploration and drilling may occur. All drilling in the Arctic is on pause as of this writing. On September 3, 2010, during a trip to Alaska, Secretary of the Interior Ken Salazar announced that the Department of the Interior will not decide whether to allow exploratory drilling for oil and gas in the Alaska Arctic Outer Continental Shelf until the Department has completed a review of issues relating to offshore drilling activities.19 On

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September 9, 2010, the state of Alaska sued the Department of the Interior in the U.S. District Court for the District of Alaska, contending that the announcement imposed an improper de facto moratorium and did not give the state a chance to comment or a final decision to appeal.20 An Interior spokesperson indicated that the Department was ―taking a cautious approach‖ and needed ―additional information about spill risks and spill response capabilities.‖21 The Department also contends that there is no moratorium in place for Alaska, but rather a period of additional review of proposed drilling plans.22

A. Beaufort Sea Pioneer Natural Resources, Eni Petroleum, Shell, and BP all have interests in the Beaufort Sea. All existing offshore fields in the Beaufort Sea are either fully or partially based on artificial offshore islands, though there are proposed drilling sites farther offshore which will require the use of drillships. Pioneer Natural Resources was the first independent company to control a producing field in the Beaufort Sea. It has been extracting oil in the Oooguruk offshore field since 2008 in partnership with Eni. The site is located on an artificial gravel island five miles offshore in fourand-a-half feet of water.23 Italy‘s Eni has gradually relinquished some of its onshore leases and has instead focused on developing its near-shore Nikaitchuq field in the Beaufort Sea. Eni plans initially to produce oil through an onshore base and later to construct an offshore island and continue production from the water. The company has also teamed up with Shell to conduct seismic tests in the Harrison Bay area of the Beaufort.24 BP operates three offshore fields in the Beaufort Sea: Northstar, Endicott, and Liberty. All of them are constructed on man-made gravel islands in the Beaufort Sea waters. The first two fields are older operations, while Liberty was set to begin operating this summer. Liberty is of particular note because it is an ultra-extended reach well: Although it will be drilled in fairly shallow water within three miles from shore on state submerged lands, the well will extend laterally for up to eight miles from the surface location of the drilling rig.25 In light of the Deepwater Horizon spill, federal regulators have decided to review BP‘s plans before allowing BP final permission to drill at Liberty.26 On November 30, 2010, BP decided to suspend work on Liberty for an indefinite time as a result of construction issues. MMS proposed additional lease sales in the Beaufort Sea in its 2010-2015 draft proposed five-year leasing program.27 The National Oceanic and Atmospheric Administration (NOAA) commented on this plan, raising issues

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related to the impacts of off shore oil exploration and development on living marine resources and their habitats. It also conveyed its concern about the lack of oil spill response preparedness in the Arctic and encouraged leasing to be delayed pending additional research.28 President Obama‘s March 31, 2010 announcement of a new Outer Continental Shelf policy cancelled planned some leases under the 2007-2012 leasing plan and delayed implementation of the proposed 2010-2015 plan to 2012-2017. The 2012-2017 plan is in its early stages of development, and will evaluate whether or not to lease areas in the Beaufort and the Chukchi Seas. Public meetings to determine the scope of the environmental impact statement and the areas to be considered in the five-year leasing program were scheduled for the summer of 2010, but were cancelled in light of the Deepwater Horizon spill.29

B. Chukchi Sea The 2008 sale of Lease Area 193 in this region proved to be the most profitable in the history of Alaska offshore leasing. Companies bid a total of $2.6 billion for the available lease areas. Lease Sale 193 encompasses approximately 29.4 million acres of the Outer Continental Shelf in the Chukchi Sea. In 2008, seven companies bid for leases: ConocoPhillips, Shell Gulf of Mexico, StatoilHydro USA E&P, the Northern America Civil Recovery Arbitrage Corp, Repsol E&P USA, Eni Petroleum, and Iona Energy Company.30 Shell is the only company that has presented plans to drill in the Chukchi (after conducting seismic studies there in 2006 and 2007). It received preliminary permits to drill up to three wells during the summer of 2010. A coalition of Alaska Native and environmental groups challenged the adequacy of the environmental review of the lease sale, contending that the Final Environmental Impact Statement had not fully examined impacts on the environment and human communities. On July 21, 2010, the U.S. District Court for the District of Alaska agreed and remanded the Environmental Impact Statement to BOEMRE for a more thorough environmental impact analysis.31 On August 2, 2010, the court amended its ruling and allowed nondrilling activities to continue, granting Shell and Statoil permission to conduct seismic tests in the Chukchi Sea during the remainder of the 2010 summer.32 (Drilling activity had previously been halted by Secretary Salazar‘s announcement on May 27, 2010 of a six-month moratorium.) Shell spent $2.1 billion for its 275 lease blocks in the Chukchi in 2008.33 A leaseholder can have a tract for up to ten years but then must have a development plan in place or the Secretary of the Interior will cancel the non-

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producing lease.34 Shell has used up three of those years on its Chukchi sites. Even if the exploratory drilling occurs in the Chukchi and is successful, Shell predicts that another ten to fifteen years would pass before production began.35 As with the Beaufort Sea, NOAA‘s comments on recent proposed lease sales in the Chukchi expressed the view that no leasing should occur in the Chukchi Sea without additional research on oil spill response.36

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D. Overview of Applicable Regulatory Requirements Related to Spill Response37 A. Boemre and Alaska Regulations BOEMRE and Alaska Department of Environmental Conservation regulations require an applicant for a permit to conduct offshore exploration or production to provide information regarding its response capabilities. BOEMRE requires an emergency response action plan, which identifies, among other things, a spill management team, a planned location for a spill-response operations center, and an identification of procedures to be followed in the event of a spill.38 The plan must also include a worst-case discharge appendix.39 In addition to information about the potential volume, trajectory, and impacted areas in a worst-case discharge spill, the appendix must include a discussion of the potential response to the worst-case discharge scenario in adverse weather conditions. This discussion requires a description of the response equipment; its type, location, and quantity; the amount of time to move the equipment to the spill; and capability, including effective daily recovery capacity. Adverse weather conditions are defined elsewhere in the regulations and ―include, but are not limited to: Fog, inhospitable water and air temperatures, wind, sea ice, current, and sea states.‖40 Alaska regulators may additionally require an applicant for a permit for an exploration or production facility to ―account for variations in seasonal conditions‖ and ―provide response scenarios for a discharge of the applicable response planning standard volume under typical summer environmental conditions and typical winter environmental conditions.‖41 Alaska regulations also specify how much response equipment, including boom, skimmers, and personnel, must be carried, while noting that these are minimum planning requirements, not what may be actually required to respond to a spill. In the wake of the Deepwater Horizon disaster, Alaska is conducting an analysis of the state regulations regarding offshore drilling. Additionally, the Alaska Oil and Gas Conservation Commission42 has put together a

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commission to review offshore drilling practices and ultra-extended reach wells.43 The Commission put out a public notice on June 24, 2010, seeking public comment on the current requirements regarding well blowout prevention and well control and their possible expansion, including whether the Commission should require ―operators drilling offshore or ultra-extended reach wells to demonstrate the ready capability to drill a relief well if necessary.‖44 The review is focused on source control and does not appear to be investigating spill response issues. The Division of Oil and Gas, within the Alaska Department of Natural Resources, is evaluating its own rules and requirements to determine whether the existing authorities regulating petroleum are sufficient. That study may be completed as early as this September.45

B. Shell’s Chukchi Sea Regional Exploration Oil Discharge Prevention and Contingency Plan A review of Shell‘s Chukchi Sea Regional Exploration Oil Discharge Prevention and Contingency Plan (―Shell C-Plan‖) illustrates some of the current requirements and the level of detail provided to meet them. Shell is the only company to have made a proposal for drilling in the Chukchi, so there are unfortunately no competing plans with which to compare the response plans Shell proposes. This paper‘s brief discussion of Shell‘s proposal is not meant to be comprehensive.46 Because Shell‘s proposal is for exploratory drilling, rather than production, it is subject to different requirements than those for producing wells.47 BOEMRE regulations require an exploratory drilling operation to calculate a worse-case discharge scenario lasting 30 days, and to provide a response plan for that scenario.48 The worst-case discharge is the daily volume possible from an uncontrolled blowout.49 The state regulations require an exploration facility to plan for a release of 16,500 barrels, and an additional 5,500 barrels for each of 12 past 72 hours in the case of a blowout.50 Shell‘s final C-Plan includes response plans for a discharge of 5,500 barrels for 30 days, for a total release of 165,000 barrels.51 With regard to risks from loss of well control, Shell believes that ―a prudent operator can conduct a Chukchi Sea drilling program using a single drillship,‖ which would ―relocate to a safe location to initiate a relief well‖ in the event of a blowout.52 Shell estimates that it could drill a relief well in as few as 16 days or as many as 34 days. Shell‘s preferred method for containing a blowout is the use of dynamic surface control measures.53 The plan, which Shell indicates is accepted as best available technology, is to pump fluid down

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the well casing and circulate the fluid at a sufficient rate to create friction, which will match or exceed the reservoir pressure and stop the flow.54 Shell states that it would likely not be able to use a well-capping technique because of the nature of the well. It notes that ―[w]ell capping is not feasible for offshore wells from moored vessels with [the blowout preventer] sitting below the mudline.‖55 Because of this limitation, the C-Plan asserts that Shell would immediately mobilize to drill a relief well in the event of a blowout. Since the Deepwater Horizon event, Shell has added to its plan a proposal to build a containment system similar to that built to control the Macondo well. It plans to store a containment dome and containment recovery system at a port in Alaska and to deploy it in the event of a subsea spill.56 The Shell C-Plan notes that, in addition to the Shell-operated response equipment and response teams, Alaska Clean Seas would be used as the primary contractor. Alaska Clean Seas is a non-profit oil spill removal organization whose members are companies exploring or drilling on the North Slope or on the Outer Continental Shelf.57 (A similar oil spill removal organization, Clean Gulf Associates, exists for the Gulf of Mexico.) The Arctic Slope Regional Corporation also runs an additional oil spill removal organization. In the event of a blowout, Shell proposes to call on Wild Well Control, Inc., a well-control specialist.58 Shell notes that recovery of the spilled oil would be limited by the presence of ice, and the plan anticipates that during freeze-up conditions, some oil would become encapsulated by the ice. Shell states that it would monitor and track such oil, and that ―response strategies and specific tactics will be modified to accommodate the challenges of working with a variety of potential ice conditions.‖59 Within the context of each response strategy discussed in the plan, Shell acknowledges some of the limitations that the presence of ice creates. As discussed in greater depth below, it is likely that non-mechanical response strategies such as in situ burning would play a large role in any response. MMS conditionally approved Shell‘s exploration plan (as distinguished from the C-plan) on December 7, 2009.60 MMS found that Shell‘s plans for ―responding to a blowout, loss or disablement to the drilling unit, or loss of or damage to support craft,‖ complied with a regulation specific to Alaska offshore projects requiring emergency plans, and included, as required, accompanying procedures for critical operations and curtailment.61 However, MMS required that Shell ―provide documentation on the availability of suitable alternative drilling unit(s) that would be made available to Shell should it be necessary to drill a relief well.‖62 Shell has identified an additional

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drillship that could be mobilized to begin drilling a relief well, the Kulluk drilling unit, likely to be stored at Dutch Harbor in the Aleutian Islands in southwest Alaska.63 Shell‘s initial C-Plan was submitted in May 2009.64 MMS gave its conditional approval on December 18, 2009.65 Both MMS and Alaska regulators required Shell to submit additional information on several response issues, such as where response equipment would be pre-staged, the estimated mobilization times for spill response equipment, a copy of its contract with oil spill response operators for dispersant support, and the length of time it would take Alaska Clean Seas to transport response support from Prudhoe Bay to the Chukchi sites.66 MMS also required Shell to conduct contingency plan exercises, including a tabletop drill addressing the worst-case discharge scenario, and deployment exercises demonstrating the capacity to carry out the response activities described in the plan. Shell submitted a revised plan in March 2010.67 On April 6, 2010, MMS gave final unconditional approval of the Shell CPlan, finding that the requested information had been provided. In a news interview after the Deepwater Horizon spill, BOEMRE spokesperson John Callahan said, ―The Alaska Region [of BOEMRE] can confirm that it reviewed Shell‘s contingency plan and found it adequate for the time it was issued. However, in light of the BP oil spill in the Gulf and new requirements for the plans, we will be reviewing the adequacy of the current version of the project‘s spill plan.‖68

II. CHALLENGES OF SPILL RESPONSE The Arctic environment poses unique challenges for spill response. Some limitations of existing techniques are discussed below. To the extent the Shell C-Plan seeks to address these issues, Shell‘s proposed method of adapting to the limitations is described.

A. Adverse Weather The presence or absence of ice is a large factor in the ability to respond to a spill, but it is not the only environmental factor affecting spill response. Temperature affects the consistency of oil and the speed at which it degrades. Winds and the resulting wave action are another factor. High energy from

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wind and waves can help oil to disperse naturally, but this energy also breaks up a thick slick into multiple thinner slicks, which are more difficult to address. Also, in broken ice, waves are less effective at naturally dispersing oil.69 Weather, including wind and wave activity, also affects responder access to an oiled area and whether recovery strategies such as boom and skimmers will work. Adverse weather conditions prevented responders from collecting oil from the wellhead, employing mechanical recovery methods, and conducting in situ burns at times during the Deepwater Horizon response. Seasonally short Arctic days and the prevalence of fog and storms also limit the amount of time when response is feasible. Sea state may be calmer in the Arctic than in the Gulf, as the sea ice has a muffling effect on waves. However, the water may grow turbulent over time as the summer ice melts and wave activity increases.70 The amount of time when responders are simply unable to work is known as the response gap, and it is based on, among other things, adverse weather conditions. A study of response capabilities in Prince William Sound attempted to quantify the response gap in that region.71 Researchers identified when response efforts would not be possible based on their investigation of when environmental conditions would cause mechanical recovery systems to fail. For example, they concluded that response efforts would not be affected by wind speeds of less than 21 knots, would be impaired but possible in speeds between 21 and 30 knots, and would not be possible in winds of over 30 knots. They then used six years of hourly wind, sea state (a measure which includes wave height and wave period), temperature, and visibility data from two locations in Prince William Sound to evaluate the length of time that environmental conditions exceeded response operating limits.72 They eliminated any days when the locations in the Sound were closed to tanker traffic. The study found that, considering all the environmental limitations together, response operating limits were exceeded, and response was not possible, 38% of the time. That figure rose to 65% of the time during the winter season.73 It does not appear that a similar comprehensive response gap analysis has been conducted for the Arctic.74 However, the Shell C-Plan notes that temperature alone would be a significant limitation. All non-emergency work stops when temperatures fall below -45 degrees Fahrenheit, and, according to Shell, response efforts would be limited by temperatures below -20 degrees Fahrenheit, which would occur 50% of the time in the month of January and 64% of the time in the month of February.75

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B. Locating the Oil One of the main challenges for oil spill responders in Arctic waters is the problem of locating oil. Oil spilled into broken ice will tend to move with the ice.76 Oil is also more difficult to locate if it moves under ice floes or becomes encapsulated into surrounding ice. Visual observations are not an adequate means of detection, as the oil is generally hidden from view beneath the ice. In 2009, then-MMS published a report entitled ―Arctic Oil Spill Response Research and Development Program: A Decade of Achievement.‖77 This paper chronicles issues and advances in oil spill response in the icy Arctic environment. In the paper, MMS noted that the ―ability to reliably detect and map oil trapped in, under, on, or among ice is critical to mounting [an] effective response in Arctic water.‖78 The existing method for locating oil in or under ice involves drilling holes in a grid through the ice to detect oil underneath. This method is expensive, dangerous, and not always possible based on ice conditions. MMS has conducted several research studies aimed at evaluating potential solutions to this problem. Ground penetrating radar (GPR) is one technology viewed as having potential.79 GPR units can be used by personnel walking on the ice or can be mounted on helicopters flying over the ice at a very low altitude.80 According to MMS‘s GPR laboratory and field-testing, the technology can detect oil slicks that are at least two centimeters (approximately one inch) thick in or under one to three feet of ice when used from a helicopter and up to seven feet of ice when a hand-held unit is used. Though GPR represents an advance over the drilling method, many factors limit its usefulness. MMS‘s field test report acknowledges that ―[d]etection of oil under ice through multi-year ice or rafted/ridged first-year ice might be difficult or impossible.‖81 Other types of rough or pocketed ice will pose similar difficulties. Additionally, though oil slicks may tend to be thicker in the Arctic environment than in other places as a result of the cold temperatures, the oil is still likely to spread out, making the ability to detect only slicks that are more than two centimeters thick a serious limitation. Though researchers indicate that the technology has promise, the responder may still need to start out with a basic sense of where the oil is in order for GPR to be of use. The Shell C-Plan acknowledges that tracking a spill through ice might be necessary. Shell indicates that it could track the oil with drift buoys, radar reflectors, flags, GPR, and laser fluorosensors.82 In the section on planning for a release in winter pack ice, the Shell C-Plan states that ―[p]romising results of

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tests with Ground Penetrating Radar and other remote-sensing systems could lead to the development and refinement of detection and tracking techniques for oil that is trapped deep within a thick ice layer.‖ The C-Plan goes on to predict that such trapped oil could be dealt with through a ―leave in place‖ strategy, discussed below.83 It does not appear that MMS had any comment on this aspect of the plan when the agency approved the C-Plan.84

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C. Mechanical Recovery Technology In addition to acting as a barrier to detection, ice also poses a physical barrier to mechanical containment and response efforts. Boom and skimmers, which are often deployed in tandem as part of early response efforts, are not very effective in broken ice conditions.85 For any mechanical recovery technology to work, it needs to ―encounter‖ the oil, which means that the oil needs to be grouped together in a thick enough slick for the recovery system to separate the oil at the surface from the water. Boom is difficult to deploy through broken ice. MMS notes that boom is ―of little to no use in large moving ice floes or in ice concentrations greater than 30%.‖86 Boom for use in the Arctic also must be made of a durable material that can withstand impacts from pieces of ice. Skimmers can become clogged with ice and slush, and they need to be positioned between ice floes, which may not always be possible. Additionally, a skimming vessel will break up ice floes, moving the natural ice barrier and letting the oil spread out, thus making it harder to skim.87 The oil that is skimmed will still likely contain pieces of ice. Although some advances in the material used to make skimmers, such as the development of grooved skimming drums, have improved skimmer efficiency in ice conditions, overall skimming potential is limited by the presence of ice.88 If the ice cover is too great, and mechanical recovery is not possible, it may be necessary to let the oil become incorporated into the ice and deal with it when the ice melts.89 MMS notes: ―For high ice concentrations of 8/10 or more, most of the spilled oil (especially from a subsea blowout) will become immobilized or encapsulated within the ice . . . . Oil encapsulated within the ice is isolated from any weathering processes (evaporation, dispersion, emulsification). The fresh condition of the oil when exposed (e.g. through ice management or natural melt processes) enhances the potential for in situ burning.‖ This strategy effectively requires responders to leave oil in place but somehow track it, so that they can attempt to remove it once it is freed from

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the ice but before it re-enters the marine environment. This is sometimes referred to as ―mining‖ of oil.90 In the interim, the oil is unlikely to degrade, making it more susceptible to burning but less likely to be reduced in amount by natural processes. This ―leave-in-place‖ strategy does not appear to have been used during an actual spill, though it is the subject of research. The Shell C-Plan indicates that this strategy might be used for a spill in early winter. The plan predicts that ―[t]ypically, within a day or two, new ice would completely surround the oil, encapsulating, immobilizing and preserving the condition of the oil. The iceencapsulated oil can be marked and tracked for removal when the ice is safe to work on, or the oil could be tracked until spring. At that time the oil would become exposed at the surface through brine-channel migration or through surface melt down to the small entrapped oil droplets.‖91 The behavior of oil in ice is an important topic of research.92 According to researchers, the accepted view is that oil becomes encapsulated as ice forms around it. As the ice begins to melt, the oil is transported through the ice to the surface of the ice through brine channels, which are paths through the ice where salt is very concentrated.93 However, newer research calls this assumption about transportation up to the surface into question, and there remain unknowns about the role of brine channels as a pathway for marine exposure to oil. Questions remain about whether oil may be pulled into the brine channels and, rather than moving to the surface of the ice, move down through the ice and into the water column.94 The Shell C-Plan comments on the difficulties of using mechanical response technologies in icy conditions. The plan notes that even low concentration of individual ice floes ―can obstruct containment or deflection boom, prevent oil from accumulating in large pools, and block the flow of oil toward a recovery device.‖95 Shell explains that, though it will modify mechanical response tactics to suit the Arctic environment, as ice concentrations increase, non-mechanical tools such as in situ burning and dispersants (both discussed below) will become more practical.96

D. In Situ Burning In situ burning is another response technique that was used in the Deepwater Horizon response and would be used in any Arctic oil spill response. This strategy requires gathering the oil either with fireproof boom or between natural ice berms. It also requires that the oil not be overly weathered.

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Burning is an important strategy in the Arctic, where there is less risk of having a fire spread out of control. Additionally, there is potentially less concern about the negative air quality impacts of burning as there are lower concentrations of people and wildlife that could be affected. Moreover, oil mixed with some ice, snow, or slush can still burn. Burning in the Arctic, however, is not without difficulty. In order to stage the fire-proof boom, vessels must be able to access the area and boom must be pre-staged for quick deployment. Oil is more difficult to ignite at lower temperatures. Chemical ―herders‖ may be required to gather and thicken the oil, but no commercially-produced herders are currently approved for use in Arctic waters.97 Oil that enters the water column before hitting the surface, such as from a subsea pipe leak or blowout, will be more likely to become emulsified and spread out once it reaches the surface and will therefore be harder to burn. Because of the propensity of oil to spread, in situ burning is a technique that will work best with a rapid response. As with all response techniques, the efficiency of in situ burning will vary widely. Efficiency will largely depend on how much of the oil can be contained and burned. For example, in a 2006 experiment in Norway that simulated a tanker spill, 96% of the oil that surfaced was successfully burned,98 but in a 1998 well blowout study in situ burning accounted for only 3.4-6.4% of the total volume of oil spilled in fall freeze-up conditions on open water.99 The Shell C-Plan takes a positive view of in situ burning, asserting that ―the consensus of research‖ is that it is an ―effective technique with removal rates of 85 to 95 percent in most situations.‖100 The C-Plan describes difficulties associated with ice, but also suggests that ice may assist burning by containing the oil, dampening wave action, and reducing the propensity of the oil to spread out in a thin layer.101 Shell does not estimate the percentage of days that wind and wave conditions would likely prevent in situ burning.

E. Chemical Countermeasures Dispersants were used extensively in the Deepwater Horizon response and are often a critical component of oil spill response. However, their potential Arctic use is limited by uncertainty over their effectiveness and toxicity in that environment. Dispersant effectiveness depends on the properties of the oil, the amount of weathering that has taken place, and the energy available to mix the

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dispersants into the oil. Aerial spraying can occur even during broken ice or bad weather conditions, but mixing might be reduced. Application by boat can increase mixing as the vessel churns up the water, but requires a boat capable of traveling in the ice and appropriate weather. Once the oil is encapsulated into or emulsified with the water, dispersants are unlikely to be effective. A 2001 study commissioned by the Prince William Sound Regional Citizens‘ Advisory Council found that dispersants were less than 10% effective when applied to Alaska North Slope crude oil spilled on water at the temperature and salinity common in the estuaries and marine waters of Alaska.102 The study found that temperature had a strong effect on the behavior of the oil, which in turn affected dispersant effectiveness. However, an MMS/ ExxonMobil-sponsored project, based on testing at Ohmsett, the National Oil Spill Response Test Facility in New Jersey, concluded that dispersants could be effective in cold water.103 This study estimated dispersant effectiveness at a range of 82% to 99%. More research is needed regarding dispersant effectiveness in situations involving ice cover, heavy wind conditions, and weathered oils.104 Concerns about dispersant toxicity in the Arctic are similar to concerns about dispersant toxicity generally. One Arctic-specific issue is the speed of biodegradation of dispersed oil. Dispersants break down oil into smaller droplets, which may then be more easily biodegraded by oil-consuming bacteria.105 Oil-consuming bacteria are present in Arctic waters, but they may break down dispersed oil more slowly than in warmer waters.106 As a result, dispersed oil may be present in the ecosystem for a longer period of time. Moreover, concerns about the long-term fate and effects of dispersed oil in the Arctic are potentially magnified because of the lack of baseline data about the environment. The Alaska Regional Contingency Plan sets out dispersant guidelines.107 Within the Alaska plan, the North Slope Subarea Contingency Plan sets out the decision-making process for the use of dispersants and requires the Federal On-Scene Coordinator to consult the guidelines before authorizing dispersant use.108 The Federal On-Scene Coordinator must ―examine conventional response alternatives, such as containment and cleanup, for comparison to dispersant application‖ and may consider dispersant use only ―when an effective conventional response is not feasible or not totally adequate in containing/controlling the spill.‖109 Shell‘s dispersant plan for Chukchi exploration is to store 25,000 gallons of Corexit 9500 in Anchorage and pre-stage another 1,300 gallons with Alaska Clean Seas on the North Slope.110

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The Shell C-Plan contends that ―[d]ispersant use is a rational approach to mitigate environmental impacts from spills when sea states or other factors limit or negate conventional countermeasures.‖111 The plan suggests that, because mechanical recovery and in situ burning opportunities might be limited, dispersants are a valuable option.112 However, the plan also notes the potential limitations on dispersant effectiveness. It recognizes that because the properties of the oil in the reservoir are unknown, on-site testing would be a condition of dispersant use. The plan also notes that, to be effective, dispersants must be applied to fresh crude before it has an opportunity to emulsify or weather, and that dispersants are less effective on colder, more viscous oil. Finally, Shell states that it would try to avoid applying dispersant on or near sea birds or marine mammals.113

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F. Bioremediation and Natural Processes Oil will degrade in the water over time as it is consumed by bacteria. Bioremediation is ―the act of adding materials to contaminated environments to cause an acceleration of the natural biodegradation processes.‖114 The National Contingency Plan, which governs oil spill response, specifies that ―bioremediation agents‖ are ―microbiological cultures, enzyme additives, or nutrient additives that are deliberately introduced into an oil discharge and that will significantly increase the rate of biodegradation to mitigate the effects of the discharge.‖115 Bioremediation may be a potential response strategy in the Arctic, where the temperature and weather conditions otherwise slow the natural biodegradation process. Responders have used bioremediation techniques in the cleanup of a number of major oil spills.116 For example, one day after the June 8, 1990 spill from the Mega Borg off the coast of Texas, the Federal On-Scene Coordinator authorized the use of a bioremediation product on the open-sea oil slick.117 It was unclear how effective the product was, and this response highlighted the difficulties of open-sea application.118 Responders applied bioremediation materials— including nutrients, fertilizer, and exogenous bacteria—to the shoreline after the Amoco Cadiz wrecked off the coast of France.119 The approaching tourist season, however, prevented more extensive use in the area.120 The most prominent experimentation with onshore bioremediation occurred after the Exxon Valdez spill.121 The level of endogenous oilmetabolizing bacteria had already increased on the Alaska shoreline.

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Responders decided to promote growth of these endogenous bacteria by adding nutrients and fertilizer to the shoreline of Prince William Sound, instead of seeding the shoreline with exogenous bacteria.122 This technique was considered successful.123 As with the Amoco Cadiz response, bioremediation in the Exxon Valdez response involved shoreline use, rather than use in open water. There are concerns that low temperatures and the variable salinity in the Arctic will decrease the potential of bioremediation. Research done in Norway, however, suggests that microbial communities located in ice can begin to break down oil.124 A patent issued in 2001 registers an improved method of administering bacteria to an open-water spill, and a pending patent application filed by a German group discloses a technique specifically aimed at bioremediating open water Arctic spills.125 The regulatory framework governing bioremediation processes is complicated. The National Contingency Plan treats bioremediation products similarly to dispersants, with a product schedule and authorization requirements.126 Twenty-four products are listed on the product schedule. The North Slope Subarea Area Contingency Plan also discusses bioremediation products, and contains a general protocol for testing products listed on the National Contingency Plan schedule for use in Alaskan waters.127 These products are not preapproved for any use.

III. GEOGRAPHIC AND CULTURAL ISSUES A. Response Posture and Readiness As noted above, the Beaufort and Chukchi Seas are different in terms of response needs. This section focuses mainly on response in the Chukchi, where the distance from shore and lack of infrastructure make access, let alone response, difficult. Some of these concerns do apply to the Beaufort as well. The National Contingency Plan requires the Coast Guard to oversee oil spill planning and preparedness, and to supervise an oil-spill response in coastal waters. Current federal emergency response capabilities in the region are very limited. Coast Guard officials have noted over the past few years that they are ill-prepared to respond to a major spill in the Arctic.128 In addition to the response limitations detailed above, the Coast Guard lacks ice-class vehicles capable of responding to a spill under Arctic conditions. The Coast Guard has three polar icebreakers: the Polar Star, the Polar Sea, and the

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Healy. Both the Polar Star and the Polar Sea are currently non-operational, and both have exceeded their intended 30-year service lives.129 The Polar Sea, originally commissioned in 1978, was returned to service in 2006 following a rehabilitation project intended to extend the vessel‘s service life to 2014.130 In June of this year the Coast Guard announced that the Polar Sea would cease operations until January 2011 due to ―an unexpected engine casualty,‖ the cause of which is still under investigation.131 Another rehabilitation project, budgeted at $60 million and intended to extend the life of the Polar Star by seven to ten years, began in 2006.132 It is expected to be completed in 2013. The most recent Coast Guard estimates suggest that the work required to further extend the lives of the Polar Sea and the Polar Star would cost about $400 million per vessel (in 2008 dollars), and the cost of replacement ships would be between $800-925 million.133 The same report predicts that it would take eight to ten years to build the new ships. The Coast Guard procured the third ship, the Healy, in the 1990s, and commissioned it in 2000. The Healy was supposed to complement the Polar Sea and the Polar Star with its greater research support capabilities. It has less icebreaking capability than the other ships. The funding for operations and maintenance on all of these vessels has come through the National Science Foundation‘s budget since FY2006, because of the ships‘ increasing research functions.134 Should a major drilling program begin offshore in the Chukchi Sea, additional operational polar icebreakers would be required to reach a rig or a spill in icy conditions. Decisions regarding whether to repair the current vessels or to acquire additional ice-class vessels are currently in the hands of Congress and subject to the budgeting process. Distance is another major hurdle, even in open water and good weather conditions. Though the operators of the lease sites and their contractors will provide response equipment and personnel in the event of a spill, the Coast Guard still must oversee that response. The nearest Coast Guard operations base to the Chukchi region is on Kodiak Island, which is approximately 1,000 miles from the leasing sites. In addition to overseeing spill response, the Coast Guard provides search and rescue capabilities in other areas. Without a presence in the Arctic, it would be very difficult for the Coast Guard to conduct any emergency search and rescue operations. In the Beaufort Sea, response capability is increased by proximity to the city of Barrow and the shoreline. However, Barrow is still a small community of less than 5,000 people.135 Wainwright, the second-largest town in the North

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Slope Borough and on the Chukchi Sea coast, had a population of about 550 at the time of the 2000 census.136 A major spill would require bringing in responders, but it would be difficult for this region to support a large influx of response personnel. The nature of the sea also complicates the staging of operations. The sea is too shallow at Wainwright to support a full dock, and there is only a boat ramp from which to launch smaller vessels. The nearest dock capable of supporting large vessels is at Prudhoe Bay in the Beaufort Sea. Shell‘s plan for exploratory drilling in the Chukchi involves a small flotilla of ships available to assist with response efforts. The Shell C-Plan asserts that an oil spill response vessel will be positioned so that it could arrive at a spill site within one hour.137 It also anticipates that a larger transport vessel will be able to arrive within 24 hours and would be able to store up to 513,000 barrels of oil or oily water. Additional personnel and resources, according to the plan, will be mobilized through the contractor Alaska Clean Seas, which has personnel stationed on the North Slope in Prudhoe Bay and along the Beaufort Sea. They have an advisor on Chukchi exploration issues but do not appear to have any response personnel stationed west of Barrow at present.138 According to the C-Plan, equipment will be pre-staged at Wainwright, where there is a small airport and a boat ramp from which to deploy the equipment to the spill. Environmental groups have criticized this plan, asserting that the estimated response times are unrealistic. Pew Environment‘s U.S. Arctic program has drafted a peer-reviewed report on oil spill response in the Arctic, which includes a response scenario analysis for the Chukchi Sea.139

B. Subsistence Resource Use Subsistence resource uses provide an important background to any discussion of offshore drilling in the Arctic. Inupiat Eskimos are the dominant population in Alaska‘s Arctic region and have practiced subsistence hunting and fishing for thousands of years. For most residents of the North Slope, a subsistence-based lifestyle is an economic necessity. The cost of living is high as a result of transportation costs for goods and services. While jobs are available in oil extraction facilities in the Prudhoe Bay area, the per-capita income does not correspond to the high cost of living.140 The Inupiat are forced to supplement their diet through subsistence hunting and fishing since the harsh weather makes agriculture impossible.141 Walruses, seals, and

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caribou make up part of the Inupiat diet, but the bowhead whale is of particular importance due to its size and food potential. Bowhead whales can reach 60 feet in length and weigh more than 120,000 pounds. They migrate from Russian to Canadian waters and back through the Chukchi and Beaufort Seas. They are the most important subsistence animal for the coastal communities of northwest and northern Alaska.142 Of the 74 percent of North Slope Borough households that responded to a 1998 survey, nearly 69 percent of Inupiat families reported that the bowhead whale makes up more than half of their subsistence food diet.143 Whale hunting and the customs surrounding it are also an important part of the cultural heritage of the Inupiat. A 1986 study estimated that 70 percent of the population of Wainwright, Alaska directly participates in preparing and preserving a whale that has been caught. No other communal activity involves as high a level of participation.144 Many coastal Inupiat are strongly opposed to offshore drilling, largely because it can interfere with the migratory patterns and well-being of the bowhead whale. Much of this opposition relates to concerns over seismic activities, which can drive the whales off their normal migratory path.145 Oil spills present another hazard. In case of a spill, whales may pass through the oil, exposing their bodies to harmful hydrocarbons. No research has studied the toxic effects of inhaled or ingested oil on bowhead whales, but scientists believe the consequences would be similar to those for polar bears and seals, which are both seriously affected by oiling.146 While no major oil spill has occurred in the Beaufort Sea, concerns about the potentially calamitous effects of a spill on the bowhead whale population are a major factor in any evaluation of offshore drilling.

IV. AREAS FOR COMMISSION INQUIRY Shell‘s exploratory drilling C-Plan is currently the only formal industry proposal for contingency planning and oil spill response in the Arctic. While Shell‘s plan acknowledges many of the challenges of spill response in the Arctic, questions remain as to whether its solutions to those challenges are realistic. The Commission may wish to consider the recent analysis conducted by the Pew Environment Group in evaluating the Shell plan and the requirements for Arctic response plans generally. The Commission may also want to consider the regulatory standards to which the C-Plan is keyed. The regulations set out requirements for spill

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response planning, such as the volume for the worst-case discharge scenario and the proximity to the well of spill response equipment. The Shell plan appears to go beyond these standards, but other drillers may not. Environmental groups have criticized the current response planning standards as inadequate because they allow an applicant to underestimate the risk of, and do not require sufficient response capacity in the event of, a worst-case discharge. Bills in both the U.S. House and Senate attempt to respond to these concerns by requiring response plans to include a more comprehensive risk analysis, greater detail about response capability, and specific information on measures to be used in case of a loss of well control.147 The Commission, after further review of the regulations and an evaluation of the action Congress is considering, may wish to recommend amending the regulations. The Commission may also wish to consider the resources brought to bear to review contingency plans. The Shell C-plan process, where MMS did request further information in support of the plan, shows that at least some review of the plan took place. The Commission may wish to consider whether the new BOEMRE possesses the expertise, resources, and appropriate incentives to review spill response plans, and whether other agencies should play a role in such review. For example, the Environmental Protection Agency (EPA) and NOAA may possess scientific expertise relevant to the evaluation of Arctic response plans, and the Coast Guard may possess relevant operational expertise. EPA and NOAA are currently involved in the environmental review process, but could play a larger role in the spill response planning process. Proposed Congressional actions would require the lead agency reviewing the response plan, such as BOEMRE, to obtain the written concurrence of other agencies that have a significant responsibility to remove, mitigate damage from, or prevent or reduce a substantial threat of the worstcase discharge of oil. The Commission may wish to consider this and other mechanisms to incorporate consultation with other agencies into spill response planning. It is unclear the extent to which and the speed at which the Coast Guard, the oil spill response contractors, and industry could mobilize response equipment and personnel in the event of a spill in the Chukchi Sea. Because the Coast Guard has an admitted lack of response capacity in the Arctic, immediate responsibility would fall on industry and their oil spill response contactors. Shell, at least, accepts this responsibility. One of the questions for the Commission is whether increased Coast Guard capacity should be a prerequisite for offshore activity or whether the government is comfortable with accepting responsible parties (and private contractors) as primary spill

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responders—especially in light of widespread public concern about BP‘s role as the responsible party in the Deepwater Horizon response. The Commission may also wish to consider encouraging research in two areas. First, further research is needed on the dynamics of the Arctic marine ecosystem and the ways in which marine mammals use sea and shoreline resources. Second, further information is required on the effectiveness of common response methods and whether they can be modified for the Arctic environment. The use of dispersants, bioremediation, and more advanced GPR technology should be investigated to improve response capacity. A response gap analysis, such as the analysis conducted in Prince William Sound, may be a useful tool to identify which response mechanisms should be prioritized. The U.S. Geological Service is presently evaluating the state of scientific knowledge about the Arctic and will identify specific areas for research. The Department of the Interior directed this analysis on April 13, 2010 (a week before the Deepwater Horizon explosion).148 Potential mechanisms for funding oil spill response research in general are discussed in other work by the Commission and its staff. Another question the Commission may wish to consider is the role of the local Inupiat community in setting up response infrastructure and assisting with response efforts. The Prince William Sound Regional Citizens‘ Advisory Council, established after Exxon Valdez, has been suggested as a model for incorporating local communities into spill planning and spill response. The Commission may wish to recommend that a similar council be created in the North Slope communities and be funded by industry engaging in offshore activities.

End Notes 1

Note that the research and analysis in this working paper has been substantially updated and expanded upon in subsequent work by the Commission and its staff. Note also that this working paper does not address all issues related to Arctic drilling in which the Commission may be interested. For example, the paper does not address the evaluation of spill impacts, the potential non-oil spill impacts of oil and gas development in the Arctic, or the role of environmental regulatory review under the National Environmental Policy Act, the Marine Mammal Protection Act, and other federal laws (or their Alaska state counterparts). 2 BP IN ALASKA, www.bp.com/assetsdf; SHELL‘S BEAUFORT SEA EXPLORATORY DRILLING PROGRAM: OIL SPILL PREVENTION AND RESPONSE,

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http://wwwstatic.shell.com/static/usa/downloads/about_shell/strategy/major_projects/ alaska/final_shell_ospr_booklet_10-1- 07.pdf; Ian Urbina, BP Is Pursuing Alaska Drilling Some Call Risky, N.Y. TIMES (June 23, 2010). 3 J.D. Hall, Oooguruk Project Offshore Alaska, OFFSHORE (Aug. 1, 2008), http://www.offshore-mag.com/index/article-display/337896/articles/offshore/volume68/issue-8/arctic-frontiers/oooguruk-project 4 Charles Thomas, Walter North, Tom Doughty & David Hite, Alaska North Slope Oil And Gas: A Promising Future Or An Area In Decline?, Doe/Netl (Apr. 8, 2009), http://www.netl.doe.gov/technologies/oil [hereinafter THOMAS ET AL., ALASKA NORTH SLOPE OIL AND GAS]. 5 Online Public Notice, State of Alaska, North Slope Borough: Shell Offshore Inc. 2010 Chukchi Sea Exploration Plan (Nov. 25, 2009), http://notes4.state 6 This paper does not address the announcement in October 2010 by the Shell Oil Company that it would seek to drill exploratory wells in the summer of 2011 on offshore leases in the Beaufort Sea. 7 Peter K. Velez, Upstream Emergency Response Manager, Shell International Exploration and Production B.V., Presentation to Commission Staff (Sept. 16, 2010). 8 The Macondo wellhead lay below about 5,000 feet of water; the proposed exploratory wells in the Chukchi Sea would be at depth of about 150 feet. Shell believes, based on the testing it has already done, that the pressures in the Chukchi Sea would be two to three times less than they were in the Macondo well. Letter from Marvin E. Odum, President, Shell Oil Company to S. Elizabeth Birnbaum, Minerals Management Service (May 14, 2010), available at http://www.thearcticsounder.com/article/1020shell_letter_ defends_arctic_ program_in_light. 9 Some of the shoreline and human use issues relating to the Gulf of Mexico and the Chukchi and Beaufort Seas are discussed in other work by the Commission and its staff on the potential impacts of the spill. 10 Thomas Et Al., Alaska North Slope Oil And Gas At 2-17 To 2-25. 11 Id. at 2-26. 12 Id. at 2-35. 13 MMS is now the Bureau of Ocean Energy Management, Regulation and Enforcement (BOEMRE). 14 Thomas Et Al., Alaska North Slope Oil And Gas at 2-79. 15 Fact Sheet, U.S. Geological Survey, Circum-Arctic Resource Appraisal: Estimates of Undiscovered Oil and Gas North of the Arctic Circle (2008), available at http://pubs. usgs.gov/fs/2008/3049/. 16 Shell Beaufort and Chukchi Sea, Program Update, Presentation to Commission Staff, (Sept. 17, 2010); Questions and Answers: The Next Five-Year OCS Oil and Gas Leasing Program (2012-2017), http://www.doi.gov/whatwedo/energy 17 Ronald O‘rourke, Congressional Research Service, Changes In The Arctic: Background And Issues For Congress 17 (Mar. 30, 2010). 18 See, e.g., Press Release, National Snow and Ice Data Center, Arctic Sea Ice Shatters All Previous Record Lows (Oct. 1, 2007), available at http://nsidc.org/news/press/2007_ seaiceminimum/20071001_pressrelease.html (predicting 2030); Walter Meier, Julienne Stroeve, and Florence Fetterer, Whither Arctic sea ice? A clear signal of decline regionally, seasonally and extending beyond the satellite record, 46 Annals Of Glaciology 433 (2007): (predicting 2035-2106); Julienne Stroeve, Marika Holland, Walt Meier, Ted Scambos, and

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Mark Serreze, Arctic Sea Ice Decline: Faster than Forecast, 34 Geophysical Research Letters 5 L09501 (2007) (predicting 2050-2100). 19 Kim Murphy, Salazar says Arctic Drilling Must Wait Until More is Known About Potential Pitfalls, Los Angeles Times (Sept. 4, 2010). 20 Alaska v. Salazar, No. 3:10-cv-00205 (D. Alaska filed Sept. 9, 2010). 21 Margaret Cronin Fisk, Alaska Claims in Suit U.S. Government Improperly Banned Off-Coast Drilling, BLOOMBERG (Sept. 10, 2010). 22 Dan Joling, Alaska rips feds over suspension of Arctic drilling, ANCHORAGE DAILY NEWS (Sept. 10, 2010). 23 Hall, Oooguruk Project Offshore Alaska. 24 Alan Bailey, More leases Dropped, 15 PETROLEUM NEWS (Aug. 15, 2010), http://www.petroleumnews.com/pntruncate/109175427.shtml. 25 Letter from Sean Parnell, Governor of Alaska, to Michael Bromwich, Director, Bureau of Ocean Energy Management, Regulation, and Enforcement 5 (Aug. 25, 2010), available at http://gov.alaska.gov/parnell_media 26 Jim Efstathiou Jr., BP’s Liberty Oil Well in Alaska to Face New Safety Rules, BLOOMBERG (June 24, 2010). 27 MMS, Draft Proposed Outer Continental Shelf (OCS) Oil and Gas Leasing Program 20102015 (January 2009) (on file with Commission staff) [hereinafter MMS 2009 Proposal]. 28 Letter from Jane Lubchenco, Under Secretary of Commerce for Oceans and Atmosphere, to S. Elizabeth Birnbaum, Director, Minerals Management Service 5-12 (Sept. 21, 2009) [hereinafter NOAA 2009 Comments] (detailing NOAA‘s comments on the U.S. Department of the Interior/Minerals Management Service Draft Proposed Outer Continental Shelf Oil and Gas Leasing program for 2010-2015) (on file with Commission staff). 29 BOEMRE, Introduction—5-Year Program, http://www.boemre.gov/5-year/. 30 Kristen Nelson, Chukchi High Five, 13 PETROLEUM NEWS (Feb. 10, 2008), http://www.petroleumnews.com/pntruncate/347813743.shtml. 31 Native Village of Point Hope v. Salazar, 2010 WL 2943120 (D. Alaska July 21, 2010). 32 Yereth Rosen, Shell, Statoil get OK to do Chukchi Oil Surveys, REUTERS (Aug. 6, 2010). 33 Nelson, Petroleum High Five. 34 43 U.S.C. §§ 1334(c), 1337(b)(2). 35 Shell Presentation to Commission Staff (Sept. 16, 2010). 36 NOAA 2009 Comments at 5. 37 This section is a general introduction to spill planning in Alaska and is not meant as a comprehensive evaluation of planning requirements. 38 30 C.F.R. § 254.23. 39 33 C.F.R. § 254.21 (requiring an emergency response plan with appendices); 33 C.F.R. § 254.2 (setting out requirements for the worst-case discharge appendix). 40 30 C.F.R. § 254.6. 41 ALASKA ADMIN. CODE 18 § 75.425(e)(1)(I). 42 The Alaska Oil and Gas Conservation Commission (AOGCC) was formerly a part of the Department of Natural Resources, but is now a quasi-judicial agency within the executive branch. See Letter from Parnell to Bromwich (urging BOEMRE to lift the moratorium on offshore drilling in Alaska waters). 43 The review team is made up of the AOGCC‘s petroleum engineer commissioner, a petroleum engineer; the chairman of the AOGCC, a geologist; and a public appointee with oil and gas experience. That Commission will also hold hearings after this Commission releases its report. ―At this hearing, public testimony will be received and the Commission will

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National Commission on the BP Deepwater Horizon Oil Spill… examine relevant issues in light of the findings and conclusions of the National Commission.‖ See Order by Daniel T. Seamount, Jr., Chair, Alaska Oil and Gas Conservation Commission, Notice of Inquiry by the State of Alaska (June 24, 2010), available at http://notes4.state.ak.us/pn/pubnotic.nsf/6132da015d9ca2fe 89256785006af 393/3269886a2a097ed18925774c007fa8 36?OpenDocument&Highlight=0,Order,by,Daniel,T,Seamount (indicating that a public hearing on the review will be noticed 30 days after this Commission issues its report).

44

Id. Tim Bradner, Alaska’s Oil Regulators Work to Ensure the Industry is Responsible, ALASKA J. COMMERCE (July 16, 2010), http://www.alaskajournal.com/stories/071610/oil 46 Since the original release of this paper, Shell has announced that it will not seek to drill on its Chukchi Sea leases in 2011 and will instead seek to drill on its offshore leases in the Beaufort Sea. The response scenarios and plans included in the Chukchi C-Plan discussed here are largely applicable to plans for drilling in both seas. 47 The Macondo well was similarly in the exploratory drilling phase. 48 30 C.F.R. § 254.26(d). 49 30 C.F.R. § 254.47(b). 50 Alaska Admin. Code 18 § 75.434. 51 Shell, Chukchi Sea Regional Exploration Oil Discharge Prevention And Contingency Plan (Mar. 2010), 52 Id. at 1-23 53 Id. at 4-3. 54 Id. 55 Id. 56 Shell Presentation to Commission Staff (Sept. 16, 2010). 57 Alaska Clean Seas, www.alaskacleanseas.org. 58 Shell C-Plan at 1-22. 59 Id. at 1-26. 60 Letter from Jeffrey Walker, Regional Supervisor, Field Operations, MMS, to Susan Childs, Shell Offshore Inc. (Dec. 7, 2009), available at http://alaska.boemre.gov/ref/ProjectHistory/ 2009_Chukchi_Shell/2009_1207.pdf [hereinafter EP Letter] (conditionally approving Shell‘s 2010 exploration drilling program and noting that response to the contingency plan would follow separately). 61 30 C.F.R. § 250.220. 62 EP Letter at 3. 63 Shell Presentation to Commission Staff (Sept. 16, 2010). 64 Shell, Chukchi Sea Regional Exploration Oil Discharge Prevention And Contingency Plan (May 2009), available at http://alaska.boemre.gov/ref/ProjectHistory/2009_Chukchi_Shell/2009_0623_Shell_cplan.p df. 65 Letter from Jeffrey Walker, Field Operations, MMS, to Susan Childs, Shell Offshore Inc. (Dec. 18, 2009), available at http://alaska.boemre.gov/ref/ProjectHistory/2009_ Chukchi_Shell/ 2009_1218_childs.pdf (conditionally approving the Shell C-Plan). 66 Shell C-Plan at 1-13. 67 Shell C-Plan. 68 Charles W. Schmidt, Cold Hard Cache: The Arctic Drilling Controversy, 118 Environmental Health Perspectives A394 (2010).

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Mar, Inc. Et Al., Empirical Weathering Properties Of Oil In Ice And Snow Project Number 1435-01-04- Rp-34501 Final Report For U.S. Department Of The Interior Minerals Management Service Alaska Outer Continental Shelf Region (Oct. 2008), available at http://alaska.boemre.gov/reports/2008rpts/2008_033/2008_033.pdf [hereinafter WEATHERING PROPERTIES]. 70 Luc Rainville and Rebecca A. Woodgate, Observations of internal wave generation in the seasonally ice-free Arctic, 36 Geophysical Research Letters L23604 (Dec. 2, 2009). 71 Nuka Research And Planning Group, Llc, Report To Prince William Sound Regional Citizens‘ Advisory Council: Response Gap Estimate For Two Operating Areas In Prince William Sound, Alaska (2007). 72 Id. at 41. 73 Id. at 52. 74 See, e.g., Response Gap, OCEANS NORTH U.S., http://www.oceansnorth.org/response (noting the potential value of a response gap analysis). 75 SHELL C-PLAN at 3-20. 76 Weathering Properties. 77 U.S. Department Of The Interior Minerals Management Service, Arctic Oil Spill Response Research And Development Program: A Decade Of Achievement (2009), available at http://www.boemre.gov/tarprojectcategories/PDFs/MMSArcticResearch.pdf [hereinafter ACHIEVEMENT]. 78 Id. at 11. 79 Id. 80 Df Dickens Associates Ltd., Sintef, The University Centre At Svalbard, Boise State University, 2006 Svalbard Experimental Spill To Study Spill Detection And Oil Behavior In Ice: Summary Field Report (Apr. 12, 2006), http://www.boemre.gov/tarprojects/569/SummaryFieldReport.pdf. 81 Id. 82 SHELL C-PLAN at 1-27. 83 Id. at 3-27. 84 See Minerals Management Service Office Of Public Affairs, Questions And Answers On Shell‘s Ocs Chukchi Sea Exploration Plan, available at http://www.boemre.gov/ooc/PDFs/ CHUKCHI_SEA Press Release, Minerals Management Service, Salazar Conditionally Approves Shell‘s Exploration Plan for Certain Chukchi Sea Leases (Dec. 7, 2009), http://www.boemre.gov/ooc/press/2009/press1207.htm. 85 Of course, boom and skimmer technology can be of only limited use in spills in non-Arctic waters as well. The oil recovery from boom-and-skimmer efforts as part of the Deepwater Horizon response only constituted 3% of the total amount of oil recovered. NOAA, OIL BUDGET CALCULATOR TECHNICAL DOCUMENTATION (November 2010), available at http://www.restorethegulf.gov/sites/default/files/documents/ pdf/OilBudget Calc_Full_HQPrint_111110.pdf. 86 ACHIEVEMENT at 15. 87 Hans V. Jensen & Joseph V. Mullin, MORICE—new technology for mechanical oil recovery in ice infested waters, 47 MARINE POLLUTION BULLETIN 453 (2003). 88 Victoria Broje and Arturo A. Keller, Improved Mechanical Oil Spill Recovery Using an Optimized Geometry for the Skimmer Surface, 40 ENVIRON. SCI. TECHNOL. 7914 (Oct. 26, 2006). 89 ACHIEVEMENT at 15. 90 SHELL C-PLAN at 3-27

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Id. at 3-26. See, e.g., Weathering Properties; Progress Report, Oil In Ice: Transport, Fate, And Potential Exposure (Progress Report for the Period Oct. 15, 2008 to Apr. 15, 2009), available at http://www.crrc.unh.edu/progress_reports/sintef/04_2009/index.htm. 93 Weathering Properties. 94 Amy Merten, NOAA Office of Response and Restoration, Coastal Response Research Center, ―NOAA‘s Increased Preparedness for Arctic Response,‖ Presentation at the National Ice Center Symposium (June 11, 2009). 95 SHELL C-PLAN at 1-27. 96 Id. at 1-27-1-28. 97 World Wildlife Fund, Not So Fast: Some Progress In Spill Response But Us Still Ill-Prepared For Arctic Offshore Development (2009) (reviewing and critiquing MMS‘s ―Decade of Achievement‖ report). 98 Df Dickens Associates Ltd., Sintef, The University Centre At Svalbard, Boise State University, 2006 Svalbard Experimental Spill To Study Spill Detection And Oil Behavior In Ice: Final Technical Report (Dec. 15, 2006), http://www.boemre.gov/tarprojects/569/569AC.pdf. 99 Sl Ross Environmental Research, D.F. Dickins And Associates, Vaudrey And Associates, Evaluation Of Cleanup Capabilities For Large Blowout Spills In The Alaskan Beaufort Sea During Periods Of Broken Ice (June 1998), available at http://www.boemre.gov/tarprojects/297/297AA.pdf. 100 SHELL C-PLAN at 3-24, 3-32 to 3-33. 101 Id. at 3-25. 102 Adam Moles, Larry Holland, And Jeffrey Short, The Effectiveness Of Corexit 9527 And 9500 In Dispersing Fresh, Weathered, And Emulsion Of Alaska North Slope Crude Oil Under Subarctic Conditions (Apr. 2001), available at http://www.pwsrcac.org/docs/d0001400.pdf. 103 Sl Ross Environmental Research, Dispersant Effectiveness Testing IN COLD WATER (August 2002) available at http://www.boemre.gov/tarprojects/450/450mmsExCold.pdf. 104 See, e.g., Prince William Sound Oil Spill Response Institute, Advancing Oil Spill Response In Ice-Covered Waters 4 (2003), available at http://www.pws-osri.org/publications/OilIce_ final.pdf (identifying research needs to improve response abilities in icy environments) 105 There is dispute within the scientific literature about whether dispersants promote biodegradation of oil. For more information, see the staff working paper on dispersants. 106 See World Wildlife Fund, Oil Spill Response Challenges In Arctic Waters 7 (2007). 107 Alaska Regional Response Team, Unified Plan, Annex F: Chemical Countermeasures F-11 (1999), available at http://www.akrrt.org/UnifiedPlan/F-Annex.pdf [hereinafter ANNEX F]. 108 Alaska Regional Response Team, Unified Plan, North Slope Subarea Contingency Plan, Response Section, A-22 (2007), available at http://www.dec.state 109 ANNEX F at F-2. 110 SHELL C-PLAN at 3-40. 111 Id. at 3-37. 112 Id. at 3-38. 113 Id. at 3-42. 114 Richard P.J. Swannell et al., Field Evaluations of Marine Oil Spill Bioremediation, 60 MICROBIOLOGICAL REV. 342, 342 (1996) (internal quotations omitted).

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40 C.F.R. § 300.5. Swannell at 351-52. 117 Id. at 351. 118 Id.; see also id. at 358 (―[T]here is little convincing evidence to suggest that bioremediation is effective at sea. This is partly due to the logistical difficulties involved in conducting controlled open-sea trials. Further research is required to derive an effective bioremediation strategy at sea.‖) (internal citations omitted). 119 Id. 120 Id. 121 Id. at 352. 122 See id.; P.H. Pritchard et al., Oil Spill Bioremediation: Experiences, Lessons and Results from the Exxon Valdez Oil Spill in Alaska, 3 BIODEGRADATION 315 (1992). 123 Pritchard at 315. 124 SINTEF, Oil Biodegradation in Arctic Ice, http://www.sintef.no/Home/Materials-andChemistry/MarineEnvironmental-Technology/Projects-and-News/Oil-biodegradation. SINTEF is studying a number of techniques for combating oil spills in ice covered water. See SINTEF, JIP Oil in Ice, http://www.sintef.no/Projectweb/JIP-Oil-In-Ice/. 125 U.S. Patent No. 6,267,888 (issued July 31, 2001); U.S. Patent Application Publication No. US2010/0051541 A1. 126 40 C.F.R. § 300 Subpart J. 127 ANNEX F at F-85. 128 See, e.g., Captain J.J. Fisher, ―Policy & Cooperation in the Arctic,‖ Presentation at Capitol Hill Ocean Week, (June 10, 2010), available at http://nmsfocean.org/CHOW-2010-agenda; ―Oil Spill Response in the U.S. Arctic: A U.S. Coast Guard Perspective,‖ Presentation at the Environmental Law Institute (Mar. 11, 2010), available at http://www.eli.org/program_ areas/ocean_arctic_spill.cfm. 129 Ronald O‘rourke, Congressional Research Service, Coast Guard Polar Icebreaker Modernization: Background, Issues, And Options For Congress 1 (July 2, 2010). 130 Id. at 3. 131 Id. at 4. 132 Id. 133 Id. at 10-11. 134 Id. at 7. 135 U.S. Census Bureau, Population for the 15 Largest County Equivalents and Incorporated Places in Alaska: 1990 and 2000, available at http://www.census.gov/census2000/pdf/ak_tab_6.PDF. 136 U.S. Census Bureau, Fact Sheet, Wainwright city, Alaska, available at http://factfinder. census.gov/home/saff/main.html?_lang=en (search for Wainwright, Alaska). 137 SHELL C-PLAN at 1-19, 1-25. 138 See Alaska Clean Seas, Yearbook 30-41 (2009), available at http://www.alaskacleanseas.org/adobefiles/2010%20Yearbook_web (listing personnel and office locations) 139 The Pew Environment Group, Oil Spill Prevention And Response In The U.S. Arctic Ocean (Nov. 2010). 140 Committee On The Cumulative Environmental Effects Of Oil And Gas Activities On Alaska's North Slope, National Research Council, Cumulative Environmental Effects Of Oil And Gas Activities On Alaska‘s North Slope 20 (2003) [hereinafter Cumulative Environmental Effects]. 116

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Id. at 132. Alaska Department Of Fish & Game, Bowhead Whale (2008), http://www.adfg.state 143 Cumulative Environmental Effects At 135. 144 Id. 145 See National Marine Fisheries Service, Endangered Species Act—Section 7 Consultation, Biological Opinion 13 (2002) (noting that, with reference to the construction and operation of the Liberty Oil production island in the Beaufort Sea, that bowhead whales will defect from their normal migratory paths at distances of up to 35 miles from seismic operations). Changes in migratory patterns will have a significant effect on Inupiat hunting: hunters must follow the whales into riskier waters, making the hunting trip longer and more dangerous. Further, the hunters may not be able to transport the carcass to the shore before it begins deteriorating, thus jeopardizing the whale‘s food potential. 146 Cumulative Environmental Effects at 103. 147 See Consolidated Land, Energy, and Aquatic Resources Act of 2009, H.R. 3534, 111th Cong. (2009); Outer Continental Shelf Reform Act of 2010, S. 3516, 111th Cong. (2010). 148 Press Release, Department of Interior, Secretary Salazar Unveils Arctic Studies Initiative that will Inform Oil and Gas decisions for Beaufort and Chukchi Seas (Apr. 13, 2010).

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Chapter 3

ANALYSIS OF CRUDE OIL PRODUCTION IN * THE ARCTIC NATIONAL WILDLIFE REFUGE Energy Information Administration

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PREFACE On December 6, 2007, Senator Ted Stevens requested that the Energy Information Administration (EIA) provide an assessment of Federal oil and natural gas leasing in the coastal plain of the Arctic National Wildlife Refuge (ANWR) in Alaska (Appendix A). This report responds to that request. The legislation that established EIA in 1977 vested the organization with a degree of statutory independence. EIA does not take positions on policy questions. It is the responsibility of EIA to provide timely, highquality information and to prepare objective, credible analyses for use by the Congress, the Administration, and the public. This report should not be construed as representing the official position of the U.S. Department of Energy or the Administration. The projections in the reference case used in this report are not statements of what will happen but of what might happen, given the assumptions and methodologies used. The reference case projections are business-as-usual trend forecasts, given known technology, technological and demographic trends, and current laws and regulations. Thus, they *

This is an edited, reformatted and augmented version of an Energy Information Administration publication, Office of Integrated Analysis and Forecasting, U.S. Department of Energy, Washington, DC 20585, SR/OIAF/2008-03, dated May 2008.

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Energy Information Administration provide a policy-neutral starting point that can be used to analyze policy initiatives. EIA does not propose, advocate, or speculate on future legislative and regulatory changes. All laws are assumed to remain as currently enacted; however, the impacts of scheduled regulatory changes, when defined, are reflected.

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INTRODUCTION On December 6, 2007, Senator Ted Stevens requested that the Energy Information Administration (EIA) provide an assessment of Federal oil and natural gas leasing in the coastal plain of the Arctic National Wildlife Refuge (ANWR) in Alaska (Appendix A). In his request, Senator Stevens said that the analysis should develop ―plausible scenarios for development of the Coast Plain consistent with the most recent USGS resource assessments and oil price situation.‖ Senator Stevens also requested that the new EIA analysis be based on the approach developed in EIA‘s 2000 Service Report entitled Potential Oil Production from the Coastal Plain of the Arctic National Wildlife Refuge.1 This analysis assumes that the authorization for Federal oil and natural gas leasing occurs during 2008. This analysis presents three ANWR cases that assess the potential impact of oil and natural gas leasing in the 1002 Area of ANWR.2 These ANWR cases represent the following potential oil resource levels: •

•

•

A mean oil resource case, which is based on the U.S. Geological Survey (USGS) mean probability estimate3 of technically recoverable oil resources in the 1002 Area of ANWR; A low oil resource case, which is based on the USGS 95-percent probability estimate of technically recoverable oil resources in the 1002 Area of ANWR; and A high oil resource case, which is based on the USGS 5-percent probability estimate of technically recoverable oil resources in the 1002 Area of ANWR.

These three ANWR scenarios are compared to the Annual Energy Outlook 2008 (AEO2008) reference case,4 which serves as the analytical baseline for this report. A similar analysis was requested by then-Chairman Richard W. Pombo in a February 23, 2004, letter to EIA.5

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SUMMARY The opening of the ANWR 1002 Area to oil and natural gas development is projected to increase domestic crude oil production starting in 2018. In the mean ANWR oil resource case, additional oil production resulting from the opening of ANWR reaches 780,000 barrels per day in 2027 and then declines to 710,000 barrels per day in 2030. In the low and high ANWR oil resource cases, additional oil production resulting from the opening of ANWR peaks in 2028 at 510,000 and 1.45 million barrels per day, respectively. Between 2018 and 2030, cumulative additional oil production is 2.6 billion barrels for the mean oil resource case, while the low and high resource cases project a cumulative additional oil production of 1.9 and 4.3 billion barrels, respectively. Crude oil imports are projected to decline by about one barrel for every barrel of ANWR oil production. Opening ANWR results in the lowest oil import dependency levels during the 2022 through 2026 time frame, when oil import dependency falls to the minimum values of 46 and 49 percent for the high and low oil resource cases, respectively. During that timeframe, the mean resource case and AEO2008 reference case project an average oil import dependency of 48 and 51 percent, respectively. Because ANWR oil production is declining after 2028, U.S. oil dependency rises to 51 percent in 2030 in the mean resource case, compared to 54 percent in the AEO2008 reference case. The high and low resource cases project a 2030 oil import dependency of 48 percent and 52 percent, respectively. Additional oil production resulting from the opening of ANWR improves the U.S. balance of trade. Cumulative expenditures on foreign crude oil and liquid fuels between 2018 and 2030 are reduced by $202 billion dollars (2006 dollars) in the mean oil resource case and reduced by $135 and $327 billion dollars in the low and high oil resource cases, respectively. Additional oil production resulting from the opening of ANWR would be only a small portion of total world oil production, and would likely be offset in part by somewhat lower production outside the United States. The opening of ANWR is projected to have its largest oil price reduction impacts as follows: a reduction in low-sulfur, light crude oil prices of $0.41 per barrel (2006 dollars) in 2026 for the low oil resource case, $0.75 per barrel in 2025 for the mean oil resource case, and $1.44 per barrel in 2027 for the high oil resource case, relative to the reference case.

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BACKGROUND

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Federal law currently prohibits oil and natural gas development in ANWR. ANWR is located on the northern coast of Alaska due east of both Prudhoe Bay, the largest oil field ever discovered in the United States, and the National Petroleum Reserve-Alaska (NPRA) (Figure 1). In 1998, the USGS estimated that between 5.7 and 16.0 billion barrels of technically recoverable oil6 are in the coastal plain area of ANWR (also referred to as the 1002 Area), with a mean estimate of 10.4 billion barrels, of which 7.7 billion barrels falls within the Federal portion of the ANWR 1002 Area.7 In comparison, the estimated volume of undiscovered, technically recoverable oil in the rest of the United States is about 120 billion barrels.8

Source: United States Geological Survey. Figure 1. Map of Northern Alaska Showing ANWR and the Coastal Plain 1002 Area.

In developing ANWR‘s technically recoverable oil resources, the USGS estimated both the original-oil-in-place (OOIP) volumes and the recovery factors for those volumes. This additional information is important for analyses of very long-term issues, such as discussions surrounding the peaking of world oil supply, where the recovery factors implicit in an estimate of technically recoverable resources may be significantly changed by price and technology developments over time. However, for the present analysis, which focuses on production profiles over the next two decades, the technically recoverable resource estimates provided by USGS provide a reasonable starting point.

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For the purposes of this analysis, any reference to ANWR pertains to all Federal, State, and Native lands within and adjacent to the 1002 Area. Both the State officials and Native corporations have expressed a strong interest in developing their respective oil resources, which are legally and/or economically linked to a Congressional decision to allow development in ANWR, as discussed in EIA‘s 2004 report.9 ANWR was created by the Alaska National Interest Lands Conservation Act (ANILCA) in 1980. Section 1002 of ANILCA deferred a decision on the management of oil and natural gas exploration and development of 1.5 million acres of potentially productive lands in the coastal plain of ANWR. The coastal plain area represents about 8 percent of the total area of ANWR. The USGS estimates that 74 percent of the oil resources in ANWR‘s coastal plain area are on Federal lands, with the remaining 26 percent on State and Native lands. To date, there has been no assessment of the oil and natural gas resources in the rest of ANWR outside of the coastal plain area. However, it is unlikely that the non-coastal plain area of ANWR has the same level of resources that are estimated to be in the coastal plain area, due to differences in geology.

METHODOLOGY AND ASSUMPTIONS The effects of opening the coastal plain area of ANWR were determined by incorporating the ANWR region into the National Energy Modeling System (NEMS).10 The key assumptions required to project crude oil production from the coastal plain of ANWR include: • • • • •

timing of first production, timing of continuing development, field size distributions, production profiles, and current oil market conditions.

Timing of First Production At the present time, there has been no crude oil production in the ANWR coastal plain region. This analysis assumes that enactment of the legislation in

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2008 would result in first production from the ANWR area in 10 years, i.e., 2018. The primary constraints to a rapid development of ANWR oil resources are the limited weather ―windows‖ for collecting seismic data and drilling wells (a 3-to-4 month winter window) and for ocean barging of heavy infrastructure equipment to the well site (a 2-to-3 month summer window). The assumption that ANWR oil production would begin 10 years after legislation approves the Federal oil and natural gas leasing in the 1002 Area is based on the following 8-to-12 year timeline: •

•

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•

•

2 to 3 years to obtain leases, including the development of a U.S. Bureau of Land Management (BLM) leasing program, which includes approval of an Environmental Impact Statement, the collection and analysis of seismic data, and the auction and award of leases. 2 to 3 years to drill a single exploratory well. Exploratory wells are slower to drill because geophysical data are collected during drilling, e.g., rock cores and well logs. Typically, Alaska North Slope exploration wells take two full winter seasons to reach the desired depth. 1 to 2 years to develop a production development plan and obtain BLM approval for that plan, if a commercial oil reservoir is discovered. Considerably more time could be required if the discovered oil reservoir is very deep, is filled with heavy oil, or is highly faulted. The petroleum company might have to collect more seismic data or drill delineation wells to confirm that the deposit is commercial. 3 to 4 years to construct the feeder pipelines; to fabricate oil separation and treatment plants, and transport them up from the lower48 States to the North Slope by ocean barge; construct drilling pads; drill to depth; and complete the wells.

The 10-year timeline for developing ANWR petroleum resources assumes that there is no protracted legal battle in approving the BLM‘s draft Environmental Impact Statement, the BLM‘s approval to collect seismic data, or the BLM‘s approval of a specific lease-development proposal. The Alaska North Slope Badami and Alpine oil fields are recent examples of how long it might take to develop new ANWR oil fields. Located near the western border of ANWR, on State lands, the Badami field was discovered in 1990 and went into production in 1998, thereby taking 8 years between the oil

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discovery and initial production.11 On the western border of the State lands, near the National Petroleum Reserve-Alaska, the Alpine field was discovered in 1994 and initial oil production occurred in 2000, thereby taking 6 years from discovery.12 These Alaska North Slope oil field development time delays do not include the time delays associated with BLM leasing, the collection and interpretation of seismic data, and the drilling of exploratory wells.

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Timing of Continuing Development This analysis assumes that much of the oil resources in ANWR, like the other oil resources on Alaska's North Slope, could be profitably developed given the current levels of technology and at current and projected oil prices. This analysis also assumes that new fields in ANWR will begin development 2 years after a prior ANWR field begins oil production. The decision to use a 2-year time lag in bringing ANWR fields into production is driven by four factors. First, there is the large expected size of the ANWR fields, which complicates the logistical problems associated with their development. Second, there is considerable investment infrastructure required both to begin production in these fields and to link these fields to the TransAlaska Pipeline System (TAPS). Third, there is competition in investment and drilling resources from other domestic and foreign projects, which potentially limits the resources available for ANWR development. Finally, increasing the rate of ANWR development might also require an expansion of TAPS throughput capacity. This study does not assume that the expected rate of technological change in the oil and natural gas industry will affect the rate of development of ANWR. While a higher rate of technological development might reduce costs and lead to more efficient development of ANWR resources, the primary impediment to the development of ANWR resources is the current legal restriction that precludes access to these oil resources.

Field Size Distributions The current analysis uses the USGS assessment of potential field sizes in the coastal plain area, based on its assessment of the underlying geology. For the purposes of evaluating the impact of opening ANWR for U.S. markets, EIA assumed that State and Native lands within the coastal plain of ANWR

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would be opened for development. In the mean oil resource case, the total volume of technically recoverable crude oil projected to be found within the coastal plain area is 10.4 billion barrels, compared to 5.7 billion barrels for the 95-percent probability estimate, and 16.0 billion barrels for the 5-percent probability estimate. Because the USGS 5-percent and 95- percent probability oil resource estimates are asymmetric around the mean estimate, the expected field size distribution and, in turn, the distribution of projected oil production are also asymmetric with respect to the mean estimate‘s field sizes and projected production. In the mean oil resource case, the largest projected field in ANWR is nearly 1.4 billion barrels. While considerably smaller than the 13.5-billionbarrel Prudhoe Bay field,13 this would be larger than any new domestic onshore field brought into production in decades. Subsequent fields, which are developed through 2030 in the mean resource case, are expected to be smaller, with two additional fields each with 700 million barrels of oil and four additional fields each with 360 million barrels of oil (Table 1). To put these field sizes in context with recent North Slope Alaska oil discoveries, the Alpine Oil field, the largest field to start producing in recent years, is estimated to have 540 million barrels of ultimate recovery.14 Because the larger fields are generally easier to find and cheaper to develop, EIA‘s analysis assumes that the largest oil fields are developed first. Table 1. Oil Field Sizes and Their Date of Initial Production for the Three ANWR Resource Cases (million barrels) Year In Which Field Begins Production 2018 2020 2022 2024 2026 2028 2030 Total

Mean Oil Resource Case 1,370 700 700 360 360 360 360 4,210

Low Oil Resource Case 700 700 340 340 340 340 180 2,940

High Oil Resource Case 2,000 1,340 1,340 700 700 700 700 7,480

Source: Energy Information Administration, Office of Integrated Analysis and Forecasting.

Because the USGS assessment of ANWR oil resources has not changed since 2001, the ANWR field sizes used in this analysis are the same as those used in EIA‘s 2004 ANWR analysis.

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Production Profiles Potential production from ANWR fields is based on the size of the field discovered and the production profiles of other fields of the same size in Alaska with similar geological characteristics. In general, fields are assumed to take 3 to 4 years to reach peak production, maintain peak production for 3 to 4 years, and then decline until they are no longer profitable and are closed. Identical production profiles were used in the prior EIA report.

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Current Oil Market Conditions Alaska North Slope crude oil prices have increased dramatically, rising from $23.62 per barrel in 2000 to $47.05 per barrel in 2005, a 99 percent increase, and to $63.69 in 2007, a 170 percent increase.15 Alaska North Slope oil prices have continued to increase in 2008, in line with other crude prices. The price of West Texas Intermediate crude oil, which typically has a price premium of $5 to $8 per barrel over Alaska North Slope crude, has recently exceeded $120 per barrel. Considered in isolation, higher prices alone might raise an expectation of higher ultimate recovery from whatever oil resource exists in place.16 Higher prices can motivate efforts to increase the recovery factor through more intensive drilling and through the application of advanced techniques to increase recovery factors. While the menu of available methods may in some cases be limited by the features of the Alaska North Slope environment, for example, steam-injection enhanced oil recovery of the near-surface West Sak heavy oil deposits could endanger the permafrost, some techniques would likely still be suitable. Higher prices also make it more attractive to go after very small fields that are in close proximity to the larger fields that are presumed to be the initial development targets. However, as discussed below, the main impact of such approaches on the amount of oil actually recovered from ANWR is likely to occur after 2030, the current time horizon for EIA analyses. As previously noted, there is a strong incentive for serial development of the ANWR resource, starting with the largest fields first. As shown in Table 1, the expected size of fields developed in each year through 2030 declines over time. Based on the field size distributions provided for USGS for each of the resource cases, the expected target field in 2030 is estimated to contain 180 million barrels of recoverable oil in the low (most unfavorable) resource case

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and even more oil in the other two resource cases. Based on recent development practice, oil fields smaller than 10 million barrels of recoverable oil that lie in close proximity to existing developed fields in Alaska were deemed desirable development targets even when crude oil prices were substantially below their current level.17 Oil fields of 180 million barrels in proximity to even larger developed fields within ANWR are likely to present attractive development opportunities even at prices well below today‘s level. Crude oil prices could be a significant factor in determining whether much smaller fields within ANWR would also be attractive to develop. However, decisions regarding such smaller fields would most likely be taken sometime after 2030, affecting production levels only after such fields are actually brought on line. A similar timing issue arises with respect to the application of advanced techniques to raise ultimate recovery factors in fields of various sizes. With all new fields already assumed to be developed in an efficient manner if ANWR resources are opened to leasing and development, investments in such techniques would predominantly occur well after fields are first developed. While prices can influence decisions regarding the application of advanced techniques, the timing of ANWR development is such that the major impact on production from large fields in ANWR is not likely to be felt before 2030. However, a more significant impact could be realized in later years. The increase in drilling costs over time is another important consideration that mitigates against an immediate impact of higher oil prices on the production profile following initial development in a scenario where ANWR resources are open to leasing and development. For example, the American Petroleum Institute‘s (API) Joint Association Survey of Drilling Costs (JAS) reports, that for the 10,000 to 12,499-foot well-depth interval, the average cost of drilling a domestic18 onshore oil well increased from $111 per foot-drilled in 2000 to $294 per foot-drilled in 2005, a 165-percent cost increase.19 For the same well-depth interval, Alaska onshore oil well drilling costs increased from $283 per foot-drilled in 2000 to $1,880 per foot-drilled in 2005, a 564- percent cost increase.20 The vast majority of the oil wells drilled in Alaska occur on the North Slope. These API well drilling cost averages illustrate two aspects of Alaska North Slope oil field development costs. First, Alaska oil fields have always been more expensive to develop than lower-48 oil fields due to the North Slope‘s remote location, harsh winters, and the environmental requirement to maintain the permafrost layer. Second, in the current market environment, where producers are completing for scarce oil field equipment, drilling rigs,

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and skilled labor, the remoteness of the Alaska North Slope and its limited drilling season works to its detriment, causing oil field development costs to increase more than that witnessed in the lower-48. In the lower-48, a drilling company might move a land rig only a couple of miles, or at most, a couple of hundred miles to another drilling site. In contrast, the deployment of new rigs to the Alaska North Slope requires that they be transported many thousands of miles without any option for quick redeployment. Over the long-term, both lower-48 and Alaska North Slope oil field development costs are expected to subside as the supply of drilling rigs, oil field equipment, and skilled labor increases to catch up with demand. However, it is unlikely that Alaska North Slope oil field development costs will decline to year 2000 levels. In summary, the basic intuition that higher crude oil prices would likely result in higher ultimate recovery from whatever resource exists in place is sound. However, given the timing and cost considerations outlined above, EIA does not expect the recent increase in oil prices to affect the projected profile of ANWR development and production activities prior to 2030, the end of the time horizon for this analysis. Therefore, this current analysis of projected production from ANWR through 2030 parallels our prior recent analyses of this topic that have used similar or identical information on ANWR resources notwithstanding the recent run-up in world crude oil prices.

RESULTS In the AEO2008 reference case, U.S. conventional crude oil production grows from 5.1 million barrels per day in 2006 to a peak of 6.3 million barrels per day in 2018, and then declines to 5.6 million barrels per day in 2030 (Figure 2 and Table 2). The shape of the U.S. production profile is largely driven by lower-48 offshore oil production, which rises from 1.4 million barrels per day in 2006 to 2.4 million barrels per day in 2015, and then falls to 1.9 million barrels per day in 2030. Lower-48 onshore oil production grows slightly through 2030 because high crude oil prices stimulate the growth in carbon dioxide enhanced oil recovery (EOR) production, which offsets the decline in the other lower-48 onshore oil production. In the AEO2008 reference case, Alaska crude oil production (without ANWR) declines from 741,000 barrels per day in 2006 to about 520,000 barrels per day in 2014. After 2014, Alaska oil production increases due to the discovery and development of new offshore oil fields that are expected to be

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found off the Alaska North Slope.21 These new fields raise Alaska oil production to about 700,000 barrels per day in 2020. After 2020, Alaska oil production declines to about 300,000 barrels per day in 2030. In all three ANWR resource cases, ANWR crude oil production begins in 2018 and grows during most of the projection period before production begins to decline. In the mean oil resource case, ANWR oil production peaks at 780,000 barrels per day in 2027. The low- resource-case production peaks at 510,000 barrels per day in 2028, while the high- resource-case production peaks at 1,450,000 barrels per day in 2028. Cumulative oil production resulting from the opening of ANWR from 2018 through 2030 amounts to 2.6 billion barrels in the mean resource case, 1.9 billion barrels in the low resource case, and 4.3 billion barrels in the high resource case.

Source: National Energy Modeling System runs - aeo2008.d030208f, anwr2008.d031008a, anwr2008HRref.d040308c and anwr2008LRref.d040308d. Figure 2. Domestic Crude Oil Production for the AEO2008 Reference Case and the Three ANWR Resource Cases, 2005-2030, (million barrels per day).

The opening of ANWR to oil and gas development includes the following impacts: • • • • •

reducing world oil prices, reducing the U.S. dependence on imported foreign oil, improving the U.S. balance of trade, extending the life of TAPS for oil, and increasing U.S. jobs.

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Table 2. Liquid Fuels Supply Impact of Opening ANWR 1002 Area to Petroleum Development under Three Oil Resource Cases million barrels per day, unless otherwise noted 2006

LSL Crude Oil Price (2006 dollars per barrel)

$66.02

2020 AEO2008 Reference Case $59.70

U.S. Crude Production

5.1

6.2

6.5

6.5

6.5

Lower-48

4.4

5.5

5.5

5.5

5.5

Alaska

0.7

0.7

0.9

1.0

1.0

Net Crude Imports

10.1

9.8

9.5

9.5

9.4

Total Crude Supply

15.2

16.0

16.0

16.0

16.0

Natural Gas Liquids

1.7

1.7

1.7

1.7

1.7

Other Inputs

1.4

3.0

3.0

3.0

3.0

Net Product Imports

2.3

1.4

1.4

1.4

1.4

Total Primary Supply Net Import Share of Total Primary Supply

20.7

22.0

22.1

22.1

22.1

60 %

52 %

50 %

50 %

50 %

Net Expenditures for Crude and Product Imports (billion 2006 dollars)

$265

$207

$200

$201

$199

LSL Crude Oil Price (2006 dollars per barrel)

$66.02

$64.49

$63.74

$64.04

$63.13

U.S. Crude Production

5.1

6.0

6.8

6.5

7.3

Lower-48

4.4

5.5

5.5

5.5

5.5

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Liquid Fuels Supply Category

Mean Oil Resource Case $59.46

Low Oil Resource Case $59.47

High Oil Resource Case $59.39

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Table 2. (Continued) 2006

Alaska

0.7

2020 AEO2008 Reference Case 0.5

Net Crude Imports

10.1

10.1

9.5

9.7

9.0

Total Crude Supply

15.2

16.1

16.3

16.3

16.3

Natural Gas Liquids

1.7

1.6

1.7

1.6

1.7

Other Inputs

1.4

3.3

3.3

3.3

3.4

Net Product Imports

2.3

1.3

1.2

1.2

1.1

Total Primary Supply Net Import Share of Total Primary Supply

20.7

22.3

22.4

22.4

22.5

60 %

52 %

48 %

50 %

46 %

$265

$228

$207

$216

$193

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Liquid Fuels Supply Category

Net Expenditures for Crude and Product Imports (billion 2006 dollars) LSL Crude Oil Price (2006 dollars per barrel)

Mean Oil Resource Case 1.3

Low Oil Resource Case 1.0

High Oil Resource Case 1.8

$66.02

$70.45

$69.78

$69.95

$69.08

U.S. Crude Production

5.1

5.6

6.3

6.1

6.9

Lower-48

4.4

5.3

5.3

5.3

5.3

Alaska

0.7

0.3

1.0

0.8

1.7

Net Crude Imports

10.1

11.0

10.6

10.7

10.0

Total Crude Supply

15.2

16.6

16.9

16.7

17.0

Natural Gas Liquids

1.7

1.6

1.6

1.6

1.6

Other Inputs

1.4

3.4

3.4

3.5

3.4

Net Product Imports

2.3

1.3

1.1

1.2

1.0

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2006

20.7

2020 AEO2008 Reference Case 22.9

Mean Oil Resource Case 23.0

Low Oil Resource Case 23.0

High Oil Resource Case 23.1

60 %

54 %

51 %

52 %

48 %

$265

$262

$241

$248

$223

Liquid Fuels Supply Category Total Primary Supply Net Import Share of Total Primary Supply Net Expenditures for Crude and Product Imports (billion 2006 dollars)

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Source: National Energy Modeling System runs - aeo2008.d030208f, anwr2008.d031008a, anwr2008HRref.d040308c, and anwr2008LRref.d040308d. LSL=Low-sulfur, light. Note: Totals may not equal the sum of the components due to independent rounding.

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The remainder of this section will focus primarily on the first four impacts, because the employment impacts are difficult to determine for oil fields being developed on the Alaska North Slope. With respect to the world oil price impact, projected ANWR oil production constitutes between 0.4 and 1.2 percent of total world oil consumption in 2030, based on the low and high resource cases, respectively.22 Consequently, ANWR oil production is not projected to have a large impact on world oil prices. Relative to the AEO2008 reference case, ANWR oil production is projected to have its largest oil price reduction impacts as follows: a reduction in low-sulfur, light (LSL) crude oil23 prices of $0.41 per barrel (2006 dollars) in 2026 in the low oil resource case, $0.75 per barrel in 2025 in the mean oil resource case, and $1.44 per barrel in 2027 in the high oil resource case. Assuming that world oil markets continue to work as they do today, the Organization of Petroleum Exporting Countries (OPEC) could neutralize any potential price impact of ANWR oil production by reducing its oil exports by an equal amount. High oil prices and high Corporate Average Fuel Economy (CAFE) standards are projected to restrain the growth in future U.S. liquid fuels consumption. In the AEO2008 reference case, total U.S. liquid fuels consumption grows slowly from 20.7 million barrels per day in 2006 to 22.8 million barrels per day in 2030. Lower projected U.S. liquid fuels consumption results in ANWR oil production causing a larger percentage reduction in future oil and liquid product imports than was the case in prior ANWR analyses conducted by EIA. Every barrel of ANWR oil production reduces crude oil imports by about a barrel (Figure 3 and Table 2). In the AEO2008 reference case, the proportion of crude oil and liquid fuel imports to total supply remains relatively constant during the 2018 through 2025 time period at an average value of 51 percent. After 2025, reference case oil dependency increases to about 54 percent of U.S. liquid fuels supply in 2030. Because U.S. liquid fuels consumption grows slowly during the entire projection period, the lowest import dependency levels occur between 2022 and 2026 across the three resource cases.24 The mean oil resource case projects a minimum import share of 48 percent in 2024, before rising to 51 percent in 2030. The low and high resource cases project minimum import shares of 49 and 46 percent in 2022 and 2026, respectively. The reduction in oil import volumes also reduces the level of expenditures on crude oil and liquid fuel imports (Figure 4 and Table 2). In the AEO2008 reference case, high projected oil prices cause cumulative net U.S. expenditures on imported oil and liquid fuels to cost about $2.9 trillion (2006

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dollars) between 2018 and 2030. The mean oil resource case reduces this import expenditure by $202 billion dollars, or about 7 percent. In the low and high resource cases, ANWR oil production reduces cumulative net expenditures on imported crude oil and liquid fuels by about $135 to $327 billion (2006 dollars), respectively. As a result, the opening of ANWR to Federal oil and natural gas leasing improves the U.S. balance of trade by $135 to $327 billion during the 2018 through 2030 timeframe, based on the world oil prices projected in the AEO2008 reference case. The development of ANWR oil resources potentially extends the lifetime operation of TAPS. Currently, TAPS is believed to be uneconomic to operate once the oil throughput falls below 200,000 barrels per day.25 Although the reference case projects North Slope production to be above this minimum level, at about 280,000 barrels per day in 2030, the development of ANWR oil resources extends the life of this pipeline well beyond 2030. Greater TAPS throughput also reduces oil transportation rates, thereby prolonging the life of existing oil fields and encouraging the development of new, small North Slope oil fields.

Source: National Energy Modeling System runs - aeo2008.d030208f, anwr2008. d031008a, anwr2008HRref.d040308c, and anwr2008LRref.d040308d. Figure 3. Net Import Share of Liquid Fuels Consumed in the United States for the AEO2008 Reference Case and the Three ANWR Resource Cases, 2015-2030 (percent).

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.

Source: National Energy Modeling System runs - aeo2008.d030208f, anwr2008. d031008a, anwr2008HRref.d040308c, and anwr2008LRref.d040308d. Figure 4. Net Expenditures for Crude Oil and Liquid Fuel Imports for the AEO2008 Reference Case and the Three ANWR Resource Cases, 2015–2030, (billions of 2006 dollars).

ANWR PRODUCTION UNCERTAINTIES There is much uncertainty regarding the impact of opening ANWR on U.S. oil production and imports, due to several factors: •

The size of the underlying resource base. There is little direct knowledge regarding the petroleum geology of the ANWR region. The USGS oil resource estimates are based largely on the oil productivity of geologic formations that exist in the neighboring State lands and which continue into ANWR. Consequently, there is considerable uncertainty regarding both the size and quality of the oil

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•

•

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•

83

resources that exist in ANWR. Thus, the potential ultimate oil recovery and potential yearly production are highly uncertain. Oil field sizes. The size of the oil fields found in ANWR is one factor that will determine the rate at which ANWR oil resources are developed and produced. If the reservoirs are larger than expected, then production would be greater in the 2018 through 2025 timeframe. Similarly, if the reservoirs are smaller than expected, then production would be less. The quality of the oil and the characteristics of the oil reservoirs. Oil field production rates are also determined by the quality of oil found, e.g., viscosity and paraffin content, and the field‘s reservoir characteristics, i.e., its depth, permeability, faulting, and water saturation. This analysis assumes oil quality and reservoir characteristics similar to those associated with the Prudhoe Bay field. If, for example, the oil discovered in ANWR has a considerably higher viscosity than the Prudhoe Bay field oil, e.g., over 10,000 centipoise, then oil production rates would be lower than projected in this analysis. Environmental considerations. Environmental restrictions could affect access for exploration and development. Also, legal challenges to the BLM‘s leasing program and to its approval of seismic data collection and of specific oil field projects could significantly delay ANWR oil development and production.

Although there is considerable uncertainty regarding future ANWR oil production, the current upper limit to ANWR oil production is the transportation capacity of TAPS. TAPS has maximum throughput capacity of 2.136 million barrels per day.26 The high ANWR oil resource case comes closest to reaching this pipeline capacity, when total North Slope oil production peaks at 1.9 million barrels per day in 2026.

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APPENDIX A: REQUEST LETTER FROM ALASKA SENATOR TED STEVENS

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End Notes

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1

Energy Information Administration, Potential Oil Production from the Coastal Plain of the Arctic National Wildlife Refuge: Updated Assessment, SR/O&G/2000-02 (Washington, DC, May 2000) web site www.eia.doe.gov/pub/oil_gas/petroleum/analysis_publications/ arctic_national_wildlife_refuge/html/summary.html. 2 The 1002 Area refers to the coastal plain of ANWR, which is roughly north of the Sadlerochit Mountains and west of the Aichilik River. 3 The mean probability estimate refers to a 1-in-2 chance of there being oil resources at least equal to the size of that estimate; the 95-percent probability estimate refers to a 19-in-20 chance of there being oil resources at least equal to the size of that estimate; and the 5percent probability estimate refers to a 1-in-20 chance of there being oil resources at least equal to the size of that estimate. 4 Energy Information Administration, Annual Energy Outlook 2008, DOE/EIA-0383(2008) (Washington, DC, May 2008) web site www.eia.doe.gov/oiaf/aeo/index.html. 5 Energy Information Administration, Analysis of Oil and Gas Production in the Arctic National Wildlife Refuge, SR/OIAF/2004-04 (Washington, DC, March 2004) web site www.eia.doe.gov/oiaf/servicerpt/ogp/pdf/sroiaf(2004)04.pdf. 6 1 Technically recoverable resources are resources that can be produced using current technology. 7 2 U.S. Department of Interior, U.S. Geological Survey, The Oil and Gas Resource Potential of the Arctic National Wildlife Refuge 1002 Area, Alaska, Open File Report 98-34, 1999; U.S. Geological Survey, USGS Fact Sheet FS028-01, April 2001; and, Oil and Gas Resources of the Arctic Alaska Petroleum Province, by David W. Houseknecht and Kenneth J. Bird, U.S. Geological Survey Professional Paper 1732–A, 2005. 8 3 U.S. Department of Interior, Minerals Management Service, Assessment of Undiscovered Technically Recoverable Oil and Gas Resources of the Nation‘s Outer Continental Shelf, 2006, MMS Fact Sheet RED-2006-01b, February, 2006; and U.S. Geological Survey, USGS National Assessment of Oil and Gas Resources Update, USGS website: http://certmapper.cr.usgs.gov/data/noga00/natl/tabular/2007/summary_07.pdf, December 2007. 9 Energy Information Administration, Analysis of Oil and Gas Production in the Arctic National Wildlife Refuge, SR/OIAF/2004-04 (Washington, DC, March 2004) web site www.eia.doe.gov/oiaf/servicerpt/ogp/pdf/sroiaf (2004)04.pdf. 10 Energy Information Administration, The National Energy Modeling System: An Overview, DOE/EIA-0581(2003) (Washington, DC, March 2003) web site www.eia.doe.gov/ oiaf/aeo/overview/index.html. 11 Alaska Department of Natural Resources, Division of Oil and Gas, 2002 Report: Tables & Graphs Edition, pages 1-27 and 2-4. 12 Ibid, pages 1-17 and 2-4. 13 The 13.5 billion barrels of Prudhoe Bay field oil represents the cumulative volume of oil expected to be produced from this field over its entire production life. The amount of original-oil-in-place in Prudhoe Bay is estimated to be 25 billion barrels. Source: U.S. Department of Energy, National Energy Technology Laboratory, Arctic Energy Office, Alaska North Slope Oil and Gas, A Promising Future or an Area in Decline? DOE/NETL2007/1280, (Fairbanks, Alaska, August 2007), Table 3.113, page 3-123. 14 Ibid, page 3-124.

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15

Energy Information Administration, Petroleum Marketing Monthly, DOE/EIA-0380(2008/05) (Washington, DC, May 2008), Table 18, page 43. 16 The 1998 USGS ANWR assessment assumed an average recovery factor of 37 percent of the original-oil-inplace. This recovery factor is based on primary (pressure-driven) and secondary (water-injection) recovery techniques, but does not included tertiary (enhanced oil recovery) techniques, which can increase oil recovery by an additional 5 to 15 percentage points. 17 Examples include the North Prudhoe and West Beach oil fields that are in close proximity to the Prudhoe Bay field. 18 Including Alaska. 19 American Petroleum Institute, Joint Association Survey on Drilling Costs, 2000 and 2005 editions (Washington, DC, December 2001 & April 2006), Table 2.12. 20 Ibid, Table 2.24. 21 The U.S. Minerals Management Service (MMS) estimates that approximately 23.6 billion barrels of undiscovered technically recoverable oil resources exist in the Beaufort and Chukchi Seas off the North Slope and that approximately 19 billion barrels of oil would be economic to produce at $80 per barrel or less. Source: U.S. Department of Interior, Minerals Management Service, Undiscovered Oil and Gas Resource, Alaska Federal Offshore, as of 2006 (Washington, DC, 2006). 22 World oil consumption is projected to be 117.6 millions barrels per day in 2030. Source: Energy Information Administration, International Energy Outlook 2007, DOE/EIA0484(2007) (Washington, DC, May 2007), Table A5, page 88, web site www.eia.doe.gov/oiaf/ieo/index.html. 23 Low-sulfur, light crude oil, such as West Texas Intermediate, is one of the more common price benchmarks used for world oil prices. 24 The maximum volumetric reduction in imports occurs in 2027 and 2028 when ANWR oil production peaks across the three cases. 25 Petroleum News, TAPS Switches into the 21st century, Volume 12, Number 9, March 4, 2007, pages 9 – 10. 26 Alyeska Pipeline Service Co. web site www.alyeska-pipe.com/Pipeline Facts/Pipeline Operations.html.

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Chapter 4

POSSIBLE FEDERAL REVENUE FROM OIL DEVELOPMENT OF ANWR * AND NEARBY AREAS

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Salvatore Lazzari SUMMARY Recent high petroleum prices, and the related economic burden on consumers and energy-intensive industries, has raised the issue of stimulating domestic supplies of crude oil. One possible source is the coastal plain of the Arctic National Wildlife Refuge (ANWR), which is estimated to contain significant quantities of oil and gas. Interest in developing the ANWR oil resources has also focused on the revenues that the federal government could collect should exploration and development be successful. Some observers have suggested using such revenues for purposes such as providing relief to petroleum consumers, further subsidizing energy conservation measures, or reducing federal budget deficits. However, current federal law prohibits the production of oil and gas in ANWR. Federal revenues would consist primarily of corporate income taxes on profits earned by oil producers from the production and sale of ANWR oil. As landowner, the federal government would also collect royalties *

This is an edited, reformatted and augmented version of a Congressional Research Service publication, CRS Report for Congress Order Code RL34547, dated June 23, 2008.

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from such production on federal lands, which are included in the estimates. If producers were able to recover 10.3 billion barrels of oil over the life of the properties — the United States Geological Survey has estimated there is a 50-50 chance that the ANWR coastal plain contains at least this amount of oil — and if oil prices are $125/barrel, then the federal government might be able to collect $191 billion in revenues over the production period, estimated to be at least 30 years once production commences. This estimate consists of nearly $132 billion in federal corporate income taxes, and about nearly $59 billion in federal royalties. These estimates are subject to major limitations. Estimates of technologically recoverable oil used in this report include the resources from the federal lands, and assume the availability of resources in Native lands in the Refuge and offshore state lands. The Alaska Statehood Act would allot 90% of gross royalties to the state and 10% to the federal government. The federal government would collect revenues from bonus bids from federal leases, and rents on undeveloped leases. These are not estimated separately by CRS. Independent estimates by the Congressional Budget Office for President Bush‘s FY2009 budget proposal show estimated bonus bid revenues of $6 billion between FY2011 and FY2018. Finally, income tax revenues from the secondary feedback effects would also increase as a result of the stimulus to general economic activity. However, these revenues are not included here due to the difficulty in estimation over the projection time horizon.

INTRODUCTION Recent high petroleum prices, and the economic burden on consumers and energy-intensive industries, has raised the issue of stimulating domestic supplies of crude oil. One possible source is the coastal plain of the Arctic National Wildlife Refuge (ANWR), which is estimated to contain significant quantities of oil and gas. The coastal plain includes areas outside the ANWR boundary, but within the Refuge these areas are (1) the section 1002 area of federal lands;1 (2) 92,000 acres belonging to Native Alaskan corporations; and (3) several thousand acres of Native allotments in various states of conveyance to individuals.2 Interest in developing the ANWR oil resources has also focused on the significant revenues that the federal government could collect should exploration and development be successful. Observers have suggested using such revenues for purposes such as providing relief to petroleum consumers, further subsidizing energy conservation measures, or reducing

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federal budget deficits. However, current federal law prohibits this development. This report estimates the potential revenues to the United States Treasury from ANWR oil development should Congress approve such development.3 It has been prepared according to key oil price assumptions. More specifically, estimates of potential federal revenues are based on market oil prices — the price at which the ANWR output would be sold — of $60, $80, $90, $100, and $125 per barrel.4 This report is not an analysis of the broader ANWR issue.

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KEY ASSUMPTIONS AND CAVEATS These revenue estimates are premised on significant changes in federal legislation, as well as a number of other assumptions. To reach these estimates, the following was assumed: (1) Congress authorizes oil and gas production from ANWR; (2) commercial quantities of oil will be found, currently an unknown; (3) the current revenue division of 90% to Alaska and 10% to the federal government will be modified by Congress to allow a 50-50 split of royalties; (4) other current bidding systems apply such as bonus bidding and ad-valorem royalties of 12.5%; (5) Congress authorizes oil and gas production under Native-owned lands; and (6) all of the coastal plain, including state waters are available for leasing.5 Federal revenues would consist primarily of corporate income taxes on profits earned by oil producers from the production and sale of ANWR oil. As landowner, the federal government would also collect royalties from such production on federal lands, which are included in the estimates. Revenues from bonus bids from federal leases, and rents on undeveloped leases, however, are not estimated separately, although Congressional Budget Office (CBO) estimates of bonus bids are reported. In addition, the federal government would collect income tax revenues from the secondary feedback effects as a result of the stimulus to general economic activity. However, these revenues are not included here due to the difficulty in estimation over an assumed 30-year production horizon. Note that all estimates of future revenues are not discounted to real 2008 dollars due to lack of available data; such discounting would result in much smaller revenue estimates.6 Estimates of technologically recoverable oil used in this report include the resources from the federal lands, and assume the availability of resources in Native lands in the Refuge and offshore state lands; however such availability is not within federal control. The estimates are based on a 1999 USGS study of

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the quantity of technically recoverable oil, and they assume that all technically recoverable oil is also economically recoverable.7 The revenue projections below are very long-term forecasts of what might happen, and not what will happen, given the methodology and the posited assumptions. All of the data used in this estimation are provided by the U.S. Energy Information Administration (EIA), as documented in the footnotes. In particular, the oil production data draws from a May 2000 EIA report based on the resource assessment estimated by the U.S. Geological Survey (USGS) in 1998.8 Note also that, according to the EIA and the USGS, it would take between 7 and 12 years after congressional approval to commence production, if feasible, from the ANWR area. Further, production from the area is assumed to last at least 30 years.9 Also, other major uncertainties, in addition to the production feasability starting date and the lands that might be developed, include (1) the size of the underlying reserve base, (2) the underlying field structure, (3) the costs of development, (4) the market price of oil, (5) the average effective tax rate, and (6) the terms of the authorizing legislation. Thus, revenue projections are highly uncertain. Projections of federal revenue represent totals over the entire recovery period, until oil resources are no longer recoverable. Thus, they do not take into account any increased (or decreased) recovery based on changed economic conditions or the annual flow of production. Finally, the projections below exclude potentially large revenues from the development of natural gas, which according to probability analysis may exist in large quantities in the ANWR coastal plain (particularly the 1002 federal area10). Revenue projections from natural gas development are excluded because there is currently no way to transport the gas to market (no pipeline or other means of transportation).11

PROJECTED TOTAL REVENUES: CORPORATE TAX RECEIPTS AND ROYALTIES Table 1 summarizes the results of our estimation procedure, which is described in the remaining sections of this report. It shows a projected increase in corporate income tax revenues and cumulative estimated royalties projected over the estimated life of the ANWR and other nearby properties from the production and sale of the estimated technically recoverable reserves of oil. Tables 2 and 3 show the corporate tax revenues and royalties separately.

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Table 1 presents 15 projections (undiscounted for the time value of money), each corresponding to an oil price and production scenario. For instance, if producers were able to recover 10.3 billion barrels of oil over the life of the area — there is an estimated 50-50 chance that the ANWR coastal plain contains at least this amount of oil — and if oil prices average $90/barrel over the production lifetime of the area, then the federal government is projected to collect nearly $138 billion in revenues over the production period, estimated to be at least 30 years once production commences. This would consist of nearly $95 billion in federal corporate income taxes (Table 2), and nearly $43 billion in federal royalties (Table 3). (Tables 2 and 3 are each presented below in the sections on the estimation procedure for corporate income taxes and royalties. These estimates assume that all of the oil that is technically recoverable is also economically recoverable, which is not necessarily the case. The amount of economically recoverable oil depends on unknown variables such as market oil prices and oil finding and transport costs. With regard to oil prices, the higher the price, the more the amount of economically recoverable reserves approaches the magnitude of technically recoverable reserves. Table 1. Possible Cumulative Corporate Income Tax Revenue and Royalties from ANWR Coastal Plain Oil (billions of $) Estimated Technically Recoverable Oil (billions of barrels) At least 5.7 At least 10.3 16.0 or more (prob. = 0.95) (prob.= 0.5) (prob. = 0.05) Oil Price per Barrel ($)

Revenues (billions of $)

$125

$105.7

$191.1

$296.8

$100

$84.6

$152.9

$237.5

$90

$76.2

$137.6

$214.2

$80

$67.7

$122.3

$189.9

$60

$48.3

$91.7

$142.5

Source: CRS estimates based on EIA data (see text). Note: These revenue projections represent values over the production period of approximately 30 years, and are not stated in present value terms, which would be smaller.

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The development of the ANWR coastal plain would also generate federal revenues in the form of bonus bids from the leases on federal lands, and income tax revenues from secondary feedback and multiplier effects from an expanding economy. Bonus bids have been estimated by the Congressional Budget Office for President Bush‘s FY2009 budget proposal to lease the ANWR coastal plain. According to these estimates, bonus bids could total $6 billion between FY2011 and FY2018.12 The additional federal income tax revenues (both individual and business) from the secondary economic effects are more difficult to estimate because they would depend on the annual expenditures generated by oil development, the geographic dispersion of those expenditures, and the state of the general economy at the time. Neither bonus bids nor income tax revenues from secondary effects are included in Table 1.

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PROJECTED CORPORATE INCOME TAX REVENUES Increases in federal corporate income taxes (Table 2) would most likely represent the single biggest source of revenue for the federal government if oil were found and produced in ANWR. The basic methodology to estimate potential corporate income taxes is to multiply estimated domestic, pre-tax profits from the assumed oil production at ANWR, projected over the lives of the properties, by the estimated effective federal corporate income tax rate for the major integrated companies that would be expected to have an interest in developing ANWR. Domestic, pre-tax profits are the difference between revenues (price times output) and production costs. Five hypothetical oil price scenarios are assumed here (each in current dollars), reflecting the unpredictability (and volatility) of world crude prices: $125/barrel, $100/barrel, $90/barrel, $80/barrel, and $60/barrel. It is important to underscore that these are hypothetical price scenarios and do not constitute projections of what crude oil prices are likely to be.

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Table 2. Possible Corporate Income Tax Revenues from Successful ANWR Coastal Plain Oil Development (billions of $) Estimated Technically Recoverable Oil Output (billions of barrels) At least 5.7 At least 10.3 16.0 or more (prob. = 0.95) (prob. = 0.5) (prob. = 0.05) Oil Price per Barrel ($)

Revenues (billions of $)

$125

$72.9

$131.7

$204.6

$100

$58.3

$105.4

$163.7

$90

$52.5

$94.8

$147.3

$80

$46.7

$84.3

$130.9

$60

$32.5

$63.2

$98.2

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Source: CRS estimates based on EIA data (see text). Note: These revenue projections represent values over the production period of approximately 30 years, and are not stated in present value terms, which would be much less.

Oil Output Estimated oil output is based on a May 2000 report by the EIA, which is based on a 1999 USGS study that estimates the quantity of technically recoverable oil and gas.13 This report estimates oil (and gas) output for the three areas of the geographic coastal plain (including areas outside the ANWR boundary) expected to be of interest to the oil industry should congressional approval for federal lands be forthcoming. In addition, prospects for development of Alaskan state lands (offshore lands outside the Refuge out to the 3-mile limit) would likely be increased by successful onshore development and were included in this analysis. Under §1003 of the Alaska National Interest Lands Conservation Act (P.L. 96-487), all lands inside ANWR are closed to development unless Congress changes the law. Were oil and gas development authorized for the federal lands in the Refuge, development might also be allowed or become feasible on the nearly 100,000 acres of Native lands in the refuge. According to the 1999 USGS report assessing possible oil and gas in the three areas described above, there is a 95% probability that there are 5.7 billion barrels or more of technically recoverable crude oil and natural gas

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liquids in the three areas, and a 5% probability that there are 16.0 billion barrels or more. USGS‘s mean estimate — 50% probability — is 10.3 billion barrels or more. About three-fourths of the possible oil and natural gas liquids14 are estimated to be under federal lands, and one-fourth under Native Corporation lands and the adjacent offshore state lands.15 Estimates of technically recoverable oil are those quantities producible using current recovery practices, but without regard to economic viability. The 1999 USGS study and the May 2000 EIA study were conducted when oil prices were much lower than today. As oil prices rise, the fraction of technically recoverable oil that is also economically recoverable rises. At today‘s record oil prices, most of the technically recoverable oil is likely also economically recoverable, although a precise estimate is not available.16 For each recoverable oil quantity and price combination scenario, federal corporate income tax revenue was estimated by (1) multiplying the quantity times the price, (2) subtracting production costs (operating costs plus depreciation, depletion, amortization, and administration), and (3) multiplying the result by the average effective federal corporate tax rate currently applicable to major U.S. energy producers.

Production Costs Projections of production costs were based upon annual financial data on oil and gas industry operations published by the EIA in its Performance Profiles reports covering the major U.S.-based energy producing companies.17 An eleven-year average (for 1995-2005) was used to remove the volatility of profits over business cycles and fluctuations in volatile market oil prices to reflect the long-term nature of oil development in the ANWR coastal plain, which, if successful, would be expected to produce oil for at least 30 years. Based upon the Performance Profiles data, production costs of domestic oil and gas producers averaged 69% of revenues over the 1995-2005 period and, consequently, net pre-tax profits for those companies averaged 31% of revenue.18 That percentage was used to project net pre-tax profits from ANWR output over the life of the wells. The production cost percentage was based upon cost data for all domestic U.S. operations rather than just for Alaska, which are not available. The costs reflect the consolidated operations of largely major integrated producers, rather than just production operations. Exploration and production costs above the Arctic Circle are far higher than in the lower 48 states, but these are the only available data.19 It was not possible

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to analyze factors that may increase production costs, but some may be important: time of year limitations, need for ice roads, the movement of equipment across permafrost and so forth. The effective federal corporate income tax rate also was estimated using EIA‘s Performance Profiles. Based upon data in those reports, the average effective tax rate for the years 1998-2005 was 33%. This was derived by subtracting from the U.S. federal tax any foreign tax credit (which would not be claimed on income from ANWR operations), and dividing by U.S. pre-tax income.20 This effective tax rate probably is an upper bound; and the actual effective tax rate over the production horizon might end up being lower due to substantial industry investments in ANWR oil and gas development. Also, the estimation of the effective tax rate assumes that current tax legislation remains unchanged. Any future amendments to current tax laws could, of course, either lower or raise effective tax rates.

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FEDERAL ROYALTIES Landowners typically collect royalties on minerals extracted from their lands by mineral operators and producers. Likewise the federal government earns royalties from production of oil and gas on federal lands, generally 12.5% of the oil and gas value. The federal lands in ANWR have been estimated by the USGS to contain 74% of the estimated technically recoverable reserves. (The remaining 26% of estimated total recoverable oil resides in state and Alaska Native Corporation lands.)21 The Alaska Statehood Act allocates 90% of the royalties from oil and gas production on federal lands to Alaska; the federal government retains the remaining 10%.22 However, our revenue projections assume a 50-50 split of all royalties, which is consistent with most current legislation.23 Many, but not all, bills that would approve development of ANWR provide for a 50-50 division of the royalties. Some bills (e.g., H.R. 39 in the 109th Congress) have been silent on revenue distribution; thus, the current 90-10 split would retained. Obviously, a 90-10 division of the royalty revenues means that less revenue would remain for federal government use. Table 3 shows the projected total royalties accruing to the federal government over the expected productive lifetime of the ANWR federal leases assuming a 50-50 split with the state. The same amount of revenues are projected to accrue to the State of Alaska. There would also be income to the State of Alaska regardless of whether economically recoverable oil is found.

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This is because even if no commercially recoverable oil were found, the State of Alaska would likely share in the bonus bids and rents over the short term (5-10 years) while the oil industry is searching for the oil. Table 3. Projected Federal Royalties from Possible ANWR Oil on Federal Land Alone (billions of $)

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Estimated Technically Recoverable Oil from Federal Lands (billions of barrels) At least 4.2 At least 7.6 11.8 or more (prob. = 0.95) (prob. = 0.5) (prob. = 0.05) Oil Price per Barrel ($)

Revenues (billions of $)

$125

$32.8

$59.4

$92.2

$100

$26.3

$47.5

$73.8

$90

$23.7

$42.8

$66.9

$80

$21.0

$38.0

$59.0

$60

$15.8

$28.5

$44.3

Source: CRS estimates based on EIA data (see text). Note: These revenue projections represent values over the production period of approximately 30 years, and are not stated in present value terms, which would be smaller.

End Notes 1

This area of federal lands is referred to as the ―section 1002 area‖ because of a study required in §1002 of the Alaska National Interest Lands Conservation Act (ANILCA, P.L. 96-487) of 1980. The current prohibition on oil and gas development in ANWR is in §1003 of ANILCA. 2 The 92,000 acres belong to the Kaktovik Inupiat Corporation and the Arctic Slope Regional Corporation. The Native lands inside the ANWR boundary fall into three categories: approximately three townships of Native lands within the geographic coastal plain of the Refuge but outside the administratively defined 1002 area; one township of Native land also within the geographic coastal plain of the Refuge, but administratively part of the 1002 area; and a number of Native allotments scattered through the geographic coastal plain, with some concentrations along the coast and in the foothills. Offshore state lands are largely open to development, although the state and the federal governments have disputed precise boundaries. For legal background, see CRS Report RL31115, Legal Issues Related to Proposed Drilling for Oil and Gas in the Arctic National Wildlife Refuge (ANWR), by Pamela Baldwin. The May 2000 EIA report considered only the 92,000 acres. See Potential

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Oil Production from the Coastal Plain of the Arctic National Wildlife Refuge: Updated Assessment. May 2000, SR/O&G/200-02, op. cit., p. vii. 3 For background and a discussion of ANWR legislation and surrounding issues, see CRS Report RL33872, Arctic National Wildlife Refuge (ANWR): New Directions in the 110th Congress. 4 S. 2758, introduced by Senator Murkowski on March 13, 2008, would open up ANWR to oil development if oil prices were to equal $125 per barrel or more for five consecutive days. 5 In past Congresses (e.g., the 109th Congress), some bills have would have restricted ANWR development footprints to 2,000 acres, which might not be sufficient to provide access to the entire coastal plain of the Refuge. This analysis assumes production is permitted from the whole of the Coastal Plain, Native lands, and nearby state waters. 6 Revenue estimates are not discounted because they require annual production data for each year over the entire production time horizon. The 2008 EIA study shows the production profile for some years, but not over the entire production horizon; the May 2000 EIA study shows the production curves for the entire 60-year period but does not provide the raw data. See U.S. Department of Energy. Energy Information Administration. Potential Oil Production from the Coastal Plain of the Arctic National Wildlife Refuge: Updated Assessment. May 2000, SR/O&G/2000-02; and U.S. Department of Energy. Energy Information Administration. Analysis of Crude Oil Production in the Arctic National Wildlife Refuge. May 2008, SR/OIAF/2008-03. 7 At very high oil prices, this is likely to be the case. See discussion under ―Oil Output,‖ below. 8 U.S. Department of Interior. U.S. Geological Survey. Economics of U.S. Geological Survey’s 1002 Area Regional Assessment: An Economic Update, Open File Report 98-34, 1999. 9 The May 2000 EIA study, which estimates annual production profiles based on USGS‘s assessment of technically recoverable resources, estimates production schedules over a 60 year time horizon. 10 U.S. Geological Survey. The Oil and Gas Resource Potential of the Arctic National Wildlife Refuge 1002 Area, Alaska, op. cit. 11 Building such a pipeline has been debated. But, even assuming a decision is made, it would take many years — at least 10 years, according to some estimates — to build such a pipeline to bring the gas to market. 12 See U.S. Congress. Congressional Budget Office. An Analysis of the President’s Budgetary Proposals for Fiscal Year 2009. March 2008. p. 15. Under the President‘s proposal, half of the bonus bid revenue would go to Alaska, and half would be retained by the federal government. 13 Energy Information Administration. Potential Oil Production from the Coastal Plain of the Arctic National Wildlife Refuge: Updated Assessment, op. cit.; U.S. Geological Survey. The Oil and Gas Resource Potential of the Arctic National Wildlife Refuge 1002 Area, Alaska, op. cit. 14 For production calculations, natural gas liquids are considered to be equivalent to oil. 15 U.S. Geological Survey. Frontier Areas and Resource Assessment: the Case of the 1002 Area of the Alaska North Slope. USGS Open File Report 02-119. Hereafter referred to as ―Frontier Areas.” 16 In another study of ANWR oil and gas resources, the USGS estimated that at a $30/barrel oil price, between 72% and 82% of the technically recoverable oil is also economically recoverable; at a $55/barrel oil price more than 90% of the technically recoverable oil becomes economic. See U.S. Department of Interior. U.S. Geological Survey. Economics of 1998 U.S. Geological Survey’s 1002 Area Regional Assessment: And Economic Update. Open-File Report 2005-1359.

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17

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Energy Information Administration. Performance Profiles of Major Energy Producers (Issues 2005, 2004, 2002, 2000, 1998, and 1996). Data used are in the table that reports Income Components and Financial Ratios in Oil and Natural Gas Production for Financial Reporting System Companies. 18 Ibid. 19 The May 2008 EIA report provides some data indicating that production costs above the Arctic Circle are much higher than production costs elsewhere. It estimates the costs of drilling the average deep well with the costs of drilling a deep well in Alaska‘s North Slope. See EIA‘s. Analysis of Crude Oil Production in the Arctic National Wildlife Refuge. Op. cit., p. 7. 20 The effective tax rates were based upon both non-vertically integrated companies and vertically integrated companies. The EIA data are not disaggregated. 21 Frontier Areas, op. cit. 22 The manner is which royalties are split between other states and the federal government differs. For all states except Alaska, direct royalties under the Mineral Leasing Act (MLA) are divided equally (50-50) between the state in which the deposits are located and the federal government. The MLA also provides that all states except Alaska also get back 40% from the Reclamation Fund (established by the Reclamation Act of 1902), in effect giving each state 90% of the royalties and the federal government 10%. Alaska does not receive allocations from the Reclamation Fund, so to equalize royalty treatment among the states, the Alaska Statehood Act and the Federal Land Policy and Management Act provide that Alaska‘s royalty share is 90% of the direct royalties (rather than 50%). 23 For more information see CRS Report RL33523, Arctic National Wildlife Refuge (ANWR): Controversies for the 109th Congress, by M. Lynne Corn, Bernard A. Gelb, and Pamela Baldwin.

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Chapter 5

POTENTIAL IMPACTS OF PROPOSED OIL AND GAS DEVELOPMENT ON THE ARCTIC REFUGE'S COASTAL PLAIN: HISTORICAL OVERVIEW AND ISSUES OF CONCERN *

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United States Fish and Wildlife Service HISTORY OF THE ARCTIC REFUGE AS IT RELATES TO OIL IN ALASKA Interest in the oil resources of northern Alaska began with reports in the early 1900s of surface oil seeps along the arctic coast east of Point Barrow. In 1923, the 23-million acre Naval Petroleum Reserve No. 4 was established in northwestern Alaska to secure a supply of oil for future national security needs. That area was later renamed the National Petroleum Reserve-Alaska (NPR-A). Extensive government-sponsored exploration for oil and gas occurred in the NPR-A during the 1940-1950s. During World War II, the entire North Slope of Alaska - 48.8 million acres - was withdrawn from entry under the public land laws and thus held for exclusive use by the U.S. government for military purposes.

*

This is an edited, reformatted and augmented version of the United States Fish and Wildlife Service publication.

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In the 1950s, post-war construction and accelerating resource development across Alaska raised concerns about the potential loss of this region's special natural values. In 1952-53, government scientists conducted a comprehensive survey of potential conservation areas in Alaska. Their report, "The Last Great Wilderness," identified the undisturbed northeast corner of Alaska as the best opportunity for protection. Two major consequences followed: •

•

In 1957, Secretary of Interior Fred Seaton of the Eisenhower Administration revoked the previous military withdrawal on 20 million acres of the North Slope of Alaska to make it available for commercial oil and gas leasing. This was in addition to the previously established 23 million acre Naval Petroleum Reserve. In 1960, Secretary Seaton designated 8.9 million acres of coastal plain and mountains of northeast Alaska as the Arctic National Wildlife Range to protect its "unique wildlife, wilderness and recreation values."

These two actions laid out a general land use pattern for northern Alaska by setting aside about 43 million acres for multiple land uses including oil and

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gas development, while the northeastern corner was protected for wildlife and wilderness conservation.

Generalized view of land status by 1961. The majority of the tan area north of the Continental Divide was ultimately selected by the State under the Alaska Statehood Act (1959) or by Native Corporations established by the Alaska Native Claims Settlement Act (1971).

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The largest oil field in North America was discovered on state land in the Prudhoe Bay area in 1968, and additional petroleum discoveries have more recently been made on Alaska's North Slope. Oil is transported from the North Slope by the 800-mile Trans-Alaska Pipeline System, from Prudhoe Bay to Valdez in south-central Alaska, where it is then transferred to oil tankers.

Reserves of oil were believed to also exist in the Arctic National Wildlife Range. The fate of the Range was extensively debated in Congress for years before passage of the Alaska National Interest Lands Conservation Act (ANILCA-1980). The U.S. House of Representatives passed legislation in 1978 and 1979 designating the entire original Range, including the now contested arctic coastal tundra, as Wilderness. The Senate's version, however, required studies of wildlife and petroleum resources, and the potential impacts of oil and gas development within the northern part of the Range. It postponed the decision to authorize oil and gas development or Wilderness designation. Differences between the House and Senate were not worked out by a conference committee in the usual manner. Instead, following the 1980 election, the House accepted the Senate bill and President Carter signed ANILCA into law. ANILCA doubled the size of the Range, renamed it the Arctic National Wildlife Refuge, and designated most of the original Range as Wilderness.

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The part of the original Range that was not designated Wilderness was addressed in Section 1002 of ANILCA, and is now referred to as the "1002 Area." Section 1002 outlined additional information that would be needed before Congress could designate the area as Wilderness, or permit oil development. Studies of the 1002 Area included a comprehensive inventory and assessment of the fish and wildlife resources, an analysis of potential impacts of oil and gas exploration and development on those resources, and a delineation of the extent and amount of potential petroleum resources.

In Section 1003 of ANILCA, Congress specifically stated that the "production of oil and gas from the Arctic National Wildlife Refuge is prohibited and no leasing or other development leading to production of oil and gas from the [Refuge] shall be undertaken until authorized by an act of Congress.‖ The U.S. Fish and Wildlife Service conducted fish and wildlife baseline studies of the 1002 Area beginning in 1981, and the results were published in several volumes, culminating with a final report in 1986. During the winters of 1984 and 1985, seismic exploration was conducted along 1,400 miles of survey lines in the area. This work was conducted by a private exploration firm and funded by a group of oil companies. Several oil companies independently conducted other geological studies including surface rock

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sampling, mapping and geochemical testing. Follow-up studies continued to assess the impacts of the winter exploration program on fish and wildlife and their habitats. (See references at the end of this report.)

A land exchange completed in 1983 transferred the subsurface title of Kaktovik village corporation lands (Kaktovik Inupiat Corporation (KIC)) from the Federal government to the Arctic Slope Regional Corporation (a for-profit

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Native corporation established by the Alaska Native Claims Settlement Act). This allowed for an exploratory well to be drilled by industry in 1985 within the Refuge's boundary on these private lands. The well was later plugged and abandoned, and the results of the drilling operations remain confidential.

1990 photo of the KIC exploratory well drilled in 1985, showing KIC well pad and reserve pit after closure. Information gathered from the biological, seismic and geological studies was used to complete a Legislative Environmental Impact Statement (LEIS) that described the potential impacts of oil and gas development. This LEIS included the Secretary's final report and recommendation, and was submitted to Congress in 1987. The report concluded that oil development and production in the 1002 Area would have major effects on the Porcupine Caribou herd and muskoxen. Major effects were defined as "widespread, longterm change in habitat availability or quality which would likely modify natural abundance or distribution of species." Moderate effects were expected for wolves, wolverine, polar bears, snow geese, seabirds and shorebirds, arctic grayling and coastal fish. Major restrictions on subsistence activities by Kaktovik residents would also be expected. In the report, the Secretary of Interior recommended that Congress authorize an oil and gas leasing program that would avoid unnecessary adverse effects on the environment. Congress failed to act on the recommendation, first in 1989 following the Exxon Valdez oil spill, and again in 1991 when a provision to open the Arctic Refuge to development was dropped from the National Energy Policy Act. In

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1995, Congress passed budget legislation that included a provision to allow drilling in the Refuge. Citing a desire to protect biological and wilderness values, President Clinton vetoed the bill.

HOW MUCH OIL IS IN THE ARCTIC REFUGE?

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The U.S. Geological Survey (USGS) updated its estimates of potential petroleum resources in the Refuge in 1998 by re-analyzing the original seismic data from 1984-1985 along with more recent data from seismic surveys and drilling in adjacent areas. Using the updated report and recent oil prices, the USGS estimated in 2000 that, assuming a price of $24 per barrel, there is a 95% chance of finding 1.9 billion barrels (BBO) of economically recoverable oil in the Arctic Refuge's 1002 Area; a 5% chance of finding 9.4 BBO; and a 50% chance of finding 5.3 BBO. Reported estimates of 16 BBO from the 1002 Area and adjacent private lands and offshore State waters do not factor in the costs of developing the oil field.

At prices less than $16 per barrel, there is reportedly no economically recoverable oil in the 1002 Area. (Present oil prices are ranging between $20 to $25 per barrel.) Nearly 1 million barrels of oil a day are produced from the existing oil fields in areas west of the Arctic Refuge, and new wells are

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brought into production each year. Americans use 19 million barrels of oil each day, or 7 billion barrels of oil per year. There is, therefore, a 50% chance of fmding a 9 month's supply of oil in the 1002 Area, at $24 per barrel. Ongoing leasing activities and advancing oil recovery technologies on Alaska's North Slope and Beaufort Sea continue to provide the industry with new opportunities for exploration and development outside the boundaries of the Arctic Refuge.

THE UNIQUE CONSERVATION VALUES OF THE ARCTIC REFUGE The Arctic National Wildlife Refuge is the largest unit in the National Wildlife Refuge System. The Refuge is America's finest example of an intact, naturally functioning community of arctic/subarctic ecosystems. Such a broad spectrum of diverse habitats occurring within a single protected unit is unparalleled in North America, and perhaps in the entire circumpolar north. When the Eisenhower Administration established the original Arctic Range in 1960, Secretary of Interior Seaton described it as: one of the world's great wildlife areas. The great diversity of vegetation and topography in this compact area, together with its relatively undisturbed condition, led to its selection as ... one of our remaining wildlife and wilderness frontiers.

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Within the Arctic Refuge, the Brooks Range mountains compress the coastal plain and foothills tundra to a 20-40 mile wide band between the mountains and the sea. In contrast, the mountains further west rise far away from the Arctic Ocean coast, creating broad coastal tundra ranging 100-200 miles north to south in the Prudhoe Bay and NPR-A areas. Although the 1002 Area is only 10% of the total Refuge acreage, it includes most of the Refuge's coastal plain and arctic foothills ecological zones. The 1002 Area contains just 4% of Alaska's coastal plain and foothills zones. The Arctic Refuge is the only area on Alaska's North Slope where petroleum development is specifically prohibited by Congress. The rest of the region is available for oil and gas development through administrative decisions by the Secretary of the Interior on NPR-A and the Beaufort Sea, or by the Commissioner of the Alaska Department of Natural Resources on State lands and waters.

The 1002 Area is critically important to the ecological integrity of the whole Arctic Refuge, providing essential habitats for numerous internationally important species such as the Porcupine Caribou herd and polar bears. The compactness and proximity of a number of arctic and subarctic ecological zones in the Arctic Refuge provides for greater plant and animal diversity than in any other similar sized land area on Alaska's North Slope. The Refuge is also an important part of a larger international network of protected arctic and subarctic areas. In Canada's Yukon Territory, the

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government and First Nations people protected the coastal tundra and adjacent mountains by establishing Ivvavik and Vuntut National Parks, where oil exploration and production are not allowed.

POTENTIAL IMPACTS OF OIL AND GAS DEVELOPMENT ON REFUGE RESOURCES Newer technologies that are applied today in Alaska's expanding North Slope oil fields include directional drilling that allows for multiple well heads on smaller drill pads; the re-injection of drilling wastes into the ground, which replaces surface reserve pits; better delineation of oil reserves using 3dimensional seismic surveys, which has reduced the number of dry holes; and use of temporary ice pads and ice roads for conducting exploratory drilling and construction in the winter. As the oil fields expand east and west, additional oil reserves are consequently being tapped from smaller satellite fields that rely on the existing infrastructure at Prudhoe Bay and Kuparuk.

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Although technological advances in oil and gas exploration and development have reduced some of the harmful environmental effects associated with those activities, oil and gas development remains an intrusive industrial process. The physical "footprint" of the existing North Slope oil facilities and roads covers about 10,000 acres, but the current industrial complex extends across an 800 square mile region, nearly 100 miles from east to west. It continues to grow as new oil fields are developed. The 100-mile wide 1002 Area is located more than 30 miles from the end of the nearest pipeline and more than 50 miles from the nearest gravel road and oil support facilities. According to the U.S. Geological Survey, possible oil reserves may be located in many small accumulations in complex geological formations, rather than in one giant field as was discovered at Prudhoe Bay. Consequently, development in the 1002 Area could likely require a large number of small production sites spread across the Refuge landscape, connected by an infrastructure of roads, pipelines, power plants, processing facilities, loading docks, dormitories, airstrips, gravel pits, utility lines and landfills.

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A substantial amount of water is needed for oil drilling, development, and construction of ice roads. Water needed for oil development ranges from eight to 15 million gallons over a 5-month period, according to the Bureau of Land Management. If water is not available to build ice roads, gravel is generally used. Water resources are limited in the 1002 Area. In winter, only about nine million gallons of liquid water may be available in the entire 1002 Area, which is enough to freeze into and maintain only 10 miles of ice roads. Therefore, full development may likely require a network of permanent gravel pads and roads.

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Cumulative biological consequences of oil field development that may be expected in the Arctic Refuge include: • • • • • •

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•

blocking, deflecting or disturbing wildlife loss of subsistence hunting opportunities increased predation by arctic fox, gulls and ravens on nesting birds due to introduction of 8 garbage as a consistent food source alteration of natural drainage patterns, causing changes in vegetation deposition of alkaline dust on tundra along roads, altering vegetation over a much larger area than the actual width of the road local pollutant haze and acid rain from nitrogen oxides, methane and particulate matter emissions contamination of soil and water from fuel and oil spills

Impacts of Winter Exploration While the exploration of oil typically occurs during the winter months when caribou and birds are absent from the 1002 Area, there are several arcticadapted species that remain in the area during winter would likely be affected, most notably muskoxen and polar bears, but also wolverine, arctic fox, and arctic grayling. Winter exploration could also impact the sensitive arctic tundra vegetation.

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Muskoxen About 250 muskoxen live year-round in the 1002 area of the Arctic Refuge. They use smaller areas in winter when snow limits available habitat. In order to survive cold weather and poor forage conditions, muskoxen reduce their activity and movements in winter to conserve energy. Muskoxen give birth four to six weeks before summer forage is available. Therefore, females must maintain body fat throughout the winter to successfully rear a calf. Calf production and animal survival is influenced by environmental conditions such as snow depth and the length of the snow season. In recent years, the number of muskox calves produced in the 1002 Area has declined.

Muskoxen respond to predators and other disturbances by moving into a defensive group from which they protect themselves with sharp horns. If groups are disturbed enough, they will run. This can result in the deaths of young calves that are left behind. Muskoxen in the 1002 Area are most frequently found along or adjacent to large rivers flowing across the coastal plain. During petroleum exploration and development, large rivers are regularly used for gravel and water removal as well as transportation corridors. Concerns associated with oil field activities along river corridors include: • •

displacement of muskoxen from preferred winter habitat increased energy needs related to disturbance and displacement

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decreased body condition of females increased incidents of predation decreased calf production and animal survival

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Polar Bear Female polar bears that are going to give birth to cubs build dens in the winter. These females den on either ocean ice or on land, and those that den on land choose sites along shoreline bluffs or along steep creek banks where snow drifts early in the winter. The Arctic Refuge's coastal tundra provides the most important land denning habitat for the Beaufort Sea polar bear population.

According to studies of radio-collared polar bears of the Beaufort Sea population between 1981 and 2000, 53 dens were located on the mainland coast of Alaska and Canada. Of these 53 dens, 22 (42%) were within the Arctic Refuge's 1002 Area. Current seismic exploration methods require numerous vehicles to move in a grid pattern across the tundra. Maternal polar bears with newborn cubs can be prematurely displaced from their winter dens by the noise, vibrations and human disturbance associated with oil exploration activities. This displacement may result in potentially fatal human-bear conflicts, and may expose the cubs to increased mortality due to harsh winter conditions for which they are not yet prepared.

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Vegetation Seismic exploration involves sending sound waves into the ground, recording how the sound reflects back, and interpreting the results to construct an image of subsurface geology to determine if oil may be present. A seismic exploration program on Alaska's North Slope is typically a large operation with many people and vehicles driving across the tundra in a grid pattern. Although such exploration is conducted only in winter, snow cover on the 1002 Area is often shallow and uneven, providing little protection for sensitive tundra vegetation and soils. The impact from seismic vehicles and lines depends on the type of vegetation, texture and ice content of the soil, the surface shape, snow depth, and type of vehicle. Two-dimensional (2-D) exploration was authorized by Congress in the 1002 Area in the winters of 1984 and 1985. Monitoring of more than 100 permanent plots along the 1,400 miles of seismic lines has documented that while many areas recovered, some trails had still not recovered by 1999. Some of the trails have become troughs visible from the air. Others show changes in the amount and types of tundra plants. In some areas, permafrost (permanently frozen soil) melted and the trails are wetter than they were previously.

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1,400 miles of seismic lines were surveyed in the 1002 Area during the winters of 1984 and 1985 to determine the amount and distribution of petroleum resources.

Vehicles in March, 1985, compacted the snow and damaged underlying plants during seismic exploration activities.

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A winter 1984 seismic trail in the 1002 Area seen in June 2000.

Trail damage to tussock tundra the summer following winter seismic surveys. Seismic trail near Marsh Creek in the 1002 Area:

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Seismic exploration is conducted every winter on the North Slope of Alaska, west of the Refuge. New vehicle tracks and older ones in various stages of recovery are visible on the tundra in the summer. Today, 3dimensional (3-D) seismic surveys, as conducted west of the Refuge boundary, require a much more dense grid of lines to collect all the data necessary for creating 3-D images of oil reserves. While the 1984-85 2-D trails on the Arctic

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Refuge were 4 miles apart, 3-D trails would be one half mile or less apart. The impact to vegetation and soils on the Refuge would likely be much greater from 3-D seismic surveys than from the 2-D seismic surveys conducted in the 1980s.

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IMPACTS OF YEAR-ROUND OIL FIELD DEVELOPMENT If winter exploration activities, including seismic surveys and drilling, find economical amounts of oil, then full-scale construction and development of oil fields might occur to produce oil and gas on a year-round basis. In addition to affecting muskoxen, polar bears and other arctic-adapted resident species, oil and gas production would likely also impact caribou and birds that migrate to the 1002 Area during the brief summer period for calving and nesting.

Caribou In late spring, just as the snow recedes and the tundra plants turn green, the Porcupine Caribou herd, numbering 129,000, migrates from south of the Brooks Range in the Arctic Refuge and Canada to give birth to their young on the arctic coastal tundra.

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The caribou's preferred food during calving season is higher in nutrition, more digestible, and more available within the 1002 Area than in surrounding areas. To successfully reproduce, female caribou must be able to move freely throughout the 1002 Area to find adequate food resources to build up their fat reserves and milk. This allows them to produce healthy calves. Cows with newborn calves are particularly sensitive, and commonly move as much as 1.5 miles away from human disturbance. This has been well-documented in the vicinity of existing North Slope oil fields.

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The Arctic Refuge's coastal tundra has been the birthing ground for the majority of Porcupine Caribou cows in all but three of the last 18 years. In those 3 years (1987, 1988 and 2000), snow remained on the tundra longer than usual, forcing the caribou to have their calves in areas farther east or inland. Calf survival was poorer in those years due to lower food nutrition and higher levels of predation.

Caribou populations naturally fluctuate in response to weather and forage conditions, and all the arctic caribou herds in North America increased under favorable conditions in the 1980s. There are fundamental differences between the calving areas of the Central Arctic and the Porcupine herds. In the case of the Central Arctic herd, there is a greater amount of alternative calving area available for displaced cows to move to because the mountains are much farther from the ocean. The 1002 Area is only one-fifth the size of the area used by the Central Arctic caribou herd, but six times as many caribou use the 1002 Area. In the Arctic Refuge, where the mountains are close to the coast, few alternative areas would be available for displaced cows. If the 1002 Area was developed, the associated pipelines, roads, and structures would potentially impact the Porcupine Caribou herd by: • • • •

reducing the amount and quality of preferred forage available during and after calving, restricting access to important coastal insect-relief habitats, exposing the herd to higher predation, and altering an ancient migratory pattern, the effects of which we can not predict.

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A reduction in annual calf survival of as little as 5% would be sufficient to cause a decline in the Porcupine caribou population.

Birds 135 species of birds are known to use the 1002 Area, including numerous shorebirds, waterfowl, loons, songbirds, and raptors. One notable example is snow geese. Large numbers of snow geese, varying from 15,000 to more than 300,000 birds, feed on the Arctic Refuge coastal tundra for three to four weeks each fall, on their way from nesting grounds on Banks Island in Canada to wintering grounds primarily in California's Central Valley. They feed on cottongrass and other plants to build up fat reserves in preparation for their journey south, eating as much weight every day. The rich vegetation of the coastal tundra enables them by 400% in only two to three weeks.

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Snow geese feed on small patches of vegetation that are widely distributed across the Refuge's coastal tundra, so a large area is necessary to meet their needs. They are extremely sensitive to disturbance, often flying away from their feeding sites when human activities occur several miles distant.

LIST OF REPORTS GENERAL OVERVIEW Bird, K. J., and L.B. Magoon, eds. 1987. Petroleum geology of the northern part of the Arctic National Wildlife Refuge, northeastern Alaska. U.S. Geological Survey Bulletin 1778. 329 pp. Clough, N.K., Patton, P.C., and Christiansen, A.C., eds. 1987. Arctic National Wildlife Refuge, Alaska, coastal plain resource assessment - Report and recommendation to the Congress of the United States and final legislative environmental impact statement. U.S. Department of Interior, Washington D.C. Garner, G.W., and P.E. Reynolds. 1986. Final report - baseline study of the fish, wildlife, and their habitats. Arctic National Wildlife Refuge Coastal Plain Resource Assessment. (several volumes). U.S. Department of Interior, Fish and Wildlife Service, Anchorage, Alaska. T. R. McCabe, B. Griffith, N. E. Walsh, and D. D. Young, editors. 1992. Terrestrial Research: 1002 Area -Arctic NWR Interim Report 1988 - 1990. U.S. Fish Wildlife Service, Anchorage, Alaska. 432 pp.

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U.S. Fish and Wildlife Service. 1995. A Preliminary Review of the Arctic National Wildlife Refuge, Alaska Coastal Plain Resource Assessment: Report and Recommendation to the Congress of the United States and Final Legislative Environmental Impact Statement. August 29, 1995. Report written for the Special Assistant to the Secretary of the Interior for Alaska. Anchorage, AK. U.S. Geological Survey. 1999. The Oil and Gas Resource Potential of the Arctic National Wildlife Refuge 1002 Area, Alaska. Open File Report 9834 and Fact Sheet FS-040-98. U.S. Department of the Interior, Geological Survey, Reston, VA.

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Caribou Ballard, W. B., M. A. Cronin, and H. A. Whitlaw. 2000. Caribou and oilfields. Pages 85-104 in J. C. Truett and S. R. Johnson, editors . The natural history of an arctic oil field-development and the biota. Academic Press. 422pp. Cameron, R. D. 1995. Distribution and productivity of the Central Arctic Herd in relation to petroleum development: case history studies with a nutritional perspective. Federal Aid in Wildlife Restoration Final Report. Alaska Department of Fish and Game. Juneau. 35pp. Cameron, R. D., and K. R. Whitten. 1979. Seasonal movements and sexual segregation of caribou determined by aerial survey. Journal of Wildlife Management. 43:626-633. Cameron, R. D., K. R. Whitten, W. T. Smith, and D. D. Roby. 1979. Caribou distribution and group composition associated with construction of the Trans-Alaska Pipeline. Canadian Field Naturalist. 93:155-162. Cameron, R. D., D. J. Reed, J. R. Dau, and W. T. Smith. 1992. Redistribution of calving caribou in response to oil field development on the arctic slope of Alaska. Arctic 45:338-342. Dau, J. R., and R. D. Cameron. 1986. Effects of a road system on caribou distribution during calving. Rangifer, Special Issue No. 1:95-101. Fancy, S. G., and K. R. Whitten. 1991. Selection of calving sites by Porcupine herd caribou. Canadian Journal of Zoology. 69:1736-1743. Nellemann, C., and R. D. Cameron. 1996. Terrain preferences of calving caribou exposed to petroleum development. Arctic. 49:23-28.

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Nellemann, C., and R. D. Cameron. 1998. Cumulative impacts of an evolving oilfield complex on calving caribou. Canadian Journal of Zoology. 76:1425-1430. Smith, W. T., and R. D. Cameron. 1985. Reactions of large groups of caribou to a pipeline corridor on the arctic coastal plain of Alaska. Arctic. 38:5357. Smith, W. T., R. D. Cameron, and D. J. Reed. 1994. Distribution and movements of caribou in relation to roads and pipelines, Kuparuk Development Area, 1978-1990. Alaska Department of Fish and Game Wildlife Technical Bulletin. 12. 54pp. Whitten, K. R., and R. D. Cameron. 1983. Movements of collared caribou, Rangifer tarandus, in relation to petroleum development on the arctic slope of Alaska. Canadian Field-Naturalist. 97(2):143-146. Whitten, K. R., and R. D. Cameron. 1985. Distribution of caribou calving in relation to the Prudhoe Bay oilfield. In: Martell, A. M., and D. E Russell, eds. Proceedings of the First North American Caribou Workshop, Whitehorse, Yukon. Ottawa: Canadian Wildlife Service. 33-39. Whitten, K. R., G. W. Garner, F. J. Mauer, and R. B. Harris. 1992. Productivity and early calf survival in the Porcupine caribou herd. Journal of Wildlife Management. 56:201-212

Muskox Nellemann, C.H. and P.E. Reynolds. 1997. Terrain preferences associated with patterns of late winter distribution of muskoxen (Ovibos moschatus). Arctic and Alpine Research. 29(3). O'Brien, C.M. 1988. Characterization of muskox habitat in northeastern Alaska. M.S. thesis. University of Alaska, Fairbanks, Alaska. Reynolds, P. E. 1992. Population dynamics of muskoxen on the Arctic Coastal Plain: productivity and dispersal as a natural regulator of population size in the 1002 Area of Arctic NWR. Pages 1-20 in T. R. McCabe, B. Griffith, N. E. Walsh, and D. D. Young, editors. Terrestrial Research: 1002 Area Arctic NWR Interim Report 1988 - 1990. U.S. Fish Wildlife Service, Anchorage, Alaska. 432 pp. Reynolds, P. E. 1992. Winter distribution, movements and habitat use of muskoxen on potential petroleum lease areas of the Arctic NWR. Pages 130-147 in T. R. McCabe, B. Griffith, N. E. Walsh, and D. D. Young,

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editors. Terrestrial Research: 1002 Area - Arctic NWR Interim Report 1988 -1990. U.S. Fish Wildlife Service, Anchorage, Alaska. 432 pp. Reynolds, P.E. 1992. Seasonal differences in the distribution and movements of muskoxen (Ovibos moschatus) in northeastern Alaska. Rangifer 12(3) pp 171-172. Reynolds, P. E. 1993. Dynamics of muskox groups in northeastern Alaska. Rangifer 13(2)83-89. Reynolds, P.E. 1994. Muskoxen on the move: expansion of a re-established population. Trans. of the 59th North American Wildlife Natural Resource Conference 59 (abstract). Reynolds, P. E. 1998. Dynamics and range expansion of a reestablished muskox population. Journal of Wildlife Management 62:734-744. Reynolds, P. E.1998. Ecology of a reestablished population of muskoxen in northeastern Alaska. PhD thesis. University of Alaska, Fairbanks. 105pp. Robus, M. A. 1981. Muskox habitat and use patterns in northeastern Alaska. M.S. thesis, University of Alaska-Fairbanks, Fairbanks, AK. 116pp. Wilson, K. J. 1992. Spatial scales of muskox resource selection in late winter. M.S. thesis. University of Alaska, Fairbanks. 9Opp. Wilson, K. J., D. R. Klein, and P. E. Reynolds. 1992. Assessments of the characteristics of muskox winter habitat in potential lease areas of the Arctic NWR, Alaska. Pages 309-340 in T. R. McCabe, B. Griffith, N. E. Walsh, and D. D. Young, editors. Terrestrial Research: 1002 Area Arctic NWR Interim Report 1988 - 1990. U.S. Fish Wildlife Service, Anchorage, Alaska. 432 pp.

Polar Bear Amstrup, S. C. 1993. Human disturbances of denning polar bears in Alaska. Arctic 46:246-250. Amstrup, S.C., and C. Gardner. 1994. Polar bear maternity denning in the Beaufort Sea. Journal of Wildlife Management 58:1-10. U.S. Fish and Wildlife Service. 1995. Habitat Conservation Strategy for Polar Bears in Alaska. U.S. Fish and Wildlife Service, Alaska Region, Anchorage, Alaska.

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Predators

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Haugen, H. S. 1987. Den-site behavior, summer diet, and skull injuries of wolves in Alaska. M.S. thesis. University of Alaska, Fairbanks. 205pp. Phillips, M.K.1986. Behavior and habitat use of grizzly bears in northeastern Alaska. M.S. thesis. University of Alaska, Fairbanks Reynolds, H.V. and G.W. Garner. 1987. Patterns of grizzly bear predation on caribou in northern Alaska. Proceedings International Conference on Bear Research and Management. 7:59-67. Weiler, G. J. and G. W. Garner. 1987. Wolves of the Arctic NWR: Their seasonal movements and prey relationships. in G. Garner and P. Reynolds, editors. 1985 Update Rep. Baseline Study of Fish, Wildlife, and their Habitats. U. S. Fish and Wildlife Service, Anchorage, Alaska 1281 pp. Young, D. D., G. W. Garner, R. Ambrose, H. Reynolds, and T. R. McCabe. 1992. Differential impacts of predators (brown bears, wolves, golden eagles) on caribou calving in the 1002 Area and potential displacement areas: an assessment of predation risks. Pages 37-66 in T. R. McCabe, B. Griffith, N. E. Walsh, and D. D. Young, editors. Terrestrial Research: 1002 Area - Arctic NWR Interim Report 1988 - 1990. U.S. Fish Wildlife Service, Anchorage, Alaska. 432 pp.

Birds Brackney, A. W. 1990. Distribution, abundance, and productivity of fall staging snow geese on the coastal plain of the Arctic NWR, 1989. Pages 11-13 in T. R. McCabe, editor. Annual Wildlife Inventories: 1002 Area Arctic NWR Annual Progress Report 1989. U.S. Fish and Wildlife Service, Anchorage, Alaska. Brackney, A. W. 1990. Abundance and productivity of tundra swans in the coastal plain of the Arctic NWR, 1989. Pages 14-16 in T. R. McCabe, editor. Annual Wildlife Inventories: 1002 Area - Arctic NWR Annual Progress Report 1989. U.S. Fish and Wildlife Service, Anchorage, Alaska. Brackney, A. W., and J. W. Hupp. 1993. Fall diet of Snow Geese staging in northeastern Alaska. Journal of Wildlife Management. 57:55-61. Hupp, J. W., and D. G. Robertson. 1992. Potential impacts of petroleum development on Lesser Snow Geese staging on the Arctic Coastal Plain. Pages 207-230 in T. R. McCabe, B. Griffith, N. E. Walsh,

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and D. D. Young, editors. Terrestrial Research: 1002 Area - Arctic NWR Interim Report 1988 -1990. U.S. Fish Wildlife Service, Anchorage, Alaska. 432 pp. Hupp, J. W., and D. G. Robertson. 1998. Forage site selection by lesser snow geese during autumn staging on the Arctic National Wildlife Refuge, Alaska. Wildlife Monograph No. 138. 40 pp. Martin, P. D., J. G. Kidd and D. C. Anthon. 1990. Migratory bird use of potential port sites on the Beaufort sea coast of the Arctic NWR. Pages 118 in T. R. McCabe, editor. Terrestrial Research: 1002 Area - Arctic NWR Annual Progress Report 1989. U.S. Fish Wildlife Service, Anchorage, Alaska. Monda, M., J. T. Ratti and T. R. McCabe. 1993. Behavioral responses of nesting tundra swans to human disturbance and implications from nest predation on the Arctic NWR. Proc. 14th Trumpeter Swan Society Conference. Courtenary, British Columbia, Canada. p. 178 (Abstract). Monda, M. J., J. T. Ratti, and T. R. McCabe. 1994. Reproductive ecology of tundra swans on the Arctic NWR, Alaska. Journal of Wildlife Management. 58(4):757-773. Monda, M., J. T. Ratti and T. R. McCabe. 1994. Modification of Tundra Swan habitat by repeated use of nesting territories. Proc. 14th Trumpeter Swan Society Conference. Courtenary, British Columbia, Canada. p. 179 (Abstract). Monda, Ma 1991. Reproductive ecology of tundra swans on the Arctic NWR. Ph.D. thesis. Univ. Idaho, Moscow, Idaho. 94 pp. Monda, M. J., J. T. Ratti, and T. R. McCabe. 1992. Reproductive ecology of tundra swans on the Arctic NWR, Alaska. Pages 231-274 in T. R. McCabe, B. Griffith, N. E. Walsh, and D. D. Young, editors. Terrestrial Research: 1002 Area - Arctic NWR Interim Report 1988 - 1990. U.S. Fish Wildlife Service, Anchorage, Alaska. 432 pp. Oates, R. M., P. D. Martin and D. C. Anthon. 1989. Migratory bird use of potential port sites on the Beaufort sea coast of the Arctic NWR. Pages 132 in T. R. McCabe, editor. Terrestrial Research: 1002 Area - Arctic NWR Annual Progress Report 1988. U.S. Fish Wildlife Service, Anchorage, Alaska. Willms, M. A. 1992. Arctic National Wildlife Refuge migratory bird use of potential port sites, Final Report. U.S. Fish and Wildlife Service, Anchorage, Alaska. 126 pp. Willms, M.A. and D.W. Crowley. 1992. Migratory birds use of potential port sites on the Beaufort Sea coast of the Arctic NWR. Pages 1-28 in T. R.

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McCabe, B. Griffith, N. E. Walsh, and D. D. Young, editors. Terrestrial Research: 1002 Area - Arctic NWR Interim Report 1988 - 1990. U.S. Fish Wildlife Service, Anchorage, Alaska. 432 pp.

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Fish Underwood, T.J., J. A. Gordon, and B.M. Osborne. 1992. Fish population characteristics of Arctic National Wildlife Refuge coastal waters, summer 1990. Alaska Fisheries Progress Report Number 92-3. U.S. Fish and Wildlife Service, Anchorage, Alaska. Underwood, T. J., J. A. Gordon, L. A. Thorpe, and B. M. Osborne. 1994. Fish population characteristics of Arctic National Wildlife Refuge coastal waters, summer 1991. Alaska Fisheries Progress Report Number 94-1. U.S. Fish and Wildlife Service, Anchorage, Alaska. Underwood, T.J., J.A. Gordon, M. J. Millard, L.A. Thome, and B.M. Osborne. 1995. Characteristics of selected fish populations of the Arctic National Wildlife Refuge Coastal Waters, Final Report, 1988-1991. Fisheries Technical Report Number 28. U.S. Fish and Wildlife Service, Fairbanks Fishery Resource Office, Fairbanks, Alaska. Underwood, T.J., M. J. Millard, and L.A. Thorpe. 1996. Characteristics of Dolly Varden in nearshore waters of the Arctic National Wildlife Refuge, Alaska. Transactions of the American Fisheries Society. 125:719-728. Underwood, T.J., D.E. Palmer, L.A. Thorpe, and B.M. Osborne. 1997. Weight-length relationships and the variation of Dolly Varden condition in coastal waters of the Arctic National Wildlife Refuge, Alaska. American Fisheries Society Symposium. 19:295-309. Wiswar, D. W. 1991. Summer distribution of fishes in the Okpilak and Akutoktak rivers, Arctic National Wildlife Refuge, Alaska 1989. Alaska Fisheries Technical Report Number 11. U.S. Fish and Wildlife Service, Fairbanks Fishery Resource Office, Fairbanks, Alaska. Wiswar, D. W. 1992. Summer distribution of fishes in the Okpilak and Akutoktak, Katakturuk, and Jago rivers, Arctic National Wildlife Refuge, Alaska 1990. Alaska Fisheries Technical Report Number 17. U.S. Fish and Wildlife Service, Fairbanks Fishery Resource Office, Fairbanks, Alaska. Wiswar, D. W. 1994. Summer distribution of Arctic fishes in the 1002 area of the Arctic National Wildlife Refuge, Alaska 1991 with special emphasis on selected lakes, tundra streams, and the Sadlerochit river drainage.

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Alaska Fisheries Technical Report Number 27. U.S. Fish and Wildlife Service, Fairbanks Fishery Resource Office, Fairbanks, AK. Wiswar, D.W., R. L. West, and W.N. Winkleman. 1995. Fisheries investigation in Oruktalik Lagoon, Arctic Lagoon, Arctic National Wildlife Refuge, Alaska. 1986. Alaska Fisheries Technical Report No. 27, U.S. Fish and Wildlife Service, Fairbanks, Fishery Resource Office, Fairbanks, AK.

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Vegetation Felix, N. A. and M. K. Raynolds. 1988. The role of snow cover in limiting surface disturbance caused by winter seismic exploration. Arctic 42(2):6268. Felix, N. A. and M. K. Raynolds. 1989. The effects of winter seismic trails on tundra vegetation in northeastern Alaska, U.S.A. Arctic and Alpine Res. 21(2):188-202. Raynolds, M. K. and N. A. Felix. 1989. Airphoto analysis of winter seismic disturbance in northeastern Alaska. Arctic 42:(4)362-367. Emers, M., J. C. Jorgenson, and M. K. Raynolds. 1995. Response of Arctic plant communities to winter vehicle disturbance. Can. J. Botany 73: 905919. Emers M. and J. C. Jorgenson. 1996. Effects of winter seismic exploration on the vegetation and soil thermal regime of the Arctic National Wildlife Refuge. In Crawford, R. M. M. Ed., 1996. Disturbance and recovery in Arctic lands: an ecological perspective. Kluwer Academic Publishers, Dordrecht, the Netherlands.

Water Lyons, S. M., and J. M. Trawicki 1994. Water resource inventory and assessment, coastal plain, Arctic National Wildlife Refuge: 1987-1992 Final Report. U.S. Fish and Wildlife Service, Water Resource Branch Anchorage, AK. WRB 94-3. Trawicki, J. M. , S. M. Lyons and G. V. Elliott. 1991. Distribution and quantification of water within lakes of the 1002 area, Arctic National Wildlife Refuge, Alaska. Alaska Fisheries Technical Report No. 10. U.S. Fish and Wildlife Service, Anchorage, AK.

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This publication should be cited as follows: U.S. Fish and Wildlife Service. 2001. Potential impacts of proposed oil and gas development on the Arctic Refuge's coastal plain: Historical overview and issues of concern. Web page of the Arctic National Wildlife Refuge, Fairbanks, Alaska. 17 January 2001. http://arctic.fws.gov/issuesl.html

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INDEX # 20th century, 37 21st century, 86

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A access, 11, 12, 36, 38, 45, 49, 52, 71, 83, 97, 121 acid, 112 additives, 51 adverse effects, 105 adverse weather, 41, 45 agencies, 17, 22, 56 agriculture, 54 air quality, 6, 29, 49 air temperature, 16, 41 amortization, 94 Arctic, v, vii, viii, 1, 2, 3, 5, 6, 7, 8, 9, 10, 11, 12, 13, 14, 15, 16, 17, 18, 19, 20, 21, 22, 23, 24, 25, 26, 27, 28, 30, 31, 32, 33, 35, 36, 37, 38, 40, 43, 44, 45, 46, 47, 48, 49, 50, 51, 52, 53, 54, 55, 56, 57, 58, 59, 60, 61, 62, 63, 64, 65, 66, 85, 87, 88, 94, 96, 97, 98, 99, 100, 102, 103, 104, 105, 106, 107, 108, 112, 113, 114, 118, 119, 121, 122, 123, 124, 125, 126, 127, 128, 129, 130, 131 Arctic drilling, vii, 35, 57, 59

Arctic National Wildlife Refuge, v, vii, viii, 65, 66, 85, 87, 88, 96, 97, 98, 102, 103, 107, 123, 124, 128, 129, 130, 131 Arctic oil, vii, 1, 13, 23, 24, 25, 26, 48 Arctic oil spill, vii, 1, 13, 23, 25, 48 assessment, 18, 20, 24, 28, 65, 66, 69, 71, 72, 86, 90, 97, 103, 123, 127, 130 assets, 13, 17, 26, 36, 57 authorities, 42

B background information, vii, 35 bacteria, 50, 51, 52 banks, 114 barriers, 12 base, 12, 14, 25, 39, 53, 82, 90 benchmarks, 86 beneficiaries, 24 benefits, 9, 24, 26 benthic invertebrates, 14, 17 bioavailability, 23 biodegradation, 50, 51, 62, 63 biodiversity, 14 biological consequences, 112 bioremediation, 18, 51, 52, 57, 63 birds, 14, 15, 17, 19, 51, 112, 119, 122, 128 body fat, 113 Brooks Range, 108, 119 budget deficit, viii, 87, 89

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Index

Bureau of Land Management, 70, 111 burn, 12, 49 business cycle, 94

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C Capitol Hill, 31, 63 carbon, 75 carbon dioxide, 75 Census, 63 cetacean, 20, 32 challenges, vii, 1, 11, 18, 27, 28, 35, 43, 44, 46, 55, 83 chemical, 17 chemicals, 12 cleaning, 23 cleanup, 50, 51 climate, 15, 16, 19, 20, 21, 24, 27 climate change, 15, 16, 20, 21, 24 closure, 105 Coast Guard, 12, 25, 28, 31, 52, 53, 56, 63 coastal communities, 13, 55 collisions, 38 commercial, 2, 15, 16, 18, 20, 22, 70, 89, 100 Commission inquiry, vii, 35 communities, 13, 14, 16, 18, 22, 24, 25, 27, 28, 40, 57, 130 community, 5, 53, 57, 107 competition, 71 complement, 53 compliance, 6 composition, 124 Concise, 28 conference, 102 Congress, 22, 28, 31, 53, 56, 58, 63, 65, 87, 89, 93, 95, 97, 98, 102, 103, 105, 108, 115, 123, 124 Congressional Budget Office, 88, 89, 92, 97 consensus, 49 conservation, viii, 15, 87, 88, 100, 101 construction, 2, 6, 26, 29, 36, 39, 64, 100, 109, 111, 119, 124 consumers, viii, 87, 88 consumption, 80, 86

contaminant, 20 contamination, 112 Continental, 3, 4, 6, 7, 30, 31, 32, 38, 40, 43, 59, 61, 64, 85, 101 contingency, 23, 30, 31, 33, 44, 55, 56, 60 control measures, 42 controversial, 24 cooperation, 22, 26 corrosion, 10 cost, 2, 36, 37, 53, 54, 74, 75, 80, 94 cost of living, 54 counsel, 27 Court of Appeals, 6 covering, 94 crabs, 15 cracks, 38 crude oil, vii, viii, 50, 67, 69, 72, 73, 74, 75, 76, 80, 86, 87, 88, 92, 93 cultural heritage, 13, 25, 55

D damages, 26, 28 data collection, 18, 28 data set, 23 deaths, 113 decision-making process, 50 deficiency, 25 Department of Commerce, 28 Department of Defense, 28 Department of Energy, 28, 65, 85, 97 Department of Homeland Security, 28 Department of the Interior, 3, 6, 8, 18, 24, 28, 29, 32, 38, 57 Department of Transportation, 28 deposition, 9, 112 deposits, 2, 73, 98 depreciation, 94 depth, 5, 6, 8, 10, 36, 43, 58, 70, 74, 83, 113, 115 detection, 18, 46, 47 diet, 54, 55, 127 disaster, 23, 41 dispersion, 12, 47, 92 displacement, 113, 114, 127

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Index distribution, 15, 17, 19, 20, 21, 23, 31, 72, 95, 105, 116, 124, 125, 126, 129 diversity, 107, 108 draft, 39, 70 drainage, 112, 129 drinking water, 5

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E ecological information, 24 ecology, 21, 128 economic activity, 88, 89 economic losses, 9 ecosystem, 17, 18, 19, 24, 50, 57 editors, 123, 124, 125, 126, 127, 128, 129 election, 102 emergency, 41, 43, 45, 52, 53, 59 emergency response, 41, 52, 59 employment, 27, 80 energy, viii, 12, 19, 26, 29, 44, 49, 58, 87, 88, 94, 113 energy-intensive industries, viii, 87, 88 engineering, 6 environment, 13, 18, 21, 27, 28, 40, 44, 46, 48, 49, 50, 57, 73, 74, 105 environmental conditions, 12, 23, 36, 41, 45, 113 environmental effects, 110 environmental impact, 8, 24, 40, 51, 123 environmental organizations, 6 Environmental Protection Agency, 6, 28, 56 environmental regulations, 6 enzyme, 51 EPA, 6, 27, 29, 56 equipment, 9, 11, 13, 22, 23, 36, 41, 43, 44, 53, 54, 56, 70, 74, 75, 95 evaporation, 47 evidence, 63 executive branch, 59 Executive Order, 18 expenditures, 67, 80, 92 expertise, 56 exports, 80 exposure, 48 extraction, 19, 54

135

extreme cold, 10

F families, 55 fat, 120, 122 fauna, 14 feasability, 90 Federal Emergency Management Agency, 28 federal government, viii, 22, 26, 87, 88, 89, 91, 92, 95, 96, 97, 98 federal law, viii, 57, 87, 89 financial, 94 financial data, 94 fiscal year 2009, 8 fish, 14, 15, 16, 17, 21, 103, 105, 123, 129 Fish and Wildlife Service, v, 28, 99, 103, 123, 124, 126, 127, 128, 129, 130, 131 fisheries, 15, 21, 22 fishing, 13, 16, 18, 20, 54 fitness, 5 fluctuations, 94 fluid, 42 food, 13, 14, 22, 55, 64, 112, 120, 121 food chain, 14 food web, 22 formation, 9 France, 51 freezing, 11, 38 friction, 43 frost, 9 funding, 20, 22, 23, 53, 57 funds, 17, 28

G garbage, 112 gas decision-making, vii, 2 geology, 69, 71, 82, 115, 123 goods and services, 54 governments, 22, 23 growth, 21, 52, 75, 80 growth rate, 21

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136

Index

guidance, 26 guidelines, 26, 50 Gulf Coast, 37 Gulf of Mexico, 4, 5, 25, 36, 40, 43, 58

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H habitat, 18, 22, 27, 105, 113, 114, 125, 126, 127, 128 habitats, 14, 21, 22, 25, 40, 104, 107, 108, 121, 123 haze, 112 health, 13, 20 heavy oil, 70, 73 height, 45 hemisphere, 15 high winds, 10, 12 highways, 13 history, 15, 21, 40, 124 House, 56, 102 House of Representatives, 102 human, 11, 24, 27, 28, 37, 40, 58, 114, 120, 123, 128 human dimensions, 24 hunting, 13, 14, 25, 54, 55, 64, 112 hydrocarbons, 14, 27, 55

I identification, 22, 28, 41 image, 115 images, 118 imports, 26, 67, 80, 82, 86 improvements, 10, 18 income, 8, 54, 87, 88, 89, 90, 91, 92, 94, 95 income tax, 87, 88, 89, 90, 91, 92, 94, 95 independence, 65 individuals, 88 industries, viii, 26, 87, 88 industry, 6, 8, 17, 19, 22, 23, 24, 25, 26, 30, 31, 33, 36, 37, 55, 56, 57, 71, 93, 94, 95, 96, 105, 107 information sharing, 22

infrastructure, 10, 13, 24, 26, 36, 52, 57, 70, 71, 109, 110 injuries, 127 integrity, 108 international standards, 26 investment, 38, 71 investments, 9, 74, 95 islands, 4, 10, 36, 39 isolation, 13, 73 issues, vii, 1, 8, 10, 12, 22, 23, 24, 30, 31, 36, 37, 38, 39, 42, 44, 46, 54, 57, 58, 60, 68, 97, 131 Italy, 39

K knots, 45

L lakes, 129, 130 landfills, 110 landscape, 110 laws, viii, 65, 95, 99 laws and regulations, 65 lead, 16, 47, 56, 71 legislation, 65, 69, 70, 89, 90, 95, 97, 102, 106 lifetime, 81, 91, 95 light, 5, 7, 39, 40, 44, 57, 58, 60, 67, 79, 80, 86 liquid fuels, 67, 80 liquids, 38, 94, 97 local conditions, 20 local government, 17 logistics, 28 low temperatures, 52

M magnitude, 91 majority, 27, 36, 38, 74, 101, 121 mammal, 14, 17, 19, 20, 21 mammals, 14, 15, 17, 19, 20, 22, 28, 51, 57

Arctic Oil and Gas: Development and Concerns : Development and Concerns, edited by Roman Shumenko, Nova Science

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Index man, 4, 36, 39 management, 11, 16, 41, 47, 69 mapping, 104 marine environment, 25, 48 marine fish, 20, 21, 22 Marine Mammal Protection Act, 57 materials, 51 matter, 112 media, 59 medical, 5 melt, 36, 47, 48 melting, 14, 38 melts, 38, 45, 47 metabolizing, 51 methodology, 90, 92 microbial communities, 52 migration, 13, 15, 19, 21, 48 military, viii, 99, 100 mission, 12 missions, 12 mixing, 50 models, 18 mollusks, 14 moratorium, 39, 40, 59 mortality, 114 Moscow, 128 multiplier, 92 multiplier effect, 92

N National Aeronautics and Space Administration, 28 National Petroleum Reserve-Alaska (NPRA), viii, 99 National Research Council, 21, 27, 30, 31, 32, 63 national security, viii, 26, 99 natural gas, viii, 8, 17, 26, 38, 65, 66, 67, 68, 69, 70, 71, 81, 90, 93, 97 natural resources, 28 Naval Petroleum, viii, 99, 100 Netherlands, 130 neutral, 66 nitrogen, 112

137

North America, 2, 15, 22, 30, 102, 107, 121, 125, 126 North Slope of Alaska, viii, 15, 99, 100, 118 Norway, 49, 52 NPR, viii, 99, 108 nutrient, 51 nutrients, 51, 52 nutrition, 120, 121

O oceans, 32 officials, 12, 52, 69 offshore oil and gas development, vii, 1, 24, 25 Oil Pollution Act of 1990, 22, 23, 28 oil production, viii, 9, 67, 70, 71, 72, 75, 76, 80, 81, 82, 83, 86, 90, 92 oil spill, vii, 1, 5, 10, 11, 12, 13, 14, 16, 18, 19, 20, 22, 23, 24, 25, 26, 27, 30, 31, 33, 35, 40, 41, 43, 44, 46, 48, 49, 51, 52, 54, 55, 56, 57, 63, 105, 112 operating costs, 94 operations, 10, 12, 25, 26, 38, 39, 41, 43, 53, 54, 64, 94, 95, 105 opportunities, 51, 74, 107, 112 oversight, 25 ownership, 3, 4, 7

P Pacific, 16, 32 permeability, 83 permission, 5, 39, 40 permit, 6, 28, 41, 103 PET, 30 petroleum, viii, 2, 8, 26, 42, 59, 70, 82, 85, 87, 88, 102, 103, 106, 108, 113, 116, 124, 125, 127 Petroleum, viii, 28, 29, 30, 39, 40, 59, 68, 71, 74, 77, 80, 85, 86, 99, 100, 123 phytoplankton, 14 plankton, 17 plants, 70, 115, 116, 119, 122

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138

Index

Point Barrow, viii, 20, 99 polar, 12, 14, 15, 25, 52, 53, 55, 105, 108, 112, 114, 119, 126 policy, 40, 65, 66 policy initiative, 66 pollution, 22 pools, 48 population, 13, 15, 28, 54, 55, 114, 122, 125, 126, 129 population size, 125 Porcupine caribou herd, 125 power generation, 5 power plants, 110 predation, 112, 114, 121, 127, 128 predators, 15, 113, 127 preparation, 18, 122 preparedness, 24, 25, 40, 52 present value, 91, 93, 96 President, 18, 40, 58, 88, 92, 97, 102, 106 President Clinton, 106 President Obama, 18, 40 prevention, 42 Prince William Sound, 45, 50, 52, 57, 61, 62 private investment, 37 probability, 66, 72, 85, 90, 93 producers, 74, 87, 89, 91, 94, 95 production costs, 92, 94, 98 profit, 43, 104 project, viii, 29, 44, 50, 53, 58, 67, 69, 80, 94 protection, 100, 115 public concern, 57 public land laws, viii, 99 pumps, 6

Q quantification, 28, 130

ramp, 54 recognition, 16 recommendations, vii, 26, 35 recovery, 11, 21, 22, 23, 41, 43, 45, 47, 48, 51, 61, 68, 72, 73, 74, 75, 83, 86, 90, 94, 107, 118, 130 recovery technology, 47 recreation, 100 Reform, 64 regulations, 5, 41, 42, 55 regulatory changes, 66 regulatory framework, 52 rehabilitation, 53 relief, viii, 10, 42, 43, 87, 88, 121 remote sensing, 11, 23 repair, 53 reproduction, 21 requirements, 12, 25, 26, 41, 42, 44, 52, 55, 59 research institutions, 22, 23, 25 researchers, 16, 46, 48 reserves, 9, 90, 91, 95, 109, 110, 118, 120, 122 resources, vii, viii, 2, 13, 14, 15, 16, 17, 18, 19, 22, 25, 28, 36, 38, 40, 54, 56, 57, 66, 68, 69, 70, 71, 72, 74, 75, 81, 83, 85, 86, 87, 88, 89, 90, 97, 99, 102, 103, 106, 111, 116, 120 response, vii, 1, 8, 10, 11, 12, 13, 18, 19, 22, 23, 24, 25, 27, 28, 35, 36, 37, 39, 40, 41, 42, 43, 44, 45, 46, 47, 48, 49, 50, 51, 52, 53, 54, 55, 56, 57, 60, 61, 62, 121, 124 response capacity, 56, 57 response time, 54 restoration, 24, 28 restrictions, 83, 105 revenue, 9, 89, 90, 91, 92, 93, 94, 95, 96, 97 risk, 8, 10, 18, 27, 38, 39, 42, 49, 56, 127 royalty, 95, 98 rules, 42

R radar, 11, 46 radio, 114

S safety, 6, 11, 25 salinity, 50, 52

Arctic Oil and Gas: Development and Concerns : Development and Concerns, edited by Roman Shumenko, Nova Science

Copyright © 2011. Nova Science Publishers, Incorporated. All rights reserved.

Index salmon, 15, 16 saltwater, 22 saturation, 83 science, 17, 18, 23 scientific knowledge, 19, 57 scope, 19, 40 SEA, 57, 61 seasonality, 10 Secretary of Commerce, 59 sediment, 17 seeding, 52 segregation, 124 seismic data, 70, 71, 83, 106 Senate, 56, 102 sensing, 11, 47 sensitivity, 22 sewage, 5 shape, 75, 115 shellfish, 16 shoreline, 4, 10, 36, 37, 51, 53, 57, 58, 114 showing, 105 skimming, 47 species, 13, 14, 15, 16, 18, 19, 20, 21, 22, 24, 25, 105, 108, 112, 119, 122 stakeholders, 18 state, 2, 3, 5, 8, 10, 13, 15, 17, 22, 37, 39, 41, 42, 45, 57, 58, 60, 62, 64, 88, 89, 92, 93, 94, 95, 96, 97, 98, 102 states, 41, 43, 46, 51, 88, 94, 98 statutes, 27 stimulus, 26, 88, 89 storms, 10, 28, 45 stress, 24 structure, 20, 90 subsistence, vii, 1, 13, 14, 16, 19, 22, 24, 25, 28, 54, 55, 105, 112 sulfur, 67, 79, 80, 86 surging, 4 survival, 13, 113, 114, 121, 122, 125

T tactics, 43, 48 tanks, 22 target, 6, 73

139

tax rates, 95, 98 taxes, 88, 91, 92 teams, 43 techniques, 10, 11, 20, 22, 44, 47, 49, 51, 63, 73, 74, 86 technological advances, 110 technological change, 71 technologies, 18, 23, 48, 107, 109 technology, 29, 37, 38, 42, 46, 57, 61, 65, 68, 71, 85 temperature, 9, 16, 45, 50, 51 territory, 2 testing, 23, 46, 50, 51, 52, 58, 104 texture, 115 time frame, 24, 67 tourism, 18 toxic effect, 14, 55 toxicity, 12, 49, 50 tracks, 118 trade, 26, 67, 76, 81 trajectory, 41 transparency, 25 transport, 9, 44, 54, 64, 70, 90, 91 transport costs, 91 transportation, 26, 28, 48, 54, 81, 83, 90, 113 Treasury, 89 treatment, 5, 70, 98 Trust Fund, 23, 28 tundra, 15, 102, 108, 109, 112, 114, 115, 117, 118, 119, 121, 122, 123, 127, 128, 129, 130

U U.S. Army Corps of Engineers, 28 U.S. Department of the Interior, 30, 32, 59, 124 U.S. Geological Survey, 9, 18, 30, 38, 58, 66, 85, 90, 97, 106, 110, 123, 124 United States (USA), v, 2, 26, 28, 19, 40, 67, 68, 81, 88, 89, 99, 123, 124 universities, 17, 22 updating, 26

Arctic Oil and Gas: Development and Concerns : Development and Concerns, edited by Roman Shumenko, Nova Science

140

Index

V valve, 10 variables, 10, 91 variations, 41 vegetation, 107, 112, 115, 119, 122, 123, 130 vehicles, 12, 52, 114, 115 vessels, 27, 43, 49, 53, 54 viscosity, 11, 83 volatility, 92, 94 vote, 27

W

Z zooplankton, 14

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walking, 11, 46 war, 100 Washington, 27, 30, 31, 65, 85, 86, 123 waste, 6 water, 5, 6, 8, 9, 10, 11, 12, 18, 21, 22, 23, 25, 27, 36, 37, 38, 39, 41, 45, 46, 47, 48,

49, 50, 51, 52, 53, 54, 58, 63, 83, 86, 111, 112, 113, 130 web, 63, 85, 86 well-being, 55 wells, 2, 3, 4, 5, 6, 8, 27, 37, 38, 40, 42, 43, 58, 70, 71, 74, 94, 106 whales, 13, 14, 19, 25, 36, 55, 64 White House, 32 wilderness, 100, 101, 106, 107 wildlife, 14, 49, 85, 100, 101, 102, 103, 107, 112, 123 wind speeds, 45 windows, 70 withdrawal, 100 workers, 9 World War I, viii, 99

Arctic Oil and Gas: Development and Concerns : Development and Concerns, edited by Roman Shumenko, Nova Science