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Arctic Energy Center Weekly Roundup 8/26/16-9/2/16

This week in the news


This Week on AEC

In the News

Interest In The Arctic Continues. (Op-ed by Lucas Frances – Arctic Energy Center) E&P Magazine. While the Arctic region often is forgotten when Americans picture their nation’s energy landscape, its importance shouldn’t be undermined. The offshore Arctic contains an estimated 30% of America’s conventional hydrocarbon resources, and the industry has been active there since the first onshore exploratory well was drilled in 1900. The U.S. should not allow these massive reserves to go unused. Offshore Arctic projects take decades to reach development, and with the next lease sales not expected until 2019, it is unlikely that any offshore resource will begin producing until 2030 or beyond. There is simply no way to predict what kind of price environment will exist at that point. The only certainty in today’s price environment is that cutting the Arctic leases now will needlessly limit future options. Similarly, anti-energy activist groups’ second contention that the industry isn’t interested in developing Arctic resources also is a flawed argument. A quick review of the public consultation on the forthcoming leasing program shows that numerous companies submitted comments emphasizing that the Arctic must be included.
The US is critically lagging behind Russia in the next frontier of global competition. Business Insider. The next major frontier of global competition is rapidly emerging: the Arctic. The melting of Arctic ice has opened up new transit routes and allowed access to an estimated 22% of the world's undiscovered oil and natural gas resources. And Russia has sought to take advantage of these new conditions. At the Center for Strategic and International Studies last week, US Gen. Paul Selva, vice chairman of the Joint Chiefs of Staff, commented on the US's underwhelming presence in the region. "We basically have nothing," Sen. Angus King (I-ME), echoed last week to reporters upon returning from a trip to Greenland, the Washington Examiner reports. "The president put money in his budget this year to start the process of a new icebreaker, but by the time a new icebreaker is built, the current one will be way beyond its current life, so it's a replacement not a new one," King said. According to Robert Kaplan, senior fellow at the Center for a New American Security and author of "The Revenge of Geography," the Arctic will "give new meaning to sea power and especially air power in future decades."
Energizing Alaska. Energy Tomorrow (API Blog). To ensure America’s future energy security, it’s imperative that Arctic oil and natural gas production in the Chukchi and Beaufort seas off Alaska’s northern coast be included in the United States’ strategic energy planning. According to federal estimates, economically recoverable oil and gas in the Alaskan Outer Continental Shelf and in unexplored portions of Alaska could total more than 35 billion barrels of oil and 137 trillion cubic feet of natural gas. That energy is vital to future U.S. security and prosperity. Currently, the federal Bureau of Ocean Energy Management (BOEM) is in the final stages of preparing the next five-year offshore leasing program that will be the blueprint for offshore development in the 2017-2022 time frame. Arctic lease sales, which were contained in the program’s draft version, should be included in the final version as well.
Russia will deploy a division of troops about 50 miles from the US. Business Insider. At a recent event, Russian Defense Minister Sergei Shoigu said that a division of troops would be stationed in Chukotka, Russia's far-east region, just slightly more than 50 miles from Alaska. "There are plans to form a coastal defense division in 2018 on the Chukotka operational direction," said Shoigu. He said that the deployment was "to ensure control of the closed sea zones of the Kuril Islands and the Bering Strait, cover the routes of Pacific Fleet forces' deployment in the Far Eastern and Northern sea zones, and increase the combat viability of naval strategic nuclear forces." Broadly, Russia has taken the lead in militarizing and exploring the Arctic region, as melting ice caps open up new shipping lanes between the East and West. In that context, the deployment of a division to the sparsely populated Chukotka region makes sense. In the past, Russia has bemoaned NATO and US troop deployments near to its borders. How the US will respond to this deployment remains to be seen.
Governor says Alaska will know in a year if market will support pipeline project. Alaska Dispatch News. Despite the huge challenges facing the massive Alaska LNG project, Gov. Bill Walker said on Thursday the state has an unprecedented opportunity to take the reins of a project and finally build a pipeline and sell natural gas from the North Slope as state leaders and companies have long wanted. This is the first time in history the producers have offered real commitments to sell their gas while also leaving the door open for the state to attract major new partners to help support the liquefied natural gas project, Walker said. In an interview with Alaska Dispatch News, Walker said he will continue his "relentless" pace to see a project built. Walker sought the interview after weeks of seemingly bad news about the gas line, including reluctance by the producers to move ahead with the current project and a consultant report saying the gas line wasn't competitive with other projects around the world. Walker said the state will take steps to determine whether potential buyers and investors will support the project. He said the state will have an answer within one year whether the project can move forward — or not. If the interest is not there, the state backs off.
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