[Senate Hearing 112-811]
[From the U.S. Government Publishing Office]



                                                        S. Hrg. 112-811
 
                    PREPARING FOR OFFSHORE DRILLING

                     IN THE ARCTIC: LESSONS LEARNED

                         FROM THE FIRST SEASON
=======================================================================



                             FIELD HEARING

                               before the

                         COMMITTEE ON COMMERCE,

                      SCIENCE, AND TRANSPORTATION

                          UNITED STATES SENATE

                      ONE HUNDRED TWELFTH CONGRESS

                             SECOND SESSION

                               __________

                            OCTOBER 11, 2012

                               __________

    Printed for the use of the Committee on Commerce, Science, and 
                             Transportation





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       SENATE COMMITTEE ON COMMERCE, SCIENCE, AND TRANSPORTATION

                      ONE HUNDRED TWELFTH CONGRESS

                             SECOND SESSION

            JOHN D. ROCKEFELLER IV, West Virginia, Chairman
DANIEL K. INOUYE, Hawaii             KAY BAILEY HUTCHISON, Texas, 
JOHN F. KERRY, Massachusetts             Ranking
BARBARA BOXER, California            OLYMPIA J. SNOWE, Maine
BILL NELSON, Florida                 JIM DeMINT, South Carolina
MARIA CANTWELL, Washington           JOHN THUNE, South Dakota
FRANK R. LAUTENBERG, New Jersey      ROGER F. WICKER, Mississippi
MARK PRYOR, Arkansas                 JOHNNY ISAKSON, Georgia
CLAIRE McCASKILL, Missouri           ROY BLUNT, Missouri
AMY KLOBUCHAR, Minnesota             JOHN BOOZMAN, Arkansas
TOM UDALL, New Mexico                PATRICK J. TOOMEY, Pennsylvania
MARK WARNER, Virginia                MARCO RUBIO, Florida
MARK BEGICH, Alaska                  KELLY AYOTTE, New Hampshire
                                     DEAN HELLER, Nevada
                    Ellen L. Doneski, Staff Director
                   James Reid, Deputy Staff Director
                     John Williams, General Counsel
             Richard M. Russell, Republican Staff Director
            David Quinalty, Republican Deputy Staff Director
   Rebecca Seidel, Republican General Counsel and Chief Investigator



                            C O N T E N T S

                              ----------                              
                                                                   Page
Hearing held on October 11, 2012.................................     1
Statement of Senator Begich......................................     1

                               Witnesses

Hon. David J. Hayes, Deputy Secretary, U.S. Department of the 
  Interior.......................................................     3
    Prepared statement...........................................     5
Rear Admiral Thomas P. Ostebo, Commander, Seventeenth District, 
  U.S. Coast Guard...............................................     9
    Prepared statement...........................................    11
Laura K. Furgione, Acting Assistant Administrator for Weather 
  Services and Acting Director, National Weather Service, 
  National Oceanic and Atmospheric Administration, U.S. 
  Department of Commerce.........................................    14
    Prepared statement...........................................    16
Peter E. Slaiby, Vice President, Shell Alaska....................    33
    Prepared statement...........................................    36
Jacob Adams, Chief Administrative Officer, North Slope Borough...    43
    Prepared statement...........................................    45
Edith Vorderstrasee, Consulting Division Manager, UMIAQ, 
  Ukpeagvik Inupiat Corporation (UIC)............................    47
    Prepared statement...........................................    50

                                Appendix

Letter dated September 21, 2012 to Hon. Ken Salazar, Secretary, 
  U.S. Department of the Interior from Senators Jeffrey A. 
  Merkley, Patrick Leahy, Frank R. Lautenberg, Richard Durbin, 
  Barbara Boxer and Sheldon Whitehouse...........................    59
Response to written questions submitted by Hon. Barbara Boxer:
    Hon. David J. Hayes..........................................    60
    Rear Admiral Thomas P. Ostebo................................    61
    Peter E. Slaiby..............................................    62


                    PREPARING FOR OFFSHORE DRILLING

                     IN THE ARCTIC: LESSONS LEARNED


                         FROM THE FIRST SEASON

                              ----------                              


                       THURSDAY, OCTOBER 11, 2012

                                       U.S. Senate,
        Committee on Commerce, Science, and Transportation,
                                                     Anchorage, AK.
    The Committee met, pursuant to notice, at 10:02 a.m. in 
room 106, Gorsuch Commons, University of Alaska Anchorage 
Campus, Hon. Mark Begich, Chairman, presiding.

            OPENING STATEMENT OF HON. MARK BEGICH, 
                    U.S. SENATOR FROM ALASKA

    Senator Begich. We appreciate everyone being here this 
morning. This is a hearing of the U.S. Senate Commerce, 
Science, and Transportation Committee, the third hearing I've 
chaired here in Alaska, and I have to be frank with you. I 
think my colleagues back in Washington think I'm going to move 
the whole committee to Alaska because we have had so many 
hearings here. But as Chair of the Oceans, Atmosphere, 
Fisheries and Coast Guard Subcommittee, it's important to have 
these hearings here in Alaska as many of the issues under the 
Subcommittee directly deal with Alaska, and Alaska is a major 
player.
    Alaska's coastline is longer than the rest of the nation's, 
and we have more waters in the Exclusive Economic Zone and 
twice as much continental shelf as the other 49 states 
combined.
    And when the Senate ratifies--and I hope they do--the Law 
of the Sea treaty, Alaska's extended continental shelf could 
grow in area by twice the size of California.
    Our state is second to none in the economic value and 
landings of commercial fisheries, and the seafood industry 
continues to be the largest private employer in the state.
    Perched along the great circle route between the West Coast 
and Asia, Alaska plays a major role leader in maritime shipping 
across the Pacific. With the melting polar ice cap, the Bering 
Strait is growing in importance as a link between Europe and 
Asia.
    The value of our oil and gas reserves, and particularly our 
yet untapped reserves, is really a game-changer for the nation. 
The waters of the Beaufort and Chukchi Seas hold what many 
estimate to be the largest yet to be recovered reserves of oil 
and natural gas in the world.
    As Alaskans well know, we are highly dependent on our 
state's oil and gas industry. Last year, oil and natural gas 
accounted for 91 percent of our state's revenue. Yet these 
reserves have extraordinary promise, not only for Alaska, but 
for the nation as a whole, as a stable source of domestic-
produced energy.
    For these reasons, President Obama supported my push to 
start utilizing Alaska resources to support America's energy 
needs and pursued an ``all of the above'' approach to 
developing our nation's energy supplies.
    We in Alaska know well the challenges and risks that 
accompany offshore development. As we look to the future, we 
need to proceed carefully, safely, and make sure local 
communities are fully prepared and engaged.
    The purpose of today's hearing is to take a look back on 
the first season of exploratory activity, and review the 
operational lessons learned and, of course, ask what does the 
future hold for oil and gas, not only through the exploration 
period but the development period.
    Of course, not everything went according to plan this 
season. But Alaskans are familiar with the difficulties of 
operating on the frontier where the weather is harsh and 
infrastructure is lacking. More importantly, we understand the 
importance of proceeding with caution to ensure protection of 
the broader Arctic ecosystem and especially the resources upon 
which subsistence users of the North Slope depend.
    Today we will have several people testifying, and we 
appreciate the two panels that will be here. I welcome the 
testimony of the Deputy Secretary of the Interior, David Hayes, 
who has led the Federal interagency effort on onshore oil up 
here in Alaska; and also the testimony of Shell Oil's Pete 
Slaiby on the second panel today.
    With increased energy development and maritime activity, 
our Nation must ensure that the Coast Guard has the 
capabilities to operate in the Arctic waters and to ensure safe 
commerce. I welcome Rear Admiral Thomas Ostebo of the United 
States Coast Guard at the hearing today.
    All of these activities will rely on the weather and the 
ice forecasts and the scientific underpinnings shared by the 
National Oceanic and Atmospheric Administration. For the past 2 
years, I've led Senate efforts to get NOAA's polar-orbiting 
satellites back on track. Most people would not know what those 
are. I know you will mention those a little bit here. But they 
are critical for all the activity of our nation, but especially 
in the Arctic. So I look forward to hearing Acting Director 
Laura Furgione's testimony later.
    But I am particularly looking forward to hearing updates 
from Jacob Adams on behalf of the North Slope Borough and Edith 
Vorderstrasse on behalf of UIC.
    What I am hoping today is to hear how things went this 
season from your perspectives. What are the benefits, 
challenges with the new development? What will it bring for 
you? Where are the opportunities, and what Federal investments 
are needed, in your estimation?
    To prepare for these changes, I have proposed several 
pieces of legislation: to provide a steady funding stream for 
the needed scientific research in the Arctic, which is 
critical; strengthen our icebreaker fleet and address other 
infrastructure needs that the Coast Guard needs; examine the 
unique health needs of residents of the Arctic; even strengthen 
our diplomatic role through the appointment of an Arctic 
Ambassador.
    This review of the first season will help make us better, 
understand what is going on in the Arctic, but also will help 
us in Washington, D.C. for legislation needed to move forward 
in the Arctic.
    Let me also say that when I have talked about this issue, 
and I know there is great debate, but it is no longer the 
question of if the Arctic will be developed, it is how it will 
be developed and how we move forward in the right way to meet 
all these issues that I have just laid out, plus many more. It 
is an incredible opportunity for Alaska. It is an incredible 
opportunity for this Nation to see the potential of the Arctic. 
Today we are focused on oil and gas, but there are many aspects 
to the Arctic.
    Let me first start here with Mr. Hayes. Thank you very much 
for being here, and thank you for adjusting your schedule. I 
know you are going to head up to Wainwright I think tomorrow, 
and we believe the weather will be good. But as Alaska knows, 
the weather can change every minute.
    Mr. Hayes, please.

   STATEMENT OF HON. DAVID J. HAYES, DEPUTY SECRETARY, U.S. 
                   DEPARTMENT OF THE INTERIOR

    Mr. Hayes. Thank you very much, Senator. It is a pleasure 
to be here, and I have submitted some written testimony for the 
record. I thought I would just make a few oral comments and 
would be delighted to engage in a dialogue with you, obviously, 
on these important subjects.
    I want to thank you first for holding the hearing. I think 
it's timely, and obviously the subject is incredibly important 
to all of us.
    I would like to focus in terms of my oral comments on the 
experience that we are having now with regard to the drilling 
activity in the Arctic, and to do so I want to step back for a 
bit and give a short bit of history here.
    As you well know, you recommended a year or so ago, over a 
year ago now, that the Federal Government be better coordinated 
when it comes to permitting activities in the Arctic. And in 
part because of your advocacy, the President enacted an 
executive order on July 11 of last year that establishes an 
interagency group, a working group designed to facilitate the 
permitting of conventional and renewable energy in Alaska, and 
the President asked me to chair the group as the Deputy 
Secretary of the Department of the Interior.
    We, of course, have enormous responsibilities at the 
Department of the Interior, and primary responsibility for the 
permitting associated with offshore activity. We also have very 
large land base responsibilities as well through the National 
Petroleum Reserve Alaska and other landholdings. And, of 
course, we have a special responsibility for Native Alaskans 
through the Bureau of Indian Affairs and our general trust 
responsibility.
    But as you have pointed out many times, there are many 
other Federal players as well that must be participating in 
permitting activities, our friends at NOAA, at the Army Corps 
of Engineers, at the Coast Guard and EPA and others, and 
through the interagency process that was established by the 
executive order that you helped promote.
    I am pleased to report that the Federal Government has 
never been more coordinated in terms of permitting activities, 
and I believe has never before provided a clearer roadmap to 
companies that are interested in doing business in the Arctic 
with regard to the Federal responsibilities associated 
therewith.
    I think we have enjoyed the working relationship with Mr. 
Slaiby and Shell in terms of the last year working together as 
our Bureau of Ocean Energy Management reviewed and ultimately 
approved an oil spill response plan for both the Chukchi and 
the Beaufort, working side by side with our colleagues at NOAA, 
at the Coast Guard, at EPA, and that's the way business should 
be done.
    In terms of lessons learned, I think that this summer has 
been an enormously important learning experience with regard to 
offshore drilling activity. I want to compliment Shell for the 
professional approach that they have taken in responding to 
what we believe is the gold standard for safe and 
environmentally sound exploration activities that we have 
established through our regulatory requirements. These 
requirements are sensitive to the needs of Alaska Natives, in 
particular subsistence whalers. Shell has respected those needs 
and has been adhering to the high safety standards that we 
required.
    Obviously, the difficult ice year inhibited the ability of 
Shell to do as much as they would have liked to have done this 
summer. But I just met with two of our inspectors this morning 
who have been on both rigs. They report that the top hole 
drilling activities that have been underway have been underway 
professionally and safely, and we look forward to, at the end 
of this drilling season, doing a post mortem and to working 
with the company and with other interested parties, the Coast 
Guard, et cetera, to learn the lessons that we have learned and 
take them into the next summer.
    I will say I wanted to touch on one other subject before I 
turn it over to my colleagues on the panel. In connection with 
our interagency working group activities where we bring the 
Federal family together to help coordinate responses to 
permitting requests by companies, I will say that this exercise 
has been incredibly important not only to ensure that we are 
working together, but we also through this process have 
identified some needs that we see as a Federal family in terms 
of working with our state counterparts, our community 
interests, Native Alaskans and others, and they fall into a 
couple of categories.
    One is a better and more complete relationship with the 
science community to make sure that decisionmakers have access 
to scientific issues that are so important to many permitting 
decisions. And in that regard, through our interagency working 
group, we have had an ongoing dialogue with the science 
community, and it has led to a request from the White House 
that we proceed with an effort to pull together the science in 
a coordinated way for access to Federal decisionmakers. Fran 
Ulmer, this state's own former Lieutenant Governor, and now 
chair of the Arctic Research Commission, is heading up that 
effort.
    The other piece, finally, is we concluded that we should 
have a more holistic approach to helping make good decisions 
about specific projects and not proceed on a one-off by one-off 
project basis. Instead, take a more integrated management 
approach, where we look at the entire scope of sensitivities in 
terms of resources, environmental considerations, subsistence 
needs, et cetera, and then within that context have a sense of 
what future development in the Arctic might look like so that 
as we are proceeding on a specific project approval question, 
we have in mind the broader context.
    We have been requested to prepare, and are in the process 
of preparing a report to the President on this broader look and 
how we should move forward in a broader context in 
decisionmaking, and we are committed to provide that report to 
the President by the end of the year, and we'll be reaching out 
to many interested stakeholders in the meantime.
    So with that, I appreciate again your holding this hearing, 
Senator Begich, appreciate your personal leadership on these 
important issues.
    [The prepared statement of Mr. Hayes follows:]

     Prepared Statement of Hon. David J. Hayes, Deputy Secretary, 
                       Department of the Interior
    Mr. Chairman and Members of the Committee, thank you for the 
opportunity to appear before you today to discuss the Department of the 
Interior's implementation of the Administration's program of safe and 
environmentally responsible offshore oil and gas development in the 
Arctic, specifically focusing on the lessons learned. Let me begin by 
providing a brief overview of recent energy-development related 
activities that the Department has carried out in Alaska, followed by a 
discussion of our achievements and future plans with the Interagency 
Working Group on Coordination of Domestic Energy Development and 
Permitting in Alaska.
Introduction
    Alaska is an important component of our nation's energy strategy. 
President Obama has stressed the Administration's commitment to a 
comprehensive, all-of-the-above energy strategy to both grow America's 
energy economy and continue to reduce our dependence on foreign oil. 
This includes not only investing in advanced technologies and 
alternative fuels and energy generation, but also the safe, 
responsible, and environmentally sustainable production of domestic oil 
and gas. The Department of the Interior is doing its part to respond to 
the President's call. America's public lands and Federal waters provide 
resources that are critical to the nation's energy security.
    Congress has placed enormous responsibility and trust in our 
Department when it comes to Alaska. Through the Bureau of Land 
Management, the National Park Service, and the U.S. Fish and Wildlife 
Service, we manage more than 200 million acres of Alaska--more than 
half the landmass of the entire State--and we also have primary 
responsibility regarding the permitting of offshore activities in 
Alaska's ocean waters. More particularly, Congress has entrusted our 
Department with the responsibility to oversee both conventional and 
renewable energy development on our public lands in Alaska, and on the 
Outer Continental Shelf (OCS). In addition, through the Bureau of 
Indian Affairs, and with the help of our other bureaus, we also have a 
special responsibility to promote the Federal Government's relationship 
with Alaska Natives, including honoring their cultural heritage and 
helping to implement their subsistence rights.
    In addition to our regulatory and special trust responsibilities in 
Alaska, we have a major science commitment in Alaska. The world-class 
scientists in our United States Geological Survey have taken the lead 
for the U.S. government, working with the FWS, on many of our most 
threatened marine and terrestrial species, including polar bears, 
walruses, sea otters, and caribou (all of which are subject to FWS 
oversight). USGS scientists also are working with scientists at the 
University of Alaska and others every day to monitor and better 
understand seismic and volcanic hazards in the State, to assess 
Alaska's energy resources, and to analyze the impact that the changing 
climate in Alaska is having on everything from coastal erosion to 
permafrost loss and increased fire risk.
    With these significant and varied responsibilities in mind, our 
goal has been to develop a framework in which to manage these natural 
resources in a fashion that balances our statutory conservation and 
development missions. We have put in place a process that will 
facilitate targeted development in the right places at the right time, 
and to reconcile this development with the protection of areas of 
sensitive habitat or, in Alaska, that are important for subsistence 
hunting and fishing activities. This approach is evident in the 
Department's Proposed Final OCS Oil and Gas Leasing Program for 2012-
2017.
Offshore Development
    Ensuring the safe and responsible development of the nation's 
offshore oil and gas resources through leasing under the Five Year 
Program is an important part of the Administration's strategy. On 
August 27, 2012, Secretary Salazar approved the Five Year OCS Oil and 
Gas Leasing Program for 2012-2017 that makes all areas with the 
highest-known resource potential--including frontier areas in the 
Alaska Arctic--available for oil and gas leasing. The Five Year Program 
makes available areas focused on the most likely recoverable oil and 
gas resources that the Outer Continental Shelf is estimated to hold, 
and schedules 15 potential lease sales for the five-year period, 
including 12 in the Gulf of Mexico and three off the coast of Alaska.
    The Five Year Program is designed to account for the distinct needs 
of the regions across the OCS, and it considers a range of factors, 
including current and developing information about resource potential, 
the status of resource development and emergency response 
infrastructure, recognition of regional interests and concerns, and the 
need for a balanced approach to the use of the nation's shared natural 
resources.
    Consistent with this goal, the Five Year Program anticipates future 
lease sales in the Alaskan Arctic. More specifically, the Program 
identifies a potential 2016 sale in the Chukchi Sea and a 2017 sale in 
the Beaufort Sea. These potential lease sales are proposed to be held 
later in the Program because there already are a large number of leases 
that are awaiting exploration and development. In addition, important 
new information is being collected from the exploratory activities and 
vigorous scientific studies that are now underway.
    This approach is consistent with the responsibly cautious approach 
that we are taking to oil development in the Arctic in order to account 
for its unique environmental resources. As we proceed, we are drawing 
from the best available science, and taking full account of the social, 
cultural, and subsistence needs of Alaska Natives. The Five Year 
Program also re-affirms existing protections for Arctic coastal areas 
by continuing to exclude certain areas from leasing, and by identifying 
an additional exclusion area near Barrow which Alaska Natives rely upon 
for subsistence whaling activities. The Bureau of Ocean Energy 
Management (BOEM) also has indicated its intent that future Arctic 
lease sales will be tailored to appropriate offshore areas, based on 
factors that include industry interest, resource potential, subsistence 
hunting and fishing, wildlife, and environmental sensitivities.
Onshore Development
    We have pursued the same balanced development approach for onshore 
oil and gas development in Alaska's National Petroleum Reserve (NPR-A). 
Developing the energy resources of the NPR-A will help us to enhance 
domestic energy production and meet our nation's energy demands while 
decreasing our dependency on foreign oil sources. Secretary Salazar 
announced in August the preferred alternative for managing the 22.5 
million acre NPR-A. This proposed plan will help harness the oil and 
gas potential of the NPR-A while also protecting wildlife and 
subsistence rights of Alaska Natives.
    As part of that process, the Department engaged in unprecedented 
outreach to local communities, industry, and other stakeholders, and 
reviewed more than 400,000 comments. After a thorough analysis, BLM 
developed a proposal under which approximately 11.8 million acres, 
covering the large majority of estimated of oil and gas resources in 
the NPR-A, will be available for leasing. This area is estimated to 
hold approximately 549 million barrels of discovered and undiscovered 
economically recoverable oil and approximately 8.7 trillion cubic feet 
of discovered and undiscovered economically recoverable natural gas. 
But some sensitive areas, including some key subsistence hunting areas 
and the unique migratory bird stronghold in the Teshekpuk Lake area, 
one of the largest Arctic lakes in the world and summer home for 
hundreds of thousands of waterfowl, will not be eligible for leasing.
    This proposed plan strikes the right balance between these 
important interests.
    The proposal also makes clear that if pipelines and infrastructure 
are needed, including potential pipelines from the north and west, they 
can be accommodated following project-specific reviews and decision-
making in accordance with existing law. Once this new management plan 
is finalized, it will provide industry with added certainty about where 
and how development can move forward in the NPR-A.
    And at the end of last month, the Department announced that the BLM 
will hold its second oil and gas lease sale in the past year on 
November 7, 2012, in Anchorage. The sale will include 400 tracts and 
cover approximately 4.5 million acres in the NPR-A. This sale further 
responds to President Obama's direction in May 2011 that annual oil and 
gas lease sales be conducted in the NPR-A. The previous sale in the 
NPR-A, last December, made 283 tracts and three million acres 
available.
Alaska Interagency Working Group
    Alaska and its resources are clearly an important part of our 
nation's energy future. We believe that we are making good, common-
sense decisions on all of these Arctic development issues, based on the 
best science available and input from the State, municipalities, Alaska 
Natives and other stakeholders. And we are continuing to foster new and 
innovative methods for better informed and coordinated decisionmaking.
    Under Executive Order 13580, issued July 20, 2011, the President 
established the Interagency Working Group on Coordination of Domestic 
Energy Development and Permitting in Alaska in order to facilitate the 
orderly and environmentally sound development of renewable and 
conventional energy in Alaska. The President appointed me, as the 
Deputy Secretary of the Department of the Interior, to serve as chair 
of the Alaska Interagency Working Group. Under the Executive Order, the 
Alaska Interagency Working Group is charged with coordinating 
permitting activities among the many agencies that have permitting-
related authority. As noted above, many of the primary permitting 
responsibilities reside in the Department of the Interior, but other 
agencies involved in many projects include the National Oceanic and 
Atmospheric Administration, the Environmental Protection Agency, the 
U.S. Army Corps of Engineers, and the Coast Guard.
    Through the President's Executive Order and operation of the Alaska 
Interagency Working Group, we have for the first time created a 
coordinating vehicle for that provides clearer access to decision-
makers for all stakeholders with an interest in proposed development 
activity, and more certainty for companies that want to do business in 
Alaska and the Arctic. To be clear, the Alaska Interagency Working 
Group does not tell agencies how they should make decisions under the 
authorities that Congress has given them, but it sets an expectation 
that the participating agencies will actively communicate with each 
other and respect reasonable timelines. And this is paying dividends in 
better coordinated permitting and decisionmaking.
    For example, the Alaska Interagency Working Group has consistently 
helped to facilitate coordination and collaboration between agencies as 
they considered requests by Shell, related to their proposed 
exploratory drilling activities in the Chukchi and Beaufort Seas. 
Relevant agencies worked together through their respective approval 
processes, each upholding their specific requirements on parallel, 
coordinated schedules. The working group also provided a forum for 
input by municipalities, Alaska Natives and other key stakeholders. 
This feedback helped agencies to develop the specific conditions of 
program approvals--for example, a measure included in the approval of 
Shell's Exploration Plan for the Chukchi Sea designed to mitigate the 
risk of an end-of-season oil spill by requiring Shell to leave 
sufficient time to implement cap and containment operations as well as 
significant clean-up before the onset of sea ice, in the event of a 
loss of well control.
    This cross-agency effort helped to ensure that Shell had a clear, 
holistic understanding of the Federal Government's expectations, and 
what they needed to do in order to comply. Moreover, coordination 
between agencies has proved invaluable over the past months, as 
agencies worked through last-minute issues, often on tight timelines, 
in preparation for potential activity this summer. Ultimately, Shell is 
moving forward with certain drilling activities in both the Beaufort 
and Chukchi Seas as it prepares for potential additional exploration 
and development activities in the future.
    As we made clear from the start, Shell's approved operations must 
meet the rigorous safety, environmental protection, and emergency 
response standards that the Department has put in place for the Arctic. 
Bureau of Safety and Environmental Enforcement inspectors are on each 
of Shell's drilling rigs full-time, carefully overseeing those 
activities. Shell has shown a commendable commitment to meeting these 
standards, and we will continue to work with Shell for the remainder of 
this year and into the future. As you know, Shell is currently 
conducting top-hole drilling activities in non-hydrocarbon bearing 
zones in both the Beaufort and Chukchi seas.
    The collective experience gained in the course of our preparations 
for this summer's activities, in terms of organizing, testing and 
deploying emergency and response equipment, vessels and personnel, is 
invaluable and will serve us well into the future. We also expect that 
this summer's activities will yield important information about weather 
and sea ice conditions, coastal and ocean currents, biological data, as 
well as sea floor mapping. Much of this information will come from 
Shell's activities, and the Alaska Interagency Working Group has 
provided an important mechanism to help agencies to coordinate their 
own information-gathering and analytical efforts in order to maximize 
the extent to which new information is leveraged and incorporated into 
decision-making processes.
Strengthening the Role of Science and Adopting an Integrated Management 

        Approach for the Arctic
    The Alaska Interagency Working Group is also working to strengthen 
the role of science in agency management decisions related to energy 
development in the Arctic.
    As noted above, the Department draws from the best available 
science as we develop our leasing and management plans, an approach 
that is critical when addressing energy and other development issues in 
the fragile Arctic. There is an enormous amount of scientific research 
underway in the Arctic, and the Alaska Interagency Working Group is 
helping to improve the lines of communication between the scientific 
community, decision-makers, and the public so they can work together to 
answer key questions.
    As an outgrowth of the discussions that our Alaska Interagency 
Working Group has had with the science community, and the need that I 
have identified, as Chair, to improve the interface of the science 
community with decision-makers and to adopt a more holistic approach 
when making project-based decisions in Alaska--and particularly in the 
Arctic--the Alaska Interagency Working Group has been asked to prepare 
a report to the President by the end of this year that will address two 
issues:

  1.  The establishment of a centralized hub of scientific information 
        to help inform decision-makers and the public; and

  2.  The development of a framework for building a more integrated 
        approach to evaluating potential infrastructure development in 
        the Alaskan Arctic.

    With regard to the first issue, the Interagency Working Group is 
partnering with the Arctic Research Commission and its chair, Fran 
Ulmer, and other members of the scientific community to develop a 
centralized and accessible database of scientific information and 
traditional knowledge relevant to resource management in the Arctic. 
This will provide more and better access for all decision makers--
whether they are State, Federal or local--to a centralized hub or 
portal for this information to help inform decision-makers and the 
public. Never before has there been an effort to pull together this 
range of scientific information on the Arctic into a single portal for 
access by all.
    The initiative will build upon existing data collections, such as 
the North Slope Science Initiative's Data Catalogue, Arctic ERMA, 
ocean.data.gov, regional observing systems, private industry and the 
University of Alaska's Geographic Information Network of Alaska, and it 
will complement existing interagency efforts like the Interagency 
Arctic Research Policy Committee, which is developing a five-year plan 
for Arctic research covering FY 2013-2017. Special consideration will 
be given to ensuring that cultural and traditional knowledge are fully 
integrated.
    Our work on the second issue will address the potential development 
of an ``Integrated Arctic Management'' framework for evaluating 
potential infrastructure development in the Alaskan Arctic. We 
recognize that with the burgeoning interest in the Arctic--domestically 
and internationally--and anticipated growth in energy development, 
shipping, tourism, and the like, traditional subsistence lifestyles and 
a sensitive environment may be impacted. It is important that, given 
these challenges, we make decisions based on good science, traditional 
knowledge, and with an eye toward the future. Simply put, today's 
decisions should be made in a broader context that looks down the road 
and considers what decisions may be put in front of us tomorrow.
    Working closely with the State of Alaska, Alaska Natives, local 
communities, and the many agencies and stakeholders that have been 
focusing on specific projects or regions, the framework will complement 
the efforts of the National Ocean Council and pull together Arctic-wide 
information that is relevant to future decision-making, including 
ecologically and culturally important areas, natural resources and 
processes, and key drivers of environmental changes in the Arctic; 
trends, environmental and otherwise, that affect these resources over 
time; and commercial, societal, and governmental trends that could lead 
to future infrastructure related needs in the Arctic.
    This type of approach will assist in making sound decisions 
regarding potential future infrastructure development in the Arctic as 
it recognizes the importance of a comprehensive approach in the Arctic, 
rather than evaluating activities on a sector-by-sector, project-by-
project, or issue-by-issue basis.
Renewable Energy Development
    Before I close, let me also mention that the Alaska Interagency 
Working Group is pursuing an aggressive renewable energy agenda and is 
working to facilitate the development of wind, biomass, and hydropower 
across Alaska, with a special focus on delivering affordable, reliable 
energy to remote villages located off the electricity grid. In 
particular, our Working Group is collaborating with the State of 
Alaska, industry, Alaska renewable energy experts, and native community 
representatives to develop practical and, to the extent possible, 
replicable small-scale wind-diesel energy technologies for villages off 
the grid in Alaska. The potential upside here is enormous, both for the 
Alaska Native villages and for the promise that such systems might hold 
for other isolated villages around the world.
Conclusion
    President Obama has stressed the Administration's commitment to a 
comprehensive, all-of-the-above energy strategy to both grow America's 
energy economy and continue to reduce our dependence on foreign oil. 
America's public lands and Federal waters provide resources that are 
critical to the nation's energy security. We at the Department are 
doing our part to ensure that development of the resources under our 
jurisdiction is carried out in a manner that balances our statutory 
conservation and development missions, and we are committed continuing 
to advance better coordinated Federal permitting and decisionmaking 
across government.
    We have put in place a process that will facilitate targeted 
development to the right places at the right time, and to reconcile 
this development with the protection of sensitive or special habitats. 
And through the Alaska Interagency Working Group, we are better 
coordinating Federal permitting activities and working to strengthen 
the role of science in agency management decisions related to energy 
development in the Arctic.
    Mr. Chairman, thank you again for the opportunity to be here today 
to discuss these important issues. I am happy to answer any questions 
that you or the Committee may have.

    Senator Begich. Thank you very much, Mr. Hayes.
    Let me interrupt, if I can. I know, Admiral Ostebo, you are 
next, but I also had a note which is good news. The Coast Guard 
I think issued their Certificate of Inspection on the Arctic 
Challenger today or yesterday. This is the ship that we were 
waiting for, it had a lot of issues with it, but they went 
through what I call the punch list, and made sure it met the 
standards that the Coast Guard had. So, that was really good 
news to hear today.

    STATEMENT OF REAR ADMIRAL THOMAS P. OSTEBO, COMMANDER, 
             SEVENTEENTH DISTRICT, U.S. COAST GUARD

    Admiral Ostebo. Yes, sir. We have issued the COI, 
Certificate of Inspection.
    Senator Begich. We like good news like that. I bet Shell 
likes good news like that.
    Admiral Ostebo. Sir, again, it's great to see you, although 
I would prefer to be in a helicopter out on one of our cutters 
again. That would be a lot more fun, but this is important, and 
it is----
    Senator Begich. I'll make you feel like you're in a 
helicopter.
    [Laughter.]
    Admiral Ostebo. Yes, sir.
    This is a timely hearing, and I'd echo what Deputy 
Secretary Hayes said, that there are a lot of lessons learned, 
and this really couldn't have come at a better time.
    So if I may, sir, good morning, Senator Begich, 
distinguished colleagues. I am honored to join you here today 
for this important panel.
    First and foremost, I want to thank you for your continued 
support of the U.S. Coast Guard, and especially of our hard-
working men and women here in Alaska. It is my honor to lead 
them as we execute a portfolio of critical, demanding missions 
throughout our Alaskan environment.
    Senator, I also want to thank you again for your personal 
time in visiting the Coast Guard Cutter BERTHOLF earlier this 
year in August. As you know, BERTHOLF is the lead ship in our 
national security cutter fleet, and it was a great honor to 
have you aboard there with Secretary Napolitano and Admiral 
Papp.
    I also want to thank our colleagues throughout the State of 
Alaska for their proactive leadership, partnership, and 
interest in the maritime equities, and have joined with the 
Coast Guard in all the work we have to do.
    Alaska's state, local and native leaders are also truly 
outstanding to work with, and I'm most grateful for their 
partnership and collaboration in so many areas. We truly 
couldn't do our work without them.
    I am pleased to report that the Coast Guard in Alaska is 
ready to meet today's missions. We are ready to assist those in 
distress and to work collaboratively to prevent and respond to 
oil spills and other concerns with our partners. We remain 
committed to protecting the nation's largest fisheries here in 
Alaska. A large part of that is in the Bering Sea itself.
    Maritime activity in the most remote regions of Alaska 
continues to grow. This includes the drilling operations in 
both the Chukchi and the Beaufort Sea; foreign tankers and 
commercial vessels on the Northern Sea route, the Northwest 
Passage that exit through the Bering, and also transit through 
one of the world's richest fishing grounds; research vessels 
continue to increase offshore; cruise ship activity around 
Alaskan communities on the North Slope and in a lot of places 
where they haven't been before. Commercial transit through the 
Bering Strait Unimak Pass also continues to increase from year 
to year, and we follow these trends closely as we work to be 
prepared for the operational requirements in the years ahead.
    We must also continue to refine our ability to provide and 
to support persistent presence and capability and operational 
presence in the Arctic and wherever human activity and 
environmental risks grow. This is why Operation Arctic Shield 
2012 and our expanded work in the Arctic is so important. 
During the past 5 months, we have deployed the National 
Security Cutter BERTHOLF, and High-Endurance Cutter ALEX HALEY, 
two of our 225-foot oceangoing light-ice-capable buoy tenders, 
and we have repositioned two HH-60 Jayhawks, our newest and 
most capable helicopters, to Barrow to provide persistent 
presence as we tested and deployed the Oil Spill Recovery 
System in the Arctic for the first time. We gained many lessons 
learned in the high latitudes.
    Strategically, Arctic Shield 2012 focused on three specific 
areas. One was outreach; two, operations; and three, assessing 
the capabilities that we currently have and looking to the 
future for those that we'll need. Although this season wasn't 
as successful or wasn't as big as we had hoped as far as 
Secretary Hayes had mentioned with the weather and other 
concerns, we did learn much this year.
    This summer we had over 16 engagements in our partnership 
role with 33 Arctic communities. We brought medical, dental and 
veterinary services throughout the North Slope. We conducted 
consultation and coordination with our Native communities and 
leaders regarding Coast Guard operations and the operations of 
industry offshore. We worked with public education Kids Don't 
Float fishing vessel inspections and recreational boat and ice 
safety training. All in all, we devoted over 1,000 hours of 
public service with our fine Coast Guardsmen across the North 
Slope. Our partnerships are critically important.
    Operationally, we learned a lot this year, sir. We learned 
how our ships operate. We learned where the pivotal points are 
with communications and capability and working in the Arctic in 
the long run.
    Infrastructure and atmospheric propagation causes a lot of 
trouble with communications. We know that's going to be a 
critical node in the future not only for the Coast Guard but 
for our DOD partners, for our interagency partners as we look 
to the expansion of activities in the Arctic. We're going to 
have to address that as Job 1, sir.
    And finally, regarding our capabilities, we had a very 
productive test of our Oil Spill Recovery System in the Arctic. 
That was the first time it's been above the Arctic Circle. We 
realize it does not work in icy waters, but it does work 
effectively in the open waters of the Arctic, as we learned 
this summer.
    Sir, in closing, I am grateful for your interest in the 
U.S. Coast Guard and for your support of all of our efforts 
this summer. It has been truly an historic summer for our 
forces, and I couldn't be more proud of the people that serve 
your state here in Alaska. The men and women of the Coast Guard 
Alaska are ready today and prepared for tomorrow. Through 
courage, determination and proficiency, we will continue to set 
the standard for mission execution nationally and provide 
frontline services here in your state.
    Thank you very much for the opportunity to testify, and I 
look forward to your questions.
    [The prepared statement of Admiral Ostebo follows:]

    Prepared Statement of Rear Admiral Thomas P. Ostebo, Commander, 
                 Seventeenth District, U.S. Coast Guard
    Senator Begich and distinguished colleagues, thank you for the 
opportunity to join you today. I am pleased to discuss Coast Guard 
Arctic responsibilities and operations. This past summer we prepared 
for Arctic activity driven by the oil industry's planned drilling 
operations in the Chukchi and Beaufort Seas. Partnering closely with 
Federal, State, Local, and Tribal government partners, and working with 
industry as the regulated parties, the Coast Guard was ready for 
operations in the Arctic with Operation Arctic Shield. The lessons we 
learned this year will inform our planning and strategy, to ensure we 
remain always ready to ensure the safety, security and stewardship of 
the emerging maritime frontier of the Arctic.
Operation Arctic Shield 2012
    Arctic Shield 2012 was a three pronged interagency operation in 
Alaska's coastal Arctic domain consisting of outreach, operations, and 
assessment of capabilities from February through October 2012. Outreach 
was comprised of delivering education, awareness and health services 
for Arctic communities and outlying native villages. Operations 
involved deployment of major cutter forces, air assets, communication 
equipment, and mission support to conduct the Coast Guard's missions. 
Assessment of capabilities involved an analysis of our front-line 
operations and mission support assets in Arctic conditions. 
Additionally, an oil spill contingency exercise in Barrow, Alaska, 
tested Coast Guard and Navy skimming equipment launched from a 225-foot 
Coast Guard buoy tender. Arctic Shield 2012 was carefully tailored to 
deliver the appropriate set of capabilities to this remote area. I am 
very proud of our team in the Seventeenth Coast Guard District for 
bringing the Arctic Shield plan to fruition.
    The following unclassified schematic outlined our planned force lay 
down for Arctic Shield 2012. The graphic demonstrates our key 
challenge--moving Coast Guard resources from our long-established bases 
in south Alaska to the emerging frontier of northern Alaska.


    For the first time, we had two MH-60 helicopters in Barrow standing 
the watch and ready to respond. This meant that, readiness and weather 
permitting, we could meet a 30-minute launch window for imminent 
missions such as search and rescue, environmental protection and law 
enforcement. The following photo shows the MH-60s in their leased 
hangar in Barrow.


    We deployed USCGC BERTHOLF, the first National Security Cutter, to 
the southern Arctic region, providing persistent operational presence, 
and command and control, in areas where we lacked the permanent 
infrastructure of a coastal Sector. We also deployed two light-ice 
capable 225-foot ocean-going buoy tenders to increase offshore 
operational capability in the region.
The Coast Guard in Alaska and the Arctic Region
    The Coast Guard has been operating in the Arctic Ocean since 1867, 
when Alaska was just a territory. Then, as now, our mission is to 
assist scientific exploration, chart the waters, provide humanitarian 
assistance to native tribes, conduct search and rescue, and enforce 
U.S. laws and regulations.
    In Alaska, Coast Guard aircraft and vessels monitor more than 
950,000 square miles off the Alaskan coast to enforce U.S. laws. We 
patrol an even larger area of the North Pacific Ocean to stop large-
scale high seas drift netting and other illegal fishing practices, 
including foreign incursions into the U.S. Exclusive Economic Zone. We 
also conduct marine safety and environmental protection missions in the 
region.
    To protect the Arctic environment, we are engaging industry and the 
private sector to address their significant responsibilities for 
pollution prevention, preparedness, and response. Recognizing that 
pollution response is significantly more difficult in cold, ice, and 
darkness, enhancing preventative measures is critical. Those engaging 
in offshore commercial activity in the Arctic must also plan and 
prepare for emergency response in the face of a harsh environment, long 
transit distances for air and surface assets, and limited response 
resources. We continue to work to improve awareness, contingency 
planning, and communications. We are also actively participating in the 
Department of Interior-led interagency working group on Coordination of 
Domestic Energy Development and Permitting in Alaska (established by 
Executive Order 13580) to synchronize the efforts of Federal agencies 
responsible for overseeing the safe and responsible development of 
Alaska's onshore and offshore energy.
    While prevention is critical, the Coast Guard must be able to 
manage the response to pollution incidents where responsible parties 
are not known or fail to adequately respond. In 2010, we deployed an 
emergency vessel towing system north of the Arctic Circle. We have also 
exercised the Vessel of Opportunity Skimming System (VOSS) and the 
Spilled Oil Recovery System (SORS) in Alaskan waters, but we had yet to 
conduct exercises north of the Arctic Circle until this summer. Both of 
these systems enable vessels to collect oil in the event of a 
discharge, however, these systems have limited capacity and are only 
effective in ice-free conditions. As part of Arctic Shield 2012, we 
conducted the furthest northern deployment and testing of the SORS in 
the vicinity of Barrow.
    Fisheries are also a concern in the region. The National Marine 
Fisheries Service, based upon a recommendation from the North Pacific 
Fisheries Management Council, has imposed a moratorium on fishing 
within the U.S. Exclusive Economic Zone north of the Bering Strait 
until an assessment of the practicality of sustained commercial fishing 
is completed. The Coast Guard will continue to carry out its mission to 
enforce and protect living marine resources in the high latitudes.
    We are employing our Waterways Analysis and Management System to 
assess vessel traffic density and determine the need for improved aids 
to navigation and other safety requirements. We are also moving forward 
with a Bering Strait Port Access Route Study, in coordination with our 
international partners, which is a preliminary analysis to evaluate 
vessel traffic management and appropriate ship routing measures.
    The Coast Guard continues to support international and multilateral 
organizations, studies, projects and initiatives. We are actively 
working with the Arctic Council, International Maritime Organization 
and their respective working groups. We are leading the U.S. delegation 
to the Arctic Council Oil Spill Task Force that is developing an 
International Instrument on Arctic Marine Oil Pollution Preparedness 
and Response. We are also conducting joint contingency response 
exercises with Canada and we maintain communications and working 
relationships with Canadian and Russian agencies responsible for 
regional operations including Search and Rescue, law enforcement and 
oil spill response. We maintain bilateral response relationships with 
Canada and Russia, and last month we hosted representatives from the 
Russian State Marine Pollution Control Salvage and Rescue 
Administration to sign an expanded Memorandum of Understanding and 
Joint Contingency Plan to foster closer cooperation in oil spill 
response. We will continue to engage Arctic nations, international 
organizations, industry, academia and Alaskan state, local and tribal 
governments to strengthen our partnerships and inter-operability.
    Our engagement with Alaska Native Tribes continues to be highly 
beneficial. Our continued partnership has made our operations safer and 
more successful. We are working hard to ensure tribal equities are 
recognized, and that indigenous peoples and their way of life are 
protected. We look forward to continuing to strengthen our partnerships 
with our Alaskan Native partners.
    The Coast Guard continues to push forward and assess our 
capabilities to conduct operations in the Arctic. Since 2008, we set up 
small, temporary Forward Operating Locations on the North Slope in 
Prudhoe Bay, Nome, Barrow and Kotzebue to test our capabilities with 
boats, helicopters, and Maritime Safety and Security Teams. We also 
deployed our light-ice capable 225-foot ocean-going buoy tenders to 
test our equipment, train our crews and increase our awareness of 
activity. Additionally, each year from April to November we have flown 
two sorties a month to evaluate activities in the region.
    Looking ahead over the next 10-15 years, the Coast Guard's regional 
mission profile will continue to evolve. Increasing human activity will 
increase the significance and volume of maritime issues, such as 
freedom of navigation, offshore resource exploration, and environmental 
preservation.
The Coast Guard in Context of National Arctic Policy
    U.S. Arctic policy is set forth in the 2009 National Security 
Presidential Directive 66/Homeland Security Presidential Directive 25. 
For the past four years, as we are today with Arctic Shield 2012, we 
have been conducting limited Arctic operations during open water 
periods. However, we face many challenges looking into the future. Some 
Arctic operations demand specialized capabilities and personnel trained 
and equipped to operate in extreme climates. Our assessments of the 
nation's requirements for operating in ice-laden waters will consider 
infrastructure requirements to support operations, and requirements for 
personnel and equipment to operate in extreme cold and ice.
    Given the scope of these challenges, we have been conducting oil-
in-ice research since 2010 to evaluate, develop, and test equipment and 
techniques that can be used to successfully track and recover oil in 
any ice filled waters, and have explored promising technologies, such 
as heated skimmers. The Coast Guard's strategic approach is to ensure 
we pursue the capabilities in the future to perform our statutory 
missions so we can ensure the Arctic is safe, secure, and 
environmentally sustainable. This strategy is consistent with our 
Service's approach to performing its Maritime Safety, Security and 
Stewardship functions.
Conclusion
    Arctic Shield 2012 was an appropriate plan to meet projected 
mission requirements this year. Moving forward, we will continue 
building our strategy using a whole-of-government approach that will 
inform national dialogue and policy development for this critical 
region.
    While there are many challenges, the increasingly open Arctic Ocean 
also presents unique opportunities. We look forward to working with the 
Congress on how our Coast Guard can continue to support our national 
Arctic objectives, protect its fragile environment and remain Semper 
Paratus--Always Ready in this new ocean.
    Thank you for the opportunity to testify today. I look forward to 
your questions.

    Senator Begich. Thank you very much. And I will say, the 
Bertholf is an incredible piece of equipment, and just knowing 
what its capacity is. I think, that the work by being up there, 
the activity between you, the local community, as well as 
industry, well, because of the Coast Guard's presence I think 
nine lives you were able to identify that you had saved because 
of that equipment.
    Admiral Ostebo. Yes, sir. Yes, sir.
    Senator Begich. It's a great piece of equipment, and I 
enjoyed flying on it, and you had a great crew there.
    Admiral Ostebo. Thank you, sir.
    Senator Begich. Ms. Furgione, please.

       STATEMENT OF LAURA K. FURGIONE, ACTING ASSISTANT 
         ADMINISTRATOR FOR WEATHER SERVICES AND ACTING 
         DIRECTOR, NATIONAL WEATHER SERVICE, NATIONAL 
         OCEANIC AND ATMOSPHERIC ADMINISTRATION, U.S. 
                     DEPARTMENT OF COMMERCE

    Ms. Furgione. Good morning, Chairman, and thank you for the 
opportunity to come to Alaska again. As I said, things have 
been much better for me personally in the last 24 hours, so I 
appreciate the opportunity to be here with you and to testify 
before you again. I was with you in Barrow on your first 
hearing in the field.
    My name is Laura Furgione. I am the Acting Director for the 
National Weather Service, which is a part of NOAA, the National 
Oceanic and Atmospheric Administration. This year in the 
Arctic, we have witnessed the lowest sea ice extent on record. 
That's 18 percent below the previous minimum that I was up here 
to experience firsthand in 2007, and 49 percent below the 1979-
2000 average. As sea ice retreats, the Arctic waters become 
more accessible. That creates increasing needs for scientific 
information and emergency response preparedness and assistance.
    NOAA plays a critical role in the Arctic by providing 
information, knowledge and services to allow folks to live and 
operate safely here in the Arctic. A strategic approach to 
leveraging across all agencies is essential for the United 
States to take advantage of emerging economic opportunities 
without causing irreparable harm to our precious and fragile 
resources here in the Arctic.
    As interest and activities continue to expand in the 
Arctic, NOAA is receiving increasing requests for longer-range 
weather forecasts and warnings, detailed sea ice forecasts, and 
more accurate nautical charts. We strive to meet the needs of 
our stakeholders and partners, including the Coast Guard, the 
State of Alaska, and the Department of Interior in our 
collective effort to protect lives and property and support 
sound decisions for managing those resources.
    The Arctic region has very little information 
infrastructure needed to provide weather forecasts and warnings 
of the caliber we have come to expect in the Lower 48. Thus, 
data from polar orbiting satellites, as you mentioned before, 
is critical to feed our real-time forecasting and warnings such 
as the Rapid Sea Ice Formation and Severe Storms. With your 
support in Fiscal Year 2012, NOAA has made significant 
progress, gained momentum, and established a foundation to move 
the JPSS, the Joint Polar Satellite System, forward.
    Even with this support, NOAA could still face a data gap in 
the U.S. Civilian Polar Orbiting Satellites, which both 
civilian and military users rely upon. This critical piece of 
national infrastructure will be instrumental at a time when the 
Arctic development is expected to ramp up significantly.
    Sea ice poses a specific forecasting challenge. Sea ice 
formation in the Arctic Ocean is complicated, and it's a 
process related to many environmental factors. Nonetheless, we 
are able to predict sea ice development and movement with 
varying degrees of uncertainty and certainty. Between the 
National Ice Thinner, which is a NOAA-Navy-Coast Guard 
partnership, and the National Weather Service here in Alaska, 
we're able to serve the U.S. Arctic with daily sea ice 
forecasts and analysis 5 days a week, and we hope to expand to 
7 days a week.
    NOAA is also focused on improving its Arctic Marine 
Transportation Services to support safe, environmentally sound 
navigation and economic development. Currently, Alaska has 
limited tide and current data, obsolete shoreline and 
hydrographic data, and in fact most of the Arctic waters that 
have been charted were surveyed long ago, back to the Captain 
Cook days. As a result, confidence in the region's nautical 
charts is very low. NOAA's Arctic Nautical Charting Plan that 
was developed in 2011 identifies 17,000 miles of Alaska 
coastline and 240,000 square nautical miles of navigationally 
significant waters in need of surveying. To that end, we 
completed surveys of Kotzebue Sound, the Kuskokwim River, and 
the Krenitzin Islands in 2011.
    In 2012, the NOAA ship Fairweather conducted a 
reconnaissance survey north through the Bering Strait to the 
U.S.-Canadian border to help prioritize survey needs for 2013 
and beyond.
    As energy exploration and transportation activities 
increase in the region, NOAA and our interagency partners are 
actively preparing for potential emergencies. NOAA is the lead 
scientific support agency to the Coast Guard during a marine 
oil spill response or a pollution threat. NOAA and its partners 
have developed an Environmental Response Management 
Application, otherwise known as ERMA, for the Arctic region. 
This is a Web-based geographic information system that will 
help emergency responders and environmental resource managers 
deal with spills and environmental damage. We thank the 
Interior Department for their support of the Arctic ERMA.
    NOAA also enjoys a close working relationship with the 
Coast Guard in the Arctic, and across the Nation. We thank them 
for their hard work and willingness to partner on our shared 
missions.
    Moving forward, Federal investments are needed as energy 
companies transition from exploratory oil and gas activities to 
production. Obtaining additional environmental observations and 
improved forecast modeling, nautical charts and response 
preparedness has all required significant effort from the 
Federal community and are critical to our successful and 
sustainable economic development in the region. As Deputy 
Secretary Hayes mentioned, the President has requested an 
interagency working group on coordination of domestic energy 
development and permitting in Alaska. NOAA is managing the 
writing of this report, which will address key components of an 
integrated Arctic management framework for evaluating potential 
infrastructure development in the Arctic.
    There is a great deal of work to be done. NOAA is committed 
to strengthening Arctic science and stewardship in 
collaboration with our partners in order to provide information 
products and services needed by our stakeholders.
    Thank you for the opportunity to appear before you today, 
and I look forward to answering any of your questions. Thank 
you.
    [The prepared statement of Ms. Furgione follows:]

Prepared Statement of Laura K. Furgione, Acting Assistant Administrator 
  for Weather Services and Acting Director, National Weather Service, 
  National Oceanic and Atmospheric Administration, U.S. Department of 
                                Commerce
    Chairman Rockefeller, Ranking Member Hutchison, Senator Begich, and 
distinguished members of the Committee, thank you for the opportunity 
to submit testimony on preparations for, and lessons learned from, the 
first season of drilling in the Arctic. My name is Laura Furgione, 
Acting Assistant Administrator for Weather Services of the National 
Oceanic and Atmospheric Administration (NOAA). This year in the Arctic 
we have witnessed the lowest sea ice extent on record, 18 percent below 
the previous minimum in 2007 and 49 percent below the 1979 to 2000 
average. Shifts in ocean ecosystems are evident from the Aleutian 
Islands to Barrow, Alaska and across the Arctic Ocean, due to a 
combination of Arctic warming, natural variability, and sensitivity to 
changing sea ice conditions. As sea ice retreats, the Arctic waters 
become more accessible, creating cascading needs for scientific 
information and emergency response planning.
    As the maritime community anticipates a future open Arctic trade 
route, and as the energy industry anticipates and prepares for years of 
oil and gas exploration in the Chukchi and Beaufort Seas, this hearing 
puts a well-deserved spotlight on emerging Arctic opportunities and 
challenges, as well as the Federal Government's role in helping the 
United States (U.S.) to safely and sustainably manage the use of its 
Arctic resources. One of NOAA's missions is gathering and disseminating 
environmental information for situational awareness, economic decision-
making, and public safety. We are receiving more requests for services 
such as detailed Arctic weather forecasts and severe storm warnings, 
better short-and long-term sea ice forecasts, and more comprehensive 
and up-to-date nautical charts. NOAA also stands ready to deliver on 
its other core science and stewardship roles, such as providing 
baseline data for fisheries management and protected species and 
ecosystems, understanding how oil behaves in frigid waters, and 
assisting with emergency response.
    Federal agencies with Arctic responsibilities must work together to 
maximize effectiveness and continue to generate the sound science 
necessary for upholding these responsibilities. Dr. Jane Lubchenco, 
Under Secretary of Commerce for Oceans and Atmosphere, told U.S. Coast 
Guard (USCG) Academy Cadets this past April, ``Nowhere is the need for 
partnerships, stewardship, and leadership seen more keenly than in the 
Arctic.'' In my testimony, I will describe NOAA's contributions to a 
unified Federal Government approach that supports safe and 
environmentally sustainable economic activity in the Arctic, including 
oil and gas exploration.
NOAA's Arctic Vision and Strategy
    After listening to what Arctic stakeholders said they needed via 
various means, including public comment, Alaska/regional meetings with 
stakeholders, and conversations with sister agencies on their Arctic 
requirements, in 2011 NOAA developed a comprehensive Arctic strategy 
that integrates and aligns our numerous and diverse capabilities within 
the broader context of our nation's Arctic policies and research goals. 
NOAA's Arctic Vision and Strategy \1\ has six priority goals to 
directly support the efforts of our local, state, Federal, and 
international partners and stakeholders. NOAA has since organized its 
Arctic efforts around these goals:
---------------------------------------------------------------------------
    \1\ http://www.arctic.noaa.gov/docs/arctic_strat_2010.pdf.

---------------------------------------------------------------------------
  1.  Forecast Sea Ice

  2.  Strengthen Foundational Science to Understand and Detect Arctic 
        Climate and Ecosystem Changes

  3.  Improve Weather and Water Forecasts and Warnings

  4.  Enhance International and National Partnerships

  5.  Improve Stewardship and Management of Ocean and Coastal Resources 
        in the Arctic

  6.  Advance Resilient and Healthy Arctic Communities and Economies

    These goals were selected because they represent areas where NOAA 
can address and provide leadership on urgent and timely issues that 
meet two key criteria: providing the information, knowledge, and 
policies to meet NOAA mandates and stewardship responsibilities and 
providing the information, knowledge, and services to enable others to 
live and operate safely in the Arctic. A strategic approach to 
leveraging our strengths and those of other Federal agencies with 
Arctic missions is essential for the United States to take advantage of 
emerging economic opportunities there without causing irreparable harm 
to this fragile region.
NOAA's Arctic Tools and Products
    Within NOAA's existing capacity for Arctic action, we have had some 
successes in implementing our strategic goals, particularly those 
relating directly to improving stewardship on management of coastal 
resources and advancing communities and economies, such as marine 
transportation and oil and gas exploration. Additionally, NOAA has been 
working with its Federal partners through the National Ocean Council to 
implement actions to improve Arctic environmental response management 
and sea ice forecasting, enhance Arctic communications systems, and 
advance Arctic mapping and charting.
Weather and Sea Ice Forecasting
    NOAA delivers public, marine, and aviation weather forecast 
services to protect life and property, enhance the economy and fulfill 
U.S. obligations under international treaties for the safety and 
security of marine transportation, oil and gas exploration, and tourism 
activities, and to protect northern and western Alaska coastal 
communities from storm surge and other hazards. Major stakeholders and 
partners, including the USCG and the State of Alaska's Division of 
Homeland Security and Emergency Management, require more accurate 
weather and water information for planning and decision making to 
protect lives, property, and manage the region's many resources. For 
example, we learned during Hurricane Irene that it takes seven hours to 
evacuate Connecticut's coastal residents. By contrast, it takes 24 
daylight hours to evacuate the villages along Alaska's west coast where 
hurricane-strength storms are becoming more frequent, impressing the 
need for more accurate and advanced notice regarding potential hazards. 
Since road systems are not viable transportation options in Alaska, 
Arctic populations rely heavily on aviation and marine weather for safe 
transportation and access to goods and services.
    Weather prediction in the Arctic is generally not of the same 
accuracy, resolution (temporal and spatial), and reliability as similar 
products over the lower 48 states and mid-latitudes. The Arctic region 
has very little of the information infrastructure needed to provide 
weather forecast and warning services of a caliber comparable to the 
mid-latitudes. A primary reason for this discrepancy is the relative 
scarcity of field observations to support meteorological and 
oceanographic modeling and environmental observations and studies 
supporting weather and ice forecasts. Existing observations are highly 
limited in both geographic scope and frequency. The Arctic region also 
presents unique numerical modeling challenges with respect to the 
dynamic coupled interaction of the ocean, sea ice, and atmospheric 
processes both in near- and long-term prediction scales. For example, 
there is inadequate real-time meteorological data in U.S. Arctic waters 
to support accurate forecasting of ocean storms, which have the 
potential to threaten marine transportation, offshore oil and gas 
operations, and the Arctic coastal communities.
    Sea ice formation in the Arctic Ocean is a complicated process 
related to many environmental factors, including: winds, temperatures, 
and radiation that vary over time; surface and sub-surface ocean 
temperatures, water salinity, ocean currents; and antecedent ice 
conditions. Despite these complexities, there are techniques that can 
be used to formulate some objective sea ice freeze-up guidance with 
varying degrees of uncertainty. NOAA employs many methods to forecast 
the development and movement of sea ice in the Arctic, including 
analog, dynamic sea ice models, and statistical methods. Considerable 
uncertainties in long-term sea ice forecasting and a rapidly changing 
baseline in the Arctic make it difficult to provide a precise date for 
the timing of sea ice freeze-up in the open water or in the many 
communities along Alaska's coastline. Accordingly, NOAA uses a 
probabilistic approach when possible, and delivers information in 
simpler terms (ranges of most probable dates) for the public. NOAA 
maintains strong relationships with its customers and stakeholders, 
providing briefings and outlook information to support tactical and 
strategic operational decision-making for the Arctic. In addition, NOAA 
partners with the U.S. Navy and USCG to operate the National Ice Center 
in Suitland, Maryland, which delivers global scale operational analyses 
and forecasts of sea ice conditions to a broad constituency of national 
and international users. NOAA's sea ice operations in Alaska and 
Maryland collaborate to provide daily products serving the U.S. Arctic 
five days a week. NOAA, along with the National Aeronautics and Space 
Administration and the National Science Foundation, also supports the 
National Snow and Ice Data Center within the Cooperative Institute for 
Research in Environmental Sciences at the University of Colorado, where 
a vast array of Arctic data are collated, managed, and made available 
to both academic and public users. NOAA has been implementing an 
ongoing expansion of the U.S. Climate Reference Network in Alaska with 
an aim to continue reducing the uncertainty in temperature and 
precipitation trends, which is critical to the accurate 
characterization of climate variability and change.
    Currently, NOAA uses in situ, airborne, and satellite technologies 
to inform the meteorological and oceanographic datasets that generate 
forecasts in the Arctic. NOAA's international partners also contribute 
meteorological information to these datasets. However, to improve local 
and global forecasts in this region, new in situ and airborne 
technologies would be needed to enhance forecast coverage in the 
Arctic. Science and technology will need to be leveraged based on 
advanced numerical models, including being able to depict and convey 
ranges of uncertainty in the predictions. Improved Earth system models 
will include coupling of atmosphere, ocean, land, and ice at local, 
regional, and global scales. Improving forecasts of sea ice, on all but 
the shortest time periods, requires parallel improvement in general 
weather forecasts, especially wind forecasts as wind speed and 
direction are key drivers of ice dynamics at this scale driving the 
requirement for increased wind observations.
Satellites
    In data-sparse areas like Alaska, polar-satellite data are critical 
to weather forecasting, an essential component of aviation safety. 
Light aircraft aviation is a $400 million a year industry in Alaska, 
and since many Alaskan communities are not accessible by roads, 
residents often rely on aircraft as a primary mode of transportation. 
Furthermore, since geostationary satellite coverage is not available in 
large areas of the Arctic, NOAA's Search and Rescue beacon program 
relies heavily on polar-orbiting satellites to receive signals from 
distressed mariners and aircraft personnel. Although we experienced 
funding instability in FY 2011, with the support from Congress in FY 
2012 ($924.0 million for polar orbiting satellites), NOAA has made 
significant progress, gained momentum, and established a foundation to 
move the Joint Polar Satellite System (JPSS) program forward. NOAA 
could still face a data gap beginning in 2016 in the U.S. civilian 
polar orbit if the Suomi NPP mission were to cease operations at the 
end of its projected life in 2016 before JPSS-1 becomes fully 
operational. Data from NOAA's polar orbiting satellite are critical in 
real-time forecasting and warning of events such as rapid sea ice 
formation and storms carrying hurricane force winds that are major 
hazards for life, property, and economic activities in the Arctic. This 
critical piece of national infrastructure will be instrumental at a 
time when Arctic development is expected to ramp up to protect U.S. 
assets in this region. NOAA is doing everything it can to minimize the 
potential data gap.
Marine Transportation
    NOAA recognizes both the value and the challenge of improving the 
marine transportation system in Arctic waters. Currently, Alaska has 
limited geospatial infrastructure; sparse tide and current measurements 
and predictions; obsolete shoreline and hydrographic data; and poor 
nautical charts. Most Arctic waters that have been charted were 
surveyed with obsolete technology, some dating back to the 19th 
century, before the region was part of the United States. In addition, 
the large scales of most of the charts are not detailed enough to 
adequately support coastal navigation. As a result, confidence in the 
Arctic region's nautical charts is low.
    NOAA policy places a high priority on updating nautical charts 
needed by the ever-increasing number of commercial shippers, tankers, 
passenger vessels, and fishing fleets transiting the Alaskan coastline. 
NOAA's Arctic Nautical Charting Plan, issued in June 2011, provides a 
strategy for additions and improvements to nautical chart coverage in 
U.S. Arctic waters and describes the activities necessary to produce 
and maintain charts suitable for safe navigation. The plan identified 
17,000 miles of Alaskan coastline, and 240,000 square nautical miles of 
navigationally significant waters in need of new or updated surveying. 
Since 2007, NOAA has acquired approximately 2,950 square nautical miles 
of hydrographic data with modern survey methods (multibeam sonar) in 
the U.S. Arctic. In 2011, NOAA completed surveys in Kotzebue Sound, 
Kuskokwim River, and the Krenitzin Islands. In addition to updating 
existing charts, NOAA created a new chart of Kotzebue Sound.
    In order to leverage NOAA's resources, NOAA is building on both 
public and private sector partnerships, domestically and 
internationally, to find complementary sources of data that strengthen 
our knowledge of the Arctic environment and improve science-based 
decision making. For example, NOAA signed an innovative data sharing 
MOA with oil companies doing work in the Arctic and has a growing 
relationship with USCG aimed at most effectively utilizing bathymetric 
data collected by USCG ships in the Arctic.
    NOAA has expanded efforts to foster international collaboration on 
hydrographic surveying, nautical charting, and other mapping activities 
through our role as U.S. representative to the International 
Hydrographic Organization. In this capacity, we worked to establish an 
Arctic Regional Hydrographic Commission with Denmark, Canada, Norway, 
and Russia to facilitate coordination and data exchange in the region.
    U.S. collaboration with Canada has resulted in several years of an 
effective partnership to conduct joint seafloor mapping missions of the 
Arctic extended continental shelf (ECS). Per criteria set forth in 
Article 76 of the Law of the Sea Convention to define ECS and in 
preparation for determining and submitting limits of the U.S. ECS in 
the Arctic, NOAA and the U.S. Geological Survey worked with Canada to 
acquire hydrographic and geological data using the USCG Cutter Healy 
and the Canadian icebreaker Louis St. Laurent. As of September 2012, 
the U.S. ECS project has mapped 106,710 square nautical miles of 
offshore seafloor bathymetry in the Arctic Ocean to support this 
effort. In fact, USCG Cutter Healy just completed a five-week mapping 
cruise in the Arctic, collecting 20,000 square nautical miles of 
additional bathymetric and geologic data necessary to delimit the U.S. 
ECS in the high Arctic. Ancillary partnership projects leveraged aboard 
the Healy, such as an Arctic ocean acidification study and an ice buoy 
study, are also amassing data that will provide a better scientific 
understanding of the ecological processes on our continental margins, 
and new insights into climate variability, marine ecosystems, 
undiscovered or unconventional energy, mineral resources, and 
environmental triggers for extreme events, such as earthquakes and 
tsunamis. The U.S. could significantly advance our economic interests 
in the Arctic with respect to ECS and other activities by ratifying the 
Law of the Sea Convention.
    To provide the foundational positioning framework supporting the 
above activities, NOAA is building on existing partnerships to acquire 
gravity data in Alaska. NOAA aims to achieve 80 percent coverage north 
of the Arctic Circle by the end of FY 2013. This project, Gravity for 
the Redefinition of the American Vertical Datum, will reduce elevation 
measurement positioning errors from multiple meters to two centimeters 
or less. The improved accuracy will help coastal communities and the 
private sector develop climate change adaptation strategies and make 
better informed decisions on infrastructure hardening, erosion and 
flood controls. NOAA is utilizing the Continuously Operating Reference 
Station (CORS) program and its partners to fill critical gaps in CORS 
coverage for Alaska. Although there are almost 100 active CORS in 
Alaska's CORS Network, less than two dozen CORS stations are in the 
Alaskan Arctic: nine sites along the Aleutian Chain, six in Arctic 
coastal areas of the Bering Sea, and seven along the North Slope.
    In addition to new partnerships, NOAA is also looking at new 
technologies, such as sonars and autonomous vehicles that can be force 
multipliers for our existing resources. We are taking innovative steps 
to prioritize the charting of unsurveyed areas to minimize risk to 
shipping. In late September, the NOAA Ship Fairweather completed a 30-
day reconnaissance survey to evaluate a sparsely surveyed 1,500-
nautical mile coastal corridor (last measured by Captain James Cook in 
1778) from Dutch Harbor through the Bering Strait and extending east 
through the Chukchi and Beaufort Seas to the U.S.--Canadian maritime 
boundary. Analysis of this mission will help NOAA define the highest 
priority survey projects in the Arctic.
Tides and Currents
    NOAA is evaluating the technology and strategies needed for long-
term monitoring of tides, water levels, and currents under harsh Arctic 
conditions. In 2008, NOAA developed an innovative system to collect 
water level data in remote, cold climate regions where winter sea ice 
precludes traditional tide station installations. In August 2008, two 
specially designed bottom-mounted water level gauges were deployed 
approximately two miles off the coast of Barrow, Alaska, in 100 feet of 
water. The systems were equipped with a high-stability pressure sensor, 
conductivity sensor, and acoustic, modern, disposable ballast, and a 
pop-up buoy for recovery. Both systems were recovered one year later, 
in August 2009, and re-deployed to collect a second year of water 
level, water temperature, and salinity data with recovery in August 
2010. The data obtained represent unique data sets collected by NOAA on 
the North Slope of Alaska, and the results have already contributed to 
an improved vertical reference system for the region.
    Existing tidal observations, along with many others, are available 
through the NOAA Integrated Ocean Observing System (IOOS) regional 
partner in Alaska, the Alaska Ocean Observing System (AOOS). IOOS, 
along with AOOS and other regional partners, addresses regional and 
national needs for ocean information, gathers specific data on key 
coastal and ocean variables, and ensures timely and sustained 
dissemination and availability of these data. AOOS released a new 
Arctic data portal in September 2012 that provides access to several 
thousand information layers ranging from habitat type to climatic 
regimes to research instruments. The Arctic data portal will be the 
foundation for a new set of tools focused on the northern Bering and 
Chukchi Seas region. These tools will assist with future conversations 
including shipping, local planning, climate change strategies, and oil 
and gas development.
Spill Response
    As Arctic sea ice continues to melt and thin, energy exploration 
and transportation activities will be increasing in the region, 
escalating the risk of oil spills and accidents. In anticipation, NOAA 
and interagency partners are actively preparing for possible 
emergencies. As the lead agency for scientific support to the USCG 
during an offshore oil spill response or pollution threat, NOAA's 
expertise in pollution response and impact science will be critical in 
the event of an Arctic oil spill and subsequent Natural Resource Damage 
Assessment (NRDA) preparedness. Currently, NOAA has one permanent 
Scientific Support Coordinator located in Anchorage, who actively 
participates in spill readiness exercises, and is working to improve 
data on the Artic environment and toxicity of hazardous materials. Over 
the last 25 years NOAA has assisted in over 100 oil spill drills and 
over 200 spill responses in Alaska, advising the USCG on oil 
trajectories, oil fate and weathering, use of spill countermeasures 
such as in situ burning and dispersants, and consideration of 
environmental impacts. NOAA also established the Alaska Joint 
Assessment Team in 2011 to build relationships between agencies and 
industry parties and reach consensus on protocols to facilitate 
implementation of NRDA, should an assessment become necessary.
    In preparation for a potential Arctic oil spill, NOAA and its 
partners have developed an Environmental Response Management 
Application (ERMA) for the Arctic region, the same interactive online 
mapping tool used during the Deepwater Horizon oil spill response. ERMA 
is a web-based GIS tool that assists both emergency responders and 
environmental resource managers in dealing with incidents that may harm 
the environment. ERMA integrates and synthesizes data into a single 
interactive map, providing a quick visualization of the situation and 
improving communication and coordination among responders and 
environmental stakeholders. ERMA was selected by the USCG as the Common 
Operational Picture for the Deepwater Horizon spill incident because it 
allowed data access across responding agencies and provided a simple 
interface by which to visualize response operations and relevant socio-
economic and environmental data. ERMA is a proven operational system 
and continues to be enhanced through strong Federal, state, and 
industry partnerships. Arctic ERMA was developed in partnership with 
NOAA, the Oil Spill Recovery Institute, the University of New 
Hampshire, and the Department of the Interior's (DOI) Bureau of Safety 
and Environmental Enforcement (BSEE). On July 31, NOAA and BSEE jointly 
announced the launch of Arctic ERMA for public access. ERMA, the 
University of Alaska-Fairbanks, and AOOS are also working together to 
ingest, share, and make data publicly available.
Monitoring Species and Climate Change
    Collecting and integrating biological, physical, and chemical 
information is essential for managing existing and emerging fisheries, 
developing models to assess risk of action or inaction, monitoring 
invasive species and detecting ongoing and future ecosystem changes in 
the complex Arctic region. To that end, NOAA is partnering with the 
University of Alaska and the Bureau of Ocean Energy Management (BOEM) 
to provide baseline information on the abundance and distribution of 
Arctic marine species and their habitats through an Arctic Ecosystem 
Integrated Survey. NOAA has also initiated the Distributed Biological 
Observatory program to provide biological and environmental sampling to 
track the ongoing shifts in ecosystem structure associated with climate 
change. NOAA also initiated a two-year survey of ice-associated seals 
in cooperation with Russian scientists in the western Arctic in 2012. 
These surveys will provide the first comprehensive estimate of 
abundance for four species of seals and will serve as a baseline for 
trend analyses in the future.
NOAA's Participation in Recent Oil and Gas Activity
    On July 12, 2011, the President issued Executive Order 13580 to 
establish an Interagency Working Group on Coordination of Domestic 
Energy Development and Permitting in Alaska (IAWG). The working group's 
purpose is to coordinate the efforts of Federal agencies responsible 
for overseeing the safe and responsible development of onshore and 
offshore energy resources and associated infrastructure in Alaska and 
the U.S. Arctic Outer Continental Shelf. The IAWG, chaired by DOI, has 
effectively facilitated interagency coordination and communication 
among the numerous government agencies charged with permitting 
activities, as well as State, local, and Alaska Native partners, 
related to oil and gas development.
    Over the past eighteen months, the IAWG and its weekly staff 
meetings have helped to keep Federal permitting agencies synchronized 
and up-to-speed on permitting activities carried out by fellow 
regulatory agencies, thereby effectively improving the efficiency of 
the permitting process. NOAA has worked closely with this group since 
its inception. We have also strengthened our coordination with 
industry, Alaska Natives, and other stakeholders to improve our 
science-based decisionmaking.
    Additionally, working closely with the State of Alaska, Alaska 
Natives, and local communities, the IAWG will prepare a report to the 
President by the end of 2012 to address key components of an 
``Integrated Arctic Management'' framework for evaluating potential 
infrastructure development in the Arctic. NOAA is playing an integral 
role in this effort.
    In May 2011, Dr. Lubchenco signed a Memorandum of Understanding 
between NOAA and the Bureau of Ocean Energy Management, Regulation, and 
Enforcement, now the BOEM and the BSEE, to ensure that decision-making 
relating to the development of outer continental shelf energy resources 
is based on the relevant scientific information and expertise of both 
agencies in order to fulfill the stewardship and conservation of living 
marine resources and ecosystems responsibilities that fall under the 
agencies' respective authorities. Leveraging relationships such as this 
to build sustained observations will enable Alaska researchers to study 
the effects of oil and gas exploration, sea ice loss, ocean 
acidification, and sea surface temperature warming on Arctic ecosystems 
over time. This information will also inform NOAA's ecosystem 
stewardship, private sector economic development, and USCG and U.S. 
Navy missions.
    In May 2011, Shell filed its Marine Mammal Protection Act (MMPA) 
incidental harassment authorization applications for exploratory 
drilling programs in the Beaufort and Chukchi Seas. Using the best 
available information, NOAA conducted careful analyses of potential 
impacts to marine mammals and published notices of proposed incidental 
harassment authorizations for public comment in November 2011.
    In August 2011, Dr. Lubchenco signed an agreement with Shell 
Exploration & Production, ConocoPhillips, and Statoil USA E&P Inc. to 
enhance collaboration on ocean, coastal, and climate science for the 
Arctic. The agreement calls for sharing a number of scientific data 
sets for this largely frontier region, including weather and ocean 
observations, biological information, and sea ice and sea floor mapping 
studies. In June 2012, all parties signed the first of three Annexes to 
the agreement. This first annex lays out protocols for sharing 
meteorological, oceanographic, and sea ice data. Already, NOAA has seen 
a 50 percent increase in the number of marine weather observations 
coming in from Arctic waters as a result of this agreement. These data 
will enhance the Arctic regional climatology analyses and historical, 
quality-controlled World Ocean Database developed by NOAA scientists. 
Follow-on annexes are being drafted to address protocols for sharing 
biological and hydrographic data.
    In the fall of 2011, NOAA began working with DOI and partner 
agencies to review and provide comments on Shell's Chukchi Sea and 
Beaufort Sea Oil Spill Response Plans. This important dialogue with DOI 
and industry on the Oil Spill Response Plans led to changes in the plan 
that addressed NOAA's concerns on oil trajectory modeling and supported 
a drilling season length that allows for adequate oil spill response. 
NOAA looks forward to continuing the ongoing dialogue with our Federal 
partners and industry to support safe offshore development in Alaska.
    In January 2012, NOAA convened an independent peer-review panel, 
including scientists from the North Slope Borough, representatives from 
the potentially impacted Alaska Native subsistence hunting groups, and 
academics to review Shell's marine mammal monitoring plans. This review 
was discussed in detail during the annual Open Water Meeting in March 
2012 here in Anchorage. This public meeting, which is sponsored by NOAA 
and has been held annually since 1994, includes participants from 
Federal, industry, and local government agencies, potentially impacted 
Alaska Native organizations and communities, and other interested 
parties. The Open Water Meeting provides a productive and open forum 
for the discussion of upcoming industry activities in the Arctic, 
results of marine mammal mitigation monitoring programs from previous 
seasons, and methods for minimizing impacts to marine mammals and 
subsistence uses from upcoming industry activities.
    In the Spring of 2012, NOAA assembled a prioritized list of 
additional staff training, resources, and research needed to assist the 
USCG with a smarter, safer and more efficient Arctic oil spill 
response. This effort resulted in a partnership with DOI's BSEE to 
expedite and enhance the development of the ERMA, the same interactive 
online mapping tool used in the Gulf of Mexico during the Deepwater 
Horizon oil spill response. We thank BSEE for their recognition of the 
need for this important tool and willingness to partner.
    As the first Arctic exploratory drilling season since the early 
1990s was becoming a reality, May was a very busy month for all Federal 
agencies involved, including NOAA. NOAA issued MMPA incidental 
harassment authorizations to Shell Offshore Inc. to take small numbers 
of marine mammals incidental to conducting an offshore drilling program 
in the Beaufort and Chukchi Seas during the 2012 open water season 
(July 1, 2012 through October 31, 2012), participated in Shell's 
tabletop oil spill drill here in Anchorage, Alaska which simulated the 
worst case discharge scenario for the Chukchi Sea, and conducted a 
workshop in Kotzebue, Alaska on ERMA and how a natural resource damage 
assessment would be carried out in the aftermath of an Arctic oil 
spill.
    In August 2012, Shell submitted a request to DOI's BOEM to extend 
their drilling season based on Shell's prediction for sea ice 
encroachment and freeze-up at their Chukchi Sea prospect. BOEM, in the 
spirit of coordination, and through the communication lines widened by 
the creation of the Interagency Alaska Permitting Working Group, sought 
the expertise of NOAA's climate, sea ice, and weather programs to fully 
understand and consider the implications of Shell's request. The 
exercise was a lesson in interagency communication that can be carried 
into the highly anticipated 2013 season.
Lessons Learned
    The work carried out by NOAA staff leading up to and during the 
2012 Arctic drilling season has been commendable and thorough. 
Nonetheless, we would be remiss if we did not reflect on the last 18 
months and identify lessons learned.
    The primary lessons learned for NOAA at this early after-action 
phase are:

  1.  the need to consider the variability of the rapidly changing 
        Arctic and shifting historical baseline when making forward-
        looking decisions,

  2.  the need to recognize and appropriately weigh the economic, 
        social, and environmental impact that oil and gas development 
        has on the State, especially North Slope communities and 
        Alaskan Natives, and

  3.  the need to increase existing collaboration and communication to 
        improve integrated science-based decision-making and process 
        efficiency.

    Federal investments are needed as we plan for energy companies to 
move from exploratory activities into, what is anticipated to be, high-
volume production over the coming decades. In short:

  1.  We need to improve our understanding of how this rapidly changing 
        Arctic environment can sustain industrial pressures through 
        enhanced environmental observations to support the best 
        science-based decisions related to weather and sea ice 
        forecasting, and ecosystem and community stewardship.

  2.  We need more access to research platforms and ship time, that 
        will improve our observation and knowledge of the increasingly 
        dynamic Arctic environment, and

  3.  We need to improve our understanding of how oil and potential oil 
        spill response methods, such as dispersants, will behave and 
        impact Arctic species.

    The U.S. Arctic is a remote place with harsh conditions. Conducting 
research in the highly variable Arctic environment poses safety risks 
and requires specialized equipment, training, and vessels. Continuing 
to seek innovative partnerships and leveraging existing resources will 
allow us to carry out our Arctic mission in a manner that is safer, 
smarter, and more efficient.
Conclusion
    NOAA is striving to streamline and bring its diverse capabilities 
to bear on the many cultural, environmental, economic, and national 
security issues emerging as a result of rapid changes in the Arctic. 
The breadth and complexity of these impacts require a concerted, 
systematic and rapid effort with partners from international to local 
levels. NOAA's scientific capabilities are being deployed to increase 
understanding of climate and other key environmental trends, to predict 
the ecosystem response to those trends, and to offer the technical 
expertise needed to develop policy options and management strategies 
for mitigation and adaptation to the environmental challenges in the 
Arctic region. NOAA's service capabilities are supporting safety and 
security needs for fishing, marine mammal protection, marine and other 
modes of transportation, energy, infrastructure, and mineral 
exploration in the unique Arctic environment. The choices we make today 
will have pivotal impacts on the future state of the Arctic and the 
well-being of its coastal communities. There is a great deal of work to 
be done, and NOAA, in collaboration with our partners, is committed to 
strengthening Arctic science and stewardship, and providing the 
information, products, and services needed by our Arctic stakeholders.
    Thank you, Mr. Chairman, for the opportunity to appear before you 
today. I look forward to answering any questions that you or the 
Committee may have.

    Senator Begich. Thank you very much, all three of your, for 
your testimony.
    For the audience, the way the process works is I have some 
questions. There will be some interaction, and then there will 
be another panel that will come on, and you will see the 
similar process that will occur.
    So again, thank you all very much.
    Let me first start with Undersecretary Hayes. There are two 
parts. First, you did answer it to a certain extent, and that 
is how the interagency working group has kind of moved the 
process a little bit smoother and faster. Shell has kind of 
been the guinea pig so far and has been able to go through all 
the pluses and minuses in that, and we know Conoco Phillips is 
now lining up for their next opportunity in the Arctic, as well 
as Stat Oil in the future.
    How do you think--will this continue on a path that will 
move the permitting process forward in a smooth effort? I know 
Shell experienced both the old style and the new style, and I 
know we'll hear in a little bit about how we felt about the 
newer approach. But how will that improve the process and the 
cost for the next two companies that are clearly moving forward 
in the Arctic?
    Mr. Hayes. Senator, I think that time will tell, but my 
prediction is that the processes that we have put in place and 
the proof of concept that we have seen here over the last year 
in terms of coordination on the Federal side will continue and 
will redouble to the benefit of not only Stat Oil and Conoco 
Phillips but other companies interested in getting permits.
    I should say that we have applied this model onshore as 
well. In recent weeks in particular, weeks and months, there 
have been a lot of questions about Federal permitting of Exxon 
Mobil's Point Thompson project, and prior to that Conoco 
Phillip's CD5 project in the NPRA, and our interagency group on 
both of those has gotten together and is ensuring that the 
agencies with equities have been coordinating and helping 
ensure a single Federal voice.
    I should say that this model is something that the 
President has adopted more generally. He issued an executive 
order on major infrastructure projects that applies throughout 
the country that is based largely on this model of the Federal 
Government coming together and not having agencies sort of 
seriatim look at the same project in their silos.
    It's the way we should do business as a government. It is a 
real government reform effort. We're proud of it, and we want 
to make it work. We will need everyone's help in order to 
continue this process.
    I should say also we've had very good support with the 
State of Alaska in terms of coordinating with the state in that 
regard as well and have a good interaction with them on these 
issues.
    Senator Begich. I guess this year was kind of the beginning 
of what's ahead of us in the Arctic, and I think we've had 
discussions about this on the record and off the record about 
what the magnitude of the potential is there, and I think this 
effort that you all were talking about in regards to a broader 
look and how that report at the end of the year will be 
presented to the President.
    One of the concerns that pops up any time you go into a 
broad sweep, is will that then cause delay because now there is 
this bigger picture, that suddenly a group that's already 
moving through the system gets caught up in? How do you see 
that interacting with movement by Shell, by Conoco, by Stat and 
others to develop the Arctic?
    I like the approach of seeing the whole picture, because 
then you don't have these multiple competitions of air shed 
permits and, while they are here, how does this oil spill 
technology work? Is it just siloed out for Shell? Is it siloed 
out for Conoco? Can we merge this effort?
    So I understand that part. But the concern we're starting 
to hear is that as the group's work gets completed, will that 
be an obstacle that says to some of these folks now you've got 
to start over, or I'm sorry, we can't do this? Can you explain 
how that connection works?
    Mr. Hayes. I think the hope, Senator, and expectation is 
that this process will provide more clarity for all interested 
parties. I'll use the analogy of the new 5-year plan that our 
department put out for offshore activities over the next 5-year 
period. We identified an area to the northeast of Barrow in the 
offshore that we have excluded from future drilling, future 
lease sales, because of subsistence needs by the Barrow 
community and the whaling community. We think it's better to 
provide that big-picture clarity. We're not going to be leasing 
in this area. That enables companies to make good decisions and 
to not, frankly, waste their efforts in putting together bids 
for areas that are high-conflict areas.
    That's the hope more generally, that when we look at things 
on a landscape-level basis, we can provide more clarity for all 
the interested parties and permitting can go more quickly. I 
will just very quickly mention that on Friday, tomorrow, the 
Secretary is going to be announcing a final decision on how 
we're permitting large utility-scale solar projects in the 
southwest, a similar concept. Look at the landscape level, 
identify----
    Senator Begich. What we're doing here, this concept of 
bringing everyone----
    Mr. Hayes. Yes, bringing everyone together, talk about the 
entire landscape, identify the areas that make the most sense 
for development, provide the incentives and the clear pathway 
for development there, and for the areas that are sensitive and 
important for subsistence, for environmental sensitivities, 
don't look to those areas. So I think it's just a common-sense 
way to proceed, but it's going to require a lot of input from 
everybody to get it right, and that's what we're committed to 
do.
    Senator Begich. Let me ask you a couple more quick 
questions, and then I'll move to the Admiral in a second. These 
are related, but it's more about the long term. As exploration 
moves forward, as I said, my statement was it's not a question 
of if we're drilling, it's how we do it right. Is that a fair 
statement of how the Obama Administration views what we're 
doing in the Arctic? Because some people are concerned--I'll be 
very blunt with you--that once election occurs, we'll pause for 
a moment. Let's assume re-election occurs, and then suddenly 
everything reverses. That's a question we hear rumbling out 
there, and I like always to get stuff on the record and just 
clear the deck and move forward. So can you give me a sense of 
that?
    And then also we know that in 2015 we have some lease 
opportunities, and 2017. Give me your sense of how to recognize 
that Arctic development is happening, it's just a question of 
how we do it. That's how I always talk about it. Can you 
respond to that?
    Mr. Hayes. I'll respond, Senator, by saying that Shell and 
a number of other companies have leases that they have entered 
into with the U.S. Government that give them certain 
development rights subject to permitting responsibilities. It's 
our responsibility under the law to implement those permitting 
processes, and we will continue to do that. That is our 
responsibility.
    In terms of future sales, as we have indicated in our five-
year plan, we are open to additional sales in the Arctic under 
the President's 5-year plan. We are looking forward to 
continuing to get more science, and also get the experience 
based on the current activity to help inform whether and when 
and how those lease sales, potential lease sales would occur.
    Senator Begich. And the last one is, just in fairness to 
all the folks who are here to be able to answer questions, but 
let me ask you one last one. It's on NPRA. As you know, 
exploration is just a piece of the puzzle, and that's an 
important piece because we have to figure out what's there and 
how to manage it in that process. That but leads us to the real 
future, which is the development, how to develop it the right 
way and getting access to that product.
    So if it's available and it's commercially viable, it will 
have to come, as we know, through a pipe through the NPRA in 
some form, Chukchi through the east to west pipe, and Beaufort 
north to south in some form. As you know, there have been 
concerns. We've had conversations. You've been very forthright 
with us in terms of what stages they are going through.
    Give me your sense of the ability, because obviously 
companies are concerned, if they strike a successful find, it 
doesn't matter if you can't get it to market. The concern is 
are we going to be able to ensure, through the National 
Petroleum Reserve, access to the major line north-south, from 
Prudhoe down to Valdez, moving oil? That's fundamental. I know 
you're in the draft stage, so there's a limitation. I know 
you've got parameters you must work within here, but maybe you 
can give us a sense of how we can ensure the next phase. It is 
really the most important phase because you can score all you 
want, know what's there, but if you can't move it to market, 
it's irrelevant. We want to move it to market. So give me your 
thoughts on that.
    Mr. Hayes. Sure, Senator. As you know, we are heading 
toward a new, final, comprehensive plan for the 23 million-acre 
National Petroleum Reserve Alaska. We expect to finalize the 
environmental impact statement and the record of decision by 
the end of the year. The preferred alternative that the 
Secretary has already discussed anticipates a potential 
pipeline across the NPRA. The plan is flexible enough to allow 
such a pipeline to occur. Obviously, as we have explained, a 
pipeline proposal itself would need to be the subject of a 
comprehensive environmental analysis on its own terms.
    Senator Begich. An EIS.
    Mr. Hayes. An EIS. But the final NPRA comprehensive plan 
will be flexible enough to allow a pipeline to be built 
consistent with the parameters of the plan, and we will look 
forward to having an open dialogue with companies that are 
interested in developing such a pipeline.
    Senator Begich. And east-west, north-south.
    Mr. Hayes. Yes.
    Senator Begich. Both we have to pull down.
    Mr. Hayes. Yes.
    Senator Begich. OK. Thank you very much for those comments.
    Admiral, I know you've given a presentation to many people. 
You have a great presentation, great slides on that. Give me 
your sense of--you know, the big concern we always hear from 
people is we're not prepared, we are unable to assist if there 
is an issue. But based on the rules of the game, the Interior 
itself has limitations on activity and drilling and so forth. 
But overall, if you could say here are the one, two, three 
things you really learned that we have to look forward to next 
year, but really about long-term development, because 
exploration is just seasonal and a little bit of activity in 
the sense of the broader, as more and more companies do 
business up there in the sense of oil and gas exploration.
    So what are the one or two things that really you said, OK, 
this is where we've got to hone in for next year and down the 
road, not only equipment-wise but maybe even how you approach 
the issue of Arctic Shield? Do you have some thoughts there?
    Admiral Ostebo. That's the million dollar question here, 
sir, in a lot of ways.
    Senator Begich. A millions of dollars question.
    [Laughter.]
    Admiral Ostebo. Yes, sir. As you know, from the beginning 
we looked at Arctic Shield 2012, and now as that comes to a 
conclusion here in the next several weeks, we have a very 
extensive lessons learned process that we engaged in way back 
when we began this effort almost a year ago so that we could 
capture the lessons learned, get a good idea of what are the 
real requirements, what are the drivers in the long run so we 
can match our capability and capacity to meet the future needs 
in the Arctic.
    A couple of things that we learned this summer. One is, and 
you've heard me say this before, the drilling activity is just 
part of the activity that's going on in the Arctic. If you took 
that out of the equation, the Coast Guard would still have a 
need to be in the Arctic. There would still be a national 
interest in the Arctic because the activities that are taking 
place outside of that, vessel traffic----
    Senator Begich. Unrelated to oil and gas.
    Admiral Ostebo. Unrelated to oil and gas. The amount of 
traffic that is going through the Arctic, including the Bering, 
which, frankly, is part of the Arctic, is moving forward at a 
rate that it doubles every 2 or 3 years.
    Senator Begich. How many ships are now moving through 
there? I remember you gave me the data once.
    Admiral Ostebo. Right. We had anticipated, had Shell 
stepped up and was able to do their full season, that we would 
have had about 1,000 ships. AIS-carried ships go through the 
Bering Strait. It looks like we'll probably end up at about 
750, maybe 800 this----
    Senator Begich. Which are oil and gas related, and others.
    Admiral Ostebo. And others, and the major ``and others'' is 
that Northern Sea route over Russia. I just came back from 
Russia. I was there last week, and in talking to them, they 
have huge concerns about this. They're making a major 
infrastructure investment on their side. We talked a lot about 
the Bering Strait and the need for vessel traffic separation 
and situational awareness in there, demand awareness.
    But the specific question, what did we learn so far this 
summer, I'll give you the preview for that. There are three 
phrases to the Coast Guard presence in the Arctic. There's the 
offshore piece, which is critical. As you saw with the national 
security cutter, that's really the capability that I think we 
need to have in the long run out there. It gives us the ability 
to reduce our shore site infrastructure and capability because 
we have such a capable asset offshore.
    Senator Begich. It's a moving city.
    Admiral Ostebo. It's a moving city. Second, as you know, it 
has national asset capability out there. That is critically 
important, and that, matched up with our icebreakers, provide 
the right offshore presence, I think, in the long run.
    An air picture is critical. We have to have the number one 
asset, because of the distances and the criticality of being 
able to move from one spot to another, the distance between the 
two drill sites and their distance offshore, we learned that 
the HH-60 helicopter is a critical asset up there this summer. 
As you mentioned, we had a number of search and rescue cases 
and a number of people are alive today on the North Slope 
because we were there for this activity, some of them engaged 
in the activities that Shell was doing, some of them in 
subsistence work, some of them in regular commercial activity 
offshore. But the Coast Guard presence there made a difference 
in their lives and in their families.
    The third piece I would say is the structural pieces that 
go into making all this happens, communications and logistics 
in the Arctic. What we found out this summer that I think--and 
I've talked a lot with NorthCom about this--is bandwidth 
communications, and that capability in the Arctic would not 
only benefit the Coast Guard but every player that's up there, 
including the communities themselves, whether that's a fiber 
optic capability to Barrow that allows them connectivity to the 
rest of the planet and doesn't limit us in our ability to 
respond.
    I go back to my experience with the Exxon Valdez, 9/11, the 
Deepwater Horizon, Hurricane Katrina. The first thing that's 
lost in one of those major calamities in situational awareness 
is the ability to communicate, bandwidth, the ability to 
communicate and get information out to everybody else. I think 
that would be a critical need in the Arctic, and we learned 
that this summer. We had a communications detachment up there, 
and in order to stay connected with the offshore activities, 
our helicopters, for the safety of our crews and for the 
management of the cases, that's a critical piece.
    So I'd say those three pieces are where we need to make a 
long-term investment and look to the future, the offshore 
piece, the air picture, and then the supporting activities for 
those few response capabilities.
    Senator Begich. Let me ask you, again, in a broader sense 
of the Coast Guard, and I know you have limitations in what you 
can say or not say here because there are budgetary issues, but 
let me ask you this. As you moved assets to Arctic Shield, 
obviously within the Coast Guard family nationwide, there was 
shifting that had to occur to supplement or ensure that you had 
the right capacity there. Is that a fair statement?
    Admiral Ostebo. Yes, sir, that is.
    Senator Begich. In your analysis you're going to do, are 
you going to look not only at the Arctic but the bigger 
tradeoffs you have to make, and if so, what does that mean to 
the Coast Guard budget and what we need to consider long term? 
Again, my mindset is we're drilling. Ten years from now, 
development is going to hit. How are we prepared for asset 
deployment in that process?
    So as you're doing that, are you looking at this broader 
picture where the Coast Guard Command in D.C. understands that 
it's not just an Alaska issue but it's a national issue and a 
benefit to all of us if we do this right? Is that a fair----
    Admiral Ostebo. Yes, sir. A couple of ways I look at this, 
and the way the Coast Guard has been approaching this, first 
off, this isn't a one-off summer. It isn't like we do this 
operation this summer and we all go away and do something else. 
This is, as you said, an opening up. This is a critical moment 
that is going to define the Coast Guard's presence in the 
Arctic, and the U.S. Government's presence up there, for a 
whole lot of reasons, well into the future. So it's not a one-
off summer.
    Two, it's clear that we had to rob Peter to pay Paul for 
this summer, but we did not sacrifice readiness in other 
locations, and that's critical. I'll give you a good example. I 
mentioned that the HH-60 helicopter was a critical asset that 
had to be in the Arctic. Well, those helicopters, in order to 
do that, really came from our Cordova deployment site. How we 
fixed that was I took H-65 helicopters, our short-range 
helicopters and primarily our ship-based helicopters, I put 
those in Cordova. So we had response capability there all 
summer long, but we didn't have the same capability there. So 
we didn't tradeoff our ability to respond, and we didn't 
tradeoff our readiness to meet the requirements that Congress 
has given us for Cordova and the constituents that we have 
there. But we did trade capacity and overall capability to move 
that somewhere else.
    The same thing with national security cutters. As you know, 
we're out there on Bertholf. If she wasn't in the Arctic, it 
wasn't like she was going to be sitting around doing nothing. 
Her plan was to be in East PAC.
    Senator Begich. Or chasing somebody.
    Admiral Ostebo. Yes. So she would have been down in East 
PAC doing counter-narcotic and drug work, national defense and 
law enforcement work out of hemisphere. That was the mission 
that we had to take her off to put her on here.
    So while the Coast Guard maintained our readiness 
throughout this district and throughout the United States, we 
did have to shift capability around to put it up there. We 
received, obviously, on short notice, no new capability to go 
to the Arctic. We took what we had and we applied it to the 
highest threat, and I'm glad we did.
    Senator Begich. Will you have, after your analysis, and I 
know you guys do an incredible--always after missions, you have 
this process you go through, and it's a very methodical 
process. Will you have a presentation at some point, or maybe 
we can encourage it, something that occurs that says, OK, if we 
had XYZ additional, it would help us, not necessarily because 
you're going to have the mission in the Arctic, but make sure 
we're additionally covered in future needs, other areas to 
augment that? Is that part of that?
    And the reason I ask you that is it's a budget thing, but 
you don't build a ship overnight. You don't go down to the Home 
Depot and pick one up. So we want to think about this longer 
term, especially as I envision, as Under Secretary Hayes 
continues to work on the Arctic issues, you're going to end up 
three, four, who knows how many companies, with lots of ships 
active up there, which means your need will increase, but we 
don't want to lower the capacity of what's going on not only in 
Alaska but the rest of the country.
    So will that be part of it in the sense of saying here's 
what we think we'll need 5 years out from now, eight years out 
from now, 10 years out, to make sure we're covered?
    Admiral Ostebo. Yes, sir. I think a critical element of 
that that will help address that is a focus on the Coast 
Guard's shipbuilding program. As you've heard Admiral Papp say 
and our Secretary say, we have a shipbuilding program that 
needs to move forward. The national security cutter is a key 
aspect of that, and getting that built out to its full extent 
will clearly provide us with the capability and capacity to 
have a national security cutter operating in the Arctic or 
providing the presence when our icebreaker isn't up there. So I 
think that's critical.
    Our report actually will provide that overall view so it 
will be clear to everybody where we took the assets to make 
this year's summer event happen. I'm on a timeline to have that 
available before December. So we're working very quickly with 
NorthCom to put that together, and I will present that, and 
that will be available to you, sir, shortly thereafter.
    Senator Begich. Fantastic. Thank you very much.
    I have a quick question for you, Ms. Furgione, and that 
is--and you mentioned it, and it kind of intrigued me a little 
bit, and that is--well, it's kind of a two part question. One 
is we know, because of the delay of getting the satellite 
systems fully operational--and I will put that on the House in 
Congress, who didn't fund it, as the Senate wanted to do, in 
that 1 year. When you take a piece out of a funding stream for 
satellites, it's not like you can just pop them up anytime. 
There's a thing called the orbit and a few other little details 
you have to actually work toward.
    But knowing that, we know there's going to be a gap of some 
sort, but also your comment that on the sea ice analysis, I 
think you're operational 5 days a week, if I remember what you 
said there. To get that to seven days a week, when activity in 
the Arctic is especially occurring with oil and gas, are you 
folks preparing something that can give Congress direction on 
what you need to make that happen? Because, obviously, unless I 
don't know the oil and gas thing that well, they don't stop at 
5 days. They are a 7 days/24 hours cycle, though in a period.
    So is there a way to--are you going to lay out what this 
will mean, and cost, and how we can make sure that happens? And 
then will that gap, that second part of the question, that gap 
in the satellite, will we be able to compensate for that 
enough? What's the plan to take care of that gap? And I think 
that's a 2016 gap; I'm not sure, if I remember right.
    Ms. Furgione. So your question is dynamic and complex, just 
like Arctic sea ice. So one of the things in particular I 
always said when I was up here forecasting the weather, my 
forecast was always right because we didn't have the 
observations to validate the forecast.
    [Laughter.]
    Ms. Furgione. And that's critical. So when you're talking 
about, yes, our forecasts are 24 hours a day, 7 days a week, 
everyone needs forecasts. When you wake up, you need to know 
what you're going to put on to even get the kids to the bus 
stop, and it's more important when you look at the criticality 
of weather forecasts and sea ice forecasts for those who 
operate and depend on it for their livelihood.
    So one of the things in particular, we do have the 
partnership and the MOU we signed with the oil industry to make 
sure that we're----
    Senator Begich. Which was historic.
    Ms. Furgione. Yes, and that was great. It was actually an 
expansion from what we were already doing in the Gulf of 
Mexico, and I had been dying to get it up here in Alaska so we 
can have additional observations. So those in situ observations 
that we receive from the oil industry, as well as other 
observations, will help.
    What we really need is the coupled atmospheric ocean and 
ice model, and that model requires the observations that I 
talked about, and also the satellite imagery and sounding data 
that we need. But it also will require the National Weather 
Service to have better forecasts on winds and waves.
    So while we saw the lowest sea ice minimum this year, folks 
were, like, why was it so difficult to pinpoint where that ice 
was going to be? So any one particular storm system can modify 
where the ice is going to be. So we really need these models. 
We need the forecasts. We need the observations. We need the 
satellite imagery to have a better understanding of where the 
ice is right now and where the ice is going to be in the 
future.
    So I kind of had a complex response to your complex 
question, but we do have a plan. We developed NOAA's Arctic 
Vision and Strategy document, and we will continue to have 
additional information on what we will need to actually meet 
the needs of our customers here in the Arctic.
    Senator Begich. And that satellite gap, how will you handle 
that, or do you think it's minimal to a point where you can 
still feel comfortable with what information is going to be 
flowing, especially in the Arctic? Because that's really where 
the potential gap problem is. Give me your thought there.
    Ms. Furgione. The gap is serious. It would be obviously 
much better if we didn't have to think about a gap, but without 
that, it's critical in forecasting the sea ice. We need that 
fuller orbiting satellite capability. We obviously have the 
geostationary capability, and we have back-up for that, but we 
don't have back-up on the fuller orbiting satellites.
    We can work with our other partners, internationally even, 
to obtain as much information as possible, but ideally we need 
to rely on the information that we can provide ourselves 
domestically.
    Senator Begich. And let me kind of wrap it, if I can, back 
to Under Secretary Hayes, or both of you can answer this. As 
you do your coordinated effort with the oil and gas industry, 
this gap--because again, as I kind of visualize it, by 2015, 
2016, if things move properly here, you will have at least 
three companies operating in some form or another in 
exploration there.
    Are you working--and I don't know who wants to answer this 
first--to make sure that industry is brought in now? Because, 
as I kind of forecast out, using a weather word, forecasting 
out, if we keep the theory that it's not a question of if it's 
going to be developed, it's happening. So it's more about the 
how, is that happening now at this level?
    And maybe it's not part of the first mission. We're so 
worried about exploration right now, but I'm thinking long 
term.
    Mr. Hayes. Well, I think the dialogue has begun because of 
the questions about how late in the season it's safe to engage 
in drilling activity, and that goes directly to really weather 
and sea ice formation questions, and NOAA has been very helpful 
to the interagency group in providing advice, and there's been 
a dialogue already between Shell and us and NOAA on that 
question, and it underscores the point you're making, which is 
the capability of NOAA through its satellite activity and other 
projection capabilities is absolutely critically important to 
this entire endeavor.
    Ms. Furgione. And my response to that is that we work 
closely with all the partners to make sure that our 
requirements on satellite information is available, and also 
what would be the impacts if we don't have that information. So 
that's even more critical to understand what the impacts would 
be.
    As we move forward with the forecasting capability, again 
it's critical to have that satellite information available to 
advance our modeling and our forecasts to save lives and 
livelihoods.
    Senator Begich. Let me, if I can, close with this panel. I 
appreciate you all being here, and the next panel especially. 
We have a bad habit, to be very frank, with in the Senate--I 
can't speak about the House because they have their own hearing 
process. But we always need to respond to some incident. Then 
we have a big hearing, and then we all run around and grab you 
all and hammer on your heads, and then you go back and try to 
figure out what is the crisis solution here, and then we all 
sit around trying to pass laws that later we have to fix that 
we did in a crisis.
    The goal for today is not to only talk about what's going 
on and get that in the discussion, in a similar discussion we 
just had, and I'm doing this more for edification of the 
audience here and folks that might be interested in this, is to 
do this in a different approach because the Arctic is 
significant. As the Admiral described, if oil and gas was out 
of it, there are still these hundreds of vessels moving through 
the Bering Sea and the Arctic, and we need weather and 
information. It has impact to what you're doing from a larger 
perspective, the Federal Government, and all the other things 
that are going on. What I hope is, as we move forward on oil 
and gas issues, that kind of opens up the discussion on many 
other fronts.
    Admiral, you and I have talked a lot about the Bering Sea 
and that 50-mile little stretch. We spend a lot of time about 
the Suez Canal and the Panama Canal. We have no clue, no clue 
what's coming through that 50-mile area. When you're talking 
about potentially 1,000 ships, and a portion are oil and gas, 
but the rest are who knows what, it leaves us in question. And 
also for you on your end, there are a lot of potential problems 
if they don't know what's happening weather-wise.
    So I want to thank you in a broader perspective. And for 
oil and gas, if you just kind of close your eyes and say 10 
years from now, what does it look like, what we see today is 
just--and this is playing with some words--it's the tip of the 
iceberg. It really is. There's so much that's going to happen 
there. So the work that you all are doing on this interagency 
group, I'm hoping not only continues--and it sounds like you've 
expanded a little, which I think is great. It's not just about 
oil and gas. It's a broader sweep of the Arctic and what's 
happening there, and oil and gas is a big player because it 
brings a lot of capital and resources and attention, but 
there's so much other stuff going on there.
    So I can't say enough of your guys' efforts on a day to day 
basis, and being part of this hearing today, to help elevate 
it. But as I think about 10 years from now, if I'm here or 
someone is here talking about how we are doing on development, 
that we will have a great story to tell because of some of the 
things we're doing right now, not when a crisis occurs or some 
incident occurs but right now.
    So thank you for your willingness to participate in this. I 
hope this was as fun as flying in a helicopter. Admiral, I 
tried to make you feel that breeze coming through.
    Admiral Ostebo. Yes, sir.
    Senator Begich. Thank you all very much for the first 
panel. Thank you.
    We'll now rearrange the deck here, get the next panel up. 
We thank you all for being patient here. People can stretch for 
a minute or two while we get ready here.
    [Pause.]
    Senator Begich. Let me go ahead, if I can. Thank you all 
very much. Thank you for your patience. We ran longer on the 
first panel. We apologize. We appreciate everyone being 
patient. Let me go ahead and quickly just move right to the 
second panel.
    Our first speaker will be Pete Slaiby, who is the Vice 
President of Exploration and Production for Shell Alaska.
    Pete, let me go ahead and turn to you, and then we'll just 
go down the road here.

         STATEMENT OF PETER E. SLAIBY, VICE PRESIDENT, 
                          SHELL ALASKA

    Mr. Slaiby. Well, thank you very much.
    Senator Begich. Is your microphone on? Make sure the green 
button--there we go. Perfect.
    Mr. Slaiby. Well, thank you very much, Mr. Chairman. I'm 
very pleased to be here today. For the first time in more than 
20 years, Shell turned the drill bit in the Chukchi and 
Beaufort Seas. This milestone is really the first step in 
bringing oil and gas production resources from Alaska's 
offshore into production.
    I had the opportunity this week to travel to the Noble 
Discoverer drill ship, and after a number of years, obviously 
it's a pretty satisfying trip for me, and I just wanted to 
express as well that we were very, very happy with what we saw 
with respect to how things are working through the various 
regulatory processes.
    As I explained to you earlier, Senator, our ability to work 
with the communities, to have the marine mammal observers on 
board ship as part of the crew and part of the process was very 
gratifying, as well as our own ability to engage in a live 
broadcast. We brought CNN offshore, and they were able to do a 
live broadcast from the Discoverer on both the national and 
international programs.
    The bottom line of all of this: for Shell, it has been a 
journey, and I do think that we are heading down the right 
road. I have felt over the last 18 months a real change in 
course and a sense of optimism that we are heading in the right 
direction.
    However, like anything else, it can be improved. But before 
discussing the recommendations, there are several points I 
would like to make.
    First, I want to acknowledge the other witnesses on the 
panels today and the important roles they played in progressing 
our program. The Coast Guard, DOI, NOAA, North Slope Borough, 
UIC, State of Alaska are only a few of the governmental 
agencies and private corporations who have helped us on this 
journey. Without their support, we couldn't be here.
    Second, Alaska's OCS likely holds world-class volumes of 
oil and gas. Developing these resources will be an economic 
engine for decades to come, creating tens of thousands of jobs 
and actually ensuring that the Trans-Alaskan Pipeline 
continues. The oil will benefit the nation, and Alaska as well, 
ensuring that there's revenue for the government and jobs for 
the folks who are here in Alaska. This is no doubt going to be 
a generational event.
    My third point is that Shell is committed to a safe and 
environmentally responsible program. Since 2006, Shell has 
worked with Federal and state agencies, local governments, and 
many residents and private organizations to develop a program 
that meets the highest technical, operational, environmental, 
and ethical standards. It's no secret we thought we would 
finally drill into oil-bearing zones this year, and we are 
disappointed that the season didn't turn out as planned. 
Instead, Shell's 2012 program focused on top holes. This means 
we'll excavate mud line cellars--I think everybody now is 
becoming familiar with the lingo--drill to about 1,500 feet, 
and then temporarily cap the wells.
    Let me talk about why we weren't able to drill these 
exploration wells down into their objectives over the summer. 
One of our constraints has been our Arctic containment system. 
This is a fourth-line contingency response system for the very 
remote possibility of a blowout.
    The system was the first of its kind --we call it Serial 
Number 1--and we had limited time to get the job done. The 
design concept, however, is solid. We will have the system 
completed, certified, and approved for 2013. In fact, we just 
recently received a certificate of inspection, COI, from the 
Coast Guard, and over the weekend the American Bureau of 
Shipping gave the Arctic Challenger, its class.
    Unfortunately, the Arctic containment system dome was 
damaged during the deployment test on September 15th, and a 
subsequent investigation has revealed that there are still some 
areas for work. Our investigation determined that a faulty 
electrical connection associated with one of the valves caused 
a valve to open, which caused the rapid descent and ultimate 
damage to the dome. Safety systems insured that the dome did 
not hit bottom, but buoyancy chambers were damaged. We have put 
in place a comprehensive program to make the necessary repairs 
and to bolster our operating procedures.
    In the 2013 open water season, we'll finish the wells that 
we begin this year and we'll drill these wells into what we 
hope will be oil-bearing zones.
    Now if I could get to the recommendations, Mr. Chairman. 
Based on our experience, we believe that the regulations can be 
strengthened, and I've got three areas I think we should 
ultimately work on.
    First and foremost, we all need to work to ensure that 
permitting agencies are under one roof. I think the process is 
in place, and we have seen major steps this year, I can really 
differentiate between past years. But having all of the 
agencies under one roof is a huge advantage with us. Our 
concern will be the sustainability of this process. We 
recognize that others will come and follow us. How are we able 
to sustain this level of involvement with very, very senior 
leaders in the government?
    Second, Federal agencies will need to have substantial 
resources to make decisions in a timely manner. Shell paid $2.2 
billion for its leases, and I don't think it's an exaggeration 
to say that we expect the agencies that will administer this 
work to be funded at an appropriate level that allows us to 
move forward with the investments. We believe that this should 
be part of moving forward.
    And third, we believe that the regulations must be based on 
fact and science. Our Alaska project, rightfully so, should be 
subject to intense scrutiny by regulators and the public. We 
have no objections to that. Good science should and must play a 
role. Advancing science in the long run is critical to our 
success. But all too often, incorrect facts and faulty science 
have played a role in decisionmaking, and the agency 
requirements have changed in the middle of the game. This 
should not happen.
    Further, the litigation system needs reforming. Revenue 
sharing for the State of Alaska should be enacted, and the 
leases that we have in our Alaska offshore should be extended 
for longer terms.
    These are all subjects for a future discussion. Regardless 
of where you stand on Shell's project, or anyone else's project 
for that matter, I think we can all agree that these baseline 
expectations are reasonable and should be put into place. It's 
not just a good idea for Shell. It's a good idea for any 
stewardship to advance Alaska's energy positions, as well as 
the needs of the Nation. Thank you very much.
    [The prepared statement of Mr. Slaiby follows:]

  Prepared Statement of Peter E. Slaiby, Vice President, Shell Alaska
    Mr. Chairman, I am Pete Slaiby, Vice President of Shell Alaska. I 
am pleased to be here today to share with the Committee the lessons 
Shell has learned in moving forward to explore our leases in Alaska's 
Outer Continental Shelf (OCS).
    Alaska's OCS contains untapped world-class resource volumes. On 
Sunday, September 9, Shell took the first step to developing those 
resources, when crews aboard the Noble Discoverer began drilling at 
Shell's ``Burger'' prospect in the Chukchi Sea. It has taken years of 
effort to get to this point. It is a critical step in the journey to 
ensure that Alaska's vast resources are developed for the benefit of 
the Nation.
    In my testimony I will discuss:

   Alaska's vast offshore resource potential and the benefits 
        of developing those resources.

   Shell's Alaska operations with a focus on 2012 operations 
        and plans for 2013 and beyond.

   Key lessons we have learned in recent years and recommended 
        changes that policymakers should make.
Alaska OCS--World Class Potential
    We, like the U.S. Geological Survey, believe the Arctic holds vast 
resources. More than 500 exploratory, production, and disposal wells 
have been drilled in the Arctic waters off Alaska, Canada, Norway and 
Russia. In Alaska's OCS, following Federal OCS lease sales in the 1980s 
and 1990s, more than 35 wells were safely drilled in the Beaufort Sea 
and Chukchi Sea.
    Alaska's offshore likely holds one of the most prolific, 
undeveloped conventional hydrocarbon basins in the world. Conservative 
government estimates are that Alaska's OCS holds 27 billion barrels of 
oil and over 120 trillion cubic feet of gas.
    To illustrate the magnitude of this estimate, consider that 
Alaska's OCS is estimated to hold two-and-a-half times what has been 
produced in the Gulf of Mexico since 1990; and at least one-third more 
oil than has been produced to date in Prudhoe Bay over the past 30 
years.
    One independent assessment has concluded that an average of about 
700,000 barrels of oil per day for 40 years could be produced if 
Alaska's Beaufort and Chukchi Sea were developed. The study found that 
Alaska OCS oil production would peak in 2030 at 1.45 million barrels 
per day and that natural gas production would peak in 2050 at 2.1 
billion cubic feet of gas per day.
The Benefits of Developing the Alaska Offshore
    Developing Alaska's offshore oil and gas resources will have many 
benefits in Alaska and throughout the Nation. Resource development is 
an economic engine with an enormous economic multiplier effect that can 
last for decades.

   Creates Jobs and Government Revenue: Developing Alaska's OCS 
        and the associated infrastructure will be an enormous job 
        creator. It is no exaggeration to say that development will be 
        a genuine, long-term economic stimulus plan.

    In 2010, Northern Economics and the Institute for Social and 
        Economic Research (ISER) at the University of Alaska evaluated 
        the economic benefits of developing Alaska's OCS resources, and 
        found:

    New Jobs:

     An average of 54,700 jobs per year sustained for 50 
            years. Peak employment during development of more than 
            91,000.

    Payroll Paid:

     Total payroll will be $145 Billion through 2057.

     Employees in Alaska will receive $63 Billion.

     Employees in the rest of the U.S. will receive $82 
            Billion.

    Government Revenue Generated:

     Total government revenue will be $193 Billion through 
            2057.

     Federal revenue will be $167 Billion.

     State of Alaska revenue will be $15 Billion, with $4 
            Billion to local governments.

     Other states would receive $6.5 Billion.

   Extends the Operating Life of TAPS (Trans Alaska Pipeline 
        System): Developing the oil in Alaska's OCS would ensure the 
        long-term viability of TAPS, which is a critical energy supply 
        line. TAPS brings about 600,000 barrels of oil per day to 
        market, equivalent to 11 percent of the Nation's domestic 
        supply. But this is a fraction of the 2.1 million barrels per 
        day that TAPS delivered at its peak.

    TAPS throughput is declining, because production in Prudhoe Bay has 
        fallen significantly in recent decades. Unless new Alaska oil 
        resources are developed, oil throughput into TAPS will continue 
        to decline, and eventually the pipeline will shut down. The 
        implications of this are serious.

    We have already witnessed what life without TAPS would mean. In 
        2011, TAPS was temporarily shut down. This had an immediate 
        impact on crude prices, jeopardized the continuity of the U.S. 
        West Coast refinery infrastructure, and over a longer time 
        frame could ultimately result in increased reliance on Russian 
        crude supplies. Unless new oil resources in Alaska are 
        developed, TAPS future is uncertain.

    Note too that new pipelines will be needed to bring offshore oil to 
        TAPS. These new pipelines will enable the development of 
        satellite oil fields in Northern Alaska, including the National 
        Petroleum Reserve-Alaska (NPR-A). Those fields are currently 
        ``stranded'' due to lack of infrastructure and could become 
        economic to develop.
History of Shell in Alaska
    Shell has a long history in Alaska's offshore. Beginning in 1964, 
Shell produced in state waters at Cook Inlet for more than 30 years. In 
the late 1970s and mid-1980s, Shell drilled exploration wells offshore 
in the Gulf of Alaska, St. George Basin and the Bering Sea.
    In the late 1980s and early 1990s, Shell acquired Federal leases in 
Alaska's OCS. We drilled exploration wells in the Beaufort Sea and four 
of the five exploration wells drilled at that time in the Chukchi Sea. 
We found oil and gas, but chose not to proceed to development. Instead, 
we plugged and abandoned those exploratory wells for economic reasons--
including the fact that TAPS was already running near capacity.
    Since 2005, the Federal Government has held several more OCS lease 
sales in Alaska. Shell participated in these sales and is now the 
majority leaseholder in the Alaska OCS. Shell paid nearly $2.2 Billion 
for ten-year leases in the Beaufort and Chukchi Seas.
    Over the years, Shell has invested an additional $2.5 Billion and 
seven years preparing for and assembling the assets to execute an 
exploration drilling program with unparalleled mitigation and safety 
measures.
    Shell's work includes multiple years of 3D seismic data collection, 
first-of-its-kind baseline science, shallow hazard surveys, 
geotechnical programs, numerous social investment initiatives, and 
hundreds of meetings with North Slope residents.
    Shell firmly believes that scientific investigation of the impacts 
of oil and gas activities on environmental resources is required to 
establish a truly sustainable business model. Since our return to 
Alaska in 2005, Shell has championed the establishment of a new 
frontier of scientific study in the Arctic and invested millions of 
dollars. The potential for oil and gas exploration and development in 
this important region has been a catalyst for extensive Arctic studies 
and research programs. At a time when federally funded scientific 
research is under budget constraints, Shell has played a critical role 
in working with partners and stakeholders to advance the investment in 
Arctic research and to establish a new baseline understanding of the 
ecosystems of the Chukchi and Beaufort seas.
Shell Alaska: 2012 Exploration Program
    This year, Shell will drill as many ``top holes'' as possible in 
the Chukchi and Beaufort Seas during the short open water season. This 
means that we will not drill into oil reservoirs. Instead, we will 
drill the top part of a well to around 1,500 feet and then cap the 
well. We will return in 2013 to drill and evaluate potential 
hydrocarbon zones. The time spent working on the wells this year will 
reduce the time necessary in 2013 to complete and fully evaluate the 
wells.
    Shell is committed to employing world-class technology and 
experience to ensure a safe, environmentally responsible Arctic 
exploration program--one that has the smallest possible footprint and 
no significant negative impacts on North Slope stakeholders or 
traditional subsistence hunting activities. Aspects of the 2012 program 
have been under evaluation by Federal agencies since 2006. At every 
step, Shell has worked with Federal agencies, the State of Alaska, 
local governments and residents to develop a program that achieves the 
highest technical, operational and environmental standards.
    It is this commitment to the highest standards that led us to focus 
on top holes in 2012. We made the decision not drill into oil zones 
this year based on our assessment in early September about the 
readiness of our voluntary dedicated first-of-its-kind Arctic 
containment system and operating constraints.
    The operating constraints are largely about ice and weather, both 
of which played a role in delaying our mobilization in 2012. Although 
2012 had record low summer ice across the entire Arctic, our program 
was nonetheless impacted by ice. Multi-year sea-ice near our leases was 
slow to melt and remained in the Chukchi Sea in the vicinity of our 
Burger drilling location throughout summer. In addition, storm systems 
occurred during the time that our fleet was transiting to Alaska and 
during the time vessel anchoring was planned. This resulted in 
significant lost operating and drilling days in 2012. Our decision not 
to drill into oil zones this year demonstrates that we reacted to ice 
and weather in a safe and responsible manner.
    Now, let me describe briefly the components of our exploration 
program and the multi-year effort that led up to 2012. Then, I will 
describe our 2012 operations.
    There are three main components to the exploration program and 
physical assets deployed:

   First, we have two drilling rigs and multiple support ships. 
        Both drilling rigs have undergone several years of engineering 
        upgrades, including extensive upgrades to meet extremely 
        stringent air emissions regulations required by EPA.

   Second, we have assembled a 100 percent Shell-dedicated oil 
        spill response capability that provides multiple barriers and 
        responses to the very unlikely event of an oil spill or leak.

   Third, we have developed and implemented a sophisticated 
        logistics plan that provides for re-supply and transportation 
        of the vessels themselves, the equipment needed to drill wells, 
        and the personnel required to operate the program.

    As we were assembling these physical assets, we managed several 
other critical and essential elements to our program. For example:

   There was a multi-year process to obtain dozens of permits 
        and approvals needed to operate. Numerous government regulatory 
        agencies were involved; and many frustrating delays and set-
        backs occurred.

   There were many legal challenges to our permits, which 
        created significant uncertainty around our program and, in some 
        cases, actual delay.

   There was an intense outreach effort to stakeholders, 
        particularly to the residents and communities on the North 
        Slope of Alaska who have a keen interest in understanding the 
        program and providing input.

   There were unlawful vessel boardings that posed a threat to 
        people and the environment as well as to our assets. I would 
        like to expand on this. We respect and welcome a dialogue and 
        debate about Arctic development, both through the government's 
        public process and through our own engagement efforts. However, 
        once a decision has been made to approve our program, 
        interference that is unsafe and illegal should not occur and 
        should not be tolerated. Unfortunately, we experienced such 
        actions during our mobilization this year.

    Our program in the Arctic is impressive and unparalleled. In 
addition to mobilizing two drill ships, more than twenty support 
vessels, an approved capping stack, and other redundant oil-spill 
response equipment we have:

   Fully trained approximately 1,800 personnel.

   Located a Search and Rescue helicopter on site in Barrow.

   Conducted coastal observation over-flights for marine 
        mammals in both the Beaufort and Chukchi Seas.

   Hired and trained 160 Protected Species Observers, who are 
        deployed on vessels and aircraft.

   Established and fully staffed 11 Communications Centers 
        along the North Slope.

   Hired and trained 11 Subsistence Advisors and eight 
        Community Liaisons Advisors, who are on site in coastal 
        villages from St. Lawrence Island to Kaktovik.

   Hired, trained and deployed Oil Spill Response personnel.

   Put in service a dedicated 737 fixed-wing aircraft for crew 
        changes.

    It is important to note that an exploration program, unlike a 
development and production program, is a temporary, short-term 
operation. In the Alaska OCS, an exploration program includes drilling 
multiple wells. Each are anticipated to take approximately 30 days to 
complete and then the well will be permanently plugged and abandoned 
and the site cleared. Shell's exploration program will meet or exceed 
all applicable regulatory requirements for the protection of health, 
safety and the environment.
    We strive to be the best neighbors possible within the communities 
in which we work. For example, we have chartered a crew-change plane to 
avoid disrupting the existing flights in and out of Barrow. We have 
dedicated camps to quarter personnel to avoid flooding local markets 
and inflating the cost of living in communities that are already in 
tight supply. We have Communication Centers and Subsistence Advisors to 
assure that our activities are aligned with subsistence activities. 
Efforts such as these help ensure that our Alaska OCS development is 
sustainable.
    Finally, our 2012 program also includes a significantly expanded 
data-gathering data program so that we can develop a comprehensive 
understanding of the coastal and onshore environments of the North 
Slope and identify viable development opportunities, including where 
future production infrastructure can be sited, such as pipelines, 
staging areas, and pumping stations. This program included:

   Surveying an area of more than 21,000 square miles (roughly 
        the size of West Virginia) to understand the physical, 
        biological, and social environment.

   Collecting various types of scientific information in more 
        than 1,000 survey areas, transects, and study plots within the 
        National Petroleum Reserve--Alaska.

   Conducting hydraulic assessments of 62 rivers and 20 lakes.

   Conducting vegetation/wildlife habitat assessments on 176 
        assessment plots and assessing coastal fish and bird 
        populations.

   Working with the Bureau of Land Management to develop 
        consistent data collection and assessment protocols and fill 
        data needs.

    These onshore studies are being integrated with preliminary 
engineering and design efforts to identify infrastructure construction 
requirements. While this program required extensive use of helicopters 
to deploy investigators across this large area, we worked extensively 
with local stakeholders and subsistence hunting communities to reduce 
the potential for impacts.
Shell Alaska: 2013 and Beyond
    For 2013, our approved Exploration Plan allows for a similar fleet 
and personnel deployment, so that we can drill wells and make 
hydrocarbon discoveries. We plan to complete several wells in the 
Chukchi Sea and one to two wells in the Beaufort Sea to prove Alaska's 
hydrocarbon potential, and then move to verify the size and scope of 
resource. The lessons learned from 2012's complex logistics fleet and 
personnel deployment are significant. Shell is already incorporating 
these lessons into our even more robust 2013 plans.
    Well results in 2013 will dictate individual project success for 
further pursuit, or potentially, shift us to explore the remainder of 
our portfolio in both the Chukchi and Beaufort Seas. It is important to 
recognize we have 413 lease blocks in our Alaska offshore portfolio and 
paid a total of $2.2 Billion between 2005 and 2008 for the right to 
explore and develop these leases. We are paying escalating annual lease 
rentals to the Federal Government. Total rentals paid in 2013 will be 
nearly $8 million. While we are committed to continuing our exploration 
efforts, there is recognition of the untenable nature of exploring and 
confirming commercial energy resources within the 10-year lease term in 
the offshore Arctic. To have a sustainable program, these plans must be 
evaluated well in advance of lease expiry.
Lessons Learned and Recommendations
    We have learned many lessons over the last seven years in Alaska. 
Today I want to focus on the often frustrating experience with 
navigating the uncertain process governing exploration, and also 
provide a few recommendations concerning the regulatory and legal 
processes, and Arctic lease terms. Stated simply, the status quo is 
neither workable nor defensible, and it is putting the development of 
Alaska's offshore resources at risk.
Improve the Regulatory Process
    To put it bluntly, the regulatory process for drilling in Alaska is 
broken; it is not efficient, it results in unnecessary and costly 
delays, and it needs to be fixed. And we at Shell believe that it can 
be--and must be--fixed. We are willing to work with government agencies 
to accomplish this, based upon what we have learned and experienced 
over the last seven years. As we have said over a number of years, 
rigor is still required, but rigor can be delivered more efficiently. 
To put things in context, Shell paid the Federal Government $2.2 
billion for leases in the Chukchi and Beaufort Seas. Prior to offering 
these leases, the government spent years doing in-depth environmental 
analyses. While the Federal Government should not just hand Shell its 
permits and approvals without Shell making the required health, safety 
and environmental showings, we did reasonably expect that following the 
government's comprehensive environmental studies and its decision to 
offer the leases, that the necessary government permits and approvals 
to explore and develop the leases would follow in an orderly manner. 
That has not been our experience, and it has deprived us of our ability 
to exercise our rights under leases that we paid significant amounts of 
money to secure.
    I also want to make clear that fault does not always lie with the 
regulators themselves; it is the inefficient and broken regulatory 
process that is most often to blame. Over the years, we have worked 
with many individuals at state and Federal regulatory agencies that are 
extraordinarily dedicated public servants and have worked intensely on 
our program. That is much appreciated.
    But the fact remains that the regulatory system for offshore Alaska 
operations is flawed. The most fundamental flaw, which I will discuss 
in more detail, is that the regulatory process lacks certainty. Shell, 
like all other regulated businesses, needs to know the ``rules of the 
game'' up front, and these rules must be clear and cannot constantly 
change. Shell is more than willing to play by the rules; to have a 
robust and thorough permitting process; and to adhere to the highest 
environmental standards. But the way that regulatory agencies apply 
their standards, regulations and statutes should be clear and 
consistent, and the permitting process should be transparent, so that 
lease holders like Shell will know with certainty both what the 
requirements for drilling plans are, and that if these requirements are 
met, drilling can proceed.
    A second problem is that there is a lack of coordination by the 
many agencies that regulate drilling activities within the Arctic, both 
between the various agencies, and, at times, even within the same 
agency. A mechanism must be put into place to require that regulatory 
agencies properly coordinate to avoid unnecessary, timely and costly 
delays. Congress has done this in many other circumstances, and should 
do so here as well.
    To improve the regulatory process I have three recommendations:

  1.  Federal permitting for Alaska energy development and 
        infrastructure should be done by a single office. To date, our 
        project has required many permits from multiple Federal 
        agencies. The current process is cumbersome, inefficient, and 
        leads to duplication of work and effort (on both the part of 
        the agencies and Shell). There is a lack of communication among 
        and between the many agencies. Under the current system, the 
        process is neither clear nor certain, and the quality of 
        decisionmaking could suffer.

     The need for coordination was recognized by our Alaska senators in 
        legislation and the Administration in July 2011, when the 
        Federal Interagency Working Group on Coordination of Domestic 
        Energy Development and Permitting in Alaska was created to 
        ensure that Arctic energy decisions related to drilling 
        projects were coordinated across some 11 Federal departments 
        and agencies. This was a welcome development led by Assistant 
        Secretary David Hayes.

     But I believe this is not enough to efficiently meet the growing 
        demands of a project that will require years of sustained 
        effort. Going forward, Shell and possibly other companies will 
        collectively need hundreds of government reviews, approvals and 
        permits annually. Under the current multi-agency regulatory 
        process, this will not work.

     Just as important, the government should be organized in a manner 
        that ensures a cohesive approach to developing Alaska's energy 
        resources. We have seen the National Oceanic and Atmospheric 
        Administration issue an Arctic Environmental Impact Statement 
        with little consultation or coordination with other agencies. 
        We have a new National Petroleum Reserve Alaska (NPRA) 
        management plan from Bureau of Land Management that will make 
        pipeline construction through NPRA to TAPS a regulatory 
        challenge, because it includes provisions that hinder stream 
        and river crossings, complicating the construction of energy 
        infrastructure.

     The Federal Government made the decision to sell Alaska OCS leases 
        with the intent of assessing and evaluating the resources 
        potential to inform decisions about future development. The 
        government accepted $2.2 Billion from Shell in lease bids. It 
        should have a coordinated, cohesive plan to make that a 
        reality. Instead we have multiple agencies each with a separate 
        piece of the regulatory puzzle that are not always working in a 
        coordinated fashion toward a clear and common goal. We believe 
        that in order to facilitate an orderly and efficient process, 
        all regulatory approvals should be handled by a single office 
        with clear coordination and consultation requirements and clear 
        deadlines.

     Canada is moving to ``one project, one review'' in order to 
        streamline the regulatory process for all major economic 
        projects. The reforms consolidate the number of regulatory 
        bodies responsible for reviews and set binding timelines for 
        regulatory decisions. In announcing the reforms, a top 
        government official said, ``It will help prevent the long 
        delays in reviewing major economic projects that kill potential 
        jobs and stall economic growth by putting valuable investment 
        at risk.'' Many state public service commissions have a similar 
        approach, where a single siting board issues all of the permits 
        and approvals required for an energy generation project.

     To bring certainty, efficiency, clarity and coordination to the 
        process of permitting Alaska energy projects, I recommend a 
        ``one-stop'' permitting office for Alaska's offshore projects. 
        This could be done any number of ways. For example,

     All Federal review, approval and permitting work for 
            developing Alaska's energy resources and related 
            infrastructure could be done in a single office based in 
            Alaska. That office should include the range of experts 
            needed for both the offshore exploration and development 
            and the onshore infrastructure. Such an office was proposed 
            in legislation that Senator Begich and Senator Murkowski 
            introduced recently.

     Or

     Even better, Congress should consider creating a 
            dedicated, focused regulatory body for Alaska's offshore 
            oil and gas projects. The compelling reasons to take this 
            step include the size of the resource; the economic 
            benefits of development for the nation; and the critical 
            need for the resource to reach the TAPS pipeline and 
            ultimately, the market in a timely manner.

  2.  Federal agencies must be fully resourced, coordinated, and must 
        deliver decisions in a timely manner. We cannot forget that the 
        Federal Government held a lease sale and Shell paid $2.2 
        billion with the reasonable expectation that the Federal 
        Government would have adequate, trained staff with appropriate 
        expertise and direction to execute the program in a timely 
        manner. Failure to provide such support undermines confidence 
        in the offshore leasing program and denies lessees of the 
        benefit of their bargain. .

     To the extent that there is not ``one-stop'' permitting, Congress 
        should take action to assure that regulatory agencies are fully 
        coordinated, have deadlines in place for reviewing and 
        processing permit applications, and are held accountable when 
        they fail to meet such milestones. In the new transportation 
        authorization, MAP-21, agencies that miss permitting deadlines 
        can lose part of their budget. When the private sector invests 
        billions of dollars in projects that will create economic 
        activity and jobs, enhance energy security, and improve the 
        Nation's infrastructure, there is a real cost if regulatory 
        agencies fail to coordinate and deliver (or reject) needed 
        approvals and permits in a reasonable and timely manner.

     And lack of resources at the agencies cannot be an acceptable 
        excuse for delayed permitting and approvals. In this time of 
        tight budgets, policymakers should authorize and direct 
        agencies to retain outside experts with funds provided by 
        applicants. This is not new for many agencies, and can be 
        accomplished through arms-length funding and with pre-approved 
        independent third-party contractors.

  3.  Regulatory requirements must be based on facts and science; and 
        absent some compelling reason, those requirements should not 
        change ``in the middle of the game.'' Our Alaska project is 
        subject to intense scrutiny by regulators and by the public, as 
        it should be. Some who oppose the project, however, deal with 
        information not based on fact or science. While such 
        opposition--whether in the media or behind closed doors--will 
        always exist, regulatory agencies cannot allow incorrect facts 
        or faulty science to influence their decisionmaking.

     Shell is committed to advancing the scientific understanding of 
        the Arctic and the technology used in the Arctic. Some argue 
        that there is insufficient scientific data regarding the Arctic 
        and, therefore, exploration in the Chukchi and Beaufort Seas 
        should not go forward. In reality, the available scientific 
        data is more than adequate to identify and evaluate the impacts 
        of an exploration program that is, by definition, a short-term, 
        temporary operation.

     Regulatory decisions that assess the capabilities of our equipment 
        and assets must be based on accurate facts. For example, we 
        have gone to considerable expense to assemble a suite of 
        vessels and other assets that are capable of operating in 
        Arctic conditions well into the fall. What is the point of 
        having such equipment if we are not given the chance to use it 
        in our operations?
Improve the Litigation System
    The system allows multiple lawsuits on a single project, which can 
keep a project in litigation for more than a decade. When a single, 
major project needs dozens, maybe hundreds of government approvals and 
permits, each approval and each permit is an opportunity for a 
potential lawsuit by those seeking to stop the project. Project 
opponent often use the environmental laws under which permits are 
issued to challenge projects for reasons wholly unrelated to protecting 
the environment. These lawsuits have the potential to deter investment 
and economic growth.
    This problem is not unique to Shell, and should concern all of us. 
There is a better way. For example, Congress passed legislation aimed 
at reducing the uncertainty that litigation can bring to Federal 
transportation projects. Congress reduced the time in which an opponent 
must file suit from six years to five months. Under this simple reform, 
no one loses the opportunity to have his day in court, but potential 
plaintiffs can no longer ``lie in wait'' for years before bringing 
legal action. Policymakers should make such reforms apply more broadly, 
so that the right to go to court is preserved while at the same time 
ensuring that the legal process does not stymie economic growth and 
investment.
    For example, Congress could:

   Change the statute of limitations period for legal 
        challenges from six years to sixty days;

   Set a deadline for adjudication of challenges or require 
        that courts give energy projects priority on dockets;

   Require that all project challenges be brought directly in 
        the District Court closest to the project location.
Revenue Sharing
    Current law provides that revenue from Gulf of Mexico leases is 
shared with the Gulf States of Alabama, Louisiana, Mississippi and 
Texas. Alaska should also share have revenue sharing rights. It is only 
fair. Congress should approve legislation that gives Alaska a portion 
of the Federal revenue generated by production on current and future 
leases.
Extend Arctic Lease Terms
    Our Arctic offshore leases have a ten-year term. This is too short. 
Shell has worked diligently to prosecute its leases, but has 
experienced substantial and unanticipated delays due to a broken 
permitting process and to litigation. Further, the exploration window 
in the Arctic is short. While exploration in the Gulf of Mexico can be 
done 12 months a year, the exploration drilling season in the Arctic is 
typically about three or four months. We urge policymakers to provide 
longer lease terms for future Arctic leases. But we also need a remedy 
for existing leases that we have earnestly pursued; many of these are 
well into their term without even initial well results. Unless 
addressed, a number of Arctic leases will expire before they have had a 
fair chance to be explored.
Summary of Recommendations
    In summary, the statutes and regulations applicable to developing 
Alaska's offshore resources and to bring those resources to market 
should be administered by a single, dedicated body based in Alaska. The 
regulatory framework should be clear and consistent. The regulatory 
process should be properly funded, efficient and robust. The process 
should lead to timely decisions. Permitting for oil and gas activity 
must be done thoroughly and to the letter of the law, and the 
litigation process should be controlled. Regardless of one's views on 
oil and gas development, anything less than this should not be 
tolerated.
    I am happy to answer any questions.

    Senator Begich. Thank you very much.
    Let me now go to Jacob Adams, the Chief Administrative 
Officer for the North Slope Borough.
    Jacob, good to see you again.

 STATEMENT OF JACOB ADAMS, CHIEF ADMINISTRATIVE OFFICER, NORTH 
                         SLOPE BOROUGH

    Mr. Adams. Good morning, Senator Begich. My name is Jacob 
Adams, and I am the Chief Administrative Officer for the North 
Slope Borough. I appreciate the opportunity to testify about 
the challenges and opportunities that Alaska Native communities 
face as a result of offshore oil and gas development.
    As most of you know, the North Slope Borough is the local 
unit of government for the Arctic region of Alaska, an area 
slightly larger than the State of Utah. Lately there has been a 
lot of attention directed toward Arctic issues. And with that 
focus, a cacophony of voices espousing myriad viewpoints have 
arisen. It is my hope today to provide this committee with a 
well-balanced perspective on the issue of Arctic offshore oil 
and gas development.
    It is estimated that there are upwards of 20-plus billion 
barrels of recoverable oil in Arctic Alaska's outer continental 
shelf. This represents one of the largest potential finds for 
the state and the Nation since Prudhoe Bay in the 1960s. So to 
understand the kinds of opportunities that could exist for 
Alaska Native communities with a potential discovery of this 
magnitude, one need only look at history.
    The discovery of oil at Prudhoe Bay brought immeasurable 
amounts of change to the Native communities of Alaska's North 
Slope. Sod huts turned into permanent houses. Schools, 
airports, roads, and utility systems were erected. The North 
Slope Borough, along with the Native corporations, were formed 
in the early 1970s. In short, over the course of a few decades, 
a semi-nomadic people subsisting off the land and abundant 
resources of the land and sea were catapulted into modern 20th 
century society.
    This, of course, presented new challenges and opportunities 
for Alaska Natives, and with the prospect of OCS development, 
we find ourselves again, potentially, on the threshold of 
another era of unprecedented change.
    One of the greatest benefits associated with Prudhoe Bay 
was the fact that it occurred largely on state land. Royalty 
and tax revenues flowed into the state and local coffers, 
benefiting our people tremendously. This is a fact that all 
Alaskans were reminded of last week with the payment of our 
annual Permanent Fund dividends.
    But without Congressional action, OCS development may offer 
little, if any, of the benefits that we have seen with prior 
onshore development. I see this as one of the greatest 
challenges facing the people of the North Slope. And it seems 
difficult for the Federal Government to justify why the people 
of Alaska are not entitled to the same economic benefits as the 
residents of the Gulf Coast states.
    This is especially true given our people's physical and 
cultural reliance on the Bowhead whale and other important 
marine mammals. We bear the majority of the risks of what can 
go wrong with OCS development and receive little direct 
benefit. Congress should act to ensure that royalty revenue 
received from OCS development is shared with local communities 
to help mitigate the negative impacts of oil development.
    Part of the frustration expressed by Alaska Natives towards 
OCS development is attributable to the fact that we do not feel 
that we have been offered a seat at the decisionmaking table. 
While local representatives of Federal agencies often reach out 
to Alaska Native communities and solicit concerns, leadership 
in Washington, D.C. seems prone to ignore local input in the 
pursuit of political agendas. The Federal Government must give 
more than lip service to local involvement, and meaningful 
reforms need to be made to the government's tribal consultation 
policies.
    Another critical issue associated with OCS development is 
how the oil discovered will be brought to market. If industry 
decides to ship oil by tanker, the potential for an oil-related 
catastrophe impacting marine subsistence resources will 
increase and the opportunities to glean even indirect economic 
benefits will decrease dramatically.
    It is imperative that the Federal Government encourage and 
support an oil pipeline from OCS development areas into the 
Trans-Alaska Pipeline. This will mitigate potential impacts to 
critical marine subsistence resources and maximize the amount 
of economic benefit gleaned by the local peoples of the North 
Slope and Alaska.
    For this reason, it is essential that the Federal 
Government make management decisions for the NPRA that will not 
foreclose this opportunity. The Mayor of the North Slope 
Borough, Charlotte Brower, recently raised concerns over 
Secretary Salazar's preferred alternative for the NPRA, and I 
want to reiterate those concerns this morning. It is not in our 
people's best interest, nor is it common sense, for the Federal 
Government to effectively foreclose such a large area of the 
NPRA from the development of oil and gas infrastructure before 
we all have a better understanding of the economic and 
technical feasibility of potential pipeline corridors through 
NPRA.
    It would be better if the Federal Government would focus on 
making management decisions that go to the heart of some of our 
immediate concerns such as investing the resources necessary to 
have a year-round presence of Coast Guard personnel on the 
North Slope. This year we've had hundreds of ships and 
thousands of mariners operating in the Beaufort and Chukchi 
Seas. A couple of Coast Guard helicopters and a handful of 
Coastguardsmen is not sufficient to police and provide 
effective emergency coverage for such a large area. But we 
applaud the Coast Guard for being here this summer. It is a 
first for the Coast Guard and Northern Alaska.
    In addition, there must be greater investment in upgraded 
communication systems such as radio and fiber-optic, ports that 
can handle deep-draft vessels and icebreakers. It is imperative 
that Congress act soon to provide funding for such investments 
before we are overtaken by the pace that OCS oil and gas 
development is occurring.
    Another area in which Alaska Natives may realize tremendous 
opportunities from OCS development comes through our Native 
corporations. As an example, Olgoonik Corporation is moving 
forward on its plan to develop the infrastructure in their 
community necessary to support OCS development in Wainwright. 
The Arctic Slope Regional Corporation has also positioned 
itself to provide services in support of OCS development. Other 
villages and Native corporations stand to gain as development 
moves forward.
    We are also encouraged by the responsible and measured 
approach undertaken by Shell during this drilling season. It 
comes as no surprise to us that ice floes and the often 
unpredictable nature of the Arctic dictated the retreat of 
Shell's drilling rig during the late summer. But Shell's 
patience and willingness to forgo drilling into hydrocarbon-
bearing zones this year, and to refrain from drilling during 
the fall whaling season, testify to Shell's commitment to 
conduct its operations in a safe and responsible way. We 
applaud those efforts by Shell.
    To conclude, OCS development presents a plethora of 
opportunities and challenges to Alaska Native communities. 
While we appreciate the opportunity to talk about these issues 
before this committee, we feel that we must be provided more 
opportunities to have a seat at the table when it comes to 
making OCS management decisions. Until that time, we will 
continue to be wary of any decisions that are not inclusive of 
local input and involvement. Thank you.
    [The prepared statement of Mr. Adams follows:]

   Prepared Statement of Jacob Adams, Chief Administrative Officer, 
                          North Slope Borough
    Good Morning, Sen. Begich, Committee members. My name is Jacob 
Adams and I am the Chief Administrative Officer for the North Slope 
Borough.
    It is a pleasure to testify today about the challenges and 
opportunities that Alaska Native communities face as a result of 
offshore oil & gas development. As most of you know, the North Slope 
Borough is the local unit of government for the Arctic region of 
Alaska-an area slightly larger than the state of Utah.
    Lately there has been a lot of attention directed towards Arctic 
issues. And with that focus, a cacophony of voices espousing myriad 
viewpoints have arisen. It is my hope today to provide this Committee 
with a well-balanced perspective on the issue of Arctic offshore oil & 
gas development.
    It is estimated that there are upwards of 20 billion barrels of 
recoverable oil in Arctic Alaska's outer-continental shelf. This 
represents one of the largest potential finds for the state and the 
Nation since Prudhoe Bay in the 1960s. And so to understand the kinds 
of opportunities that could exist for Alaska Native communities with a 
potential discovery of this magnitude, one need only look at history.
    The discovery of oil at Prudhoe Bay brought immeasurable amounts of 
change to the Native communities of Alaska's North Slope. Sod huts 
turned into permanent houses. Schools, airports, roads, and utility 
systems were erected. Native corporations were formed along with the 
North Slope Borough. In short, over the course of a few decades, a 
semi-nomadic people subsisting off the abundant resources of the land 
and sea, were catapulted into modern 20th century society.
    This of course presented new challenges and opportunities for 
Alaska Native communities. And with the prospect of OCS development, we 
find ourselves again, potentially, on the threshold of another era of 
unprecedented change.
    One of the greatest benefits associated with Prudhoe Bay was the 
fact that it occurred largely on state land. Royalty and tax revenues 
flowed into state and local coffers-benefitting our people 
tremendously. This is a fact that all Alaskans were reminded of last 
week with the payment of our Permanent Fund dividends.
    But without Congressional action, OCS development may offer little 
if any of the benefits that we have seen with prior onshore 
development.
    I see this as one of the greatest challenges facing the people of 
the North Slope. And it seems difficult for the Federal Government to 
justify why the people of Alaska are not entitled to the same economic 
benefits as the residents of Gulf Coast states. This is especially true 
given our people's physical and cultural reliance on the Bowhead whale 
and other important marine mammals. We bear the majority of the risks 
of what can go wrong with OCS development and receive little direct 
benefit. Congress should act to ensure that royalty revenue received 
from OCS development is shared with local communities to help mitigate 
the negative impacts of development.
    Part of the frustration expressed by Alaska Natives towards OCS 
development is attributable to the fact that we do not feel that we 
have been offered a seat at the decision-making table. While local 
representatives of Federal agencies often reach out to Native 
communities and solicit concerns, leadership in Washington, D.C. seems 
prone to ignore local input in the pursuit of political agendas. The 
Federal Government must give more than lip service to local involvement 
and meaningful reforms need to be made to the government's tribal 
consultation policies.
    Another critical issue associated with OCS development is how the 
oil discovered will be brought to market. If industry decides to ship 
oil by tanker, the potential for an oil-related catastrophe impacting 
marine subsistence resources will increase and the opportunities to 
glean even indirect economic benefits will decrease dramatically.
    It is imperative that the Federal Government encourage and support 
an oil pipeline from OCS development areas into the Trans-Alaska 
Pipeline. This will mitigate potential impacts to critical marine 
subsistence resources and maximize the amount of economic benefit 
gleaned by the local peoples of the North Slope and Alaska.
    For this reason, it is essential that the Federal Government make 
management decisions for the NPR-A that will not foreclose this 
opportunity. The Mayor of the North Slope Borough, Charlotte Brower, 
recently raised concerns over Secretary Salazar's preferred alternative 
for the NPR-A, and I want to reiterate those concerns this morning. It 
is not in our people's best interest, nor is it common sense, for the 
Federal Government to effectively foreclose such a large area of the 
NPR-A from the development of oil & gas infrastructure before we all 
have a better understanding of the economic and technical feasibility 
of potential pipeline corridors.
    It would be better instead if the Federal Government would focus on 
making management decisions that go to the heart of some of our 
immediate concerns such as investing the resources necessary to have a 
year-round presence of Coast Guard personnel on the North Slope. This 
year we've had hundreds of ships and thousands of mariners operating in 
the Beaufort and Chukchi Seas. A couple of Coast Guard helicopters and 
a handful of Coastguardsman is not sufficient to police and provide 
effective emergency coverage for such a large area. But we applaud the 
Coast Guard for being here this summer.
    In addition, there must be greater investment in upgraded 
communication systems (radio and fiber-optic), ports that can handle 
deep-draft vessels, and icebreakers. It is imperative that Congress act 
soon to provide funding for such investments before we are overtaken by 
the pace that OCS oil & gas development is occurring.
    Another area in which Alaska Natives may realize tremendous 
opportunities from OCS development comes through our Native 
Corporations. As an example, Olgoonik Corporation is moving forward on 
its plan to develop the infrastructure necessary to support OCS 
development in the village of Wainwright. The Arctic Slope Regional 
Corporation has also positioned itself to provide services in support 
of OCS development. Other village and Native corporations stand to gain 
as development moves forward.
    We are also encouraged by the responsible and measured approach 
undertaken by Shell during this drilling season. It comes as no 
surprise to us that ice floes and the oft-unpredictable nature of the 
Arctic dictated the retreat of Shell's drilling rig during the late 
summer. But Shell's patience and willingness to forgo drilling into 
hydrocarbon-bearing zones this year, and to refrain from drilling 
during the fall whaling season, testify to Shell's commitment to 
conduct its operations in a safe and responsible way. And we applaud 
those efforts.
    To conclude, OCS development presents a plethora of opportunities 
and challenges to Alaska Native communities. And while we appreciate 
the opportunities to talk about these issues before this committee, we 
feel that we must be provided more opportunities to have a seat at the 
table when it comes to making OCS management decisions. Until that 
time, we will continue to be wary of any decisions that are not 
inclusive of local input and involvement. Thank you.

    Senator Begich. Thank you, Mr. Adams. Thank you.
    The next person we have is Edith Vorderstrasse--I always 
struggle a little bit with that--Consulting Division Manager of 
UIC.
    Please.

               STATEMENT OF EDITH VORDERSTRASSE,

              CONSULTING DIVISION MANAGER, UMIAQ,

              UKPEAGVIK INUPIAT CORPORATION (UIC)

    Ms. Vorderstrasse. Good morning, Senator. Thank you for 
giving us this opportunity to testify before the Subcommittee. 
My name is Edith Vorderstrasse, and I am the Consulting 
Division Manager of UMIAQ, a subsidiary of Ukpeagvik Inupiat 
Corporation, known as UIC.
    UIC was created under the Alaska Native Settlement Act in 
1972 to serve the social and economic interests of the Inupiat 
people of the community of Barrow, Alaska, the northernmost 
community in the United States. I am Inupiaq, a UIC shareholder 
and an Arctic Slope Regional Corporation shareholder, and have 
served Barrow residents in a variety of capacities, including 
former Mayor of the City of Barrow and former President of UIC.
    The life of the 21st century Inupiat is a complicated 
balancing act between preserving our culture and developing 
opportunities for the benefit of our people. If offshore oil 
production occurs in the Chukchi Sea or Beaufort Sea, the oil 
industry needs to build a strong, enduring alliance with the 
Inupiat people.
    After over 35 years of oil production on the North Slope, 
there has been no significant long-term effort for contracting 
with Alaska Native corporations or for the employment of North 
Slope residents, the people most directly affected by the oil 
production facilities. Local contracting and employment must be 
the cornerstones upon which future oil production is based in 
order to build a beneficial alliance with Inupiat communities. 
There is no reason that the Inupiat, an Alaska Native people, 
should accept the disproportionately adverse risks of offshore 
oil production without receiving the benefits it can also 
bring. Anything less than this effort would violate the Federal 
standards of environmental justice.
    UIC supports oil and gas development, both onshore and 
offshore. The Board of Directors provided us with this 
guidance: ``In our interactions with the oil and gas industry, 
we will leverage our position to benefit the Ukpeagvik Inupiat 
Corporation Family of Companies, its shareholders, and the 
community. We acknowledge the inevitability of exploration and 
development by the oil and gas industry, and we will support 
exploration and development activities as long as they are done 
in a way that ensures protection and preservation of the 
Inupiat culture and our subsistence way of life; economic 
benefit for our community; employment for our shareholders and 
their families; and contract opportunities for our companies.''
    I am here to talk about lessons we have learned during the 
development of Shell's exploration program for the Chukchi and 
Beaufort Seas this season. UMIAQ is one of several companies 
Shell has engaged. The results have been good for both 
companies and should continue. We believe Shell has effectively 
engaged Inupiat communities because they have listened to their 
concerns, made meaningful changes to their plans, and kept the 
promises that they made. As a result, Shell has formed a strong 
relationship with Alaska Native corporations for this venture, 
but it should be much stronger.
    Following the guidelines given by our Board of Directors, 
more can be done in three specific areas to strengthen the 
alliance between the oil industry, Alaska Native corporations 
and Federal regulators.
    Impact assistance to communities. Both Wainwright and 
Barrow have experienced extraordinary demands on their existing 
infrastructure to accommodate Shell's offshore efforts. Other 
communities have also had significant challenges placed on 
their local resources to accommodate the oil industry 
stakeholder engagement efforts. In some cases housing, the 
electrical generation capacity, water and sewer demands will 
soon outstrip the local communities' ability to provide the 
service.
    The Federal Government should also make available a 
revolving loan fund that will enable those communities to 
address their infrastructure demands. And I believe in this 
area, revenue sharing should be a part of the OCS leases 
because it will provide impact aid for the communities that are 
impacted by it.
    Part of this impact is not knowing what Federal facilities 
will be needed to accommodate for offshore oil production and 
the increasing amount of marine traffic on the Arctic Ocean. 
The Coast Guard has indicated they will return to the Arctic 
but have yet to say when or where. Where will they home port a 
cutter or base their aircraft?
    In the meantime, icebreakers from the People's Republic of 
China, South Korea, Russia, Canada, Finland and Sweden travel 
the Arctic Ocean virtually unchecked by the United States. Even 
if we had a mind to do so, our sole active icebreaker, the 
Healy, is hardly up to the challenge. The lack of a U.S. 
maritime presence on the Arctic Ocean and the failure of the 
Senate to ratify the Law of the Sea treaty to protect American 
coastal interests appear to concede territory to other Arctic 
Nations. Because of the lack of facilities or established 
presence, we are concerned that the United States has failed to 
recognize the Arctic as the new geopolitical frontier that it 
is becoming.
    Our concern is that unless we know what is coming from the 
Federal Government, we will not know if the ocean that we hunt 
and fish from will continue to be a safe source for our food.
    Long-term contracting opportunities. While Shell has done 
an outstanding job working with Alaska Native corporations to 
deliver an exploration program, there have been no similar in-
depth efforts by other offshore oil and gas leaseholders in 
their effort to develop the Chukchi or Beaufort Sea. One reason 
Shell has been able to mount a successful effort to drill 
offshore is that they have effectively engaged the expertise 
provided by the Alaska Native corporations. The knowledge the 
Alaska Native corporations have to effectively communicate with 
the population and regulators has played a major part in 
Shell's success.
    While initially Shell seemed happy to simply go through the 
motions and simulate stakeholder engagement, the reality was 
that it took true understanding with the assistance of the 
Alaska Native corporations to get the job done right. Shell's 
model of working with Alaska Native corporations on a long-term 
and continuing basis should be the standard for the industry.
    Workforce development is number three. One of the 
frustratingly persistent problems with oil and gas development 
is the inability for Alaska Natives to achieve meaningful long-
term employment with the oil and gas companies operating on the 
North Slope. This is despite the presence of these companies 
for almost 50 years. While some companies begin with the best 
of intentions, these efforts soon dwindle or disappear after 
production is established.
    We believe the efforts fail because of the lack of a long-
term commitment to Alaska Native employment and the fact that 
most new fields operate with a smaller work force. A smaller 
workforce means that most operators find the workforce 
development process onerous and would rather pay to hire a 
trained employee from Texas or Oklahoma than train an Alaska 
Native or anyone else from Alaska.
    We believe the Alaska Native development and hire issue is 
crucial to Arctic offshore oil and gas production because it 
brings Arctic experts into a workforce that are well 
compensated. While the smaller workforce for a new field may be 
an issue, an effort to form a training consortium for Alaska 
Natives would quite reasonably address hiring locally. This 
training consortium would be operated in Alaska and be a single 
source where oil producers could hire all workers needed in 
Alaska. We also believe that the North Slope operators should 
require their subcontractors to hire from this training 
consortium.
    An example of how this training consortium would have been 
helpful is when one of Shell's subcontractors had a request to 
hire 10 North Slope residents for work on their vessels. 
Because the company was not familiar with Alaska or how to 
effectively recruit employees from the North Slope communities, 
they were only able to recruit one person from the North Slope 
and filled the other nine vacancies with people from Texas and 
Louisiana. If this consortium were in place, all of their hires 
would have come from the North Slope.
    I hope that you will take these lessons learned back with 
you and recognize that offshore oil and gas development 
presents enormous opportunities to get it right, to work with 
Native Americans in a balanced way that is both positive and 
productive. It is also a wake-up call to the United States to 
establish a decisive presence in the Arctic that cannot be 
challenged.
    We represent an Alaska Native corporation, but we are also 
Inupiat and embody all that goes with it, which includes 
compassion, respect for elders, one another and nature, 
knowledge of our language, love for our children, knowledge of 
our family tree, hunting traditions, sharing, cooperation, 
humility, resolution of conflict, hard work, humor and 
spirituality. Our corporation recognizes that finding balance 
between the goals of economic opportunity and preserving our 
way of life will require compromise, diligence, creative 
thinking, open communications and a lot of hard work. Thank you 
for this opportunity.
    [The prepared statement of Ms. Vorderstrasse follows:]

Prepared Statement of Edith Vorderstrasee, Consulting Division Manager, 
               UMIAQ, Ukpeagvik Inupiat Corporation (UIC)
    Good Morning Senators, my name is Edith Vorderstrasse and I am the 
Consulting Division Manager for UMIAQ, a subsidiary of Ukpeagvik 
Inupiat Corporation (commonly known as UIC).
    UIC was created under the Alaska Native Claims Settlement Act in 
1972 to serve the social and economic interests of the Inupiat people 
from the community of Barrow, Alaska--the northernmost community in the 
United States. I am Inupiaq, a UIC and Arctic Slope Regional 
Corporation shareholder, and have served Barrow residents in variety of 
capacities, including former Mayor of the City of Barrow and former 
President of UIC.
    The life of the 21st Century Inupiat is a complicated balancing act 
between preserving our culture and developing opportunities for the 
benefit of our people. If offshore oil production occurs in the Chukchi 
or Beaufort Seas, the oil industry needs to build a strong, enduring 
alliance with the Inupiat people. After over 35 years of oil production 
on the North Slope, there has still been no significant long term 
effort for contracting with Alaska Native Corporations or for the 
employment of North Slope residents--the people most directly affected 
by the oil production facilities. Local contracting and employment must 
be the cornerstones upon which future oil production is based in order 
to build a beneficial alliance with Inupiat communities. There is no 
reason that the Inupiat, an Alaska Native people, should accept the 
disproportionately adverse risks of offshore oil production without 
receiving the benefits it can also bring. Anything less than this 
effort would violate the Federal standards for Environmental Justice.
    UIC supports oil and gas development, both onshore and offshore. 
The Board of Directors provided us with this guidance,

  ``In our interactions with the oil and gas industry, we will leverage 
    our position to benefit the Ukpeagvik Inupiat Corporation Family of 
    Companies, its shareholders, and the community. We acknowledge the 
    inevitability of exploration and development by the oil and gas 
    industry and we will support exploration and development activities 
    as long as they are done in a way that ensures:

   Protection and preservation of the Inupiat culture and 
        subsistence lifestyle;

   Economic benefit for our community;

   Employment for our shareholders and their families; and

   Contract opportunities for our companies.''

    I am here to talk about lessons we have learned during the 
development of Shell's Exploration Program for the Chukchi and Beaufort 
Seas this season. UMIAQ is one of several companies Shell has engaged. 
The results have been good for both companies and should continue. We 
believe Shell has effectively engaged Inupiat communities because they 
have listened to their concerns, made meaningful changes to their plans 
and kept the promises they have made. As a result, Shell has formed a 
strong relationship with Alaska Native Corporations for this venture, 
but it should be much stronger.
    Following the guidance given by our Board of Directors, more can be 
done in three specific areas to strengthen this alliance between the 
oil industry, Alaska Native Corporations and Federal regulators.

  1.  Impact Assistance to Local Communities--Both Wainwright and 
        Barrow have experienced extraordinary demands on their existing 
        infrastructure to accommodate Shell's offshore efforts. Other 
        communities have also had significant challenges placed on 
        their local resources to accommodate the oil industry 
        stakeholder engagement efforts. In some cases housing, the 
        electrical generation capacity, water and sewer demands will 
        soon outstrip the local communities' ability to provide the 
        service. The Federal Government should make available a 
        revolving loan fund that will enable these communities address 
        their infrastructural demands in a timely manner. The revenue 
        sharing would certainly help the impacted communities.

     Part of this impact is not knowing what Federal facilities will be 
        needed to accommodate for offshore oil production and the 
        increasing amount of marine traffic on the Arctic Ocean. The 
        Coast Guard has indicated they will return to the Arctic but 
        have yet to say when or where--where will they home port a 
        cutter or base their aircraft? In the meantime, icebreakers 
        from the People's Republic of China, South Korea, Russia, 
        Canada, Finland and Sweden travel the Arctic Ocean virtually 
        unchecked by the United States. Even if we had a mind to do so, 
        our sole active icebreaker, the Healy, is hardly up to the 
        challenge. The lack of a U.S. maritime presence on the Arctic 
        Ocean and the failure of the Senate to ratify the Law of the 
        Sea treaty to protect American coastal interests appear to 
        concede territory to other Arctic Nations. Because of the lack 
        of facilities or established presence, we are concerned that 
        the United States has failed to recognize the Arctic as the new 
        geo-political frontier that it is becoming.

     Our concern is that unless we know what is coming from the Federal 
        Government, we will not know if the ocean that we hunt and fish 
        from will continue to be a safe source for our food.

  2.  Long Term Contracting Opportunities--While Shell has done an 
        outstanding job working with Alaska Native Corporations to 
        deliver an exploration program, there have been no similar in-
        depth efforts by other offshore oil & gas lease holders in 
        their effort to develop their Chukchi or Beaufort leases. One 
        reason Shell has been able to mount a successful effort to 
        drill offshore is that they have effectively engaged the 
        expertise provided by the Alaska Native Corporations.

     The knowledge the Alaska Native Corporations have to effectively 
        communicate with the population and regulators has played a 
        major part in Shell's success. While initially Shell seemed 
        happy to simply go through the motions and simulate stakeholder 
        engagement, the reality was that it took true understanding 
        with the assistance of the Alaska Native Corporations to get 
        the job done right. The Shell model of working with Alaska 
        Native Corporations on a long term and continuing basis should 
        be the standard for the industry.

  3.  Workforce Development--One of the frustratingly persistent 
        problems with oil and gas development is the inability for 
        Alaska Natives to achieve meaningful long-term employment with 
        the oil and gas companies operating on the North Slope. This is 
        despite the presence of these companies for almost 50 years. 
        While some companies begin with the best of intentions, these 
        efforts soon dwindle or disappear after production is 
        established. We believe the efforts fail because of the lack of 
        a long term commitment to Alaska Native employment and the fact 
        that most new fields operate with a smaller workforce. A 
        smaller workforce means that most operators find the workforce 
        development process onerous and would rather pay to hire a 
        trained employee from Texas or Oklahoma than train an Alaska 
        Native or anyone else from Alaska.

     We believe the Alaska Native development and hire issue is crucial 
        to Arctic offshore oil and gas production because it brings 
        Arctic experts into a workforce that are well compensated. 
        While the smaller workforce for a new field may be an issue, an 
        effort to form a training consortium for Alaska Natives would 
        quite reasonably address hiring locally. This training 
        consortium would be operated in Alaska and be a single source 
        where oil producers could hire all workers needed in Alaska. We 
        also believe that the North Slope operators should require 
        their subcontractors to hire from this training consortium.

     An example of how this training consortium would have been helpful 
        is when one of Shell's subcontractors had a request to hire 10 
        North Slope residents for work on their vessels. Because the 
        company was not familiar with Alaska or how to effectively 
        recruit employees from the North Slope communities, they were 
        only able to recruit one person from the North Slope and filled 
        the other nine vacancies with people from Texas and Louisiana. 
        If this consortium were in place, all of their hires would have 
        come from the North Slope.

    I hope that you will take these lessons learned back with you and 
recognize that offshore oil and gas development presents enormous 
opportunities to get it right--to work with Native Americans in a 
balanced way that is both positive and productive. It is also a wakeup 
call to the United States to establish a decisive presence in the 
Arctic that cannot be challenged.
    We represent an Alaska Native Corporation, but we are also Inupiat 
and embody all that goes with it--which includes compassion, respect 
for elders, one another and nature, knowledge of our language, love for 
our children, knowledge of our family tree, hunting traditions, 
sharing, cooperation, humility, resolution of conflict, hard work, 
humor and spirituality. Our corporation recognizes that finding balance 
between the goals of economic opportunity and preserving our way of 
life will require compromise, diligence, creative thinking, open 
communications and a lot of hard work.

    Senator Begich. Thank you very much. Thank you for your 
very thoughtful testimony and your information. Each one of 
you, your recommendations, are very helpful.
    I'm going to keep my questions brief only because of time, 
but let me first say for the last panel and this panel, I have 
some additional questions which I will give to the record. That 
may come to you and ask for written response, so be prepared 
for that.
    But first, if I can ask you this, Mr. Slaiby, in regards to 
drilling, I think I know the answer to this, but I want to put 
it on the record. I know there are questions out there, did you 
really drill, or did you dig a hole? I mean, what I understand 
about the pilot holes you drill, and drilling is drilling, and 
next year you'll be drilling again. I just want to make sure 
I'm clear on that because I've had some people ask me, well, 
they dug a mud hole; what does that mean? Because now we're 
getting more and more familiar with your terms, this is when we 
want to make sure it's clear. Then I had some other very direct 
questions in regards to the development.
    Mr. Slaiby. Unequivocally, we drilled this year. I've been 
in the business for 32 years, so I don't have to be fact-
checked on that one. The important part of this for us is that 
with these wells, about half the work is in the first 1,500 
feet of the well.
    Senator Begich. Which is what you were doing this year.
    Mr. Slaiby. Yes, what we were doing this year, because we 
do construct a mud line cellar, which is about a 22 foot in 
diameter by a 40 foot bore hole constructed on the sea floor, 
and then we run a 30 inch and 20 inch casing inside of that. 
It's hugely time-consuming. But from that point, drilling 
forward to the termination of the well is only another 10 days 
of work.
    Senator Begich. OK. Thank you very much. Let me ask you, 
and you did have three recommendations. One was on the 
permitting agencies, the change that kind of occurred, and I'm 
assuming the interagency group made a big difference in kind of 
bringing all these bodies together. I have pending legislation 
that makes that permanent, and I want to just see if that's 
where you were headed because my worry always is what happens 
next. I think it's great that Under Secretary Hayes is there. 
He gets it about coordinating all this. But what happens next?
    You have a relationship. Even when he's yelling at you, you 
can still talk to him. But you have a relationship. Is your 
issue there, let's make this process of oil and gas development 
in the Arctic more permanent? So that whatever happens in the 
future, whatever company, whatever administration, whatever 
U.S. Senator, the same process continues. Is that what you're 
kind of referring to? I just want to make sure I'm clear on 
that.
    Mr. Slaiby. Precisely. The Deputy Secretary was very 
helpful and assembled people who were key in moving us forward. 
As I say, night and day difference between the two processes. 
Our concern and my concern specifically is sustainability, of 
being able to have that access to Deputy Secretary levels for 
Shell, for Conoco Phillips, for Stat Oil. I strongly question 
whether that level would be sustainable as we move forward.
    Senator Begich. And if I could pause, I have a couple more 
questions to ask the other two witnesses. My assumption is you 
would have that same response, that you want that high level of 
ability to interact with the issues that you bring up rather 
than 14 or 15 layers down. Is that a fair statement? Is that a 
fair statement that you want to have that kind of high level of 
interaction?
    Mr. Adams. I think that's important for the North Slope 
Borough and the communities of the North Slope to have access 
to high-level people that make management decisions about 
what's happening in the OCS. Quite often, it takes so long for 
decisions to be made that sometimes we're running up against 
time, but the Arctic doesn't have much time.
    Senator Begich. Edith?
    Ms. Vorderstrasse. It is critical that our communities have 
the opportunity to be at the forefront. That is one of the 
reasons why UIC said we need to be involved from the get-go.
    Senator Begich. You need to be at the table.
    Ms. Vorderstrasse. We need to be at the table so we know 
what is coming to our communities and what form of protection 
that we may be able to provide or suggestions to the agencies 
that are making decisions on behalf of our ocean.
    Senator Begich. Very good.
    Mr. Slaiby, let me ask you, you had some challenges this 
year equipment-wise with production, and your explanation, I 
was interested in hearing about the dome. But, I mean, you were 
testing it, right? That was the purpose, to find out what might 
go wrong, and you found out very quickly, which is better there 
than later.
    Here is the question I hear from people all the time. Take 
the dome or the containment vessel, or the other incident when 
the rig cut loose a little bit. People get concerned that is 
that the precursor to what they see in the future in the sense 
of the Arctic, and I'd like you to respond to that.
    But also, I know Shell has done, on an international level, 
when they do testing of their equipment, a live oil spill, we 
don't do that in this country. So I'm interested in your 
response to that, because I'm a believer that you should do 
some live-managed oil spill, just like down in Juneau they did 
a fire controlled management of a house for practice and 
training. A guy donated the house, which I thought was very 
interesting, and got it burnt down. OK.
    So I guess it's a two-part. One, how do you alleviate these 
concerns when you had a couple of things going on? And then, we 
don't want testing of the spill equipment in a spill. I am one 
of those believers that think we need to have a controlled 
environment. I know that makes people nervous, that we don't 
want to put anything in the ocean. Well, better to train on 
that than not.
    Your comments on the concern that people have? Because I 
know you've done it in other countries, the live spill 
management.
    Mr. Slaiby. If I could, Senator, addressing the two parts 
of the question.
    Senator Begich. Sure.
    Mr. Slaiby. One of the things I do want to bring into the 
conversation, and I know Admiral Ostebo also acknowledged, is 
that we've trained 2,000 people, deployed 20 vessels, two 
drilling rigs, three helicopters, three fixed-wing aircraft, 
and continue to operate. So, we've had a very, very successful 
year. I'm pleased with the operational aspects of that.
    With respect to the dome and the anchor dragging, no 
incident is our goal, but occasionally we will see things, and 
that's why we designed mitigation behind the incident. We had a 
number of mitigants in place in Dutch Harbor when the 
Discoverer dragged anchor. The mitigants worked, and they 
worked very quickly. Within 22 minutes, the incident was under 
control.
    Second, on the containment dome, as you quite rightly point 
out, it was Serial Number 1. There were incidents, and after we 
saw the incidents, we went through it from top to bottom until 
we got confidence. I strongly believe we have to be our own 
hardest critic. I know you get a lot of questions, but it 
really has to start with us. We have looked at it from top to 
bottom and believe that the process on the dome itself is game 
changing. An ability to separate oil and gas and water on top 
of a flowing well or a pipeline or other incident is something 
that this industry has needed since 1979.
    So, we are still bullish on this process. We've had some 
deployment issues, mechanical and operational. We will work 
through those.
    With respect to oil spill and water, we participated in a 
joint industry program, a JIP, for example, recently in 
Svalbard in the north of Norway where oil was put in the water. 
There is a second part of this JIP that will again involve 
putting oil in water and testing the effectiveness of oil spill 
response equipment.
    We have drilled, not literally but practiced, on a number 
of exercises with Coast Guard, with NOAA, with EPA, State of 
Alaska. I am very pleased with how that has worked, both in the 
tabletop drills we've done, the four grade drills that we've 
done, and the deployment exercises that we've done down in 
Prince William Sound.
    So I do believe we're ready. We have assurance that 
although the Challenger didn't travel up to Alaska, every other 
bit of the oil spill resource was deployed and available from 
the moment we started to drill.
    Senator Begich. Very good.
    Let me pause here because we just have a few more minutes. 
I want to get a couple more questions in to other folks, and 
then I might have one more, but I definitely have some that I 
want to submit on the record.
    First, two comments. I agree with what everyone said in 
regards to revenue sharing. That is a critical piece, and I 
know each one of your own entities have supported that effort, 
so I thank you for that. We're working double time. We have 
legislation pending. We brought another--a Democrat up here who 
is on the Energy Committee who is the next in line to be the 
Chairman of that Committee. If Senator Murkowski is not the 
Chair, he will be the Chair. It's critical for him to 
understand. I think there's a lot better understanding of how 
revenue sharing will happen here.
    And I also agree with you on the Law of the Sea. This is a 
critical piece, for us to understand our own sovereignty and 
making sure it's part of the equation.
    Let me ask, if I can, in regards first to Jacob and your 
comment which is very interesting--actually, you both had it, 
Edith and Jacob, in regards to more local participation and 
input in the process, not midway through. And I'll hold Shell 
off here for a second because Shell has been very aggressive, 
as you both have testified, in making sure that happens. But 
your issues are to make sure it happens more with others, as 
well as Federal agencies.
    But the comment I heard you make, Jacob, and I think I know 
what you're saying here but I want to make sure I'm correct, 
and that's on tribal consultation. Sometimes I think the 
Federal Government has a narrow focus of what tribal 
consultation is, and that's the tribes only. And because Alaska 
is unique, we have regional, village and local communities that 
are kind of missed in that. Is that what I was hearing? I want 
to make sure I'm on the same path with you, because I agree 
with that. I think there's a misunderstanding sometimes of the 
Federal Government on this end.
    Mr. Adams. Yes. I think that needs to be expanded because 
there are more than tribes on the North Slope. The North Slope 
Borough has been a major fighter in the efforts to get the 
message across to the United States Government about our 
concerns about OCS development and other governmental 
activities, and it provides a voice for the people 
collectively.
    I'd like to say that we must, or Congress must make every 
effort to allow North Slope Borough and other organizations to 
have a seat at the table to help make management decisions 
affecting the lives of the people of the North Slope.
    Senator Begich. Thank you, Jacob. Let me ask you one more 
question. I think this is more to reemphasize the point. Your 
point on oil and gas is if you're going to move oil, pipeline 
versus tanker, pipeline is the better approach. Is that what I 
heard?
    Mr. Adams. That's always been the position of the North 
Slope Borough, that there must be a pipeline. We believe that 
tankers are riskier than pipelines, and across NPRA the 
pipeline. This would also afford more economic opportunities 
for our people, jobs and revenues for the local government, 
because North Slope Borough is very dependent on the production 
of oil.
    Senator Begich. Very good.
    Let me ask Edith. You had mentioned something interesting 
that I'm anxious to work with you a little bit on, and that is 
the whole idea of employment and training and connectivity. 
Shell is a good example, where they reach out. I know 
Kensington Mine, a mining company, is doing a good job. Red Dog 
is doing a good job. There are models out there that seem to be 
working, and there are some that aren't so good.
    I've heard from some people, that there's not enough 
qualified people there. These people have told me, ``We can't 
find them, they don't want to work,'' or whatever the list is. 
I don't believe that, but that's what I hear. Give me your 
response to that. How do you feel about the ability within the 
region and within Alaska? Because our target is obviously the 
region first, but also Alaska. So give me your thoughts on 
that.
    Ms. Vorderstrasse. In reference to training or finding 
qualified individuals, I think throughout the State of Alaska 
there are probably a handful, more than a handful for the type 
of work that is required in offshore. And addressing the 
training needs of our communities, we are trying hard with UIC. 
I'm going to speak about UIC and what we're doing.
    In fact, we just did a training program, and we had seven 
or ten individuals attending this OSHA training in Barrow. 
We're going through a training phase because we know the demand 
that is going to be placed on our village corporation, any of 
our communities. We're reaching out to the communities that are 
close to Barrow so that we give them these opportunities. We 
are reaching out to the corporations and saying do you have 
anyone who may wish to join our training? We're working with 
the college to try to provide additional training that is 
needed. The MMO program has been successful. We have community 
liaison officers, and we also have subsistence advisors who we 
go through training on them so that we can provide the industry 
local employment.
    But the other thing that we are faced with is, just as any 
other community, being clean and drug free. That is a concern, 
and we are trying to provide and telling our shareholders, our 
descendants and what not, that you must be clean in order to be 
able to work for the industry, and not just for the industry. 
It is becoming the national standard.
    And so the more we can provide training, not just in our 
areas but here in Fairbanks and Anchorage, for any of our 
shareholders of any regional or village corporation, is going 
to be of great demand.
    Senator Begich. I just saw a great programming that KIC is 
doing, and it's exactly what you just described. It's about 
employment, which is important, about certification and all of 
that, but there's another piece, which is how to make sure you 
have a healthy lifestyle, because the industry may be mining 
oil and gas, but these industries are much different than in 
years past. So they require a much higher standard, and KIC I 
think is an interesting example of a mining industry that I saw 
just in the southeast.
    Let me ask, if I can, Mr. Slaiby, in regards to employment, 
are you, from Shell or the industry, are you folks sitting down 
and saying, okay, over the next 10 years' exploration period 
and development period, these are the kinds of jobs we will 
need to fill, and then trying to figure out how do we get 
people at the table, maybe UIC or North Slope Borough, or 
whoever it might be from the state, obviously, and the Federal 
Government. How do we do that?
    From an industry standpoint is that effort happening?
    Mr. Slaiby. Yes. Yes, it is. And I'll couch it under a 
statement that I think really rings true for any business 
anywhere. Unless everybody is successful in this operation, 
none of us will be successful, and that success has to extend 
to economic justice inside the communities as well. I truly 
believe that.
    So what we are doing is really looking at a slice of the 
community to work through. We've been a key sponsor of such 
things as the Avant-Garde Learning Alliance that is qualifying 
teachers' aides to take a more active role in education here in 
Alaska. I think the average time for an out-of-state teacher to 
stay active in community is, let's say, a year and a half. So 
building up and really aiming at fifth grade, which is the 
level we use, for folks to stay in school, to get the 
education, to become part of the program, is only going to be 
beneficial for Shell and other industries as well, because 
we've got to make sure that there is that level of success in 
the communities that we work on.
    When we see disparity in other places in the world that we 
work on, you're building on a house of sand and it's a recipe 
for troubles later on. So we are completely aligned with making 
that happen.
    Senator Begich. Very good. I've been given a note which 
tells me that my time has expired, and that's better than me 
expiring, which is very important.
    So first let me say to this panel, thank you very much. 
Thanks for the testimony. I do have some additional questions.
    Do we keep this open for any period of time?
    We'll keep the record open for 14 days for additional 
questions that will be submitted, and hopefully for additional 
responses you can all give.
    But I can't say enough for taking your time to come out 
here again, to have this conversation about what we need to do, 
and I appreciate this panel for their recommendations from a 
community perspective. The first panel was more about broader 
policy and what we should be doing. This was more about what on 
the ground specifically--and I will take this to heart, and 
again, as part of the congressional record, this will be part 
of the record and the ability for us to kind of keep moving 
forward.
    Thank you all very much. This hearing is closed.
    [Whereupon, at 11:58 a.m., the hearing was adjourned.]
                            A P P E N D I X

                                       United States Senate
                                 Washington, DC, September 21, 2012
Hon. Ken Salazar,
Secretary,
U.S. Department of Interior,
Washington, DC.

Dear Secretary Salazar:

    We write to comment on the Department of Interior's (DOI) 2012-2017 
Outer Continental Shelf Oil (OCS) and Gas Leasing Program. Our comments 
focus specifically on the Arctic Ocean. We strongly urge DOI not to 
include Arctic lease sales until there is a thorough examination of the 
scientific, economic, and social factors that could be affected by 
expanded drilling and a comprehensive review is made of how oil and gas 
activities will be conducted without harming the Arctic ecosystem or 
creating opportunities for subsistence.
    In the 2012-2017 program, BOEM did not include areas off of the 
Pacific coast, Atlantic coast, or the North Aleutian Basin for leasing. 
BOEM stated it did not include these regions because of local 
recommendations, and a lack of infrastructure and preparedness. These 
considerations are even more pertinent for the Arctic, making the 
proposed Arctic leasing rather perplexing.
    Challenges with infrastructure and spill response are unprecedented 
in the Arctic's remote, undeveloped region: the Arctic Ocean is 
characterized by hurricane-force storms, 20-foot swells, sea ice up to 
25 feet thick, sub-zero temperatures and months-long darkness. 
Moreover, the Arctic has extremely limited infrastructure (there are no 
roads or deep water ports and only a handful of small airports) and the 
nearest Coast Guard station is 1,000 miles away. In the event of an oil 
spill the response may be too slow and irreversible damage to 
ecosystems and species could result. Consequently, we strongly disagree 
that leases in the Arctic Ocean should be included in the 2012-2017 
program.
    We recognize that throughout the plan, BOEM states a commitment to 
finding ways of mitigating and eliminating environmental and 
subsistence conflict. However, the Arctic is a unique environment with 
significant hurdles that relevant agencies must fully address before 
leasing decisions are finalized in the region for the upcoming five-
year plan. While difficult, making the right decisions now is 
imperative for sound long-term planning in the Arctic regarding to 
shipping, infrastructure and environmental protections.
    Government and non-governmental entities have emphasized these 
concerns. In April, President Obama's National Oil Spill Commission 
released a progress report on its initial recommendations and 
concluded, ``Although there has been some progress in implementing the 
Commission's recommendations concerning frontier areas, we feel 
strongly that additional work must be done to understand the ecosystems 
of the Arctic and to establish the infrastructure necessary to protect 
this vulnerable and valuable region,'' In addition, last summer the 
U.S. Geological Survey released a report on the Arctic finding that 
major gaps in scientific understanding of the Arctic region make it 
``difficult, if not impossible'' to make informed decisions about oil 
and gas development in the Arctic Ocean.
    Long-term strategies for oil exploration need to be developed in 
the context of a full and open public process. Thus, we urge DOI to 
establish a clear and robust process that includes public participation 
with emphasis on input from communities most affected. We recommend 
that DOI should:

   Make future Arctic lease sales contingent upon the 
        development, implementation, and use of a comprehensive, 
        integrated scientific research and monitoring program.

   Make future Arctic lease sales conditional upon the 
        demonstration of effective oil spill response capability and 
        preparedness.

   Expand existing deferrals for areas known to be important 
        for subsistence or ecological reasons, such as Hanna Shoal and 
        Barrow Canyon.

    Because these recommendations have not been sufficiently addressed, 
and for the reasons outlined above, we strongly urge DOI to remove 
Arctic leases from the 2012-2017 program.
            Sincerely,

Jeffrey A. Merkley
United States Senator

Patrick Leahy
United States Senator

Frank R. Lautenberg
United States Senator
Richard Durbin
United States Senator

Barbara Boxer
United States Senator

Sheldon Whitehouse
United States Senator
      
                                 ______
                                 
    Response to Written Question Submitted by Hon. Barbara Boxer to 
                          Hon. David J. Hayes
Ensuring Safe and Responsible Drilling
    Question. On September 21, 2012, I joined five of my Senate 
colleagues in sending a letter to Secretary Salazar urging him to 
ensure that certain conditions have been met before drilling commences 
in the Arctic: comprehensive scientific research and monitoring, 
effective oil spill response capability, and an expansion of deferrals 
for areas known to have significant subsistence or ecological values. I 
would like to request that this letter be entered into the record.
    What actions is the Department of the Interior taking to ensure 
that we have sufficient scientific information about this region and 
adequate safeguards to guarantee that drilling can proceed safely and 
responsibly?
    Answer. The Department is actively engaged in efforts to support 
the Administration's commitment to facilitating a comprehensive, 
science-based approach to energy policy in the rapidly changing Arctic. 
Much of the existing scientific information on the Arctic is conducted 
by the Bureau of Ocean Energy Management's (BOEM) Environmental Studies 
Program, which is designed to provide the agency with information about 
potential impacts of energy development and how to avoid or mitigate 
effects on the human, marine, and coastal environments. A major portion 
of the ESP is conducted collaboratively with our partners, including 
Federal and State agencies, academic institutions, Alaskan Native 
organizations, and others. BOEM and its predecessor agencies have 
funded more than $400 million in studies concerning the Alaska Outer 
Continental Shelf since 1990. This has resulted in more than 500 
different study reports, as well as more than 300 peer-reviewed 
publications.
    Collecting, synthesizing and delivering relevant data on the Arctic 
to decision-makers is a top priority for the Administration. On April 
4, 2013, the Interagency Working Group on Coordination of Domestic 
Energy Development and Permitting in Alaska, which I chair, released a 
report to the President titled Managing for the Future in a Rapidly 
Changing Arctic that describes how Arctic residents are dealing with 
rapid, climate change-induced impacts to resources and traditional ways 
of life. At the same time, new economic activities and opportunities 
are emerging--notably oil and gas, marine transportation, tourism and 
mining. Several Departmental bureaus brought their expertise to the 
development of this report, including BOEM, the Bureau of Land 
Management, the Bureau of Safety and Environmental Enforcement (BSEE), 
U.S. Fish and Wildlife Service, National Park Service, and the U.S. 
Geological Survey.
    The report includes the launch of a new government website, the 
Arctic Science Portal, http://www.arctic.gov/portal/, giving 
decisionmakers and interested parties easier access to scientific 
information about the Arctic on topics such as sea ice, fisheries, oil 
spill research, and many others. The portal connects researchers, 
decision makers and the public with Arctic information and is a key 
component of the safe and responsible exploration and development of 
Alaska's vast resources while preserving the region's rich ecosystems 
that will sustain future generations.
    Finally, both BOEM and BSEE have taken effective regulatory steps 
to ensure that offshore oil and gas exploration in the Arctic is 
conducted safely and responsibly, and is subject to strong oversight. 
For example, the bureaus placed a number of stringent Arctic-specific 
conditions and standards on Shell's 2012 drilling program, and Shell 
was also required to provide expanded information and modeling as part 
of their Oil Spill Response Plans. The Department is incorporating 
lessons learned from the 2012 season into its comprehensive program for 
the review of the future proposals for oil and gas exploration offshore 
Alaska, as well as continuing partnerships developed with other 
governmental agencies for oversight and information sharing. And, among 
other things, BOEM and BSEE have undertaken a joint rulemaking to 
further codify and establish standards specific to offshore operations 
in the Alaska Outer Continental Shelf.
                                 ______
                                 
   Response to Written Questions Submitted by Hon. Barbara Boxer to 
                     Rear Admiral Thomas P. Ostebo
    Question 1. Developing an oil spill response capability is 
especially challenging given the quick-changing conditions in the 
Arctic. A recent report by the Center for American Progress, ``Putting 
a Freeze on Arctic Ocean Drilling,'' demonstrates the lack of 
appropriate infrastructure and facilities to respond to an oil spill in 
this remote region, and I request that this report be placed in the 
record. With the nearest Coast Guard station nearly 1,000 miles away, 
it could take eight hours for a helicopter to respond to an incident in 
the Arctic and even longer for Coast Guard cutters. As oil production 
increases in the Arctic in the coming years, what steps is the Coast 
Guard taking to reduce response times in case of an incident in the 
Arctic?
    Answer. In addition to Coast Guard ships and aircraft that have 
long patrolled the Arctic, Coast Guard's most capable surface vessel, a 
National Security Cutter, will be deployed this summer to conduct 
various missions, including those with a time-sensitive response 
element (i.e., search and rescue). Coast Guard will also continue 
evaluating the feasibility of establishing a forward operating location 
by deploying our helicopter and personnel to Kotzebue at the Alaska 
National Guard hangar located there. Deploying our helicopter and 
personnel to Kotzebue will give us an opportunity to leverage existing 
infrastructure and will strategically position us to conduct operations 
and effectively respond to maritime emergencies.
    The Coast Guard Federal On-Scene Coordinator (FOSC) is responsible 
for oversight and direction of any coastal Arctic oil spill, including 
ensuring the Responsible Party (RP) mobilizes resources and conducts a 
timely and effective response. As required by their offshore Oil Spill 
Response Plans (OSRP), which are reviewed by the Coast Guard and 
approved by the Bureau of Safety and Environmental Enforcement (BSEE), 
industry will pre-position oil spill response vessels and crews, as 
well as other private sector resources near the proposed drilling sites 
and ensure these assets are ready to respond to any oil spill incident 
that occurs during the warmer, ice-free summer drilling season. 
Additional response equipment is located throughout Alaska and the 
U.S., and can be deployed into the affected area in the event of a 
spill.

    Question 2. One of the primary concerns with a spill in that region 
is the possibility of oil being trapped in ice. I understand you have 
been participating in oil-in-ice research since 2010, but as oil 
production continues in the coming years, what types of technology will 
be available to address this concern?
    Answer. The U.S. Coast Guard Research, Development, Test & 
Evaluation (RDT&E) Program has been conducting oil-in-ice response 
research since 2010. The Coast Guard has conducted three demonstrations 
in the Great Lakes region as well as a demonstration in the Arctic 
region as part of the Coast Guard's Arctic Shield 2012 exercise. The 
results to date include the identification of operational performance 
gaps, documentation of existing response technology efficacy and 
lessons learned, and practical response experience for both Coast Guard 
and commercial responders.
    As part of these demonstrations, the Coast Guard evaluated existing 
response equipment such as heated skimmers and a cold-weather modified 
Spilled Oil Recovery System (SORS). The Coast Guard assessed 
operational tactics, such as the use of ice flows to herd oil for 
collection purposes, and then analyzed the efficacy of unconventional 
response equipment such as a barge for equipment staging and 
deployment, as well as a tethered aerostat, a Remotely Operated Vehicle 
(ROV) and an Unmanned Underwater Vehicle (UUV) for oil detection and 
observation.
    The Coast Guard plans to continue pursuing collaboration 
opportunities for oil-in-ice research with entities such as the 
Department of Homeland Security's Science and Technology Directorate, 
the DHS Maritime, Island and Remote and Extreme Environment Security 
Center of Excellence, the Department of the Interior's Bureau of Safety 
and Environmental Enforcement, U.S. Northern Command, the Interagency 
Coordinating Committee on Oil Pollution Research and industry.
                                 ______
                                 
   Response to Written Questions Submitted by Hon. Barbara Boxer to 
                            Peter E. Slaiby
    Question 1. Given the unique natural characteristics of the Arctic 
environment, such as ice floes and ocean swells, what tools are you 
utilizing to address these unique challenges?
    Answer. Observations and long term characterization programs of 
oceanic, atmospheric, (together known as Metocean) and ice conditions 
are integral components of Shell's exploration and development plans 
and serve to advise accurate operational forecasting and validate 
numerical models. Since Shell's resumption of exploration activities in 
the Alaskan offshore in 2005, ice and current monitoring instruments 
have been deployed annually. In 2008, a real-time reporting 
meteorological buoy was deployed at the Burger prospect in the Chukchi 
Sea during the open water season. In the following years, the 
meteorological buoy program has expanded to a total of five seasonally 
deployed buoys. Additionally, Shell sought to leverage the spatial 
advantage of its marine vessels and trained personnel to provide field 
observations of ice and Metocean conditions directly to Shell's ice and 
weather forecast team.
    Shell understands the value of the ice and Metocean measurement 
programs internally and to the greater science and research communities 
and Shell led its industry partners to establish a formal agreement 
with NOAA to share these data and cultivate collaboration. To date, 
historic and real-time data sets have been openly shared and 
professional collaboration has been realized in weekly teleconferences 
between Shell and National Weather Service (NWS) forecasters and NOAA 
taking the lead on managing the field observers as part of the VOS 
(Volunteer Observing Ship) program. In a time of Federal budget 
constraints and the sequester, access to the industry data has served 
to augment and potentially enhance the NWS forecasting ability, which 
benefits public safety.
Shell Ice and Weather Advisory Center
    Shell developed and operates the Shell Ice and Weather Advisory 
Center (SIWAC), which is an integrated forecasting service tailored to 
the needs and demands of Shell's field operations in Alaska. Started in 
2007, SIWAC has evolved to be the most comprehensive and focused ice 
and weather operation covering the offshore and coastal areas from the 
Gulf of Alaska to the Canadian Beaufort. Nationally operated ice and 
weather forecasting offices are not chartered to supply the level of 
service and quality of products necessary to make effective and 
efficient operational decisions and ensure that the demanding safety 
standards required by Shell for personnel, environment, and assets are 
met. The products and services provided by SIWAC contribute valuable 
information for defining opportunity windows, logistical movements, and 
seasonal openings and closings. SIWAC was designed to meet these needs 
by employing a dedicated team of expert Arctic forecasters with 
unmatched access to tools and field data. These experts, available 
around the clock during the operational season, are fully integrated 
into the operations process and directly engage Shell leadership, 
project managers, planners, and field personnel, ensuring that forecast 
products and services are fit for purpose.
    SIWAC consists of a team of six full time Arctic-experienced 
forecasters (2 ice forecasters and 4 meteorologists) that work in 
rotations 24/7 to provide continuous coverage for Shell during the 
operational season. In addition, there are numerous personnel who 
provide support services to the forecasters, such as satellite tasking, 
IT and web services, and research specialists. A core operational 
philosophy of the SIWAC program is that the ice and weather are 
intricately linked; therefore the ice and weather forecasters sit 
together and produce their respective products collaboratively.
    There is a constant stream of information available to develop the 
detailed and frequent forecast products. Among this information is high 
resolution RADARSAT2 satellite imagery, which is unaffected by lack of 
sunlight or cloud cover. Strategically placed Metocean buoys are 
deployed seasonally in the Chukchi and Beaufort Seas to report near 
real time measurements of atmospheric and oceanic parameters such as 
winds and temperatures. A network of field observers placed on Shell 
operated vessels provide routine reporting of local weather, sea, and 
ice conditions. Position reporting buoys are deployed to track movement 
of the pack ice. And Shell co-sponsors an array of UAF-operated HF 
Radar sites that map the ocean currents over wide areas of the Beaufort 
and Chukchi Seas. Additionally, SIWAC accesses publically available 
data and products to advise forecasting such as MODIS and AVHRR 
satellite data, nationally operated weather stations, and numerical 
models.
    State of the art technologies play a central role in the 
forecasting process. Data received are manipulated in specialized 
geospatial software tools and bespoke forecast models. Advanced web 
mapping techniques are used to composite select data sets into a Common 
Operating Picture that displays relevant environmental information in 
an interactive map in context with vessel and prospect positions.


    Figure 1. SIWAC sea ice chart for August 13, 2012 illustrating the 
detail that goes into every chart.

    SIWAC's team and significant resources produce frequent, highly 
detailed sea ice charts and accurate site-specific weather forecasts. 
Figure 1 illustrates the exceptional detail that goes into every SlWAC 
sea ice chart. Polygons are drawn around ice of similar concentration 
and characteristics, giving operations, mariners, and Shell Leadership 
guidance for executing field plans. On the weather side, the sea ice 
chart is ingested into the proprietary forecast Grid Editor model to 
produce more accurate wave fields. In addition, all relevant data 
pertaining to the meteorological conditions, such as atmospheric 
pressure and winds, as measured by the Metocean buoys and reported by 
field observers, are applied in the Grid Editor resulting in a high-
resolution, locally corrected gridded field of key meteorological 
parameters, which is directly used to develop the weather forecasts 
reported to operations.


    Figure 2. SIWAC Grid Editor output for wind speed.

    The accuracy of the ice and weather forecast products generated by 
the SIWAC team is constantly validated against measurements and 
observations to assure the quality and reliability of the information 
that gets considered by operations. Candid evaluations of the SIWAC 
program are performed at the close of the operational season, which 
summarizes the key events and looks for areas of improvement.
    In 2012, Shell entered into a collaborative agreement with the 
National Oceanographic and Atmospheric Administration (NOAA). Under 
this agreement, Shell has shared both near real-time and archived 
environmental data, such as buoy data and sea ice charts, with NOAA 
offices, which has had the immediate effect of improving forecast 
products produced by NOAA for the U.S. Arctic. Data submitted to NOAA 
become available to the general public and researchers. Additionally, 
the agreement fosters true bidirectional cooperation that was reali zed 
through twice-weekly teleconferences between Shell and NOAA forecasters 
and NOAA inducting Shell field personnel into their VOS (Volunteer 
Observing Ship) ice and weather observing program.
    While SIWAC is primarily an operational support program, its 
products and services are valuable to a wide range of subsequent users 
within Shell. As field data are collected and products are produced, 
they are archived in a geospatial system. These archives become sources 
of data to develop low-uncertainty statistics and validate models to 
create, for instance, design criteria for development.
Areas for Improvement
    SIWAC is now in its seventh year of operation and has seen 
refinement in its processes and products over the course, however there 
are areas recognized for amplification or improvement:

   Continue to develop continuity strategy--Incorporate student 
        interns, recent graduates, and/or early career individuals into 
        the program to develop the next generation of forecasters.

   Improve fatigue management--Strive to reduce length of 
        workday for the forecasters by increasing the staffing level.

   Improve colocation strategy--Goal is to provide seamless 
        transition to remote, redundant facility in event of local 
        disaster or utility outage.

   Expand Ice Management support--Feedback from internal 
        stakeholders pointed to the need for expanded sea ice 
        surveillance during break up and periods of potentially 
        threatening mobile ice. This would be accomplished through more 
        frequent and higher resolution satellite imagery and possibly 
        aerial overflights.

   Continue to develop NOAA collaboration--Explore synergistic 
        areas for greater collaboration, while continuing successful 
        elements, such as the VOS program and frequent teleconferences.

    Question 2. Please explain exactly what happened in the incident 
with the containment dome, how it could have been prevented, and what 
steps you are taking to assure the public that you are exercising the 
greatest amount of caution when you proceed with drilling in the 
future.
    The first-of-its-kind Arctic Containment System (ACS) is the 
fourth-tier of response in the unlikely event that there is a well 
control event during exploration drilling. The ACS would be called upon 
only if the blow-out preventer, shear rams and capping stack are all 
unsuccessful in a source-control scenario.
    The ACS is stationed on a 310-foot barge, the Arctic Challenger. 
Part of the ACS is a dome-like apparatus that would be lowered into the 
sea above a leaking wellhead. The dome would funnel the hydrocarbons 
into a hose that is attached to the top of the dome. The hose would 
take the hydrocarbons to the barge where specialized equipment would 
separate the water and hydrocarbons.
    During an initial test deployment in September 2012, a faulty 
electrical connection caused a valve to open. This in turn caused the 
dome to descend quickly. Safety systems ensured that the dome did not 
hit the sea floor; but the rapid descent and sudden pressure change 
damaged the buoyancy chambers.
    Following a full evaluation of the incident, Shell developed a 
comprehensive plan to redesign the dome and to provide redundant backup 
systems. The successful deployment of the new dome was witnessed and 
acknowledged by the Department of the Interior's Bureau of Safety and 
Environmental Enforcement (BSEE) in 2013.

                                  
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