[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:
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\1\ http://www.arctic.noaa.gov/docs/arctic_strat_2010.pdf.
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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.