Is Arctic Oil Drilling Ready for Prime Time?
Is the United States ready to venture into a new frontier of offshore oil and gas drilling in the Arctic Ocean?
After more than five years of winding its way through the regulatory maze, Shell could be less than a month away from securing the final permits from the Obama administration to drill in the Arctic's Chukchi and Beaufort seas. The global oil and gas company has run into some obstacles in recent weeks, such as when one of its drilling rigs already in Alaska broke loose and drifted precariously close to the shoreline. Shell's window of opportunity to drill is also closing quickly: It must suspend drilling operations in the ocean by October. (Drilling is possible only during the Arctic's summer months, July through October.)
Interior Secretary Ken Salazar said last week that Shell's plans are part of a larger dynamic unfolding in the Arctic. "We are at the beginning of deciding the whole future of the Arctic of the earth," Salazar told The New York Times.
What's at stake with Arctic drilling as it relates to America's economy, environment, and national security? Has the Obama administration effectively reviewed Shell's plan to drill? Or should the Interior Department require more reviews and delay the company's plan further? If Shell's plans are approved, how will Arctic drilling change the country's energy landscape?

July 25, 2012 7:00 PM
Arctic Exploration Vital to U.S.
By Brigham McCown
Principal and Managing Director of United Transportation Advisors LLC
Successful extractions of oil and gas resources have been accomplished in many difficult areas around the globe; particularly in places with extreme climate challenges. The issue is one of managed responsibility, especially when all groups can agree that exploring our nation’s domestic resources is in the U.S.’s best interest. Unfortunately, those opposed to fossil fuels seem to have no limit as to why drilling cannot be done safely and in harmony with the environment.
Shell is an example of one company that has been patiently attempting to finalize arrangements for drilling in the U.S.’s far north regions. The truth is, companies have waited years through a bureaucratic system, not to mention years of legal challenges, designed to discourage applicants.
Opponents of drilling have used every administrative and legal procedure in their arsenal to sidetrack approval. It is important that the necessary due diligence be observed, however, opponents must instill some confidence in the industry that proper safety and regulatory implications surroundin...
Successful extractions of oil and gas resources have been accomplished in many difficult areas around the globe; particularly in places with extreme climate challenges. The issue is one of managed responsibility, especially when all groups can agree that exploring our nation’s domestic resources is in the U.S.’s best interest. Unfortunately, those opposed to fossil fuels seem to have no limit as to why drilling cannot be done safely and in harmony with the environment.
Shell is an example of one company that has been patiently attempting to finalize arrangements for drilling in the U.S.’s far north regions. The truth is, companies have waited years through a bureaucratic system, not to mention years of legal challenges, designed to discourage applicants.
Opponents of drilling have used every administrative and legal procedure in their arsenal to sidetrack approval. It is important that the necessary due diligence be observed, however, opponents must instill some confidence in the industry that proper safety and regulatory implications surrounding the drilling activity are firmly in place.
Opponents must stop cloaking their recommendations and concerns in such a way that further delays Shell from securing its final permits. The federal government is also caught up in the waiting game. The Chukchi and Beaufort are in an area of shallow enough water and low pressure, making them ideal locations to install technical equipment, but progress is still being halted.
Interior Secretary Ken Salazar has reviewed and approved exploration and spill response plans, but before drilling can commence, the department must still approve separate applications pertaining to each well.
Drilling in the North will not only lower domestic energy prices, it will also lessen our nation’s dependence on energy imports from highly volatile areas. Drilling in the Chukchi and Beaufort seas gives the U.S. a competitive economic advantage. To that end, we should all recognize that developing these vast fields is in our nation’s best interest and vital to ensuring a safe supply of energy needed to move our economy forward.
Shell’s drilling date was initially set for July 15; it has since been pushed back on several occasions due to regulatory obstacles and unprecedented government scrutiny, namely from special interest groups.
The truth is that by working together, we can chart a path forward. That path realistically balances all factors and interests while avoiding attempts to continually add hoops that do not improve the overall process.
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July 25, 2012 2:34 PM
Arctic Drilling: Not Optimistic
By Amy Harder
energy and environment reporter, National Journal
(These comments were submitted by Dan Ritzman, Sierra Club Alaska Program Director.)
“I believe there will not be an oil spill.” Those are the words of Secretary of Interior Salazar earlier this month. I wish I could be as optimistic. Unfortunately, a number of major oil spills in the last ten years-- including the ongoing Deepwater Horizon disaster-- show that spilling is part of drilling. Each spill is a reminder that the price of offshore drilling is the constant risk of environmental devastation. In Alaska, we know this first hand. Local beaches and economies are still recovering from the 11 million gallons of oil spilled from the Exxon Valdez into the rich fishing grounds of the Prince William Sound.
Unfortunately we seem not to have learne...
(These comments were submitted by Dan Ritzman, Sierra Club Alaska Program Director.)
“I believe there will not be an oil spill.” Those are the words of Secretary of Interior Salazar earlier this month. I wish I could be as optimistic. Unfortunately, a number of major oil spills in the last ten years-- including the ongoing Deepwater Horizon disaster-- show that spilling is part of drilling. Each spill is a reminder that the price of offshore drilling is the constant risk of environmental devastation. In Alaska, we know this first hand. Local beaches and economies are still recovering from the 11 million gallons of oil spilled from the Exxon Valdez into the rich fishing grounds of the Prince William Sound.
Unfortunately we seem not to have learned the lessons offered by these disasters; Big Oil cannot be trusted. The alarmingly close call as Shell’s Discoverer drill ship almost ran aground in Dutch Harborhighlights just how unprepared Shell is to drill in the Arctic. The weather conditions during the accident were benign compared to the hurricane-force winds and 25-foot seas the Discoverer must withstand in the drilling area.
The near-grounding comes as the sheen begins to rub off the company’s “second-to-none” drilling plans. Shell is backtracking on the amount of oil it could clean up after a spill, now saying it can only “encounter” it, not clean it up. Requirements for Shell’s oil spill recovery barge to withstand strong Arctic storms have been scaled-back and the company has revealed that it can’t meet the clean air standards it initially agreed to for its fleet.
Alone each of these facts is disturbing. Together they spell real problems for the Arctic, its wildlife and its people. The Beaufort and Chukchi Seas are important feeding grounds for bowhead and beluga whales and home to the entire population of U.S. polar bears. Walrus, bearded and spotted seals, birds and fish all call these seas home. They support a wealth of wildlife that has sustained local Inupiaq culture for thousands of years.
I have been lucky to be able to experience the wonders of the Arctic first-hand. I have spent time with Alaska Native people and learned about the importance of these seas to their culture and way of life. On my last trip I floated down the Canning River, stopping just miles from where Shell plans to drill this summer. Looking out into the frozen Beaufort Sea I was reminded of just how devastating an oil spill in these fragile waters could be.
Behind Shell’s empty promises is a risky and dangerous plan that could poison one of America’s last great wild places forever. The extreme conditions of the Arctic have resulted in a delicate natural balance that has allowed both wildlife and local communities to survive for generations. A major oil spill could pollute these waters for decades, killing marine plants and animals and ending an ancient way of life. Time and again oil companies have said “trust us,” and time and again the end result has been spoiled waters and coastlines.
It is time for the Obama administration to step in and protect the Arctic. The truth is that we don’t need to open this irreplaceable area to drilling. Instead we should be focusing on making our cars cleaner and more efficient, expanding our transportation choices and investing in renewable energy. Doing so will benefit the Arctic, but also consumers throughout the lower 48 states.
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July 25, 2012 9:31 AM
Setbacks Show Need for Arctic-Specific S
By Marilyn Heiman
Marilyn Heiman is the director of the Pew Environment Group’s U.S. Arctic Program
This year’s thicker than anticipated sea ice is wreaking havoc on drilling schedules. It is a reminder of how the Arctic remains one of the most extreme - and unpredictable - regions on earth. Hurricane-force winds, 20-foot seas, shifting sea ice, sub-zero temperatures and long periods of fog may occur any time of the year.
Preventing an accident in such conditions is going to be challenging. And recent incidents, including a drill rig slipping its moorings and problems certifying an oil-containment barge, do not inspire confidence that promised protections are fully tested and in place. As the 2010 Deepwater Horizon disaster taught us, even in temperate waters it takes only one accident to cause untold human, economic and environmental damage.
The stakes are high. The Arctic Ocean is home to bowhead whales, walruses, ice seals, polar bears and other marine mammals found nowhere else in America’s waters. This unique ecosystem is central to the diet and culture of indigenous communities who have depended on its bounty for thousands of years. Even among A...
This year’s thicker than anticipated sea ice is wreaking havoc on drilling schedules. It is a reminder of how the Arctic remains one of the most extreme - and unpredictable - regions on earth. Hurricane-force winds, 20-foot seas, shifting sea ice, sub-zero temperatures and long periods of fog may occur any time of the year.
Preventing an accident in such conditions is going to be challenging. And recent incidents, including a drill rig slipping its moorings and problems certifying an oil-containment barge, do not inspire confidence that promised protections are fully tested and in place. As the 2010 Deepwater Horizon disaster taught us, even in temperate waters it takes only one accident to cause untold human, economic and environmental damage.
The stakes are high. The Arctic Ocean is home to bowhead whales, walruses, ice seals, polar bears and other marine mammals found nowhere else in America’s waters. This unique ecosystem is central to the diet and culture of indigenous communities who have depended on its bounty for thousands of years. Even among Americans who have never visited the Far North, it holds a special place in our imaginations.
Ideally, we would have better strategies in place to ensure that any development is done responsibly and respectfully, in a way that maximizes both human and environmental safety, such as:
-- Establishing Arctic-specific oil spill prevention and response standards—standards that are as tough as the Arctic itself—whether for oil development or vessel and tourist traffic. Such standards need to be written into regulations, not negotiated permit by permit and company by company.
-- Identifying and protecting sensitive areas that provide crucial wildlife habitat or areas used by indigenous communities that practice a subsistence way of life.
-- Implementing a long-term research and monitoring plan to help guide decisions on the best ways to manage the unique Arctic ecosystem, especially as it continues to be affected by the twin pressures of climate change and development.
The United States should aspire to be the world’s leader in safety, prevention and response in the Arctic. Despite some good first steps by the Obama administration, we’re not there yet.
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July 24, 2012 2:49 PM
Still not ready to drill
By Jamie Williams
President of The Wilderness Society
The recent near-grounding of the Noble Discoverer, one of two Shell rigs deployed to begin drilling in Alaska’s Chukchi and Beaufort seas, has raised increased concerns about the challenges to drilling in Arctic conditions and the state of Shell’s preparedness. The incident, which occurred near Dutch Harbor, is perhaps a warning of challenges to come should Shell get its final drilling permits from the Department of Interior.
The Wilderness Society and other conservation organizations fear that drilling in these icy, rough seas is a recipe for disaster. In an environment as volatile and sensitive as the Arctic, even a seemingly minor accident -- such as a ship slipping anchor and running aground -- could have catastrophic effects.
Shell is no stranger to mishaps in its drilling operations, and the added challenge of frigid, stormy waters -- in which Shell’s machinery is largely untested -- coupled with the remoteness of the Arctic Ocean could result in a disaster far worse than any we’ve seen before.
There is little to no s...
The recent near-grounding of the Noble Discoverer, one of two Shell rigs deployed to begin drilling in Alaska’s Chukchi and Beaufort seas, has raised increased concerns about the challenges to drilling in Arctic conditions and the state of Shell’s preparedness. The incident, which occurred near Dutch Harbor, is perhaps a warning of challenges to come should Shell get its final drilling permits from the Department of Interior.
The Wilderness Society and other conservation organizations fear that drilling in these icy, rough seas is a recipe for disaster. In an environment as volatile and sensitive as the Arctic, even a seemingly minor accident -- such as a ship slipping anchor and running aground -- could have catastrophic effects.
Shell is no stranger to mishaps in its drilling operations, and the added challenge of frigid, stormy waters -- in which Shell’s machinery is largely untested -- coupled with the remoteness of the Arctic Ocean could result in a disaster far worse than any we’ve seen before.
There is little to no scientific research on the effectiveness of oil dispersants or skimming and burning technologies in Arctic conditions, despite the fact that those are the most commonly used technologies when dealing with oil spills. If a blowout were to occur, the Arctic Ocean’s remote location would raise other major response concerns. Alaska’s limited Arctic infrastructure poses many challenges to coping with a major oil spill:
· There is no U.S. Coast Guard station north of the Arctic Circle. The nearest Coast Guard air station is nearly 1,000 miles south of the drill site, and twice as far by sea
· The United States has only one operational vessel capable of breaking through sea ice, but it can only do so in thin ice cover
· Alaska’s Arctic has few airports, and most are too small to handle the kind of emergency response needed in the event of a spill
· There are no major ports on Alaska’s North Slope, and no deepwater ports or harbors along the state’s western coast. The small ports available would be inadequate for a large-scale spill-response effort
· The closest Coast Guard Strike Team that provides rapid response and coordinates efforts and trains Coast Guard units in pollution evaluations is almost 2,400 miles away in California
· Cold temperatures are known to cause mechanical failures and could compromise not only drilling equipment but skimmers, booms, and pumps used in a spill scenario
· Testing has shown that dispersants are less effective in cold water and are not authorized for Arctic conditions
The Deepwater Horizon spill in the Gulf of Mexico, which spurred the largest environmental disaster response in our country’s history, leaked roughly five million barrels of oil and contaminated 665 miles of coastline, despite happening in an ideal environment for disaster response. The Gulf spill occurred in warm waters where cleanup technology was proven and where there was a large infrastructure capable of supporting the massive human and mechanical resources needed for oil recovery and cleanup.
Within a 500-mile radius of the Gulf spill, the Coast Guard had 30 operation centers, 95 airports with large runways, 347 airports with smaller runways, 15 oil-response cooperatives, and 35 major public ports. Alaska has four large airports, 13 small airports, five cooperatives, and no permanent Coast Guard centers or major public ports in 500 miles of the drill site.
Adding to the concern is the fact that Shell’s new emergency spill-containment barge, the Arctic Challenger, is stuck in a Seattle shipyard because it was failed to pass a U.S. Coast Guard inspection. In other words, a key safety vessel hasn’t been proven seaworthy. And Shell recently said its fleet couldn’t meet pollution limits as required under permits already granted by the federal government, so it has asked the Environmental Protection Agency to loosen pollution requirements for the ships.
The evidence speaks for itself—drilling in the Arctic is risky and unpredictable, and the industry is ill-suited to deal with a spill. That should be enough to convince the Obama administration that drilling in the Arctic is bad business.
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July 24, 2012 9:15 AM
Just Another Shell Game
By Amy Harder
energy and environment reporter, National Journal
(These comments were submitted by Susan Murray, Senior Director of the Pacific at Oceana.)
The Arctic Ocean is unique and important to the United States and the world. In the summer, it is home to an abundant burst of wildlife, including bowhead whales, seals, and birds that take advantage of the explosion of productivity created by constant daylight. For millennia, this great concentration of marine mammals and seabirds has been a part of the Inupiat subsistence culture. Now, however, a rapidly changing climate and the ever-increasing pressure of industrialization is putting the Arctic Ocean ecosystem and those dependent on it at risk.
There are already two important reasons for concern in the Arctic. First, courts, communities, and the government’s...
(These comments were submitted by Susan Murray, Senior Director of the Pacific at Oceana.)
The Arctic Ocean is unique and important to the United States and the world. In the summer, it is home to an abundant burst of wildlife, including bowhead whales, seals, and birds that take advantage of the explosion of productivity created by constant daylight. For millennia, this great concentration of marine mammals and seabirds has been a part of the Inupiat subsistence culture. Now, however, a rapidly changing climate and the ever-increasing pressure of industrialization is putting the Arctic Ocean ecosystem and those dependent on it at risk.
There are already two important reasons for concern in the Arctic. First, courts, communities, and the government’s own scientists have highlighted the need for basic scientific information about the Arctic Ocean in order to make good choices about whether to allow industrial activities and, if so, under what conditions. Additionally, there is the lack of demonstrated response capacity and infrastructure in the Arctic. The last test of oil spill response equipment in US Arctic waters was in 2000, and it was a “failure.” http://oceana.org/en/news-media/publications/reports/joint-agency-evaluation-of-the-spring-and-fall-2000-north-slope-broken-ice-exercises. Further, as shown a photo taken by the Alaska Wilderness League last weekend (July 22) from the shore in Barrow, there is still plenty of sea ice in the Arctic right now that would make drilling even more risky, if not impossible.
Nonetheless, the federal government has given Shell almost all of the approvals it needs to start drilling, and, as Secretary of the Interior Salazar’s statements show, the last approvals likely are coming.
Or at least they were. In the past month alone Shell has stumbled and bumbled its way toward the Arctic Ocean. These mishaps are further reason to question the corporate giant’s plan. Let’s recap what has occurred in just the past month:
· Shell’s oil spill recovery barge, the Arctic Challenger, remains docked in northern Washington after failing to receive Coast Guard certification. The company is arguing with the Coast Guard about how strong the vessel must be to withstand storms in the Arctic.
· Almost two years after learning it would not be able to comply with promised air pollution standards, Shell seeks a waiver of emissions limits in its permits. Shell asks to be allowed to emit an unlimited amount of ammonia, and many more times the particulate matter and nitrogen oxide than promised.
· Shell backtracks on its promise to clean up 90% of a worst-case spill. The company now says it will just “encounter” that oil rather than clean it up.
· Shell loses control of its drillship, the Noble Discoverer, in Dutch Harbor, AK. It is the second time in as many years that the boat has significant problems with its anchor system.
All of these happenings in the last month reasonably call the question of whether the Obama administration has effectively reviewed Shell’s plan to drill. Various environmental groups are asking the same question. Oceana and our partners recently filed a lawsuit in Alaska federal court challenging the government’s approval of Shell’s Chukchi and Beaufort Sea oil spill response plans. The lawsuit looks to the future in the hopes that companies will be held accountable for their actions and made to comply with the law. Even after the Deepwater Horizon accident, Interior Secretary Salazar brushed aside concerns about Shell’s spill response capabilities, stating recently that “there is not going to be an oil spill.” Statements like those do not inspire confidence in his agency’s review.
But let’s look forward now. Gasoline prices are driven by the world market, and the United States does not have big enough reserves—in the Arctic or anywhere else—to affect those prices substantially. Nor will the relatively small amount of oil produced substantially affect how much we import. Why would we risk so much for so little gain?
We need to focus our attention on a shared vision for the Arctic based on science and preparedness. The American people deserve healthy ocean ecosystems and affordable energy. Both are possible, but not without planning and science. As the recent mishaps show, we cannot just take Shell’s word for it that the company is ready. Nor should we allow the company to take shortcuts or avoid proper review. The vibrancy and biodiversity of the Arctic ecosystem depends upon these choices, and we cannot allow the future of the Arctic Ocean to be risked on the hope that nothing will go wrong.
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July 24, 2012 7:28 AM
Will Extremists Stop Alaska's Future?
By Thomas J. Pyle
President, Institute for Energy Research (IER)
It has been more than seven years since Shell first purchased leases to drill in the Arctic, and it seemed as if 2012 would be the year that exploration for energy would finally take place in the resource-rich areas of Alaska’s Chukchi and Beaufort Seas. However, recent issues with approval of an air permit for one of Shell’s drilling ships and a U.S. Coast Guard (USCG) inspection of company’s oil spill containment vessel have left the future uncertain about whether the company will be able to begin drilling on time. Not only are these delays unreasonable considering the measures Shell has taken to reduce operating risks—even in the shallow-water, low pressure conditions of the area—but they also set a bad precedent that may endanger future production in Alaska.
Shell had originally planned to drill up to five exploratory wells in the Arctic’s Chukchi and Beaufort seas, which together hold an estimated 19.5 billions of technically recoverable oi...
It has been more than seven years since Shell first purchased leases to drill in the Arctic, and it seemed as if 2012 would be the year that exploration for energy would finally take place in the resource-rich areas of Alaska’s Chukchi and Beaufort Seas. However, recent issues with approval of an air permit for one of Shell’s drilling ships and a U.S. Coast Guard (USCG) inspection of company’s oil spill containment vessel have left the future uncertain about whether the company will be able to begin drilling on time. Not only are these delays unreasonable considering the measures Shell has taken to reduce operating risks—even in the shallow-water, low pressure conditions of the area—but they also set a bad precedent that may endanger future production in Alaska.
Shell had originally planned to drill up to five exploratory wells in the Arctic’s Chukchi and Beaufort seas, which together hold an estimated 19.5 billions of technically recoverable oil reserves. To date, the company has spent over $4 billion on the project, which includes the initial price of the leases as well as the costs of paperwork for permits, seismic mapping, and research on potential impacts to Arctic wildlife.
Now, because of delays associated with granting time-sensitive final permits for the Discoverer drilling ship and the oil spill containment vessel, Shell hopes to complete one or two wells this year, if drilling is allowed to begin at all. Although the USCG recently backed off its demand that the oil spill containment vessel—a tertiary response tool that would only be used if both the blowout preventer and the capping device failed—be able to withstand the forces of 100-year storm, other obstacles still remain with the Discoverer. Levels of ammonia and nitrous oxide emitted by the ship’s drill bit were reportedly “slightly above” permit levels, and rather than having to make last-minute equipment upgrades, Shell asked EPA for a modification to the permit. That request is still pending with the agency, and until then, plans to drill will remain on hold.
Interior and USCG’s wavering has had other implications for the future of the project that reach beyond the matter of making improvements to the ships. Environmental advocates that categorically oppose domestic energy production have seized upon the suggestion that the ships may not be ready to try and bolster their case that no amount of containment preparedness is acceptable to drill in the Arctic. The Natural Resources Defense Council, one of the environmental advocacy groups that filed a lawsuit on July 10 to block approval of Shell’s spill-response plans, has said the following: “There's no way to prevent an off-shore blowout, or to quickly cap one, as we saw so tragically in the Gulf of Mexico. Nobody knows how to contain or clean up a spill in the harsh and remote seas of the Arctic.”
Comparing the Deepwater Horizon accident in mile-deep waters with exploration in the 150 feet deep waters in the Chukchi is nonsense and the NRDC surely knows that; after all, one of President Obama’s “experts’ who sat on his panel to review the accident is NRDC’s President, Frances Beinecke, and she would know that the pressures and logistical challenges we all saw in the deepwater of the Gulf are much different than shallow waters in Alaska.
If Interior fails to grant final approval to the Discoverer in time for drilling to begin this year, or if the NRDC succeeds in its quest to prevent it altogether, the impacts for the nation’s energy position will be far reaching. Not only will it prevent the development of the Chukchi and the Beaufort’s resources for at least another year, it would set a bad precedent for investment in the area’s future prospects. Companies would just as soon operate elsewhere than make the substantial time and monetary investment in a project burdened by environmental litigation and beholden to the whims of government bureaucracy. Of course, perhaps that’s the precise reason opponents of more American oil production pursue such litigation strategies, which some have called “economic terrorism.”
Such groups know that continuing to delay production in the Arctic endangers the future of the essential Trans-Alaska Pipeline System (TAPS), which they have opposed since its proposal over 40 years ago. The TAPS is currently operating at a quarter of its maximum capacity of 2.1 million barrels per day, and declining volumes mean it will eventually have to cease operating. Under the law that authorized construction of the TAPS, when the pipeline becomes “uneconomic”—meaning it no longer carries the requisite amount of oil—it will have to be torn down. Without production from the Chukchi and Beaufort seas—the only new areas to be opened up for exploration in Alaska—the TAPS has an increasingly uncertain future. For the United States to lose pipeline infrastructure that would cost $40 billion if it were to be built today would be a crippling blow to our ability to produce energy here at home, and would forever lock up the huge resources of Alaska with no means to transport them to energy thirsty consumers in the Lower 48 states.
Alaska is the most energy-rich area in the United States, yet government policies championed by anti-energy groups have prevented the development of much of the resources that lie under its lands and its shores. This year, North Dakota surpassed Alaska as the second-largest energy producing state, when just six years prior Alaska was producing about eight times more oil than North Dakota. This trend will only accelerate if the government continues to kowtow to anti-energy groups and drag its feet on allowing exploration of the Chukchi and Beaufort seas—and it will be to the detriment of our efforts to make America a more secure and prosperous place now and in the future.
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July 23, 2012 3:59 PM
No One Knows How to Clean Up Oil in Ice
By Frances Beinecke
President, Natural Resources Defense Council
Allowing Shell to drill in the Arctic Ocean will take America down a dangerous path. The Arctic is the world’s last wild ocean, and we have a chance to manage it wisely from the start. If we let oil companies rush to drill before experts can establish what is safe or permanently protect the most sensitive parts of the region, we risk despoiling our shared natural inheritance for the benefit of a few companies.
It is presently too dangerous with current technology, methods and infrastructure to undertake oil and gas activities in the Arctic Ocean. The Arctic is a remote and harsh region of gale-force winds and sub-freezing temperatures much of the year. The nearest Coast Guard station is 1,000 miles from the drill sites. The waters are packed solid with ice for eight or more months each year, and no one has yet figured out how to clean up oil in ice.
Lloyd’s of London, an expert in assessing risk, recently issued a report echoing our concerns. The company outlin...
Allowing Shell to drill in the Arctic Ocean will take America down a dangerous path. The Arctic is the world’s last wild ocean, and we have a chance to manage it wisely from the start. If we let oil companies rush to drill before experts can establish what is safe or permanently protect the most sensitive parts of the region, we risk despoiling our shared natural inheritance for the benefit of a few companies.
It is presently too dangerous with current technology, methods and infrastructure to undertake oil and gas activities in the Arctic Ocean. The Arctic is a remote and harsh region of gale-force winds and sub-freezing temperatures much of the year. The nearest Coast Guard station is 1,000 miles from the drill sites. The waters are packed solid with ice for eight or more months each year, and no one has yet figured out how to clean up oil in ice.
Lloyd’s of London, an expert in assessing risk, recently issued a report echoing our concerns. The company outlined the hazards of oil exploration in the Arctic, specifically noting the infrastructure gaps: “They range from a uniquely challenging range of operational risks, to the inevitable environmental risks caused by increased industrial activity and the constant possibility of environmental catastrophe with regional fall-out.” In other words, a spill in the Arctic would make the BP disaster look like child’s play.
I served on National Commission on the Deepwater Horizon Oil Spill and Offshore Drilling, and we recommended closing the research and response gaps that exist in the Arctic before deciding whether drilling can safely proceed. In my view, letting Shell proceed now disregards those recommendations.
Opening a new vein in our oil addiction, meanwhile, would make a mockery of science. We need to develop carbon-free energy sources, not search for ever more fossil fuel in ever more remote and pristine locations. Americans are already feeling the effects of climate change—especially in this summer of deadly heat waves, scorching drought, and relentless wildfires. Opening the Arctic Ocean to drilling will only aggravate these grave consequences.
We can keep our economy moving without risking the Arctic Ocean. Fuel efficient cars, sustainable biofuels, public transit options, and other solutions can get us where we need to go without sacrificing the Arctic Ocean or climate stability. The Obama administration’s new clean car standards, for instance, will save drivers more than $80 billion a year at the pump within 20 years, while cutting our oil use by more than we imported from Saudi Arabia and Iraq in 2010.
With these and other solutions available, there is no need to let oil companies rush into the Arctic. Instead, the responsible course is to put the brakes on risky drilling in the Arctic Ocean, while we gather the facts we need to understand this fragile and vital region. The stakes are too high to roll the dice and hope for the best.
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July 23, 2012 2:08 PM
Decision Isn't America's Alone To Make
By William O'Keefe
CEO, George C. Marshall Institute
The decision on whether Arctic oil drilling is ready for prime time is not the federal government’s to make. The United States does not have a monopoly on exploration and production in the Arctic Ocean.
Denmark, Canada, Norway, Russia, and the United States all have economic sovereignty in Arctic waters. The Arctic Ocean’s large resource potential, about 22 percent of the world’s undiscovered conventional oil and natural gas resources based on the US Geological Survey (USGS), ensures that it will be explored. Since the USGS believes that gas is the predominant resource there the rate of exploration is likely to be slow and deliberate because of the abundance of on-shore gas production and its current affordable price. But, in the end, the US can either be a leader or laggard in realizing the economic benefits of exploration.
The oil and gas industry has been drilling in hostile environments for decades and in the North Slope of Alaska since the late 1970s. Exploration there as well as in the North Sea and “Iceberg Alley” off the ...
The decision on whether Arctic oil drilling is ready for prime time is not the federal government’s to make. The United States does not have a monopoly on exploration and production in the Arctic Ocean.
Denmark, Canada, Norway, Russia, and the United States all have economic sovereignty in Arctic waters. The Arctic Ocean’s large resource potential, about 22 percent of the world’s undiscovered conventional oil and natural gas resources based on the US Geological Survey (USGS), ensures that it will be explored. Since the USGS believes that gas is the predominant resource there the rate of exploration is likely to be slow and deliberate because of the abundance of on-shore gas production and its current affordable price. But, in the end, the US can either be a leader or laggard in realizing the economic benefits of exploration.
The oil and gas industry has been drilling in hostile environments for decades and in the North Slope of Alaska since the late 1970s. Exploration there as well as in the North Sea and “Iceberg Alley” off the coast of Nova Scotia has provided the experience, knowledge, and technology for drilling in the Arctic Ocean.
Companies like Shell, Chevron, and ExxonMobil, just to name a few, are engineering technology companies. They have the talent, expertise, and the commitment to operating integrity and excellence to meet the challenges of the Arctic Ocean. Of course, much of the attention being given to the Arctic Ocean is a result of the government continuing to prohibit exploration in Alaska’s coastal plain, which might hold more oil and gas than Prudhoe Bay where over 11 billion barrels have been produced safely.
As we have seen over the past few years, domestic oil and gas development brings about important economic benefits. While the overall economy has been struggling to create jobs, the oil and gas industry has been creating them, 150,000 last year according to the energy consulting firm CERA. Those jobs and the investments that make them possible produce federal and state tax benefits. And, as has been said over and over, a barrel of oil produced here is a barrel that is not imported from unstable regions of the world.
It should be remembered that the oil industry has an excellent record in offshore exploration and production. Thousands of offshore wells, including deep-water ones, have been safely drilled around the world. From 1969 to 2010 when the Deepwater Horizon accident occurred, there were no major accidents. That is an impressive record. Environmental opposition to any energy development in Alaska, the Deep Horizon accident, and the general hostility of the Obama Administration to oil and gas development are factors that ensure that exploration will be done carefully and with an abundance of caution. Shell has no doubt demonstrated more than reasonable prudence in its engineering and operating plans to reduce risks as much as practical.
We do not live in a risk free world and no one or company can guarantee otherwise. Our advances in technology and innovation are the result of risk taking and our standard of living is better because of it. The point made at the beginning is worth repeating. Arctic Ocean oil resources will be developed. The only open question is by whom?
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July 23, 2012 12:58 PM
A New Frontier For Our Energy Future
By Craig Rucker
Executive Director, The Committee for a Constructive Tomorrow
It has taken seven years, reams of red tape, prolonged litigation, and $4.5 billion, but Royal Dutch Shell is finally on the verge of drilling for oil in the energy-rich American Arctic.
Last August, Shell received conditional approval from the U.S. Department of Interior to drill wells in the Chukchi and Beaufort Seas, and drilling could be underway in a few weeks. It may well have been worth the wait. The U.S. Geological Survey estimates that 25 percent of the world’s remaining undiscovered conventional oil and natural gas reserves are located in the Arctic, most of it in offshore reservoirs. America lays claim to about a third of these reserves, with Russia and Canada accounting for most of the rest.
To be sure, drilling in the Arctic is not for the faint of heart. In winter, temperatures can plummet to 56 degrees below zero, and the ice-free drilling season is usually limited to July through October. Last year’s bitterly cold Arctic winter left behind an unusually thick ice pack that is only now thawing to the point where it won’t inter...
It has taken seven years, reams of red tape, prolonged litigation, and $4.5 billion, but Royal Dutch Shell is finally on the verge of drilling for oil in the energy-rich American Arctic.
Last August, Shell received conditional approval from the U.S. Department of Interior to drill wells in the Chukchi and Beaufort Seas, and drilling could be underway in a few weeks. It may well have been worth the wait. The U.S. Geological Survey estimates that 25 percent of the world’s remaining undiscovered conventional oil and natural gas reserves are located in the Arctic, most of it in offshore reservoirs. America lays claim to about a third of these reserves, with Russia and Canada accounting for most of the rest.
To be sure, drilling in the Arctic is not for the faint of heart. In winter, temperatures can plummet to 56 degrees below zero, and the ice-free drilling season is usually limited to July through October. Last year’s bitterly cold Arctic winter left behind an unusually thick ice pack that is only now thawing to the point where it won’t interfere with drilling.
At times, the regulatory climate in Washington must have seemed as frigid as anything Shell has encountered in the Arctic. After much back and forth, Shell and the Environmental Protection Agency (EPA) appear close to resolving a dispute over emissions of ammonia and nitrous oxide from the company’s drill ship, Noble Discoverer. For its part, the Coast Guard has raised concerns over whether Shell’s oil-recovery barge, Arctic Challenger, can withstand the severe storms that occasionally pummel the Chukchi and Beaufort Seas.
With the global price of oil expected to remain high for the foreseeable future, the American Arctic could energy as a prime source of domestic energy. The area is thought to be able to yield up to 400,000 barrels of oil a day. Every barrel produced from Arctic oil is a barrel not imported from the Middle East or anyplace else. With its major Siberian oil fields in decline, Russia is turning its attention to the energy-rich seas in its vast Arctic regions. Russia’s state-owned oil company, Rosneft, has recently signed agreements with Exxon Mobil and Italian energy giant Eni to jointly explore several offshore sites, including several in the Arctic.
The race is on, and if the United States wants to secure its energy future, recover from the recent recession, and further free itself from the shackles of Mideast oil, it will have to take its Arctic resources seriously. Advances in seismic 3-D surveys and improvements in drilling technology could transform the Arctic into America’s next energy frontier.
Craig Rucker is executive director of the Committee for a Constructive Tomorrow.
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July 23, 2012 7:29 AM
The Arctic Drilling Conundrum
By Michael Bromwich
Founder and Managing Principal of The Bromwich Group
The wells that Shell proposes to start drilling in the Arctic's Chukchi and Beaufort Seas in the next few weeks are almost surely the most widely litigated, hotly debated, and heavily scrutinized proposed offshore wells in this country's history. The extraordinary level of interest that has existed for some time has increased as the time for Shell to begin drilling has drawn closer, focusing most recently on the complications and difficulties Shell has experienced. These have included problems and issues with one of its drillships, one of its spill response vessels, and its containment system. While these complications are real and significant, the most formidable obstacle remains one that neither Shell's top scientists and engineers, nor government regulators, can solve - the continuing presence of sea ice that has delayed the commencement of any drilling. The delays caused by the sea ice, and other permitting and certification delays, will almost surely force cutbacks in Shell's original proposed drilling program.
Why this high level of interest in these few wells? B...
The wells that Shell proposes to start drilling in the Arctic's Chukchi and Beaufort Seas in the next few weeks are almost surely the most widely litigated, hotly debated, and heavily scrutinized proposed offshore wells in this country's history. The extraordinary level of interest that has existed for some time has increased as the time for Shell to begin drilling has drawn closer, focusing most recently on the complications and difficulties Shell has experienced. These have included problems and issues with one of its drillships, one of its spill response vessels, and its containment system. While these complications are real and significant, the most formidable obstacle remains one that neither Shell's top scientists and engineers, nor government regulators, can solve - the continuing presence of sea ice that has delayed the commencement of any drilling. The delays caused by the sea ice, and other permitting and certification delays, will almost surely force cutbacks in Shell's original proposed drilling program.
Why this high level of interest in these few wells? Because of the massive oil and gas potential in the Arctic; because of the massive investment of time and money by Shell over many years; because Shell's activities this summer are viewed as the important first step for the oil and gas industry to gain a larger foothold in the Arctic in subsequent years; because of the fragility of the Arctic ecosystem; because of the painful memories of the Deepwater Horizon oil spill; because of the concerns that an oil spill of any magnitude would be far more difficult to address in the harsh conditions of the Arctic; and because of the lasting damage such a spill could cause to the way of life of many Alaska native communities. In short, Shell's proposal brings into stark relief the difficult question of how to appropriately balance the need to continue developing our offshore energy resources, especially in a region with such vast resources, with the need to preserve and protect the environment in one of the most fragile and treasured ecosystems in the world.
The government is required by law to balance these interests, and it has taken the legally required steps to do so. Even though the wells Shell proposes to drill in the Chukchi and Beaufort are in shallow water, have low pressure, and are relatively simple as a technical matter, they have received extensive regulatory scrutiny. The Department of the Interior has reviewed and approved separate exploration plans for the Chukchi and Beaufort, separate spill response plans, and must still review and approve separate applications to drill each well before drilling can begin. Those applications to drill must all satisfy the more rigorous requirements that went into effect after Deepwater Horizon. In addition, the EPA and Coast Guard have responsibilities to determine whether Shell's proposal meets other regulatory requirements, including the air emissions of its vessels and the suitability of its vessels to serve their intended functions and withstand the harsh elements of the Arctic. Indeed, by imposing the requirement that Shell have a fully capable containment system to address a potential subsea blowout (previously only required in deep water), and by committing to have inspectors on site throughout the drilling process, the Department of the Interior has shown an appropriately heightened level of concern for the risks associated with drilling in the Chukchi and the Beaufort.
We need to be clear about one central truth: offshore drilling is never without risk. We learned that painful truth the hard way during Deepwater Horizon. The claims, in the immediate aftermath, that the incident was a total and complete anomaly rang hollow, and over time were repeated less often.
But just as the risks should not be minimized, they also should not be exaggerated, as has been frequently been in the case in the debate over Arctic drilling. The risks of an oil spill are extremely small, and never have so many precautions been taken to minimize the chances of a low probability, high consequence event in the world of offshore drilling. If Shell is able to fully satisfy the remaining regulatory requirements, they should be allowed to move forward with a necessarily shortened drilling program this summer; if not, then they should not. These should be decisions made by experienced regulators, not decisions driven by politics or influence. Ironically, the final approval lies in the hands of Mother Nature and whether the sea ice melts in time. That is a powerful reminder of the formidable challenges presented by the Arctic.
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July 23, 2012 7:27 AM
Curb Methane Emissions
By Conrad Schneider
Advocacy Director, Clean Air Task Force
For several weeks now the public and the media have cast increasing attention on Arctic oil and gas drilling, specifically regarding the plans of Shell to explore in the Arctic waters off the coast of Alaska. This is, pardon the pun, only the tip of the iceberg when it comes to Arctic oil and gas development. Around the Arctic, efforts are ramping up in Russia, Norway, Greenland and Canada to stake a claim to one of the last great reserves of undiscovered oil and gas. According to the United States Geological Survey, the Arctic holds one-fifth of the world’s undiscovered, recoverable oil and natural gas; 90 billion barrels of oil and 1,669 trillion cubic feet of natural gas.
With Shell’s imminent entrance into Arctic waters, the debate is turning from “if we drill in the Arctic,” to “how and where we drill in the Arctic.” The discussion to date has primarily revolved around the key questions of oil spills and impacts to marine ecosystems. However, it is also critically important to remember that this debate starts and ends with clim...
For several weeks now the public and the media have cast increasing attention on Arctic oil and gas drilling, specifically regarding the plans of Shell to explore in the Arctic waters off the coast of Alaska. This is, pardon the pun, only the tip of the iceberg when it comes to Arctic oil and gas development. Around the Arctic, efforts are ramping up in Russia, Norway, Greenland and Canada to stake a claim to one of the last great reserves of undiscovered oil and gas. According to the United States Geological Survey, the Arctic holds one-fifth of the world’s undiscovered, recoverable oil and natural gas; 90 billion barrels of oil and 1,669 trillion cubic feet of natural gas.
With Shell’s imminent entrance into Arctic waters, the debate is turning from “if we drill in the Arctic,” to “how and where we drill in the Arctic.” The discussion to date has primarily revolved around the key questions of oil spills and impacts to marine ecosystems. However, it is also critically important to remember that this debate starts and ends with climate change.
The melting of the Arctic due to global warming is what set off the race for Arctic oil and gas. Now, it is incumbent upon the countries and the companies that intend to develop the Arctic to make sure that it is done in the least damaging way possible, and this includes paying very close attention to the global warming pollutants coming from the production: methane, black carbon and carbon dioxide. Pointing the way forward in a new report: (www.catf.us/resources/publications/view/170),
Clean Air Task Force has laid out the primary climate risks and mitigation strategies of drilling in the Arctic. Here is a summary of some of the key findings of that report:
While oil production is the primary focus of current exploration and production activities due to high oil prices, natural gas is almost always produced along with oil, posing the problem of what to do with it. Crude oil usually contains some amount of “associated” natural gas that is dissolved in the oil or exists as a cap of free gas above the oil in the geological formation. In some cases, this represents a large volume of gas. For example, nearly 3 trillion cubic feet (Tcf) per year of gas is produced in association with oil in Alaska. The largest (but by no means only) potential source of methane pollution is from the leaks or outright venting of this “associated” natural gas. Flaring, the typical way to dispose of this “stranded” gas, is much better than venting, but it releases a tremendous amount of CO2. Worldwide, about 5 trillion cubic feet of gas is flared each year. That’s about 25 percent of the US’s annual natural gas consumption. This leads to the release of about 400 million tons of CO2 per year globally, the equivalent to the annual emissions from over 70 million cars.
Black carbon is also emitted from flares, although measurements are lacking to fully understand the potential burden from flaring. What we do know is that the black carbon that flaring will release in the Arctic is particularly harmful, since it is so likely to settle out on snow or ice, where the dark pollutant rapidly warms the white frozen surface.
Many technologies and best practices exist to reduce the impact of oil and gas production both to the Arctic and the global climate. If we are going to extract the oil from the Arctic, we need to do it in a way that does not exacerbate the very real problem that climate change is already posing there. In order to do so, the US must take the lead in ensuring that only the best practices are acceptable when it comes to Arctic exploration and drilling. The technologies and practices below can dramatically reduce the emissions associated with oil and natural gas, in some cases by almost 100%.
First, we need better characterization of emissions in the region, and better monitoring and reporting information. Our current estimates of methane and black carbon emissions from oil and natural gas production are very rough, and may not apply at all for Arctic operations. Establishing standardized monitoring and reporting protocols, backed by legislation, is essential to quantifying these emissions and then adopting the best mitigation techniques.
Second, we must deal with the CO2, methane and black carbon from oil and gas production. Put simply, we must use it, store it or, as a last resort, flare it as cleanly as possible:
§ Wherever possible, all associated gas that is brought to the surface must be used beneficially. Gas should be sent to consumers through pipelines or consumed on-site or locally (for power generation, thermal or feedstock uses). Liquefying gas for transport to distant markets is another productive use, but it comes at a very large energy (CO2 emissions) cost and may also have higher methane emissions from boil-off of LNG. Other technologies to chemically transform stranded gas to liquids should also be investigated.
§ When the gas cannot be used locally or piped, the best option will often be reinjection of the gas into underground reservoirs, where geologically feasible. In addition to preventing methane or CO2 emissions, this serves to both store the gas for potential future use and also to maintain pressure in the geologic formation. Associated gas has been re-injected at large scale on Alaska’s North Slope for over 30 years.
§ When there is no reasonable alternative to flaring, operators must use effective flares. Efficient flares can destroy nearly all the methane in the gas, and should have very minimal releases of black carbon, however, as stated above, they will remain a very large source of CO2. Producers must pay royalties on any gas they flare off, too – every incentive must be brought to bear to push producers to find ways to avoid flaring.
Next, we need to deal with vented and fugitive methane emissions. Here we need vapor recovery units on storage, process tanks and floating production, storage and offloading units. Operators must use compressed air or electric control systems rather than pneumatic controllers, mitigation of methane emissions from all dehydrators and piston compressors must be required, and the use of wet seal compressors without gas capture systems must be prohibited. To detect leaks and equipment failures, aggressive inspection and maintenance programs must be in place for all facilities operating in the Arctic.
Finally, for the mitigation of black carbon emissions, we should require ultra low sulfur diesel fuel (ULSD) and Diesel Particulate Filters (DPF) for all diesel engines and diesel-powered ships – either new or retrofit. And we should push to establish International Maritime Organization requirements for BC emission reductions for international shipping affecting the Arctic.
The opening of the Arctic to increased oil and gas development is a cause for concern. The Arctic is already being hammered by climate change and other environmental impacts. If we are on the verge of an Arctic oil and gas rush, this will only add to the issues facing this fragile environment. If we implement the above policies domestically, and pressure our other Arctic neighbors to do the same, we will reduce, but certainly not eliminate, the air and climate impacts of oil and gas development in the Arctic.
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July 23, 2012 7:24 AM
Global Governance Key to Arctic Drilling
By Kevin Massy
Assistant Director of the Energy Security Initiative at the Brookings Institution
Offshore energy development in the Arctic is going ahead. Made possible by retreating ice that is the result of climate change, new areas are becoming accessible and will be explored over the course of the coming years. This summer the Beaufort and Chukchi Seas in Alaska are likely to be the site of the most significant offshore oil exploration activities in a generation. Last month Norway announced the availability of 80 new exploration blocks north of the Arctic Circle in the Barents Sea. Russia has signed deals with several multinational oil companies for development of the Kara Sea in west Siberia and the Sea of Okhotst. Canada has put vast swathes of its Arctic offshore territory up for bid to energy companies; Greenland and Iceland have also held lease sales in recent years. The Arctic has been explored before, but the limited technology and harsh conditions have in the past meant that it has proven to be too daunting an environment for companies to consider as a worthwhile investment. This has changed. With conventional oil resources now either predominantly in the hands o...
Offshore energy development in the Arctic is going ahead. Made possible by retreating ice that is the result of climate change, new areas are becoming accessible and will be explored over the course of the coming years. This summer the Beaufort and Chukchi Seas in Alaska are likely to be the site of the most significant offshore oil exploration activities in a generation. Last month Norway announced the availability of 80 new exploration blocks north of the Arctic Circle in the Barents Sea. Russia has signed deals with several multinational oil companies for development of the Kara Sea in west Siberia and the Sea of Okhotst. Canada has put vast swathes of its Arctic offshore territory up for bid to energy companies; Greenland and Iceland have also held lease sales in recent years. The Arctic has been explored before, but the limited technology and harsh conditions have in the past meant that it has proven to be too daunting an environment for companies to consider as a worthwhile investment. This has changed. With conventional oil resources now either predominantly in the hands of national oil companies or in technically challenging places, and with the development of new mapping and production technologies, the Arctic is in play.
From the perspective of governments looking for much-needed sources of revenue, the Arctic provides a potential boon in terms of royalties, taxes, and investment. For native coastal communities living in and near the areas being developed, the prospect of sharing in the wealth of hydrocarbon development is attractive, particularly as their livelihoods are being changed irrespective of energy development by the changing climate in their regions. For multinational oil companies looking to maintain profitability by replacing dwindling reserves elsewhere, the Arctic is a potential goldmine. Equipped with advanced technologies such as 3D seismic mapping, ice-resistant rigs, and extended drilling systems, they see the harsh conditions of the Arctic as a challenge that can be met through the power of innovation, in the same way as that of recovering oil from deepwater wells or from shale rock. With such powerful incentives among the stakeholders to go ahead with Arctic energy development, it is no wonder that it is happening. Governments and companies alike attach similar solemn caveats to their support of Arctic energy development: it must be done to the utmost standards of environmental protection and with respect for the human and natural inhabitants of the region. Sites to be opened up for exploration have to be carefully studied to determine the effects of energy development on the surrounding environment.
These assurances are not enough. The Arctic is a transnational public good. As such, there is a need for urgent and coordinated action between the governments and companies looking to benefit from the region’s resources. Given the fragility of the ecosystem, development itself must be foolproof with strict oversight and several layers of redundancy. In the event of an oil spill, there must be robust contingency plans to prevent a Macondo on (and in, and under) ice. There are vast differences between the conditions in the Gulf of Mexico, site of the catastrophic blowout in 2010, and those north of the Arctic circle. The ability to detect and respond to an oil spill in many arctic conditions can be hampered by an array of factors including storms, ice floes, and darkness. The ability to clean up – or even track – oil once it has spilled into ice is even less proven. Several national and corporate research initiatives are underway to understand the Arctic environment and to develop technologies and techniques to prevent and manage oil spills. However, there is little in the way of an overarching international governance system for Arctic offshore energy development. Given the imminent prospects of new oil and gas development in the Arctic, the time to start developing such a system is now.
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