A report filed by the National Petroleum Council encourages the U.S. to develop Arctic energy reserves
The National Petroleum Council (NPC) recently concluded a study at the behest of the United States’ Department of Energy about potentially tapping oil and gas reserves in the Arctic. The NPC’s report encourages developing Arctic assets in the very near future in order to ensure the future energy independence of the U.S.
The report had seven key findings:
- Arctic oil and gas resources are large and can contribute significantly to meeting future U.S. and global energy needs.
- The arctic environment poses some different challenges relative to other oil and gas production areas, but is generally well understood.
- The oil and gas industry has a long history of successful operations in arctic conditions enabled by continuing technology and operational advances.
- Most of the U.S. Arctic offshore conventional oil and gas potential can be developed using existing field-proven technology.
- The economic viability of U.S. Arctic development is challenged by operating conditions and the need for updated regulations that reflect arctic conditions.
- Realizing the promise of Arctic oil and gas requires securing public confidence.
- There have been substantial recent technology and regulatory advancements to reduce the potential for and consequences of a spill.
The recent shale boom has greatly reduced the need to import crude oil in the U.S., but the report says that the U.S. should start to develop Arctic waters more aggressively if it hopes to continue the trend. “Production profiles for [shale] oil opportunities will eventually decline,” the NPC says. “Given the resource potential and long timelines required to bring Arctic resources to market, Arctic exploration today may provide a material impact to U.S. oil production in the future, potentially averting decline, improving U.S. energy security and benefiting the local and overall U.S. economy.”
The long lifespans of offshore projects means that they could potentially reinforce U.S. energy security into the 2030’s and 2040’s. Offshore projects also require a great deal more time to bring online than onshore projects, especially those in the Arctic. In parts of the Arctic sea, like the U.S. Chukchi and Beaufort seas, thick ice is present eight to ten months of the year.
The NPC report urged extending the duration of offshore oil and gas leases – which generally require companies to be able to move into a commercial development phase by the end of ten years. While this model can work for offshore wells in the Gulf of Mexico, it does not allow enough time for assets to be developed in the Arctic.
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