Additional Permits Issued for Alaska Drilling, Improved Process Needed

By September 26, 2011Energy

After spending billions over the last six years, Shell Oil moved one step closer to exploring for oil and gas off the coast of Alaska when the EPA finally issued an air permit for operations in the Chukchi Sea.   Shell is hopeful that other needed approvals and permits from  federal agencies will be issued, so that exploration in the 2012 can go forward. 

Alaska’s offshore likely holds world-class volumes of oil and gas.  Development of these resources will make a significant contribution to the nation’s energy security.  Jobs and government revenue will be generated not only in Alaska, but also in the Lower 48.  The University of Alaska estimates that development will create an average of nearly 55,000 jobs per year for decades and through 2057 and will generate a total of $145 billion in payroll. Federal, state and local government revenues will increase by almost $200 billion. 

While regulations that ensure offshore development is done safely and responsibly are important, the US government must also have a regulatory system that works fairly and efficiently. In Alaska, the government did years of environmental analysis before inviting companies to bid on offshore leases.

Since 2005, Shell Oil has paid the government over $2.2 billion for ten-year leases that in some cases are now six years old. Despite spending an additional $1.5 billion to prepare for exploring these leases, Shell has not  drilled even one well, largely due to the government’s inability to deliver useable permits in a timely way. 

At a time when the nation’s needs the energy, the jobs and the economic impact, developing Alaska’s resources should be a priority. Manufacturers are cautiously optimistic that the regulatory barriers will continue to be removed.    

Mahta Mahdavi is director of energy and resources policy, National Association of Manufacturers.

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