Promoting Alaskan Energy Production to the Lower 48

***Prepared remarks by CEA President David Holt to the Annual Meeting of the Alaskan Resource Development Council. A slide deck accompanying the address is available below. A video of the address can be viewed here.***

It’s no secret that the United States is experiencing a huge energy boom that is revitalizing economies and impacting consumers at a very local level. Some now claim that Alaska energy is less important because of this ongoing energy revolution in the lower 48. Three years ago I spoke at the RDC Annual Meeting and said that the road to U.S. energy security runs thru Alaska. I’m here today to say that is truer now than it was three years ago.

TAPSAmerican oil and natural gas production is changing the landscape of our economy, bringing jobs back to regions of the country where industry vacated years before, and shifting population centers to the nation’s interior. In North Dakota, growth from energy production contributed 3.26 percentage points to a real GDP growth of 13.4 percent last year.

Manufacturing is resurgent because of domestic energy production. The steel industry in Louisiana and Ohio is coming back and Rust Belt towns are again building homes and adding jobs. The fertilizer industry, once thought long dead in America, is coming back with new and expanded plants cropping up across the heartland. Manufacturing is having such an impact that in 2012 durable goods manufacturing increased by 9.1% and was the single largest contributor to U.S. GDP growth.

Alaska is a key part of the U.S. energy mix. Alaskans know it, energy experts know it, but the rest of the country doesn’t.  Few people realize that Alaskan oil provides 11% of U.S. supply, or that with conservative oil resource estimates of  30 billion barrels, Alaska could fuel every U.S. domestic airline flight for the next 120 years. Alaskan natural gas resources could heat every American home for the next 34 years! Alaska provides so much energy, the United States would have to double its current number of wind turbines to offset current Alaskan oil production. That’s 50,000 additional wind turbines to equal the BTU’s coming from Alaska.

With the vast majority of Alaskan oil feeding into West Coast refineries it is very important to keep that flow as high as possible for the benefit of the entire United States — especially West Coast energy consumers.

California’s economy runs on Alaska oil. The state is the world’s fifth largest supplier of food and generates in excess of $100 billion in economic activity.  California farmers spend about 10% of total farm expenditures on energy. For every one cent increase in the diesel it takes to transport ag commodities and power tractors, the average farmer’s balance sheet could be affected by hundreds of thousands of dollars. That could mean billions in lost economic value for the entire industry.

Silicon Valley Tech firms and the hundreds of data centers they require to keep the internet running require Alaskan oil to run. The diesel generators that power an average data center in case of a loss of electricity could power a town of 7,000 people for a year. Clearly the West Coast has a vested interest in the success of Alaskan energy production.

Frac rigMany people point to the energy boom in other parts of the country as an excuse for not expanding production in Alaska. These lower 48 resources – while revolutionary – will not be sufficient to meet domestic demand or bring America close to energy self-sufficiency.  Under the current federal closed-door Alaska policy, the Energy Information Administration (EIA) predicts that the United States will still need to import 35-40% of our aggregate demand in 2030.

If we increase access to ANWR, NPR-A, the Beaufort and Chukchi Seas, we could reduce imports to 25% by 2030. That would be a huge victory and a huge step toward energy self-sufficiency. For some perspective, from 2006 to 2012 the United States reduced its imports by 10% thanks to the lower 48 shale boom. When analysts connected the shale revolution with lower overseas imports, pundits’ declarations of “energy independence” dominated the headlines for months on end. Alaska could provide an additional 10% reduction by itself.  This would keep a projected $97 billion per year invested in the U.S. economy rather than sending it overseas. If California, Oregon and Washington are going to spend $267 million per day on oil, wouldn’t we rather it come back here to Alaska and the United States?

The reductions in Trans-Alaska Pipeline throughput and decreased oil production in California has led to some unsavory situations. As production declines, imports go up. America sends over $800 million a day abroad for oil imports. With the current closed-door Alaska policy EIA projects that number could grow to nearly $1.2 billion by 2040. Already over half of the West Coast oil supply comes from abroad and half of those imports come from OPEC nations, increasing our reliance on unstable sources of oil.

Alaskans know the state could play a much larger role than it already does, but it’s not allowed to. And why?  Simply because the federal government owns the land? It may be news to some in Washington, but drilling for oil and gas doesn’t suddenly become less safe because it’s being done on public, as opposed to private, land. The notion that we can’t develop our energy resources AND protect the environment is false.  The industry does both, and we must work with regulatory officials to hold industry to a high standard, while also creating a transparent framework for safe, cost-effective development.

Officials at the Department of the Interior and other agencies need to understand that their job is not to say NO first. They must find a way to strike this proper balance and say “yes.”  Yes, we can have energy production and environmental protection at the same time. Energy companies are balancing development and environmental protection it in oil and natural gas plays across the country. That dynamic doesn’t stop just as you enter federal land.

All of this stems from the idea that local control is somehow insufficient to protecting and managing public land. For the past few decades, Washington, D.C. has not helped Alaska find solutions to meeting the nation’s energy issues. They have shut the state of Alaska down in ANWR, in NPR-A, and in the Chukchi and Beaufort. They won’t let Alaska build roads, and they won’t clean up their messes on the North Slope. They won’t let Alaska access their vast coal resources and they withhold money rightfully owed to the State of Alaska from mineral and timber production.

Ultimately, further production and advancement in Alaska will only come with support from voters in the lower 48.  Finding the appropriate balance for regulatory officials to work with industry, consumers and state officials is a call to action that Consumer Energy Alliance wants to help with. Finding safe, environmentally responsible and cost-effective ways to develop Alaskan resources is important for all energy consumers.

CEA is working to educate and motivate voters on the importance of Alaskan energy production to the health and well-being of the U.S. economy. Together we can work to revitalize Alaskan energy production and bring the positive message about Alaska’s contribution to the lower 48. Join us.