Remarks to the Standing Committee of Parliamentarians of the Arctic Region
*** As Prepared for Delivery ***
"Good morning and welcome to our nation's capital for this meeting of the Standing Committee of the Parliamentarians of the Arctic Region. It is a pleasure to see you all again.
"Interest in the Arctic, by both the general public, the media and Arctic and non-Arctic nations, continues to grow. The attention is primarily due to the impacts of climate change and subsequent loss of seasonal sea ice, and interest in shipping lanes and natural resources. ertainly all the attention on the polar bear and its changing habitat has also captivated people, at least in the United States.
"Until recently, the resources of the Arctic were deemed to be too difficult and expensive to develop. But with increasing access and high energy and mineral prices, the Arctic's wealth is now being intensely discovered, explored, and developed. This makes energy exploration among the most important and perhaps the most serious issues for Arctic policy moving forward. This includes conventional oil and natural gas but also methane hydrates and other less conventional forms. Offshore Alaska we are estimating 15 billion barrels of oil in a concentrated area of the Chukchi Sea and 8 billion barrels in the Beaufort Sea, and I am hopeful that exploratory wells will prove up this summer. The United States Geological Survey tells us that the region has up to 30 percent of the world's undiscovered gas and 13percent of its oil. We also think it holds huge amounts of other minerals - like coal, nickel, copper, tungsten, lead, zinc, gold, silver, diamonds, manganese, chromium and titanium. But there's a natural, sometimes reflexive tendency to question how in the world it can ever be safe or even economical to drill and produce in such harsh, misunderstood, and distant environments. But it's happening, and the technology and engineering behind some of the existing and proposed activities is fascinating. We already know that Russia is turning its eye to the Arctic's vast energy reserves as they are building the first offshore oil rig that can withstand temperatures as low as minus 50 degrees Celsius and heavy pack ice. As their oil production is in decline, they are also reducing taxes and bureaucratic hurdles in order to encourage new oil development in the Arctic. They are also planning for a near wholesale replacement of their icebreaker fleet in order to better operate in the polar region. By the same token, an energy company from England is now readying to seriously explore for oil and natural gas for the first time off the coast of Greenland.
"This kind of activity in the Arctic, combined with declining summer sea ice, has positive implications for energy security across borders, because LNG and oil tankers will in some cases be able to have alternatives to their current, more dangerous and clogged routes through South-East Asian straits and the Gulf of Aden and of course the Suez Canal. So non-Arctic nations are going to benefit in this way, but can also benefit through the funding element of these huge projects. The exploration, the production, and certainly the construction necessary to develop Arctic resources is going to require all types of financing not just for the sheer scale and remoteness of the projects, but for the levels of technology needed to bring them online in a way that's safe for workers, safe for the environment, and as insulated from risk as possible.
"Recently I had the experience of visiting a 4-D seismic room in New Orleans - where the images acquired through 3-D are basically animated to give a sense of shifting oil and gas reservoirs so that geologists can study trends and get a much more telling picture of the resource potential. It's almost surgical compared to the basic exploratory drilling which occurred in the last century - and it gives me confidence that a well can be targeted and explored without unnecessary impacts to surrounding areas.
"This is just one example of the ways in which technology is able to provide a reassuring answer to questions about whether the world is ready for increased energy development in the Arctic. Another example is the Liberty project in Alaska. Some of you may already be familiar with this extended reach drill rig which Parker drilling helped develop for BP to access an oilfield directionally literally 8 miles away. It's not quite there yet, but I'm hoping, and I'm betting, on good news from Alaska's North Slope on just how far we can continue to reach both literally and figuratively.
"And this brings me to a point - technology is advancing because oil and natural gas are still the most economically valuable energy sources in the world. The term "easy oil" is being slowly redefined as these technologies develop, and I have to predict that we will see a measured but certain expansion into Arctic lands and waters. This is significant because the first peoples of the Arctic have, I believe, a right to benefit by all of their resources, not just energy but the fisheries and marine mammals on which they depend for their nutrition and livelihoods. And I am encouraged by what I am seeing to be an increasing level of engagement, rather than opposition, from these constituencies. 30 years ago in Alaska, we were able to establish production from America's largest single oilfield at Prudhoe Bay by involving our Native peoples in almost every aspect of this new and really massive change to their land and lifestyle. There was engagement - sometimes contentious and sometimes very difficult - on the legislative level, on the administrative level, on the operational level, and on the personal level. The ultimate result has benefitted all Alaskans and our national energy security in ways beyond any of our predictions at the time.
"It isn't just Arctic energy that is drawing increased activity into the region. The impacts of an ice diminished Arctic are already affecting marine shipping. We recently saw two German vessels complete a commercial transit from Asia to Europe through the Arctic Ocean north of Russia. Two multipurpose heavy lift carriers transited through the North East-Passage or Northern Sea Route during August and September of last year. The route is now open for a short time in late summer and cuts about 4,000 nautical miles from the 11,000 miles long traditional journey through the Suez Canal and the Gulf of Aden.
"We now have reports that a Russian shipping firm has announced that it will use one of its ice strengthened arctic tankers to carry oil from the Kara Sea across the Northern Sea Route to Japan this year. This would be a proof of concept that could also apply to LNG tankers based on the same dual-acting icebreaker-tanker design used for the oil tanker.
"While the Arctic Marine Shipping assessment predicts it will be decades before these routes are open for many months of the year, I think we must consider that this is only the beginning and if it proves to be economical, it will happen.
"I believe we are making progress here in the United States in raising the awareness and importance of the Arctic, and you will get an update on the Arctic Regional Policy that was released by the Bush Administration in early 2009 by Ambassador David Balton of the State Department.
"I believe we are at a very critical time in the Arctic right now. There seem to be two paths that we can go down in regards to international relations- one is a path of competition and conflict, and the other is one of cooperation and diplomacy. I believe the decision on which path we ultimately take will require dynamic leadership. While some have described a scenario where the Arctic is undergoing an "arms race" or a "race for resources", I am not convinced that this is the case.
"We know that there are national security and sovereign interests for all the Arctic coastal states in the region. The United States Navy has a new roadmap for the Arctic and I have asked them to study the feasibility of a deepwater port in the far north. This study will determine whether it is in the strategic interest of the United States, as I believe it is, to build a port and where it might be located. A deep water port would not only serve our military and Coast Guard needs, but as we develop our offshore oil and gas reserves and see more shipping, tourism and vessel traffic in the Arctic, a deep water port could provide valuable support for these activities as well.
"The Coast Guard has also embarked on a high latitude study to determine what assets and infrastructure they need to be prepared for an ice diminished Arctic ocean. With increased maritime activity in the Arctic and such a shortage of infrastructure, it is vital we determine what the needs are and actively work to provide resources to protect the Arctic residents and environment.
"The Arctic clearly offers a great opportunity to work collaboratively and cooperatively. Secretary of State Hillary Clinton has confirmed that the Arctic is one area in which the Obama Administration will highlight international cooperation in the implementation of U.S. foreign policy. This follows the Administration's intent to "reset" relations with Russia and the Arctic is the perfect place to start that process. I am also encouraged that discussions for a multi-lateral Arctic-wide search and rescue plan is under way. This is certainly one area that all Arctic nations can agree on and work together to implement.
"So, what does the future hold for the Arctic? Is it going to be an area of multilateral cooperation or an area of conflict? Clearly the Arctic region presents daunting challenges and unique opportunities relating to climate change, resource development and geopolitical transformation. I am hopeful that the future will be one of cooperation. The Arctic clearly holds vast energy reserves and tremendous potential, and we have an interest to share our best practices and work together to develop a regime which will lead to safe and secure activities with the maximum level of environmental protection. And I believe it is possible.