Study lists Alaska Arctic OCS development's potential benefits

Feb 24, 2011

Nick Snow
OGJ Washington Editor

WASHINGTON, DC, Feb. 24 -- Development of resources in the Chukchi and Beaufort seas off Alaska’s Arctic coast would create an average 54,700 jobs/year nationwide with a $145 billion total payroll and generate $193 billion in federal, state, and local revenue over 50 years, according to a study by Northern Economics Inc., Alaska’s largest private economic consulting firm, and the University of Alaska at Anchorage’s Institute of Social and Economic Research.

Commercial production of Arctic Alaska offshore oil and gas resources would generate government revenue estimated at $97 billion (in 2010 dollars) in the Beaufort Sea and $96 billion in the Chukchi Sea over 50 years, said the Feb. 18 study, which was commissioned by Shell Exploration & Production Co. Of the $193 billion of total revenue, the federal government would receive $167 billion, Alaska’s state government would get $15 billion, local governments in the state would get $4 billion, and other state governments would receive $6.5 billion, it said.

It estimated about 30,100 jobs would be generated from Beaufort Sea Outer Continental Shelf development and 24,600 jobs would come from Chukchi Sea OCS development. Production could reach almost 10 billion bbl of oil and 15 tcf of natural gas, the study said.

The study shows thousands of new jobs and billions of dollars in government revenue are locked up off Alaska’s Arctic coast, National Ocean Industries Association Pres. Randall L. Luthi said on Feb. 24. “In these times of economic hardship and global uncertainty, we should take full advantage of the untapped and unexplored oil and natural gas supplies off our own shores,” he maintained. “Responsible and safe development of these resources would not only provide increased domestic energy security, but also needed jobs, income, and government revenue.”

David Holt, president of the Consumer Energy Alliance in Houston, said the study also showed the US could cut its imports of foreign crude, which now represent some 60% of its total supply, by about 9% over 35 years. It also noted approximately 77% of the world’s crude reserves are owned or controlled by national governments, he said.

“Impediments to more American energy continue to be found above ground, not below,” Holt declared. “We know we have the resources to generate these jobs, revenue, and economic growth—as demonstrated by the billions of dollars already invested in the Alaska OCS. Yet companies are being prevented from acting on these investments by permitting delays, frivolous litigation, and other makeshift roadblocks.”

“America will need all forms of energy to get our economy back on track, and that includes oil: We can either produce it here and create more American jobs or import it and create jobs elsewhere,” said Richard Ranger, a senior policy advisor at the American Petroleum Institute. “The administration and Congress need to adopt an ‘all of the above’ energy approach that leverages our offshore resources in Alaska to create an energy plan for America that boosts, rather than inhibits, our economy.”

Contact Nick Snow at nicks@pennwell.com.