A Shameful Management of the Country’s Resources  

The Obama Administration is again considering use/misuse of the nation’s Strategic Petroleum Reserve, designed to be used in a national emergency.  The average price per barrel paid for the SPR oil is less than $30.  Today’s price hovers around $100.  (Could the real motivation be arbitrage?)

At the same time, this month the Obama Administration announced the BLM plans to essentially lock up the National Petroleum Reserve-Alaska (NPR-A) at the same time the USFWS hopes to recommend wilderness designations for the approved oil and gas area of ANWR, at the same time the US Coast Guard and EPA are slowing or blocking Shell’s Arctic exploration efforts.  See the comment of petroleum engineer Richard Garrard in our report below.  To add insult to irony, as this hypocrytical administration talks piously about environmental values in NPR-A (which would be materially unaffected by a responsible oil and gas leasing program), it refuses to properly and timely clean up and plug scores of its own, abandoned legacy wells in NPR-A.  As a result of this incompetent management, America will deplete its SPR during a presidential campaign when there is no national emergency, leaving itself truly vulnerable to future emergency situations while refusing to produce domestic energy in Alaska.

 It is worse than incompetent management.  It is a shameful management of the country’s resources.  -dh


Calgary Herald.  Prime Minister Stephen Harper’s annual northern tour Monday comes at a critical time for energy development in the North, with the Mackenzie Valley pipeline project languishing and bids about to close on a huge tract of Arctic offshore petroleum exploration rights.  The federal government has already awarded more than $600 million worth of oil and gas exploration rights in northern Canada in the past 14 months alone.  Moreover, the Conservative government has also just called for bids to develop a five-year strategic plan for oil spill research in the Arctic (specifically the Beaufort Sea), including filling “knowledge gaps in oil spill countermeasures capability.”  Indeed, energy development is expected to be one of the major themes of Harper’s seventh annual trek to northern Canada, which will take him to Whitehorse, Yukon; Norman Wells, N.W.T.; Cambridge Bay, Nunavut; and Churchill, Man.  (See our report on the Prime Minister’s trip in 2009, occuring as the Obama administration considered how to zone and control the oceans rather than how to protect American interests.  -dh)


Houston Chronicle by Sean Parnell, Governor of Alaska (NGP Photo).   The United States begins a Sean Parnell, Alaska Governor, OCS, Chukchi, Houston Chronicle, Fuel Fix, Beaufort, Photo by Dave Harbournew energy era, one that will play out for decades and has already put thousands to work, even before a single oil well has been drilled.   A 22-ship fleet is en route to Arctic waters to begin exploratory drilling in the Chukchi and Beaufort seas, an important step toward securing our nation’s energy security.  Energy security doesn’t just put our oil in a pipeline; it puts Americans to work, and it does so years before oil hits the market.  It could be 10 more years before Shell Oil will produce oil from the Chukchi and Beaufort. Even so, Americans are already working across the nation and will be kept busy through the interim.  Shell’s preparations created high-paying jobs from New England to the Gulf Coast and the Pacific Northwest, in addition to Alaska’s urban centers and remote Arctic communities.  With our nation’s unemployment higher than it was in January 2009, this development cannot be overlooked.  (Read More)

 Bill Stoltz, Salazar, Alaska sovereignty, NPR-A, Alaska House of Representatives, Photo by Dave HarbourRepresentative Bill Stoltze (L), Senator Charlie Huggins, Alaska, NPR-A, Photo by Dave HarbourSenator Charlie Huggins and members of the Mat-Su Legislative Delegation sent a letter today to Governor Sean Parnell asking him to direct Attorney General Michael Geraghty to file an injunction blocking the efforts of the federal government to unilaterally restrict responsible economic growth by converting large portions of the National Petroleum Reserve Alaska (NPR-A) into a wildlife sanctuary.


Richard Garrard, petroleum geologist, Alaska, NPR-A, Photo by Dave HarbourHere is a letter from one of our readers, Richard Garrard (NGP Photo), a respected petroleum geologist.


On August 13th the Secretary of the Interior released a preferred alternative (B-2) for future leasing in the NPR-A.
The proposed plan unfortunately, ignores the sub-surface geology and hydrocarbon prospectivity by not including the regional structural high referred to as the Barrow Arch. This decision … should be of great concern for Alaska residents and the longevity of the Trans Alaska Pipeline. All of the current North Slope production comes from fields located along the Barrow Arch east of the Colville River.
Areas that had been open for leasing since 1999 have now been designated as "unavailable" and "no new non-subsistence infrastructure." These "unavailable" tracts also include most of the areas where modern 3-D seismic and recent well data have been collected by industry in the NPR-A since the resumption of leasing in 1999. In addition, all of the NPR-A coastline adjacent to the Beaufort Sea and administered by the BLM has also been designated as unavailable for leasing.
It is disturbing to note that the "2010 USGS Updated Assessment of Undiscovered Oil & Gas Resources of the NPR-A" was not based upon any of the modern 3-D seismic volumes and several of the key exploration wells at the time of the evaluation. Calculating the resource values and geological risks for subtle stratigraphic traps without this information is in my opinion problematic and unreliable. The BLM however, is forced to use the results of this USGS assessment in their current IAP/EIS, even though they have access to all data collected by industry.
What has just been decided by the Secretary of the Interior raises a key question – why have a National Petroleum Reserve in Alaska if those areas containing the best opportunity for new oil and gas discoveries are designated by the BLM as "unavailable" for future exploration and production?
I hope we do not allow the current B-2 preferred alternative to become law.
Yours sincerely

Richard (Dick) Garrard,
Petroleum Geologist


The letter is in response to U.S. Interior Secretary Ken Salazar’s plan calling for the arbitrary conversion of nearly half the reserve from being open to oil and gas exploration into protected habitat.  Salazar made his announcement while on an Alaska visit last week.
"This is one more of the growing list of excessive actions by the federal government," Rep. Stoltze, R-Mat-Su, said. "We are calling on Governor Sean Parnell and his administration to take action, as they have in the past, to preserve Alaska’s sovereignty in opposing the Federal Government’s obstruction to the growth and future of the State of Alaska."

The August 2012 issue of RDC’s Resource Review newsletter is now available online.  Topics in this edition include :

Ballot Measure 2

Alaska Business Report Card

Emission Control Area

Bristol Bay watershed assessment

EPA Overreach in Bristol Bay

Oil Company Profit and Taxes

Alaska Investment Climate

Take action, get in the game

RDC board tour to Ketchikan

PDF and web versions are available at:

PDF Version:  http://www.akrdc.org/newsletters/2012/august.pdf

Web version:  http://www.akrdc.org/newsletters/

Associated Press: Alaska delegation critical of proposed NPR-A restrictions – Special protections proposed for wildlife habitat in the 36,000-square-mile National Petroleum Reserve-Alaska would block oil development on half the area but Alaska officials’ immediate concern is how it would affect offshore drilling. Alaska’s congressional delegation said U.S. Interior Department restrictions on the Indiana-size reserve likely will add expense for a pipeline that could carry oil from offshore wells in the Chukchi Sea to the trans-Alaska pipeline. At worst, it could block access.

Associated Press: Summertime blues for drivers: Gas at August record – You may pay more than ever for a late-summer drive. U.S. drivers paid an average of $3.72 per gallon on Monday. That’s the highest price ever on this date, according to auto club AAA, a shade above the $3.717 average on Aug. 20, 2008. A year ago, the average was $3.578. More daily records are likely over the next few weeks. The national average could increase to $3.75 per gallon by Labor Day, said Tom Kloza, chief oil analyst at Oil Price Information Service. By comparison, gas prices stayed below $3.70 in late August and early September in both 2008 and 2011.
Houston ChronicleShell’s drilling rig begins two-week trek to Arctic sea – Shell’s Kulluk drilling rig began a two-week journey to the Beaufort Sea north of Alaska on Monday, marking a major step forward in the company’s slow march toward a new era of oil exploration in the region. The 29-year-old conical drilling rig is being towed from Dutch Harbor, Alaska to Shell’s Sivilluq prospect, where the company hopes to drill at least one well before ice encroaches on the region this fall. The departure of the Arctic-bound rig is a sign of Shell’s confidence that the company soon will be able to launch drilling in the area, despite setbacks that have shortened its window for oil exploration. Shell executives say they now are aiming to complete two wells in the Chukchi and Beaufort seas this summer, down a previous goal of five.
Wall Street JournalHigher Food, Energy Prices Could Weigh on Voters – If consumers vote their pocketbook, will they blame President Barack Obama for the recent rise in gasoline prices as well as coming higher food costs? Although all the media focus is on how unemployment will influence voters’ choices this November, consumers are now worried about higher inflation. Separate consumer surveys done by the Royal Bank of Canada and by Thomson-Reuters/University of Michigan show inflation fears heating up in August. The culprits are the “noncore” items of food and energy.