Support of Shell’s Revised Exploration Plan for Exploration Drilling in Chukchi Sea

April 27, 2015

Director Salerno and Director Hopper 
Regulations & Standards Branch 
381 Elden Street, HE3314 
Herndon, Virginia, 20170-4817

Re: Shell Chukchi Sea Exploration Plan, Alaska Burger Prospect

Dear Director Salerno and Director Hopper:

On behalf of the Resource Development Council for Alaska, Inc. (RDC), I am writing in support of the revised Chukchi Sea Exploration Plan (EP) submitted by Shell. The revised EP fully addresses all of the major activities associated with offshore exploration in the Chukchi Sea. RDC urges the Bureau of Ocean Energy Management and Bureau of Safety and Environmental Enforcement to approve the EP in an expeditious manner so drilling can begin this summer.

RDC is an Alaskan, non-profit, membership-funded organization founded in 1975. The RDC membership is comprised of individuals and companies from Alaska’s oil and gas, mining, timber, tourism, and fisheries industries, as well as Alaska Native corporations, local communities, organized labor, and industry support firms. RDC’s purpose is to link these diverse interests together to encourage a strong, diversified private sector in Alaska and expand the state’s economic base through the responsible development of our natural resources.

The development of Alaska’s Arctic Outer Continental Shelf (OCS) has the potential to significantly enhance our nation’s energy security far into the future. In a recent released report, the National Petroleum Council (NPC) urged the United States to move forward with oil and gas exploration and development in the Alaska Arctic or risk returning to a heavy reliance on imported oil. The NPC explained it will take 10 to 30 years of preparation and drilling to bring Arctic oil to market. Meanwhile, in the next decade and beyond, oil production in the Lower 48 will decline sharply. The NPC said that in order for the U.S. to keep domestic production high and imports low, oil companies should start exploring the Arctic now.

As you know, the federal government estimates there are 23.6 billion barrels of technically recoverable oil and about 104.4 trillion cubic feet of technically recoverable natural gas in the Chukchi and Beaufort Sea planning areas. In addition, it is estimated that economic activity from the development of the Chukchi and Beaufort seas would create an annual average of 54,700 jobs nationwide with a cumulative payroll of $154 billion over the next 50 years.

With a sustained level of leasing and exploration activity between now and 2030, the Alaska Arctic OCS could contribute significant new domestic production by the 2030s and sustain such production for decades. Offshore production in the Arctic OCS could generate $200 billion in government revenue and extend the life of the Trans-Alaska Pipeline System (TAPS), a piece of critical and strategic U.S. energy infrastructure. Over its 38-year span, TAPS has transported more than 17 billion barrels of oil to the West Coast. At its peak in 1988, TAPS carried 2.2 million barrels per day, accounting for 25 percent of domestic production, but today it transports just over 500,000 barrels per day. Declining throughput compromises the integrity of the pipeline and means less tax revenue for government. Production from OCS leases could boost TAPS throughput by at least 500,000 barrels per day and keep it in operation for decades.

RDC is confident Shell can and will properly execute on its EP and will explore its leases in a responsible manner. Approximately 440 exploration wells have been drilled in Arctic waters, including 35 in the Alaskan OCS. Shell pioneered the first oil and gas development in Cook Inlet where in 1964 it was the first operator to install a platform and produce hydrocarbons. Since 1987, Shell has successfully drilled 11 wells in the Alaska Arctic OCS, not including the two top holes drilled in the Chukchi Sea nearly three years ago. Shell’s planned drilling activities in the Chukchi Sea will occur in shallow water, similar to Cook Inlet and near-shore Gulf of Mexico, where safe drilling practices have led to a long history of safe operations.

Shell has invested more than $6 billion in its Arctic leases and subsequent efforts in preparing to responsibly explore its prospects in the Chukchi and Beaufort seas. Shell should be allowed to proceed this summer.

RDC appreciates the opportunity to comment on the Exploration Plan and looks forward to seeing Shell move forward with its plans to explore and develop its Arctic prospects offshore Alaska.

Resource Development Council for Alaska, Inc.