Federal oil for the U.S. military: A solution to the impact of sequestration on the military, enhanced national security, and economic growth Matthew A. Cronin, Research Professor of Animal Genetics University of Alaska Fairbanks, School of Natural Resources and Agricultural Sciences, Agricultural and Forestry Experiment Station, Palmer, Alaska 11 September 2013 I have become aware of the impact of budget cuts and sequestration on the U.S. military from recent testimony of top military leaders in Congressional hearings. It is clear that readiness, training, equipment maintenance, and most importantly the morale of our military personnel, is being compromised by funding reductions. I am also aware of the vast natural resources under federal government jurisdiction, including oil, gas, timber, and minerals. Many of these resources are not being developed because of environmental regulations and litigation. My experience has been that natural resources can be developed without serious environmental impacts, but that regulators, scientists, and environmental groups stop development with selective use of science to predict impacts on fish and wildlife. I submit this proposal for immediate Congressional action to help alleviate the threat to national security caused by budget reductions to the military and begin restoration of sound natural resource management on the federal estate. The problem Budget cuts, including sequestration, are having a negative impact on U.S. military operations and readiness. The largest costs to the military are personnel and fuel. Relevant facts 1. The federal government s primary responsibility is national security. 2. The U.S. military is experiencing budget cuts. 3. Budget cuts decrease the military s ability to provide national security. 4. Budget cuts decrease the morale of U.S. military personnel. 5. U.S. military personnel risk their lives to protect the country. 6. The present budget cuts put national security and the safety of our forces at risk. 7. The U.S. imports oil and gas from foreign nations, some with citizens that are hostile to the U.S. 8. The federal government controls large amounts of energy resources in the western states. 9. Development of oil and gas on federal lands is prevented by excessive environmental regulation, obstruction by government agencies, and lawsuits by environmental groups. 10. Oil development on Alaska s North Slope since the 1970 s has not negatively affected fish and wildlife populations. Private oilfield development has been environmentally sound, with state-of-the-art mitigation and restoration (See Figure 1). 1
The solution Objective: Provide immediate funding for the U.S. military for fuel and personnel costs. Immediately develop oil resources on federal lands with the revenue from the sale of oil going directly and exclusively to the Department of Defense (DOD) U.S. Army, U.S. Air Force, U.S. Navy, U.S. Marine Corps, and the Department of Homeland Security (DHS) U.S. Coast Guard (USCG) for: 1. Fuel costs. 2. A 10% pay raise for military personnel. Action plan Alaska s North Slope oil is the first operation. Other States and other resources (e.g., natural gas, minerals, and timber) can be added to the program. There are extensive onshore oil and gas prospects in Northern Alaska under federal government control including the Arctic National Wildlife Refuge (ANWR) and the National Petroleum Reserve Alaska (NPRA). Congress will pass a law, with the approval of the State of Alaska legislative and executive branches, to do the following: 1. Begin immediate and extensive exploration for oil in ANWR and NPRA beginning in the winter of 2013-2014. 2. The action is for maintaining national security. Therefore, it will use existing environmental assessments and impact statements, will not require additional research, permits, or regulation, and will not allow lawsuits to prevent exploration and development. The activity will be exempted from all regulatory permits, and will comply with standard safety and environmental management practices currently in use. 3. An exploration plan developed by the State of Alaska, in partnership with the oil industry and the U.S. Geological Survey (USGS) Energy Resources Program, will be used. Private sector oil industry experts will design development operations to maximize oil production and minimize environmental impacts. North Slope residents and experienced oilfield personnel will advise with local knowledge. 4. Upon discovery and delineation of oil reserves, begin immediate leasing and rapid production, with oil being transported to the Trans-Alaska Pipeline (TAPS) for delivery to the Valdez oil terminal. 5. The above actions will occur under accelerated leasing to the private-sector oil industry. 6. Oil lease receipts and a per-barrel royalty will be allocated to the military (DOD and USCG) to be used for fuel and personnel costs. Current DOD and USCG base funding will not be reduced as a consequence of this oil revenue. 7. No federal government agency actions will be taken, or costs incurred, other than DOD and USCG direct costs to administer the project. 8. The goal is to have exploration completed no later than April 2014, with production and first oil as soon as possible in 2014-2015. 2
Benefits of the action 1. Enhance national security by enabling the military to train and conduct operations. 2. Enhance military personnel morale and show them that we the people care about them and appreciate their sacrifice and service. 3. Demonstrate that the USA has the resolve to maintain its military capability and develop our natural resources for our own use. 4. Accelerate USA energy independence and end dependence on foreign oil. 5. Establish the federal government as participating with, rather than hindering, the States and private sector in resource development. 6. Provide economic growth for the country and good private sector jobs for young Americans. Example of oil revenue for DOD Volume of oil: bbl = barrel, Bbbl = 1 billion barrels USGS estimates for Alaska federal onshore North Slope (Figure 2): ANWR (10.36 Bbbl) and NPRA (0.90 Bbbl) = 11.26 Bbbl Assume DOD uses 360,000 bbl oil/day. 11,260,000,000/360,000 = 31,278 days = 85.7 years of oil for DOD. Oil in excess of 360,000 bbl/day can be produced to cover the costs of pay raises for military personnel. TAPS can transport > 2 million bbl/day. Value of oil: Assume $100/bbl oil 11.26 Bbbl X $100/bbl = $1,126 billion = $1.126 trillion = $1,126,000,000,000 = $1.126 x 10 12 Assume 50% royalty for oil, so net value = $563,000,000,000 ($563 billion). 3
Figure 1. The Central Arctic caribou herd uses habitats in and around the North Slope Alaska oil fields. Numbers of caribou in the herd are shown below (Data from Alaska Department of Fish and Game). The Trans-Alaska Pipeline (TAPS) began operation in 1977. Central Arctic Caribou Herd Numbers Number Census Year of Caribou 1975 5,000 1978 5,500 1980 5,000 1981 8,537 1983 12,905 1985 15,000 1989 18,000 1991 19,046 1992 23,444 1995 18,100 1997 19,730 2000 27,128 2002 31,857 2008 66,772 2010 70,034 80000 Central Arctic Caribou herd numbers 1975 to 2010 70000 60000 Number of caribou 50000 40000 30000 20000 10000 0 1970 1975 1980 1985 1990 1995 2000 2005 2010 2015 TAPS begin Year 4
Figure 2. Oil in the USA from USGS. (http://certmapper.cr.usgs.gov/data/noga00/natl/graphic/2013/mean_conv_oil_2013_large.png) 5