 talked about whether that soft security, implementing search and rescue agreements, the oil spill response and prevention agreements, it all brings into play Arctic maritime safety, Arctic shipping. And I think when one thinks of Arctic shipping, two words come to mind, Lawson Brigham. He is the, the, and you don't say that very often in Washington, the expert on Arctic shipping. Lawson is currently a distinguished professor of geography and Arctic policy at the University of Alaska Fairbanks. But we have known and come to incredibly admire his work as chair of the Arctic Council's Arctic Marine Shipping Assessment, AMSA, which really is the definitive study on maritime shipping. But Lawson's heart beats for the United States Coast Guard, I think, even though he's his second Encore career, third career. Lawson has served in the United States Coast Guard, and he, and I love his bio, and I just want to read a segment. He has participated in 18 Arctic and Antarctic expeditions, including as commander of the Polar Sea, which is in, still in mothballs, but the Polar Star is out. And was, this is when the Polar Sea became the first American surface ship to reach the North Pole. So I could just listen for the next 20 minutes of Lawson explaining that little journey. But he's going to help us understand the Arctic shipping, where we are today, where we're going in the future, how to strengthen cooperation and the role of the Arctic Council. And Lawson needed to say, you traveled very far to be with us, and we are so grateful. So with that, please join me in welcoming Lawson Brigham. Thanks, Heather and Andy for having me. They put us across the street in the Beacon Hotel here, and I worked here four times in my Coast Guard career with the Arctic Research Commission. Shortest commute I've had was walking across the street today, this morning, to the conference. I guess, there we go. I actually don't like the words Arctic shipping, because I, interesting enough, I get two words of Arctic shipping from you, Heather, because I don't think it expresses what we're talking about in the Arctic. And in order to look at, and I think the Arctic Council has got it right, you have to have a holistic look at Arctic marine use at the beginning of the 21st century, and I'll try to get into that. I've talked about, I'll talk about challenges and opportunities, and there are many, many challenges, but a few opportunities as well. This is what I'd like to cover, some global perspectives, and talk a little bit about access. Arctic sea ice retreat is not driving Arctic shipping. Actually, global commodities, these prices are, and natural resource development is the prime driver that we found out in the AMSA. I'll talk to you a little bit about current marine use, and I can't escape talking about the AMSA and its relevance today. And then I'll end with some words about the U.S. chairmanship of the Arctic Council from a perspective of maritime issues, and then I'll add more later in the panel. But before I do, I was at a conference in Southeast Asia a year and a half ago, several expert presentations from China, Japan, Korea, and Singapore, all four presenters, all men, marine engineering technical types, and they showed about 16 slides. I counted them up, and they called the place the high north, and they also had no ice in any of the slides. So at the end of the presentation, I couldn't escape without actually being somewhat civil in asking, one, where is this place high north? And two, I think we're actually missing something in the slides. They want to be too sniveling about it all. And then I went on a long rung about the place that's called the Arctic. This device that the Norwegians use for the high north is fine. I understand for Tromsø may not be Arctic, but it's high north. It's okay, but the place has always been called, and the right term is the Arctic. Kind of interesting. But my message is the misinformation is out there, and maybe the Arctic Council, for one body, needs to do a better job at communicating to the world some various specifics. We have a secretariat. The United States, in its political leadership of the Arctic Council, should exercise that secretariat and focus the secretariat on communicating with the world. I have a real ardent supporter, one of the foot soldiers of the Arctic Council of the past, and the worst part of the Arctic Council didn't communicate to the world. It's not normally the diplomats business, but the business of the Arctic Council, I hope, is to communicate better throughout the world all of what's happening at the top of the planet. And what is happening at the top of the planet, and of course the place that climate change is profound, so profound that maybe it gets attention all the time. What doesn't get attention is the global connection of Arctic natural resources to global markets. That's what drives shipping and other entities. Fishing gets some attention, and the future of shipping and the not. So when I'm always asked, well, what's happening in the Arctic besides climate change, I say, a lot. And part of that list is the last item, which we talked about this morning, need to talk about even more. It's about the Indigenous people and their rights and their voice. And it's being heard, whether it's heard in Nuffinard, remains to be seen, but nonetheless. And then of course we have some regional geopolitics with the adjudication of the seabed. So it's a mix of stuff, very dynamic, complex place, under great change, but it's not all about climate change. Even though I kind of speak as a climate change scientist, CI scientist, it's about global economics. And I hope that message in our chairmanship, in the United States chairmanship of the Arctic Council, we take on some of those issues through the maritime lens. Just another slide. I don't really need to tell you all, but I need to tell most of the audience as I deal with that 58% of the Arctic is in fact ocean. And that's an important fact. And clearly the place has certain legal and sovereign rights issues related to the ocean. It's also on the map, you'll see, it's about 2,000 nautical, roughly 2,000 nautical miles across the top of the world. If you go directly across a little less than 3,000 nautical miles across the top of the world, you really go through the Northwest Passage or the Northern Sea Route. And if it's covered by 2.1, 1.8 meters of ice after the first year ice disappears mid-century, it's a long way for navigating 3,000 miles across the top of the world, technically feasible, economically unfeasible. So I mean, it's still a barrier, but nonetheless all of the challenges we need to take on. Lots of linkages, some numbers of what's up in the Arctic, 10% of international fisheries happens in the Arctic in the Barents Sea, and in the Bering Sea, modest fisheries in Northern Canada and off Greenland and Iceland, but primarily it's Bering and Barents. You can see the other numbers, the Palladium 40% is located in Norilsk, and so is one fifth of the world's nickel in Norilsk. Norilsk is also the fourth largest producer of copper. Diamonds, Russian Arctic, Canadian Arctic, platinum, all in Norilsk, zinc, all in Alaska. 10% of the world's zinc is actually from the Red Dog Mine. And the estimated hydrocarbons from the USGS study, which was an integrated study in 2008, showed that the place is a gas province, and yet it does have some oil, and that's where people are after in the currency, offshore United States, offshore Greenland, et cetera. Rare earths in Canada, some in Greenland and some in Russia. And coal and freshwater are also commodities of the future, particularly freshwater that could be carried by ship or pipeline to world markets if necessary in the future. The global marine tourism industry is very insignificant in the Arctic, although there's a niche there. And then trade to Northern communities and the infrastructure development there is part of this connection to the global economy. Lots of interesting media coverage on this topic, some hype, some correct, some different messages. The Chinese ship, which was mentioned this morning, got tremendous press and hype around the world. And yet a few months before, the most historic, most of us who follow this stuff, voyage was of the old river, LNG ice breaking carrier, November, December, escorted by three nuclear ice breakers from Hamifest, Norway, to Bada, Japan. That's where the connection of global resources, a small heavy lift ship from China gets to the press, and yet a large, complicated ship in a historic voyage late in the year connecting Norway to Japan with a load of LNG from Hamifest. Certainly it has greater significance than the Chinese ship, but that's the way it's played out. A hundred times to the North Pole, yes, there have been a hundred surface ships last summer, two thirds of them for tourism, while on the Russian ice breakers, nuclear ice breakers, and one third for science. And then finally, a very interesting article last summer in the Moscow Times, which articulated what they call massive buildup of the northern sea route, but the most operative phrase that I took out of it was from Russian experts who actually deal with the issues, not some of the politicians and others who kind of hype the issue of the northern sea route. The northern sea route is a supplement, seasonal supplement, seasonal is important, three to six months season, seasonal supplement to the Suez Canal. There's no way that the northern sea route is going to take over the Suez or affect the Panama Canal, but you wouldn't know that from reading in the newspapers. The new maritime Arctic is represented in many senses by this offshore terminal, the Varende Terminal in the Pachora Sea. In order to get this terminal developed over the past decade, spent an operation for now five years, required technology transfer, international investment, and lots of players listed here. The operator of these ships, three ships that sail between the Varende Terminal and Murmansk in a shuttle system year-round, were all built by Samsung, the cell phone builders, build ships also using technology from the United States, Canada, and of course Finland, and of course the operator is the largest shipowner in Russia, Sokflinflot. And the rig itself, the offshore terminal, I should say, correct myself, that it was at least owned and operated by Lukauel and ConocoPhillips, so the technology transfer and the investment was from ConocoPhillips. This is the new maritime Arctic, a good poster, it's not a cartoon really, it's a good poster child of what is required, in this case and particularly in the offshore and the involvement of an international community in this new Arctic. A few words about access, we can look at these passive microwave images and just over this period of time, 79 to 2012, it's a couple years, it's not in geological scale, is it significant? Except a third of a century, 33 years here, great change in the openness of the Arctic in the summer, these two images are from the minimum extent of sea ice in September. But really the images we should see but never see, except maybe a few presentations at the Arctic Council, are these images. This is the average of the last three years of coverage in the winter time, and I probably should have included December. So from December to July, place is fully ice covered, not even partially ice covered, still, profound changes in thickness, extent, character of the sea ice, place is ice covered. So that has technical and regulatory issues for all of the Arctic. The place is covered with ice. I mean, I don't need to tell you all that here, but when I'm in Singapore, I needed to tell people that and show them some slides like this, say, I don't think that all the lines in the global trade routes across the Arctic without any ice is real, sorry to say. But here are a couple from research done at UCLA with some colleagues, Larry Smith and one of his PhD students, Ray Bragg guy, Stevenson. And this shows what the reality is today. The red indicates low-class polo ships, modest polar ice breaking capability that can actually go into the Central Arctic Ocean and cross today in September and October. All the blue lines represent normal open waterships. If, in fact, the Arctic Coastal States would allow open waterships to actually cross the Arctic Ocean, and that's a big if when we apply the polo code in the new regime, all solace and marble class ships must have certificates, must have a polo class, must be capable. So we're not going to see too many of the world's open waterships traverse right across the top. They may try, we'll see. But then some of this research, and I should tell you how these maps are generated, the ships are driven across and through the sea ice simulations of the global climate models. And so we're using output of the models which have their own warts and inaccuracies, whatever. But at least from a strategic point, we picked a model as a community model and we drove some ships across. Well, it looks like a mid-century, perhaps when there is no more multi-year ice and a place covered by first-year ice entirely, the capability of the polo class ships in the summertime is quite great. Now, there are no maps really with any lines on them except for polo class one, which is Russian nuclear ice breakers that would show any capability across most of this area in the winter time. Just to review where we are with marine use today in the Arctic in the summertime, of course, we have the world's largest nickel zinc mine, the red dog mine. And on the other side, of course, in the Russian Arctic, year-round traffic since 79 over to Narilsk and connecting Narilsk and Murmansk. And you add in, I'll just add these in quickly here, marine tourism, the North Pole, around Greenland, Svalbard for more than a century actually, and Iceland, not much in the United States maritime Arctic for tourism today. Fisheries, we know, we hear more about that, two large fisheries, several modest fisheries. The reason to add fisheries here, because we're talking about vessels that have discharges and emissions, whether they're under IMO or not, are under the coastal state jurisdiction, the fishing vessel fleets, which are the majority of vessels in the Arctic today, have their own impact on the ecosystems of the Arctic marine environment, oil and gas, of course. And summer sea lift, hundreds of voyages up to the Canadian Arctic, fewer voyages today to the Russian Arctic, but that brings large ships to coastal communities. And then finally, adding on what John was telling us, John Farrell, and other exploration of the central Arctic Ocean, at the beginning of the 21st century in the summertime, we have almost every square kilometer of the top of the world traversed by surface ships, hard to believe. Of course, it's not hard to believe there are no rules and regulations for that to be happening, and the polo code is coming. But nonetheless, this is the picture that we presented to the diplomats in the AMSA. Hey, the place is full of activity, and we need to move, press forward on a range and a framework of policies. Now, just to take us a little bit closer to home here for Americans and the audience and our Russian friends too, of course. This is the traffic level today, last season, last year, calendar year, in the United States Maritime Arctic, the Bering State region, Chukaka, this region of the Arctic. And here is the image, and this is all tracked by AAS, the Marine Exchange of Alaska. You can see in this map on the U.S. size, all barge traffic, tug-and-barge traffic. You can see near the center of the image, some commercial ships, cargo ships that go into the Red Dog Mine in Kivalina, there's a blue line into Kastaviu Sound. But really, all the large ship traffic is on the Russian side, on the northern seaward coming up and approaching the northern sea route, turning to port, essentially, if you headed north, across the Russian Arctic, and vice versa, of course. Lots of traffic on the west end of St. Lawrence Island. So here's the picture, and that's likely to be the picture for this region of the world for the next two or three decades. The only thing that could change would be on the Russian side when and if our Russian colleagues extend the navigation season, perhaps into December, perhaps into June, and have maybe six month season. Then we'll see more traffic on the Russian side. The American side will be traffic related to offshore development, the Amada of ships, the hundreds of transits related to the maybe three companies in the future, Statoil, Conoco Phillips, and Shell. That will bring lots of traffic. But there's no indication of large numbers of ships coming on the American side on transits through the Canadian Arctic. Just a couple words about the AMSA, the importance of the AMSA. Of course, the recommendations and some of the text were negotiated over a long period of time, seven months plus, and that gave us a framework for how to address the issues of protecting people in the place. We did use a scenarios process. Of course, the most important part of this effort likely in the global context is reminding the world that there are other users in the place and they've been there for millennia and they have very specific uses of the waterways and ownership and rights and how you cross those multiple uses now in the same waterway is one of the great challenges of the Arctic States. We have this scenarios process over a couple years, a bunch of workshops and we did tease out the great number of uncertainties, or 130 you could probably come up with more, but here are 20 and I started a couple. At the beginning of the AMSA, the price of oil was $147 a barrel. At the end of the AMSA after four plus years of working on it was 55. Just that one uncertainty, today oil price was 106 today in the paper. That range, that one uncertainty, because oil is an Arctic natural resource of great value, can ultimately drive, quote, this term Arctic shipping. If we had a major disaster in the Arctic, let me go back here, of which we did down in the Antarctic at the same time the AMSA was underway, we had the sinking of a small cruise ship there, but since the AMSA, we've had some very large ship groundings in the Canadian Arctic, and of course the searing images of the Costa Concorde on its side in waters that have been charted for several centuries and as a mariner hard to believe that that could happen one century after the Titanic, we have a large ship with loss of life and of course the Arctic states must do all in their power through IMO and other organizations to not let that happen. For the United States and US Coast Guard and when the majority of the passengers on some of these cruise ships are Americans, it should be a frontline issue. We did in our scenarios process, we're all pretty sharp, you know, and pretty smart, we said that's nuclear energy's taken over the world and it would be less of Arctic offshore development, of course we didn't foresee in the scenarios process the tragedy in Japan and the influence on the world in Germany teasing away from nuclear energy, I mean hard to new world, lots of uncertainties and to come up with numbers of ships in the Arctic which lots of people want to know, even during the Arctic Council in one of our sessions with the diplomats, one of the diplomats asked to know how many ships, he says Captain Brigham, how many ships are going to be through Bering Strait in 2025? I said if I knew that I surely wouldn't be telling you all, I'd be selling my wares and my great vision, said impossible to know unless you can cross all of the sectors and do some really heavy duty global economics, very difficult to tell, great uncertainty. And then finally the little, the start issue is if we do have some global agreements, i.e. polar code, that could change the dynamic in this topic of Arctic shipping. We have this gouge, this crossing of the major issues and we teased out that governance, the lack of governance or having rules based system that Ambassador Bolton talked about and others and that's about the polar code and other rules and regulations for the Arctic crossed with natural resource development as a real driver, some consternation about the word race, Arctic race, maybe if I was to redo it I might say rush just to get away from the word race, but you can see the different story lines that we presented really to get everyone to think out of the box. What are some plausible, we can tie the place up, polar preserve, we can have all kinds of marine areas where ships can't operate, a bit counter to freedom of navigation I would argue, but in history when you think whaling and sealing etc. But I think that you have to keep this in context, it was a great thinking device and a great way to express I think a very complex issue of how to use the marine world in the modern Arctic context. So we came up with a series of 17 recommendations and of course the trick was how do you sell this stuff, all these lists of things you want to do to the world and so we created these three thematic areas and I'll just run through and I'll be done in just a second here. The Arctic states themselves before the AMSA really didn't operate together and have unified positions at IMO, IHO, WMO, etc., etc., now they do and they're working very closely together, very important to essentially lobby the rest of the world, apply leverage to the rest of the world on why we need Arctic specific rules and regulations, charts, etc. The IMO measures uniformity of government and passenger ship safety, I'll mention the polo code in a second, and then the SAR agreement of course was orchestrated by Ambassador Dalton and his Russian colleague and the rest of the, using the Arctic Council of Facilitator, first up important treaty in the Arctic. A few comments about the IMO polo code, I was just a member of the U.S. delegation in London last month. As an anecdote, I can't talk about all the deliberations, you're not supposed to, but I thought one is entertaining. There's a preamble to the polo code and we try to insert some words. The polo code covers protection of the people on the ship and the ship itself and safety issues, it covers cetaceans, and it covers the marine environment, the water, and what's missing, people, coastal communities. And after long discussions at the, in some of the deliberations, the word people, not indigenous people, was inserted in the words coastal communities and the preamble, which is not binding. So you can, as part of my miscommunication to the world, the technical types, all good will and intention to have this polo code really don't know a thing about the relationship of the use of the Arctic Ocean and by indigenous people in a relationship of ships. But we're, the U.S. is trying to lead that correction along with Canada, very vocal there that we need to get people engaged. So you roll us out to the world, the polo code, and talk about people in the Arctic, I think we have a problem, big challenge. The polo code across is just an extension of conventions today, solace, safety of life at sea convention, and marple, marine pollution convention. So we're just expanding, rolling it out with Arctic specific regulations and rules to the Arctic, at least that's in theory. Now, it's pretty much agreed upon now that next spring, the pollution portion will be adopted by the Marine Environmental Protection Committee, and then the rollout will begin for implementation 2015, coincidental with the U.S. chairmanship, enforced hopefully by 2016-18. Other issues, indigenous use and surveys, some of this has been accomplished with a little plus there, community engagement much more today on a full range of issues with shipping and its impacts on indigenous people. The Arctic Council has produced a really significant report on identifying ecosystems and cultural heritage regions, sensitive regions in the area, but where we haven't making some headway as mentioned this morning on the oil spill prevention task force, but marine mammal impacts have been meetings of the International Welling Commission, and reducing air emissions is another topic. And then finally, the issues that relate to infrastructure, other than the northwest coast of Russia, coast of Iceland and the coast of Norway, there isn't any infrastructure. You may think there is, but there isn't. Even communication holes in the Arctic we know, no very admirable search and rescue capability, environmental response, ace and navigation charts. The Arctic Ocean is charted to about eight, nine percent to navigation standards. So when you list the whole things that we need to do, and of course the price tag of that, where do we get that, can't all be public investment? It has to be private public partnerships in the future. So there's a lot going on. I've starred the environmental response capacity because we do have an agreement exercising and implementing that agreement. And then the Arctic Marine Traffic System is another topic of interest to the Arctic States, and I'll get to that in just a second here. The AMSA is still operative because the Arctic ministers through the senior Arctic officials keep asking, what's the implementation plan? I hope we'll do that again. Canada will report out, I think, at the next ministerial. And I hope that the United States will again report out and pass the baton to our partner, Finland, and maybe during the Finnish chair, finish this thing up. But I hope the U.S. will continue this. It is a strategic guide, but it's most important aspect as it was negotiated. A very technical subject, which we get agreement on, was negotiated successfully and is being used in the Arctic Council. Well, here's for Ambassador Baldwin and everyone here, some items. The most significant thing happening in the Arctic, I think, over the next few years is this polar code, although viewed as arcane and technical new regime for the Arctic. All solace marpol ships will have to conform, who come from around the world to use the place the Arctic Ocean will have to conform. I hope that the United States will have this as a top issue, only in a sense of using its political capital to argue for the world, send the Coast Guard on the road around to all the Arctic States. This isn't a State Department thing per se, although whoever our envoy is will hopefully know and talk about this, maybe what some would consider arcane topic. Huge topic, new regime from the Arctic Ocean, and the United States is in the driver's seat as chair of the Arctic Council. Environmental security being one of the top things in the Arctic Council fits the profile. Easy one to do. It's just using our leverage and I think all the Arctic States will be supportive of the United States leading this particular charge. I've mentioned continued implementation. There's a missing link and it has to do with data on commercial shipping and hopefully we could have a working group in the Arctic Council that would end up having some sort of binding agreement for the Arctic States to pass this data. Maybe this could be orchestrated through the maritime organizations of the Arctic States but it's a missing link. We want the data for risk issues for domain awareness and we don't want to know where your nuclear submarines might be or warships but we do want to know where your Solis and Marple class ships are and when they're coming into our region particularly like Bering Strait or in the European Arctic. And then finally another item is a more technical issue. We talk about emissions but there is a need to note I think portion off the Arctic Ocean as a mission control area. There are others in the Baltic and the Mediterranean around North America. It's an opportunity to take a look at through a task force. Maybe it could be underpain this very specific issue which is having a missions control area. And then finally my cartoon not as nice as good as John's but but nonetheless my cartoon of what the future might hold for the Arctic and the Arctic Ocean and use of the place. Thank you. We have time for one question so we don't slip too far off so let me off the hook. Whoever has their shot may get a good one. Does anyone have a question for Dr. Brigham or he was so comprehensive you're just stunned. Dave Bolton thank you very much. No here it comes. It would be would be a bastard Bolton. Actually I wonder if you can go back some slides to the one that showed the Bering Strait. Oh yes with the data. Yeah right there that one. So there is a process underway in the U.S. right to deal with part of the Strait on our side of the line. And there are a number of people that are talking to me saying we should do more to work with our colleagues in Russia to develop comprehensive set of rules for transiting the Bering Strait region and take that together to IMO as sort of an add-on to the polar code. What is your view of that? How important is this? Yeah well it is important and you're right it has to be since international Strait IMO agreed upon voluntary measures won't be mandatory. My problem with it all is it's very difficult because of the intersection all the marine uses when you overlay indigenous use I would say it's impossible to figure out routes. The routes that IMO are supportive of in the Coast Guard are working on about marine safety somewhat on the safety of the ship and the people a little bit about marine pollution so that doesn't fit with the paradigm of the place of having ships intersecting with indigenous use. How does that play into the IMO rules and regulations? It doesn't and how do we mix that in because of course the 30-some communities on the Russian side have a play in this. It's a challenging issue it should be addressed now because it's a long-term issue as you have maybe seasonal extension on the Russian side and how that traffic will interrelate with the west end of St. Lawrence Highland and indigenous use actually out on the ice a very local kind of parochial interest. But no it's an important issue to deal with and maybe we deal with it now before the traffic might ramp up any higher. It probably wouldn't be part of a polar code per se because there's a whole regime but not regime conventions related to routing even in ice-covered waters so it's a good issue good topic certainly for cooperation of the two Arctic states in this part of the world's right for cooperation. Thank you. Well again please join me in thanking Lawson Brigham for a great presentation. Now please don't go anywhere I'd like to invite our panelists and moderator and we're going to continue that conversation and that's actually a great chart to show because we're going to talk about economic development in the Arctic and we'll let our panelists get seated. A little set change here and perhaps while everyone's getting seated let me introduce our moderator and our very good colleague Dr. Marlene Laurel. Marlene is actually participating very actively in our current project on the Russian Arctic and the international cooperative framework. Dr. Laurel is a research professor at the Elliott School of International Affairs at George Washington University and had a very exciting journey last summer to to Nurelsk but has been doing extremely important research work on migration patterns in the Arctic and urbanization in the Arctic so with that many thanks to my colleague Marlene and thank you panelists we know this is going to be a great discussion. Thank you Eder for your nice introduction. It's my pleasure to share this panel entitled Understanding Economic Trends in the Arctic. I think our keynote speaker already introduced us a lot about on the shipping issues and this maritime use of the Arctic. We will come back to that during the discussion because we will touch the cruise business in the Arctic but we will be also looking at the other side of these economic trends which are the the incredible boom of an extractive industry in the Arctic and of course both are partly linked because once you extract it something you need to send it somewhere you can send it by land lanes but you also mostly send it by sea land so both are linked. I think this looking at these economic trends in the Arctic it's really something absolutely central and that's really the moment where domestic and international factors meet that's also the moment where state and private actors interact and that's really something important that's also the moment where science and technology and geopolitics have to interact and also something which I think is very important is the moment where human beings have to be put back in the global picture because to develop the region you need not only infrastructure you need humans beings and you need not only to look at indigenous people you also have a lot a lot sorry a lot of people other kind of people to look at going from tourists to labor migrants so I think we will be touching very important issues during this panel and for that we have three speakers and I would like first to give the floor to our first speaker Mr. David Ace who is a senior fellow at the William and Flora Ulaid Foundation and distinguished visiting lecturer at the Stanford Law School is also serving as the vice chair of the advisory council on wildlife trafficking which has been established by President Obama last year and before that he served as the deputy secretary on the department at the department of the interior where he was the chief operating official and second in common to the secretary and he has a long experience looking at environment land resources and energy and how they interact in the Arctic so the floor is yours. Thank you very much Marlene so I'll use my 10 minutes or so to talk about some economic trends albeit from a bit of a US oriented perspective so forgive me for that it was the department of the interior that I was deputy secretary of and not the department of state but as Dave knows I do tend to sometimes blur those lines I'd like to talk first about energy secondly a little more briefly about shipping and transportation in part because we had such an excellent discussion a few minutes ago briefly about fishing and mining then I want to talk about science as an economic trend in the Arctic and finally a topic that's usually not talked about as an economic topic is subsistence in the Arctic and that's the people piece here let's talk about oil and gas first it is the big kahuna in terms of economic drivers in the Arctic there's there's no doubt about it we see it in Alaska and and I think that there is a tendency and I share this tendency in part because of my role in oversight for a former role in oversight for potential offshore drilling of of the north slope it's a tendency to think about this just as an offshore activity but the reality is that oil and gas is firmly rooted terrestrially in the Arctic with Alaska being exhibit a and in fact there is we are about to double down I think in terms of investment in oil and gas in the in Alaska onshore why number one Alaska is changing their tax code pending a possible ballot challenge this fall but there the governor signed a bill to change the tax tax code which had discouraged us companies from doing the type of additional investments to get the additional oil in the ground out of the ground and Prudeau Bay has plenty of that oil available but it's not been economic to pull it out of the ground it will be now and you are also seeing the potential for shale oil in the terrestrial in the in the American Arctic and of course you're seeing expansion westward into the national petroleum reserve with conical Phillips now moving forward with the first development in the national petroleum reserve all of these factors are are significant new investment likely in in the American Arctic and then of course you have the potential huge play that is now moving along really quite sprightly at least relative to how these huge plays move forward in that being the potential for a gas line from the North slope where there's 35 trillion cubic feet of of stranded natural gas bring it down to the cook inlet and put it on LNG tankers and send it to Japan I note that it's a lot closer to get from cook inlet to Japan than it is from Norway to Japan and we're talking about a 40 to 60 billion dollar investment we have the state of Alaska talking about a quarter taking a quarter investment in that and you have for the first time in the last two years a former skeptic and Rex Tillerson of Exxon Mobil talking about the potential for this to happen along with conical Phillips and BP you've got big players seeing a new worldwide opportunity for natural gas on the Russian side you see huge investment as well and the at the world petroleum conference a week or so ago in Moscow there was a lot of talk about Roseneff's for example talk about 300 billion dollars in offshore development they also talked about 80 billion dollars in onshore investment in the Siberian and Far East in order to feed the the new relationship with China you're going to see a lot more oil and gas development in Russia onshore and then the offshore stuff is also obviously in play we don't know if on the US side shell will return they they talk about it obviously they have found the challenges in the Arctic we have in Russia though operating platforms in ice filled waters and a big commitment that was again just reconfirmed at the petroleum meeting in Moscow last week we're talking tens of 20s of billions of dollars of potential investment this is the big story because I think oil and gas brings with it all of the special challenges in the Arctic and I cannot as a former regulatory official I cannot underscore enough the challenges and concerns related to the lack of infrastructure to deal with an accident on the oil and gas side we've seen it terrestrially obviously offshore the stakes are much higher as someone who was the first administration official down in the Gulf of Mexico after the Macondo well blowout I can tell you even when we have huge infrastructure capability we can have an environmental disaster on our hands so this is going to be a big play well now let me switch for a second and talk about renewable energy because there's a tendency to think only about conventional oil and gas when it comes to the Arctic one of the jobs I had at in the administration was to coordinate for the president under an executive order American policy when it came to energy in Alaska and we looked at the renewable side and I think there are tremendous opportunities here we have the irony and the tragedy of many of the local off-the-grid villages in the Arctic having to rely on very expensive difficult unhealthy diesel fuel now we've got tremendous wind resources in the western U.S. western Arctic they're also surprising solar resources some of the year there have been halting efforts Alaska state of Alaska deserves some credit for its renewable energy program but after about 25 years we have maybe 20 or 22 villages out of 250 in Alaska that have a renewable energy component to them we have the opportunity I think and we launched a couple of years ago with the national renewable energy lab the possibility to bring to the Arctic the equivalent of the wood stove in Africa which is a modular expandable standardized approach to have a hybrid renewable energy and diesel operation that can be essentially dropped into villages and utilized with standardized parts etc at the national renewable energy lab is developing that I think there's a tremendous possibility for that and I hope the U.S. will will pick up on that perhaps with its chairmanship shipping and transportation I think has been covered and will be covered by others and so I'm going to move from that I will just say though that the same issues of infrastructure that we have for oil and gas accidents I think apply here and in fact the Coast Guard folks will tell you they're more worried about the marine incident when it came to for example the shell drilling then then then an oil and gas incident and again you have no no real capability unless you're carrying it with you and if the if the velocity you're carrying it with you goes down you're in real trouble and there needs to be back to Ambassador Bolton's point in the beginning we have a search and rescue capability or a framework but we have no capability we have some early frameworks on oil spill response but really no shared capability this is a huge problem particularly given the investment size fishing and mining I think at least for the U.S. side we have the red dog mine I don't think we have a lot more at this point fishing we're interested in having a slowdown until we figure out what's going on up there final point on chipping though and and this related infrastructure business there's going to have to be a deepwater port I think in the U.S. at some point and and watch out for take a look at that let's make sure we do that right two final things because I want to make sure I don't use too much of my time I want to put science related economic activity on the list for a couple of reasons one is at least in my vantage point when I was in the administration there is a huge amount of science happening in the Arctic and if you go to Barrow in the middle of the summer you're going to find scientists crawling around you know bunking with the local folks and and and and at the former Pepe's I don't know what happens now after that burned down but in any event there is a and then the National Science Foundation many NGOs are pumping a huge amount of money into Alaska because of climate change and how rapidly Alaska is changing and I think we should celebrate that focus on science that is occurring in the Arctic ironically the National Science Foundation's budget now this is a couple years old they had something like 300 million dollars a year going to the Antarctic a lot of that because of their base down there and about 10 percent of that to the Arctic 30 million dollars it arguably should be a little more balanced and I think you're going to see that and I use I use the focus on science to simply to to remind us that the economic trend that is occurring and the science is showing us is the fact of climate change and and I agree that it's certainly not the only factor that is opening up shipping and and the commodity prices etc are but physically it is the the loss of sea ice in some months of the year is creating the opportunity for much of this activity and certainly for exploration in the Chuck Chi and Beauford Seas which really was not capable of being done a few years ago because of of sea ice and in that regard I think some of the science investments were going to related investments we're going to make and I'm pushing this a little hard but deal with the climate impacts in Alaska and I mentioned permafrost we're losing to the extent there's infrastructure in the Arctic it's being affected by the the instability that comes from permafrost thawing you got coastal erosion big-time shish moref which that Allen and I visited in 2010 is is is is being lost to the sea the loss of sea ice has increased the pounding of the of the surf and and you're losing those barrier islands and obviously wildlife impacts which gets me to the final economic trend that I think we all need to keep pay attention to which is the the economic necessity for native Alaskans and indigenous peoples in the Arctic to continue their subsistence way of life let's not forget about that's that's a real economic reality for in the Arctic and we need to make sure that as we talk about other economic trends we don't somehow roll over that I'll stop there and I look forward to questions after the other presentations thank you thank you so much for this terrific overview of this fast-changing picture of the oil and gas extraction in the Arctic we will come back on that I'm sure during the discussion now I would like to turn to our to our second speaker Mr. but now who is currently senior vice president at the of technical and regulatory affairs at cruise lines international association he also held several posts before that with the U.S. Coast Guard where he was deputy chief and attorney in the office of environmental and maritime law for several years and he also served in the U.S. Navy where he focused on nuclear issues so but the floor in yours thank you I think I recall a few moments ago tourism in the U.S. Arctic being insignificant I'm very comfortable with my own skin and actually I think that is a pretty fair statement of what it is so I'm going to show you just a couple of slides and explain a little bit about how the cruise industry works and how the cruise industry population in the Arctic and the activities there is likely to be affected or not affected by climate changes or oceanographic changes just briefly about our association we've undergone massive change in the last two years or so where we've swept under one cohesive umbrella under the name cruise lines international association or CLIA a variety of associations around the world we're still quite honestly finding them springing up in little places that we didn't know they existed before and wrapping them in and the idea being the industry should be able to speak with one voice on policy issues and develop policy together and execute policy and regulations it's been very useful since we've done that and give you a picture of what that looks like there's one exception there's one association based in Florida that we cooperate closely with but is not actually technically part of CLIA but you can see we now have a presence all over the world and what that's allowed us to do as an industry is engage at the local level much more effectively make sure that the local communities and the local regulators understand what our industry is about how it functions how it doesn't function and then bring that all together and take the best of the best ideas and bring them forward on a global level particularly through say the international maritime organization or other international organizations such as WHO ILO or even IKO at times what does that mean 63 cruise line members representing over 95 percent of the global cruise capacity inside that 63 it's a little bit of a misleading number is a significant number of river cruise operators which are very different not really germane for this topic but there's you know roughly or so depending on how you add them up maybe 40 plus mainstream cruise line operators that 95 percent of the global cruise capacity what's missed in that is some just little odd or maybe transient types of expedition cruise operators are very small cruise operators it doesn't add up to a large portion overall percentage wise of the capacity but nonetheless it's a community that we're constantly trying to reach more effectively and the globalization has allowed us to do that so for example before we undertook this globalization project if we had a policy an industry-wide policy we could reach about 80 percent of the international cruise community now we can get to 95 percent directly as members and make these things conditions of our membership and effectively reach the regions where the others are operating that might not be members and we're constantly receiving queries from people outside of our association that do want to follow our policies so it's been very successful there's also a community of about 50 000 travel agents and 250 executive partners not particularly germane for this I only put this slide up because when I first took this job a couple years ago this easily fit on one slide now it barely fits on two it really has made a big difference as to how many organizations we can reach just to give you an idea of what the picture looks like a global deployments this is capacity in lower birth capacity which basically means two people to a room it's a standardized unit of judging the size of our industry and of what might be germane for this discussion really most of it falls in alaska and even at that it's really only the northern very northern tip of where we might go because basically there's no cruise interest there's not something to see where the oil and gas industry and fishing industries are so closely involved in their in their evolution and development we basically stop at quick england and then go south those are the things that our customers want to see but you can see even at that it's a declining market share overall that has a lot to do with economic factors such as fuel costs it's very popular it'll probably stay at about that number but I don't see it becoming a rapidly larger number anytime in the near future what is growing rapidly is Asia and I think that 2015 number if I had a crystal ball and I do not exactly I would tell you that number is going to be substantially bigger in Asia Australia as well as a rapidly growing market this slide I only put this one because I'm going to superimpose the the polar code if we think of the Arctic in terms of the Arctic Circle which might be a bit too narrow of a view anyway but if we think of the Arctic Circle it looks like that it's nice and clean if we take a look at the IMO polar code not nice and clean dips farther south in some places dips farther north and others there's a substantial difference in what's covered but what's within the polar code for us where we tend to operate in the northern high latitudes is Greenland and Svalbard and again I mentioned we get right up to the margins in Alaska but it's not as if we go deep into that region because beyond Cook Inlet just a simply not of that much interest to us you'll note in the polar code what's excluded is Iceland northern Norway certain parts of Alaska you know there's a lot of of politics and economics that went into drawing these boundaries the good news is I think that the polar code is going to be effective I think I I think we might have been a little bit of a misstatement to say we don't have regulations that govern shipping in in the Arctic and same's true for the southern high latitudes I think we do but I think it's it's a question of are they fit for purpose and I think governments have answered that question no that's why we have a polar code that's adding additional requirements I think the mechanism of amending the fundamental conventions which are basically marble and solace is a good one but it's going to leave some gaps it's going to leave some gaps because the applicability isn't the same so for example the solace convention and the way the amendments are worded will not necessarily cover a vessel that is departing from and arriving back to the same port that's not an international voyage for the purpose of the solace convention and so there's a universe of ships out there I would argue the overwhelming majority of them that potentially might not be covered at least initially I know governments are seized of this they'll look at it the good news from our industry is it's not going to affect us we are going to operate within the polar code it would be just untenable for us to think of a scenario where we would utilize that where we just go back and forth and not be on international voyage but with more pole it's also nuanced and it's different from chapter to chapter as to what that means so just exactly what the full scope of the coverage is is something that actually will not probably be fully understood till the codes implemented but we've been involved for many years in the development of that code we're very optimistic that in the end it's going to strike the right balance between being allowed to maintain sufficient capacity to meet the demand that's up there and in the southern high latitudes as well but yet provide these extra protections and safety and the environment which are so important and we very much agree with those goals it's just been a matter of working through some of the more difficult details I did want to talk about itinerary selection because I think it goes to my fundamental point of things are not going to change real rapidly with regard to the cruise industry either in the high northern or high southern latitudes but let's talk about the high northern and the reason why is our industry functions very successfully over time in large part because of its flexibility and the mobility of the assets so for example if I build a billion dollar resort asset a leisure asset in Las Vegas and the economy let's just say becomes real poor in Las Vegas I'm stuck with a billion dollar asset in a place that really there's no demand for well our industry isn't quite like that if I build a billion dollar cruise ship which is not an unreasonable number at all these days for the typical sizes that are being built if the market conditions change or the regulatory environment changes or some other extrinsic driver changes I go somewhere else you know I take the ship to a place that will also be able to accommodate the operation of that ship so consumer demand is connected to that as to how we select where we'll go nobody has to buy what we're selling you might have to get on a plane to go to Los Angeles if you live on the east coast you do not have to take a cruise no but none of our customers have to buy what we're selling so if the demand's not there and we're not satisfying what they really want and providing it at a price that actually makes sense we don't have a business we don't need to talk about this or have this discussion fortunately we do and we do to some degree in the Arctic operating costs are a significant part of what we look at if fuel costs are particularly high or port costs are particularly high we'll choose somewhere else to go where the itinerary simply makes more sense I had a CEO of a very large company explain it to me really well one time he said look buddy said my job for the last 12 years has been to identify the 21 best itineraries that I have number 22 does not get a ship number 23 does not get a ship so even though the margins might be kind of thin between being above and below the line it's kind of binary it either works or it doesn't from an economic standpoint the logistics chain is very important if you've ever seen a cruise ship on a turnaround day it is an extraordinary thing to watch massive amounts of material has to go on come off passengers have to be moved on moved off immigration's got to be cleared all these things has to have have to happen you have to have the support there to do that in way of infrastructure and mainstream cruising in my opinion will probably never have sufficient infrastructure for that to be a wide-scale enterprise up there predictability another important factor and I sell a cruise in my industry 12 to 36 months in advance it's a vacation of a lifetime for a lot of people taking these cruises and an arctic cruise is a niche it is correctly described as a niche it tends to run about a thousand dollars per day per person as a typical value okay so person gives me twelve thousand dollars for the vacation of a lifetime and I just say I can't go sorry the ice is too bad I'm not going to be in that business very long so it's going to remain a small niche because of the lack of flexibility because conditions will change destinations of interest are people want to go ashore the ship with some exceptions and the trend is actually changing a little bit but generally speaking destinations drive our itineraries and not the ship itself people want an interesting place to go ashore and they can handle a significant number of people ashore at one time comfortably if they don't have a good experience because they feel crowded they're not coming back they're not going to be customers very long again don't need to have this discussion short excursion availability again requires infrastructure and economic catalysts to do that in a particular area embarkation debarkation ports that are convenient and have good air access in and out and perhaps have places where people would want to stay for a few days on either end all this is for the purpose of telling you that although it is a successful niche market they tend to be specialized ships the ones that go the ones that go very far north tend to be heavily reinforced icebreakers and I don't see that changing quickly anytime soon it's going to remain a high price niche in our market the larger ships tend to go as a repositioning measure like say for Greenland if they're going to take a northern route east or west across the Atlantic so I think I've consumed all the time that I was allocated I hope you found that useful to understand how our industry works and I thank you for your attention look forward to any questions you might have thank you so much for this great presentation you made us travel it's really nice uh our now our last but not least speaker for this panel Mr Inutek Olm Olsen who is currently minister plenty potentially for Greenland on behalf of the Royal Danish Embassy before assuming his current post he served as a senior advisor to the Danish Ministry of Foreign Affairs on Arctic and North American affairs he also had several positions in Greenland government most notably he was deputy minister for the government of Greenland for almost one decade and he managed Greenland's relation with the European Union and represented Greenland to the EU in Brussels so the floor is yours thank you very much Malin and first of all thank you for inviting me and to for organizing this event I'm going to turn the attention slightly you know away from the US and to Greenland so um and first of all I'd like to explain just shortly you know what what Greenland is and what it is that we are planning you know in terms I'll come back to the title of this panel Greenland is a self-governing autonomous part of the kingdom of Denmark um we gained home rule in 1979 and you know we are in this long-term state building exercise you can say um we renegotiated the uh the agreement we had with Denmark and this led to a new self governing act in 2009 uh our goal and interest in um developing Greenland is to first of all you know become economically self-sufficient uh we currently receive about 600 million US dollars in from Denmark and um our aim is also to you know develop Greenland politically as a nation and economically and that's where um you know the um the focus on the natural resources comes in um we have been working on developing um our natural resources for the last decades actually I mean when we when you talk about Arctic you know some people tend to think it's a wild wild west but it's not the case it's it's something that we have been building on for many years um economically fisheries continues to be the dominant factor in Greenland in which has been the case since the 1960s but it's you know it's too dangerous basically to rely only on fisheries economically so that's why we are building on developing the natural resources sector um and I mean to to echo what David Hayes said about renewable energies I mean it's something uh that we also been focusing on because uh using hydro power for the energy intensive industries is something that has potential as well especially in Greenland and we've been negotiating and there's still ongoing negotiations with Alcoa on on building an aluminum smelter based upon using energy from hydro power and also you know for electricity purposes it's we've been focusing on building up our hydro power potential for for the population and currently 70 percent of our electricity needs are covered by hydro power um as I said you know I'm gonna mainly focus on the natural resources area here uh in 2010 Greenland undertook the you know under the self-government framework we took over the total competence of our natural resources including revenue stemming from those um and um currently there are five um projects that are in advanced stage since 2002 we have been awarding over um 150 licenses exploration licenses in the mineral sector and now we're seeing the um you know the mature relations of this of of these licenses um you know and I'm gonna I'm gonna try to explain in short you know the different projects that are coming up and up and coming when it comes to oil and gas we've been awarding 23 license blocks offshore with different the 14 different companies involved the participating companies include some of the world's largest oil corporations um a total of 14 wells have been drilled in Greenland waters since the 1970s and we expect more during the course of the next few years but it's still an um an area that's in its infancy and many challenges lies ahead in 2010 and 2011 eight drillings were carried out along the west coast of Greenland and the results of these drillings was a confirmation that there is oil and gas in the area but not yet found in commercial quantities along the east coast of Greenland a bidding took bidding rounds took place last year and at the end of 2013 four blocks were awarded to three consortiums consisting among others of stat oil conical Phillips BP Sharon and Shell but it's the mining sector as I said that's showing the most um potential in the foreseeable future um on the granting of new mining permits we have decided for the go ahead for the iron ore project and rubies project the iron ore is a so-called large-scale project which consists of a minimum five billion u.s. dollars in investment in the construction period it's going to take time to develop that because we've been also hit you know by the worldwide economic downturn and it's really difficult I think it's always one of the biggest challenges for the companies is to find investors and for such a large project it's going to take time for the rubies project it's a smaller scale mine so therefore that's you know going to be that's going to materialize much sooner but we also have two two of the world's largest known deposits of rare earths are located at the southern tip of Greenland and these are also in an advanced stage we have yet to receive an application for exploitation but we expect that in the coming future it's it's difficult to say exactly when they're gonna come in but they're gonna but we expect them to come in soon all mining projects have to be environmentally and socially sustainable and it's important you know to involve the local population along the coast where the mining projects are going to be so comprehensive hearings you know are also part of this process and both society and the companies will receive a fair share of the profits impact of benefit agreements will be made for all mining projects to ensure maximum local employment maximum involvement of Greenland companies and enhancement of skills and competences of the workforce and with regard to the taxation of the the mining projects royalties will have to be paid on turnover but at the same time we intend to reduce the corporate tax for the relevant mining companies so there will be no increase in the overall taxation of these projects but and this is based upon negotiations with each individual license holder. We continue to be a very competitive country in this area based upon a benchmark analysis we undertook comparing Greenland to a variety of other mining countries and yeah I mean it's it's it's imperative for Greenland to develop the natural resources sector as I said in the beginning both to develop the society but also the economy but also because we are combating rising unemployment these years the unemployment figures have risen from four percent to nine percent to over nine percent in the last few years so it's something you know that we need to develop also to for diversification purposes and when it comes to you know the economic trends in the Arctic I think we are seeing a truly globalized market forces in play here when it comes to which countries who have interest in in the Arctic as an example I mean Australia is a number one country on the number of licenses who have of the number of licenses in Greenland but we're also seeing new actors new economic actors coming in most notably South Korea and China which are showing interest as and we already heard you know in the previous panels the interest with regard to China and South Korea you know in the commercial in the scientific sector but it's also true in the in the economic sector and I think with those words I'll end here thank you so much Greenland is really a fascinating case I think a unique one in terms of this interaction between economic development and nation building or state building it's really history in the making that we can see now so all our speakers were very respectful of the time allowed and my job was really easy so now we have a really time for a discussion I'm sure have several questions and comments on all these dynamics related to energy minerals and shipping so we welcome your comments please yeah wait the microphone is arriving oh one is here hi could I just ask a very quick question to any of the panelists in a tech you just mentioned unemployment but I'm just wondering in the extraction industries oil and gas shipping how much is there in the way of real job creation you know for indigenous people is labor being imported are these jobs transitory so what what impact is this going to have for indigenous people it's something that we are very focused on developing I mean in terms of the workforce and training them to be part of this I mean it's an ongoing process to involve both local companies but also the workforce and engage them because I mean it's crucial that I mean the that employment as much local employment takes place because I mean the worst thing for us is you know to become spectators of the development that being said there are some large-scale projects like I said for example the iron ore where these are so large you know that the local employment is insufficient and where you have to import during the construction period workforce from other countries to come in and construct these you know mining projects there's a new act that's just been adopted just actually last month the so-called large-scale act it had to I mean it passed the Greenland parliament but it also had to pass the Danish parliament because the foreign workers permit you know is still a Danish competence so that's why it has to have to pass the Danish parliament but now that's in place you know it's it talks about well it deals about it deals with which rights and you know under which conditions these foreign workers you know can come in but I want to you know pinpoint is only doing the construction phase the operational phase is different there you need much less when we talk about for example the iron ore project in the we're talking about two to three thousand workers during the construction period but seven to eight hundred during the operational period so we don't expect you know so I think you know we're looking at it you know from that perspective on as well and engage you know the workforce in the operational phase if I can give a perspective on the U.S. experience there this will be highly generalized but certainly the major oil companies working in the Proudhout Bay area make an attempt to hire some Alaska natives but the large bulk of the employees are flying back and forth every two weeks from dead horse back down to Fairbanks and and the reality is that the the Alaska villages near the the job center if you will are few and and typically unconnected by roads another observation here there there is a particularly challenging situation that's embedded in the question because on the north slope taxes from the extraction activities are hugely important to the budgets of the Alaska native villages around the north slope and there although there are and there are some jobs associated in those villages as well but few but there is a reliance on the income of the tax income from the oil and gas activities which creates and I've I've seen it particularly in the last two or three years some action real tension between the the the traditional subsistence culture of those in those villages and the recognition that oil and gas money is needed to support those communities and the and it's it's it's a and you can see it playing out so it's a it's a complex issue and and a really good question Ken thanks my question question kind of builds on kens fascinated to hear about the development plans for for Greenland and particularly in the development of you know large-scale middle projects such as iron ore or aluminum I mean my the context for me thinking about this is is Afghanistan and if you're developing resources like that or any resource you know they have to get to markets and for resources of that of that scale you know unless I mean they typically have to be transported by rail it's not economic not economical to do so by by by truck so you know in addition to first of all having to build power generation at the at the extraction facility wherever that is which is a big a big piece of it there also has to be the development of rail and or other transit capacity to get it to port where it can then be shipped shipped out and and made made made money and I guess and I thought it's going to thought about you know resource extraction in the Arctic it was typically more about oil and gas and you know there you could pipe it out so I was wondering if you could kind of talk about more about the the transit infrastructure around it and if any others on the panel had comments around that in other contexts besides Greenland I'll take a initial pass at that the Lawson mentioned the red dog mine on the western north slope there in Alaska and it is unbelievable unbelievable facility does provide something like 10% of the zinc of the world it is I've done a flyover up there and there there the the US Arctic is shallow there are no ports you get to the largest town Barrow and you're talking about skiffs and small boats and what they do in the red dog mine is is barge everything out to ships out you know a couple miles and it's an incredibly inefficient process but it obviously works for that mine in part because of the scale of it but I think it also speaks to the fact that and what it's really one of the reasons why I I don't think in the US Arctic we're going to see another big mine like that at least not very soon just because you have to have a huge resource and and and to justify the capital intensity of the effort now if if they're you know for a variety of reasons there's great interest in having some deep water port on the US side of the in the Arctic if only when buds ships and they will there will be some coming coming up through ecotourism etc you have no capability for them to refuel to you know to go to shore to to if there's an accident to have rescue you know capable rescue vessels nearby are very limited capability I should have I should say and of course the oil and gas industry as well so there's a lot of talk about pork clearance and gnome that region right there where there's some natural deep water harbor now that could change the the the economics potentially for for resource extraction nearby but as many of you know who know the Arctic it is it's a punishing environment where you have no roads you have no railroads you have in the US case shallow water so getting to market is a big issue just add might add to that nice list that David provided the weather is not great for tourism either so it's a hardy crowd that goes up there as far as you know economic benefit that goes you know where our industry does operate we do tend to generate jobs you know on a macro scale in the US I think our numbers 340,000 us jobs and 40 billion dollars in direct and indirect impact you're never going to see that in these in these Arctic regions but some of the local communities that get these seasonal stops because we can only operate there seasonally through a very short season even with the specialized ships do benefit a great deal particularly when there aren't a lot of other livelihood alternatives and Greenland is a good example where even though the larger ships tend to be a very very short window where they're typically transiting across the Atlantic one way or the other and it makes some sense to go north you know people do find that interesting they do find it interesting to meet the local culture by the local wares and take them home and infrastructure has to be a part of that somebody has to provide the launch drivers perhaps or people to to conduct tours and and it is a success story if it's managed in a proper way and I think the key is you can't overwhelm a community with tourists no matter which conveyance they come in whether it's one of our ships or someone else's aircraft it's true that you know that some of the for example mining projects are away from where the infrastructure is for example they are in all but it's further inland but at the end of a hundred I think it's like a hundred kilometers long cured near Nuke but it's all I mean where you have to build a whole new infrastructure but that's all that's part of the you know investment plan as well where you build the road and build the harbour but some of the other projects are actually you know by the ocean by the coast I mean if you look at the you know where people live in Greenland it's by the water so I mean we have you know deep sea ports of course not huge but it adapted to of course the local conditions but but it's not something you know unusual in Greenland terms you know to have to develop infrastructure as ports for example but and it it depends on each project individual project where there are because some of them are more challenging than others but it's true you know you have to build you know a whole new town so to speak yeah if I may add on the Russian case I think this issue of transportation it's really like the elephant in the room for the Russian development of its online gas or minerals in the Arctic and you really have interesting case of trying to find solution I mean Norilsk Nikkel has been able to develop his own fleet and his own port in Dudinka in the 90s and early 2000 when the Russian state wasn't really able to fund this kind of development and I think now if you look at Rosniew and especially Gazprom strategy there is really a kind of growing a warning that because of the permafrost towing the disappearance of winter roads and of the infrastructure was just drastically changed the picture for Russia and this infrastructure will just become the key issue and the one which financially will be very challenging for the Russian state so it's really something that is now becoming kind of the key issue for for the long-term sustainability of this economic development yes yeah I'm sorry the table's dominating at the moment I'll be next right I just wanted to connect a few thoughts here that have come across the table first of all with respect to all the interest in Greenland and Alaska and Russia and elsewhere for minerals and so forth I want to say because the Antarctic was raised briefly by by David that there is also interest in Antarctica in that particular area of course under the treaty we have got an agreement where there is no exploitation of minerals currently permitted but I just want to draw your attention to a couple of things under that treaty system it really was the first arms control area of the world we signed that treaty in 1959 at the height of the cold war okay so we're talking about cooperation right now and I want to say that was a scientist originally driven uh an admiral bird as well enterprise so I think you know it's a way uh enhancing keeping science cooperation going is is important for the world and for lots of reasons but um there's a good example I and I have to say that this interest in minerals has people has nations like Iran and Pakistan in the wings trying to become members of the Antarctic treaty we are up to 50 members 29 consultative parties you have to have an active and influential science presence in order to have a voting role for the governance in the treaty and I would argue that the 300 million that we spend in the Arctic every year is a very cheap way of ensuring we have that presence we did a study just so everyone knows about the cost per person uh for doing this whole enterprise we do maintain three stations year round down there and sales ships and so forth um we got on a per person basis a cost quite comparable with our national laboratories our major national laboratories which is pretty remarkable considering where we're operating now that said and I agree with David we could certainly spend more in the Arctic but just to give you the numbers we are spending at NSF a hundred million dollars per year 40 million of that goes towards logistic support which is a relatively new thing for us over the last decade and a half or so and um so and then I want to turn to a point um that that uh Ambassador Bolton raised because I also want to mention commenting on David's point about money going to Alaska as I as I showed you on the map the work goes on all throughout certainly concentrated in Alaska but also in Greenland and throughout the Arctic and the people carrying out the research are throughout all 50 states in addition to our international partners I think that's particularly important because we could build on that base in this activity among others to raise that awareness all throughout the US populace about the issues that we're discussing today um and I look forward to building on that with whatever we end up deciding under the Arctic Council leadership and I just the last thing I'll say is that um I think that um that it's extremely important at this juncture to raise that awareness and I'm my question therefore is for you Mr. Dar in the Antarctic we very favorably engage with IATTO international association of Antarctic tour operators and that's a group that have voluntarily signed on to the precepts of the treaty and making sure the tourists involved in the operation adhere to the environmental protocol and learn something about the Antarctic so I know there's some interest in the Arctic in that regard but I'm wondering if you can speak to what your industry has been talking about or is doing with respect to to that element of tourism ecotourism it's sometimes referred to sure and to talk about the high southern latitudes as an example is just fine we work very closely with IATTO and our members that actually operate in the region generally if not completely are also members of IATTO so I work very closely with them and in fact we'll be meeting with them again this week we have a cooperative arrangement so I think that our interests are represented through them and we work closely with them in the Arctic our focus for the present has been on development of the polar code and helping that be shaped in a way that that strikes that right balance and I'm really optimistic we're going to get there and that governments are going to overcome their political difficulties and get this wrapped up on the on the timeline that was suggested there is an organization I'm honestly I'm forgetting the second word in the acronym but IECO which is based in in Svalbard that represents Arctic operators as well we do cooperate with them just not as formally as IATTO and we certainly are very pleased to engage with the Arctic Council members to my knowledge we haven't received any specific request or invitation to do so but we're happy to do that and we certainly do so on an ad hoc basis and we have a great deal of mutual interest up there it makes no sense for us to take people who are investing their trust in us not only to provide them a safe experience but an enjoyable experience to a place where the environment is not maintained in a pristine manner that's what they want that's what we want to give them if I can just pivot off of your earlier comments on the science side the Antarctic is a is a wonderful example of cooperative science and the treaty and unique relationship in Antarctica certainly fostered that I think I put science on my list of economic drivers because I think that it particularly with climate change and the visibility of climate change in the American in the in the international Arctic it's visibility in part because it's a more populated region of the globe than the Antarctica and and there was also a lot of economic activity and effects being seen I think there isn't a real opportunity through the Arctic Council to have more cooperative science and actually cooperative science has been a bedrock of the Arctic Council and what was and I think the U.S. leadership of the Council hopefully will will underscore this and and and pivot forward from it and I will mention in particular what's needed I think with regard to the Arctic in part because of the economic drivers that we're talking about is is and don't get this wrong when I say this not just science for science sake but science that can be brought to help managers make good decisions on what sort of management approach is to develop for lands where to put ports that sort of thing that's what ecosystem based management is all about the Arctic Council has gotten that rolling the report to the president that that the interagency report that went to the president last year that I was involved in talked about integrated Arctic management we need to bring this to life to get science available to help managers who are managing wildlife or man who are helping make decisions about where big projects go or don't go identifying protected areas all of that and and the the Arctic Council I think has taken an important couple of steps forward other countries like Norway who has mentioned before are further along with this with their Barents Sea ecosystem based management analysis than we are in the U.S. the time is ripe I think for more science cooperation and both to understand what's going on but also to help make good resource-based decisions on which projects should go forward where recognizing the unique sensitivity of the Arctic and also the unique need to protect the wildlife resources in particular that are part of the subsistence culture of the Indigenous peoples hello my name is Talia I am a student at William & Mary and I'm going to the Arctic this summer through an organization called Students on Ice and my question for you is clearly a lot of countries are really interested in companies are interested in getting into the Arctic and exploring for gas and oil and what worries me is that the Arctic has been referred to me as kind of like a cold desert and if there ever was an oil spill it would be extremely difficult to clean up and as Mr. Hayes pointed out right now there's not proper regulation for oil spill preparedness so how can we ensure that there's going to be enough and strict regulations before oil companies get in there Marlene says this for me and it is so you ask a very important question and there are two phases of oil and gas exploration now first as I mentioned before folks tend to overlook the terrestrial oil and gas development but we shouldn't because that's that can be very challenging also but clearly the offshore oil and gas development is the is the riskier proposition because of the potential for a spill that's difficult to get more difficult to contain than it is onshore we went through this over the last three years and continuing at the Department of the Interior which regulates the which regulates drilling of oil and gas on the Outer Continental Shell for the United States and basically what we required of Shell that the company that was going out first to explore the lease tracks that had purchased for over two billion dollars in the previous administration we required that Shell bring with it the capability to handle a blowout essentially and that capability was identified and scoped based on what happened in the Gulf of Mexico meaning that there essentially had to be a flotilla that accompanied the exploration activity including an on-scene ship that was capable of collecting and and putting on board oil that would that that had spilled and also the capability to bring on scene within a matter of days a second drilling rig to put in a relief well to stop the blowout if it was continuing at that point. Shell was not able to meet those requirements it tried very hard that summer two years ago but it couldn't get the ship certified that it needed so I think that speaks to some extent to the the appropriateness or the seriousness I should say of the of the standards and the Interior Department right now is putting these standards in place for all drilling activities there's a rulemaking that we'll be seeing a draft of soon I'm told and it's my personal hope that our unfortunate experience in the United States in terms of the Gulf of Mexico now that was deep water drilling so it there's not completely analogous but in terms of the results of a spill and the difficulty of collecting the oil even in an area where there are there were hundreds and thousands of vessels of opportunity as opposed to the Chuck G and Beaufort I'm hoping that that the U.S. standards will will establish a a bar that other nations voluntarily also adhere to and and and after the oil spill and with the Arctic exploration there have been a number of country-to-country discussions about about safety standards once once an exploration drill exploration has been completed then one of two things happens you have a production well in which case you may have ships that come out and physically get filled up and then back again and you have enormous challenges there that that really are I think regulations have not necessarily been focusing on that sort of thing or you have an underground pipeline going to shore and more pipelines and that's potentially an easier situation to handle but also very capital intensive the bottom line here is that it's extraordinarily expensive difficult and risky to do offshore drilling in the Arctic and I think that that message has been heard in the oil and gas industry and they have a right to try to do it under appropriately tough circumstances and I'm hopeful that the U.S. experience has established appropriately tough standards um no it's a good point because uh it's um I mean nobody's interested in you know experiencing some kind of a catastrophe uh environmental catastrophe but so that's why I mean whenever you're dealing with the Arctic you're talking about higher standards than usual be it uh you know shipping um aviation and oil and gas um in Greenland I mean we have um some of the most strict requirements when it comes to environmental regulations we have adopted the so-called North Sea standards developed by the Norwegians which are regarded as some of the highest um we I mean we pre-qualify applicants before they are admitted in the in the process in the application process when it comes to oil and gas licenses offshore they have to you know they have to be of a certain size they have to you know show that they have experience in in operating in difficult waters for example and um and after that you know when they are qualified I mean they have when they are awarded a license they have to have for example a double rig operation so you know if one rig breaks the other one can can fill it up and um I mean among I mean they have to show us you know different contingency plans from a small spill to a very large one and how they're going to deal with that and we require them for example a bank guarantee of um I think it's about 10 uh 10 billion US dollars you know so um so they can you know so they are able to pay I mean in should an accident happen so um it's something that be very much aware aware or and it's not you know safety standards are not static it's something that continues to develop and improve and use of the best available technology and you know best standard is something that we will continue to you know develop and and decide upon this question coming back to this very noisy table uh thank you all a question first for bud and then a question for David bud you've convinced me uh cruise ship increase is not going to happen in the Arctic I always thought that as we were looking at cruise ship there was sort of a slight uptick as we were looking in in the Arctic but your your case was extremely compelling but my concern is on safety and looking at some of the circumstances so Greenland when cruise ships I think I believe on the west coast but please clarify that if that's not correct they actually have to cruise ships have to go in tandem the reason they have to go in tandem is if something would happen to a cruise ship they would not be the the search capacity to rescue or offload and that that second ship serves as the fallback safety ship that's only a practice for Greenland because it's just a very specific ad hoc is there some additional in addition to solace but is there some additional safety standards particularly on search and rescue that the industry is looking at from a best practices and and maybe this is just a very unique situation to Greenland and how they're approaching cruise ship traffic and David very quickly a question for you I think on the question for the American Arctic of economic development we have a great divide between the state of Alaska and the federal government about what that picture looks like so you have Alaskan officials that are deeply interested in building that infrastructure and growing jobs and this is my opinion you have a federal government that is agnostic at best but isn't quite sure should it shouldn't how do we proceed we don't have a vision for the development of our Arctic how do you now that you're liberated from government and you were at the cross crossroads of that that intersection between the federal and working with the state do you see where we can come together and have a a shared vision of economic development in the American Arctic or you think we're just going to keep state federal we'll just never quite find harmony on that point switch questions I'm happy to answer yours and tandem operation of cruise ships particularly in a remote itinerary is not a reasonable solution longer term it could work on a micro level very short season where you have similar ships but quite honestly we just can't sell that many seats on our ships to have that make economic sense it just won't work we just won't be able to operate in those regions in the long term now just because that isn't a solution doesn't mean there isn't one because there is and it comes in a couple of different forms and one is the concept of coordination and as we have been working with the Danish government and the Greenland authorities as well we've been emphasizing as an alternative first of all planning which is critical if you're going to take whether it's quite honestly five passengers or you know two thousand passengers to a remote location it's your responsibility to plan for that properly and evaluate the risks and mitigate the risks to the extent that you can so one of the things that we've been discussing as a corollary to that with the Danish government in particular is the concept of coordination rather than tandem pairing that is a realistic possibility in a lot of the places we operate coordination is done in the Antarctic region now but that could draw upon a variety of resources that might be in the area they might not all be cruise ships but the key is have you evaluated the risks and have you mitigated the risks and have you done so in a way that's tangible and that it's in procedures that you can point to and that can be implemented and enforced in an objective way and that's a critical component of how we envision the polar code functioning in both polar regions and quite honestly it's ripe ground for sharing the best practices we have right now for those few operators that are there and I said I don't see any large-scale growth it might mirror growth in the industry overall but it's still going to be a niche it doesn't diminish in any way the responsibility for each and every single passenger we have on board and we take that very very seriously we think about it every night when we go to bed we think about it every morning when we wake up Heather Heather raises a very important point we're in a federalist system and in Alaska probably more than any other state federal relationship we have we have friction we have friction in part because the United States government acting through the Department of the Interior primarily manages two-thirds of the state land including probably 70% of the Arctic terrestrial area between the national patrolling reserve 24 million acres and the Arctic National Wildlife Refuge was at 12 to 18 million acres and then the gates of the Arctic National Park etc moving west and of course manages the offshore the federal offshore three miles and out and you have a situation where the Alaska economy is almost completely dependent upon oil and gas revenue oil and gas revenue supplies more than 90% of the budget of the state of Alaska and every Alaskan every year gets a check in the mail for over a thousand dollars a rebate from oil and gas development so when my friends Dan Sullivan and me Treadwell are duking it out to to for the Republican primary against Mark Begich for senator you can bet that they are talking about resource development I'm a bit of a polyannish and I I actually work very closely with Dan Sullivan and me Treadwell they're fine folks and and no one wants to trash the state of Alaska but they're they're dude they're I think you know the federal government has to represent all of Americans and and I think we have an important role to work through the issues this is where this is one reason I'm so committed to science and so committed to planning the biggest risks in Alaska I think are are taking projects that come in the door and doing an up or down on that project without thinking about how that fits into the ecosystem and that's that's a recipe for a disaster and the Department of the Interior under under Ken Salazar in my watch did a management plan for the 24 million acre national petroleum reserve and set aside a huge amount of that for conservation basically and it it it got a lot of criticism from Alaskans but on the other hand the the east side of the national petroleum reserve which is abuts the state land and is close to Prudhoe Bay has oil and gas resources and is being leased and the president committed to lease have a lease sale every year in the national petroleum reserve and he's done that he's going to continue to do that we've been very sensitive about the offshore but we've moved forward with with standards and in terms of the biggest project on the horizon the gas pipeline president Obama from the very beginning has said we support a gas pipeline originally the original pipeline the beginning of the administration was the pipeline was going to come down to the lower 48 well that's off the table now because of shale gas in the lower 48 made that an economic but you now you have a potentially a global LNG market that potentially makes that economic again so I would say there is more harmony than would appear from the rhetoric Wyoming's the same way you know just sort of beating the hell out of the federal government is a sure way to get a lot of votes and you certainly have that in Alaska but when you get behind behind the scenes I think there's again I'm a little polyannish but on this but there's there's more common ground than we would think and what I do hope is that ideas like ecosystem based management and integrated Arctic management are become more embraced by the state and by the federal government we have our own problems in the federal government with different agencies acting like different fiefdoms and creating some of the same types of conflicts that you have between the federal and state so good luck up in it's good that students are going to the Arctic because it'll be a civics lesson at the least on that note I think it's time for us to conclude this panel we will be continuing discussing economic issues in the next panel devoted to fisheries which have always been a very traditional economic activities for the Arctic we stopped just for two three minutes the time for us to reorganize the panel and please join me in in thanking our three panelists and the great discussion