 Francis Alma has been such a participant so far that she probably doesn't need an introduction. She clearly is known by everyone, but it's really a great pleasure to have her here for this conference today just because of the different experiences she has had in her career. She's currently the Chair of the U.S. Arctic Commission that had been on the Deepwater Horizon Oil Spill Commission Report and had actually previously that been Lieutenant Governor of Alaska. So I think the scope as well as Chancellor of the University of course, the scope of her experience is going to give a real special perspective on the questions we've been looking at today. So Fran, I'll go ahead and turn it over. Well first of all let me thank CSIS for inviting me and thanks for putting together such a really interesting day. I suspect most of you are feeling a bit like I'm feeling, which is I've already heard enough. I need to kind of go away and process this for a moment, you know, think about it, put it into context, don't really need to hear anything more. And so here I am standing at this hour of the day prepared to give you a PowerPoint which actually I'm going to whizz through because I know mostly what we should probably reserve my time for would be, you know, perhaps a little exchange. But based on what we have heard already today and I want to take just a moment to reflect on that before I talk to you about what I plan to talk to you about is most of our speakers today, both this morning and this afternoon, have talked about responsible development in the Arctic. That term has been used frequently. And I would just like to pose a question, what does that mean? What does responsible development in the Arctic mean? As was mentioned earlier by one of the speakers at a minimum, it means balancing the desire to produce our resources and protect our environment. At another level, it probably means that the benefits from that development flow, at least in part, to the people who live there or who bear most of the burden of the risk, if anything goes wrong. Responsible development. Does it mean taking extraordinary steps to manage risk when you are doing business in an environment that is extraordinarily challenging and in many ways very different from other areas in which oil and gas development takes place? I would just pose that question as something that I would encourage us all to think about because when we hear conversations about how much research is enough, how much information is enough, how much certainty is enough, how much regulation is too much, how much time does it take to get on with the job of being able to move forward to drill. I just posed the question, what does responsible development in the Arctic mean? And I would answer that question by saying I think it means different things to different people. Obviously that's sort of an obvious thing, but I put that question on the table squarely because depending upon where you sit and who you are and what your interests are in the development, you might answer that question differently. Your standards associated with what it is that you would like to know about who's doing it and what capabilities they have and whether or not they are reaching even above and beyond what is required, those things come into play. So why am I posing those questions before I begin my PowerPoint? Because in my PowerPoint I'm going to cover two topics. Number one, some lessons learned from the oil spill commission work that I was fortunate enough to have the experience of working on last year. And secondly, to do a quick overview of which agencies and entities in the United States are doing some research, some work in oil spill preparedness response containment. And then at the very end I will just make a couple of recommendations regarding what other steps might be appropriate for us to move forward to have a slightly higher confidence level that we are meeting something close to the test of responsible development in the Arctic. So very briefly, let me talk about the commission because even though I know a number of you probably have quite a bit of familiarity with what the commission did and what our recommendations were, this will be just a brief refresher because there were recommendations that came as a result of the commission work that focused not only on the future of oil and gas development anywhere, Gulf of Mexico or any place, but because of very specific recommendations that were made with regard to the Arctic. So I'm going to do the 45-minute presentation about the oil spill commission in about 15. So I've slimmed down the slides and forgive me when I go quickly, but this will be on the website and of course there's always going to the report itself. So very briefly, the commission seven members appointed by the president. We had six months to complete our work. We held lots of hearings. We listened to a lot of people. We had fabulous staff and remarkably we produced a report with a unanimous decision on time and under budget, which is in Washington, DC, a fairly rare thing. And we presented the report to the president in January and I might just remind you that our job was not to make recommendations about the future energy policy for the United States, but rather to basically look at what were the underlying causes of the disaster and what recommendations do we have in terms of improving the safety of oil and gas development in the Outer Continental Shelf in the United States. Just a reminder, it seems like forever ago, doesn't it? For a while it was constantly on our plate. Every morning, noon, and night you could not pick up a newspaper, could not turn on the television set without seeing photos of the Gulf and hearing interviews with people whose lives were dramatically altered. Obviously 11 men died, dozens were injured, lots of oil spilled into the Gulf, millions and millions of dollars were spent. And the impacts in terms of the economic impacts, not just the oil and gas industry, but the fishing industry, the tourism industry, the whole industry of the Gulf, dramatically altered by the event and the psychological and health implications are long-term and long-lasting. It suffice it to say in a very summary way that the incident was preventable, that it was not as much a failure of technology as it was a failure of management. And there are lots of things that we can say about it, but if you sort of look at the major underlying causes of the blowout, it was a series of decisions that in retrospect, hindsight's always 2020, right? It's really quite extraordinary, but it was a failure to manage risk in an effective way that integrated the decision-making by all of the relevant parties who were doing business on that rig and back at headquarters to align in a way that would really control what was an extraordinarily difficult role from the beginning to drill because of geological conditions, but also because there were over budget and way over their time limit and there was a lot of pressure and they made a lot of choices that you would like to believe that there was a system in place that would have protected against. But it wasn't just the decisions that were made that day, frankly, as one of our staffers, an engineer with many, many years of experience in the oil industry, said a lot of the decisions that were made weren't just made on that day. It was weeks, months, in some ways years beforehand. It wasn't just in terms of the main parties who were involved in that operation. It was also the way in which we regulate the lack of support for our regulating agencies. We've already talked about that today, but if you look at the budget for MMS in comparison to the rapid uptick in development in the Gulf of Mexico, they did not have the resources. Some would argue that they really didn't have the necessary expertise. A lot of the regulations that were in place where I would argue in some cases still remain not the best in the world as we'd like in America to think that we have our best system. Frankly, it's not. And because of the way, frankly, in which MMS was structured, the good news is a lot of these things, some of them have been changed, but unfortunately all of them. We made recommendations for federal agencies, recommendations for the industry, recommendations for the Congress. I don't really have time to go into these in great depth, but in terms of federal agency recommendations, yes, frankly, we recommend that the United States could learn a lot from Norway and from the UK and from Australia and for that matter from Canada, many of whom have already spoken today to the safety case of risk management, a performance-based, goal-oriented approach as opposed to a prescriptive approach, which is still primarily the structure that we use, and I apologize that we don't have a lot of time to go into that, but it basically puts more of the onus on the operators as opposed to the agencies. It puts more of an opportunity, frankly, in play for the industry to be able to innovate and use new technologies in a way that really integrates all of the companies, contractors, and subcontractors. Sometimes you have dozens of them working on a single rig to be able to align their corporate culture and their business operating procedures to assure risk management at a very different level than a prescriptive regime puts in place. There are things that we can learn from other countries and we need to, and some of the things that the Department of Interior has already done are good in terms of the separation of responsibilities, the MMS, the reorganization of BOEM, which is a good thing, the adoption of the SEMS regulations, which were over 10 years in the making, which finally got adopted last fall. The good news is there have, there has definitely been some progress there. Not so much so for Congress, I'm sorry to say. A number of the recommendations that the Commission made for Congress have been sitting on the table and there are a lot of reasons for that and I will restrain myself from saying what I want to say. I'll just simply leave it at this. There are a number of things that Congress can, should, must do if it wants to be a responsible participant in creating a regulatory regime and the right economic incentives for industry to play at their best game instead of not so much so for everybody and these are just a few of the examples they range from restoration of the golf, using clean water like penalties, increasing the liability limits, etc. Industry made recommendations for industry including the creation of a separate safety institute. I'm happy to say that the industry has done that. I'm happy to say that the industry has done what we recommend in terms of containment technologies in the Gulf of Mexico. There are two separate approaches to that. The Marine Container Corporation and Helix, so they've moved forward. There are a lot of things happening in both the federal agencies in the industry but again not so much so for Congress in terms of recommendations that the Commission made and action is actually happening. In terms of specific recommendations for response and containment, again we could spend about an hour on this topic. The Commission looked at it rather carefully because there was so much public dissatisfaction with the way in which things happened and frankly I would have to say given the scale associated with that disaster I think that it was actually a pretty remarkable response. By the industry, by BP, by the Coast Guard, given what was required of them and frankly given what I would consider really an inadequate level of planning and preparation in that region in comparison to the planning and preparation that happens in Alaska. Exxon del Vizor, this bill happened in 1989 and a number of things happened to change the game in Alaska as a result of that spill. Not the least of which was changing law, Open 90, requirement of double hull tankers, requirement of extra escort vessels in and out of Prince William Sound, the creation of the Regional Citizens Advisory Committees, the RCACs, twice a year spill drills and the way in which we have set up depots of supplies, etc. I guess I sort of expected the same robustness in the Gulf of Mexico given the amount of volume of activity in the Gulf of Mexico which frankly I did not see in comparison to what I've seen in Alaska. So there's a lot that can be done here both from the standpoint of planning, coordination, investment in resources, training, skill building, alignment between the perishes and cities and counties and states and the various federal agencies that have a role to play. And I'm hopeful that it will be taken to another level in the Gulf of Mexico, but I'm also hopeful that we can take it to another level in the Arctic because we have work to do there. In terms of the future, the Commission made a number of recommendations and again specifically we did focus on the Arctic, not from the standpoint of passing some sort of judgment on the permit requests that are pending before federal agencies. We felt that was outside of the bounds of our initial responsibility or our competencies or frankly the amount of time that we had. We were given six months to complete our work and our principal focus was the Gulf of Mexico. So we did not try to say yay or nay, matter of fact we specifically said that the things that we identify that need to be done in the Arctic should not be viewed as a moratorium for all practical purposes. We simply said we as a nation have a responsibility to move forward in a way that assures competency and preparedness in an area that is as special and as challenging as the Arctic. So we identify a number of things including the kind of thing that we've already talked about today. The Coast Guard assets are inadequate in the Arctic. Now admittedly the responsible party under federal law is responsible for oil spill cleanup. But as we saw in the Gulf of Mexico when that Alan made it quite clear that yes it was BP that was responsible but you know what the people of the United States of America expect the United States Coast Guard to be there. That it may not be what the law says but that is what the people of this nation expect. And the gap sort of there is a gray zone that created a lot of heartburn for a lot of people in the Gulf of Mexico. Not to mention search and rescue, not to mention transportation and increased navigation demands, not to mention tourism. You know we have tourists now coming to the Arctic. So for a lot of reasons we recommend and many others have recommended that the United States make the kind of investments in the Coast Guard that will really make it possible for them to stand up not just for oil spill response but for the whole suite of responsibilities that they have. I could go on. Let me simply say one last thing, international standards. We heard today a bit about the work of the Arctic Council both with regard to oil spill response in terms of trying to set higher benchmarks for best practices in the Arctic for purposes of exploration, development and production, not just oil spill response. I think it's a very important role for the United States to play. And for those of you who are interested in the long version, I certainly encourage you to go to the oil spill commission.gov site for not only the recommendations and background of what happened but also for policy papers that were prepared by staff on pretty much every topic that we took up in a great deal of depth. So what kind of research do we really need to move forward for the terrible and hopeful never actualized experience of having a spill in the Arctic? Clearly prevention, containment, fate and effects. It's really interesting to kind of do a scan on who's doing what in the Arctic right now. This is an attempt that the U.S. Arctic Research Commission this week, and I want to credit John Farrell, our executive director, I just said, John, can you go any place to see who is doing what by way of research or preparedness in oil spill in the Arctic? And this gives you a little bit of a feel. There isn't like one entity. There are many entities that are in a variety of ways, either because of statutory responsibilities or through history or through interest or through funding or through whatever, have some connection to oil spill response. Let's just look at a couple of them. Obviously, a BLM, former MMS, has done a lot of work over the years. And the extent to which we were frustrated somewhat as a commission in the Gulf that we saw actually pretty much the same technology that was used in the Exxon Valdez oil spill in 1989 was still pretty much what was being used in the Gulf of Mexico. So taking it to another level and certainly understanding it better is important, not just for BLM, but for all of us. U.S. Coast Guard, lots of projects over the years, long history of doing work in this arena. Obviously, they are on the front lines of response in a variety of ways. They are who we turn to. NOAA. Obviously, a very important piece of this equation. They have a research center in combination with the University of New Hampshire and have done an extraordinary amount of work from very, very small spills, actually almost on a weekly basis, medium-sized spills that were very active in the Gulf of Mexico in terms of providing the kind of basic information needed by the Coast Guard needed by everybody else to project where the wind and currents were going to take the oil on any given day and where the concentrated effort would be huge and important part. Accumulating the continuum of information that is necessary is critical. Industry has done a fair amount, particularly in Norway, a combination of industry and Norwegian universities. Sintef, you've heard that referenced a couple of times today. Unlike in the United States where we don't put oil in the water to test response strategies, they actually have done that in Norway. I know that sounds amazing, but it was done and is done, not just in Norway but other places. Again, it tells us more about what response possibilities there are and particularly burning, but let's also remember a lot of those tests that have been done have been done under ideal circumstances with flat water and not the hurricane force winds that you experience in the Arctic. I am pretty much out of time. Let me just say that the United States Arctic Research Commission a year ago, under Ned Treadwell's leadership, focused on this question of what kind of research should be done for oil spill preparedness. There's actually a relatively short paper with very specific recommendations from July of 2010 that focused quite nicely, and I would say it's still very timely in terms of the recommendations that were made. Some of them are organizational. For example, that NOAA joined the Coast Guard as chair of ICC Interagency Coordinating Committee on Oil Spill Preparedness Research prevention. I think that's it. And probably not surprising that there is a predictable funding source for this research. Without the money, it ain't going to happen. Who has an interest in funding oil spill research when you think it will, you hope it will never happen, right, but you have to be prepared. So over the years, there have ever since the Exangvaldees Oil Spill and OPA90, there has been a declining amount of money spent until just the last year or two, and that kind of commitment has to be there. If we want to return to my first question, really be able to say that we're doing responsible development. I want to just mention that the National Ocean Council, as many of you know, is soliciting and has been soliciting advice on a variety of topics dealing with ocean management, ocean research, ocean agency coordination. One of the topics that the National Ocean Council focused on is the Arctic. It's actually the only region-specific area where a strategic action plan is being developed. So I mentioned it in the context of should oil be looked at oil and gas development as a single stand-alone question or should it be looked at in the broader context, as you have heard that actually both Canada and Norway do, they look at this in relationship to fishing and to tourism and to special ecological areas. That is in essence what this National Ocean Policy approach is attempting to do and it is soliciting comments. So for people in the audience who are sort of feeling that they have something to say on this topic, right now there is a process, a mechanism open from the administration to give some input into how preparedness, how we think about the Arctic, how we think about development in the Arctic, and what we need to do to prepare for it and to align resources with capability. It's very timely. So I have pretty much taken more time than I wanted to take, but in closing just a few miscellaneous thoughts before I answer any questions that you might have, I don't know how many of you read The Economist. It's actually one of my favorite magazines because it takes me just slightly out of the Alaska context, slightly out of the US context and reminds me that the world is shrinking and that we really have to pay attention. So I noticed in The Economist, actually the April 23rd, 2011 version, which was sort of the anniversary of the Deepwater Horizon disaster. The short editorial lessons from Deepwater Horizon, the headline is, don't assume disasters won't happen at the frontiers of technology, presume they will. And the short editorial talks about what it is that preparedness really means. It certainly means the absence of complacency. And I think my takeaway from spending six months in a deep dive on the oil spill commission was that we all like to low ourselves into a frame of mind that the worst won't happen. It probably would be better to hope for the best but prepare for the worst, particularly as it relates to high risk industries. And managing complex organizations, remembering that complex processes pretty much ultimately always fail in complex ways. You can't think of these things simply. You have to dive deeply into complexity theory. And to the extent that we have heard today from a variety of perspectives about the challenges in the Arctic, an area that standing here in Washington DC seems so far away, but when I was in Katsubi a few days ago is so white a part of who we are as Alaskans. I just want to urge all of us to spend some time thinking about the question of how we, as a nation, as a people, and frankly of people of the Arctic regardless of which country we call home, can really stand up to the challenge that is in front of us. And I think it is by not lowering ourselves into thinking that yesterday's technology, yesterday's business practices, yesterday's oil spill response will cut it in the future in the Arctic. And we ought to challenge ourselves every single day to try to do a better job. Thank you very much. Thank you for an excellent presentation. We have time for a couple of questions, one of which, and maybe this will be putting you too much on the spot and therefore you can tell me if it is. With your experience and what you've gone through, how do you feel, how comfortable do you feel with going ahead and proceeding with development in this area that is going to be challenging and complex, given the fabric of the institutions we have to protect ourselves and the level of our knowledge? You know, the honest truth is I go back and forth on this all the time in my head because I honestly think that this is not on it. There we go. How's that? And again, I am speaking now for myself. I'm not speaking for the oil spill commission. I'm not speaking for the Arctic Research Commission. I'm not speaking for my former employee of the University of Alaska and I'm not speaking for the state of Alaska. I have been very impressed by the way in which Shell has constantly reviewed and improved their plan to move forward. When I compare the original proposal in terms of how they were going to mitigate risk and have seen how they have responded to the criticisms from people who live in the Arctic, NGOs, environmental organizations, agencies, I have to say this is an organization that is really trying to stretch, to do things beyond what is required by law and to do things in a way that sets a high standard, frankly, for other companies to follow. And so when I see that, I have to sort of say I wish there were a way to institutionalize that. I wish there were a way for the nation to require a very different level, Arctic standards for Arctic oil and gas development that exceeds what is done in other places, because frankly, even though it is shallower water and even though they say it's lower pressure and so from that standpoint it's less risk, the conditions of the Arctic, the Hurricane Force winds, the ice, the darkness, the severe cold, the lack of infrastructure, I mean it takes staging to a whole other level of complexity. So yes, I think there ought to be Arctic-specific standards and I think that Shell, by moving the way in which they have moved to really be responsive to what they have heard from the critics, is evolving. And Pete Slavy said earlier today, he really didn't want to be a poster child for the controversies associated with oil, but frankly there are only a handful of oil and gas companies, this will probably get me in trouble, but there are only a handful of oil and gas companies that have the sophistication, the technological advancement, the experience in deep water, the resources, the financial commitment capable of being able to handle what it is that the Arctic might throw at them. So it's kind of the best possible circumstance, frankly, in the way in which Shell is proceeding, but the fact that a lot of what they are doing is not required. Makes me go back to my earlier statement about the lack of confidence I have that we as a nation are standing up the kind of regulatory regime, safety case, the kind of robustness in our capacity in our agencies to be able to do the evaluations required of not only identifying the mitigation measures, the specialized areas, the noise restrictions, et cetera, but back to the Coast Guard, the ability to have the safety net, so to speak, of the search and rescue that at some point may very much be required. So I guess my message to Congress is, if you want us to move forward responsibly in oil and gas development in the Arctic, you can't be as stingy as you have been with the agencies that can assure a higher degree of predictability, performance, safety, security for the future. Okay, so why don't we take, if there are just maybe two questions and very quick questions, collect them. Okay, me. And where's the other? John Kojic, former UN IP delegate. You mentioned very justly that one of the reasons was not only the depth, which is much deeper than what Shell deals, but management mistakes, inspections and audit was not done. Do you think that in cases where in the future we will drill and the company of one state, one country will drink in the easy of another country, do you think that we could create something like agreements for the auditing of auditors? Let's say Shell has internal audited inspection, but there are these types of agreements that we have one with Switzerland. I think the general accountability offices involved that we can conduct inspections to see what have they done. Because we have the pressure of the, it's like equation with many unknowns, four equations, five unknowns. We are conducting, as you mentioned, in Arctic conditions, their stochastic regime governed by the theory of probabilities, darkness and so on. And accountability is the other, the pressure of the public. So do you think that the governments can help also the private business and give them advice and prevention and mitigation? Well, I think the question you're posing is, is it a good idea or is it possible for the governments to reach some sort of mutual agreement where they would have a higher degree of confidence in the safety regime, the risk management of the companies that are doing business in a high-risk environment? I think at the one level, it would probably be a very good idea. At another level of do I think it's possible, I happen to live in a country that it is in an anti-regulation modality where people are saying what we really need to do is lighten up on the regulations as opposed to thinking about not less or more, but rather smarter regulation, more informed by both science and by processed safety. I mean, there's occupational safety, there's process safety, there's technology safety. I think it is important and at some point, some sort of an Arctic Council sponsored dialogue about improving the reliability and accountability of the management regulation that is done by the various countries doing business in the Arctic is definitely something to put on the table for discussion. We've talked a bit about, you know, the importance of cooperation among the Arctic nations for all spill response. We've talked about it in terms of best practices in industry, technology, etc. Maybe we could take that to another level, best practices in management regimes that really minimize risk. And that's what we're talking about. You can never eliminate risk, but there are strategies that can reduce it. And I will just say that the oil spill commission heard from Rex Tillerson of Exxon and Martin Oven, Odom from Shell, about the way in which those two companies, they're not the only companies that have done this, but the way those two companies have learned from the regulatory regimes around the world to institutionalize business practices that reduce risk. That's the kind of thing I hear you talking about, which is for those companies that do business around the world, they don't just do business in one country. They do business in all of these countries where there are different regulatory regimes evolving something that is sort of like the best practices in risk management. Maybe we're not there yet, but it's not a bad place to move toward. Okay, and final question. Thanks. Very quickly. One element of a wise development policy is knowing where not to develop. Do you think we have the knowledge of the offshore environment and living resources in the Beaufort and Chuck G.C. to make intelligent decisions about where not to develop? Well, I personally don't. I have been actually struggling with this question that you pose about how much research, how much information is enough. People have said, you know, lots and lots of money has been spent on Arctic research, and that's true. Lots and lots of Arctic studies have been done over the decades. That's true. Is it synthesized or integrated in a way that helps people actually understand what that research means for either the public or the private decision maker? I'm not so sure about that. And the USGS gap analysis that was just completed, you know, I've been struggling through it. I haven't finished reading it. I've read the summary. You know, it points very specifically to things where additional information is needed, whether it's in circulatory patterns for air and wind and water currents, et cetera, that you would need for certain types of response or whether it's impact of noise on species and whether or not you could have a mitigation strategy that would reduce negative impacts on species for purposes of noise in certain areas that are particularly important for subsistence areas. You know, there may be a subset of people in the world at the university, in industry, in the agencies that can do a better job of answering that question than I can. But I think we are still in a state of needing Arctic research synthesis at a level at which we don't have. And as Mimi said, it's not a question of how much information, so much as do you have the information that you need for certain types of decisions and lining those things up. I'm hopeful actually when David Hayes mentioned his announcement today about the coordination of Arctic permitting. It'll be an interesting exercise to see whether or not the science that is available to the agencies, whether it's EPA or NOAA or whomever, lines up with the questions they need to answer from a standpoint of statutory regulation to see whether or not by way of the statute requirements that they have to satisfy for permit purposes, whether they've got the information necessary, that coordinating committee will probably take the US GAP analysis to another level. And I would just say I'm relatively new to the US Arctic Research Commission. I was appointed a couple months ago. I am at this point in time struggling with the question of what the US Arctic Research Commission can do to assist in this effort of just being able to put in a place, perhaps it's one door that one can walk through to be able to access the research, whether it's been done by academia agencies or the private sector, so that people can better access what does exist in a timely way, in a scale appropriate way, in a useful way for purposes of the decisions that need to be made. I don't know, but we're thinking about it. Thanks. Well thank you very much for an excellent presentation. So please join me in thanking Francis. Okay give us a few more minutes for one more transition and we'll then have the last panel of the day.