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66 Proceedings Fall 2015 www.uscg.mil/proceedings production bottomed out at 5 million barrels per day. The combined techniques of horizontal drilling and hydraulic fracturing would later be repurposed for oil production, but would not begin to impact U.S. supply until 2011. These factors increased the attention on the Beaufort and Chukchi Sea outer continental shelf (OCS) lease sales of 2005, 2007, and 2008. Of the 607 active leases in the Alaska OCS, 599 were leased during these sales. 7 In February 2008, Lease Sale 193 in the Chukchi Sea resulted in an unprecedented $2.6 billion in high bids. 8 Shell Gulf of Mexico, Inc., alone invested more than $2 billion, acquiring OCS leases, including the single highest bid of $105 million for a tract in the "Burger" prospect. 9 These lease sales set the stage for a new round of Arctic exploration, but envi- ronmental, economic, and political challenges have signif- cantly slowed progress in the region. Drilling These lease sales were not the first in the Chukchi and Beaufort Sea areas. In total, there have been 13 lease sales in the region, dating back to 1979. Thirty-fve wells have been drilled, capped, and properly abandoned in the region. Despite discovering several oil accumulations and the esti- mated potential for containing undiscovered technically recoverable resources of 23 Bbbl of oil and 106 trillion cubic feet of natural gas, 10 the subset of the U.S. Arctic OCS (the combined Beaufort Sea and Chukchi Sea planning areas) was repeatedly deemed too costly to develop and produce. Prior to Shell's 2012 exploration program, the last explora- tion well drilled in the U.S. Arctic outer continental shelf was capped in 2003. 11 The exception to this trend is a series of near-shore facilities built on artifcial islands in state waters within three nauti- cal miles of Alaska's North Slope coast and near the Trans- Alaska Pipeline System infrastructure. Some of these felds In July 2008, the U.S. Geological Survey estimated that the Arctic contained undiscovered, technically recoverable resources equivalent to 90 billion barrels (Bbbl) of oil, 1,669 trillion cubic feet of natural gas, and 44 Bbbl of natural gas liquids. In total, the Arctic was estimated to account for 22 percent of the world's undiscovered, technically recover- able resources. 1 The study, which took four years to com- plete, was the largest public hydrocarbon resource appraisal conducted in the Arctic. It solidifed the growing consensus that the Arctic was the last great frontier for international oil companies (IOCs) to develop new hydrocarbon resources. 2 The History The study was released amidst a tumultuous time for the oil industry and international economy. While twelve days earlier the international crude oil benchmark, Brent, had peaked at an all-time high of $147.27 U.S. dollars per barrel, following a four-year bull market, within just fve months, Brent would trade at less than $40 per barrel. 3 Just over a month after the report was released, Lehman Brothers announced its bankruptcy, and the global economy entered its worst crisis since the Great Depression. 4 Despite the incredible churn of the moment, longer-term trends motivated the drive to the Arctic. First, energy demand growth from emerging markets was outpacing sup- ply growth. The period from 2004 to 2014, with the excep- tion of the immediate aftermath of the Great Recession, was marked by tight supply and sustained high oil prices, often in excess of $100 per barrel. 5 Second, increased resource nationalism drove IOCs out of premiere oil-producing countries. Unable to compete with state-run national oil companies for the best acreage, IOCs positioned themselves to focus on large, complex, and tech- nically advanced projects. 6 Lastly, the United States remained in a three-decade-long production decline. In 2008, unconventional natural gas production was just beginning to come online. U.S. oil Arctic Resources The lure of energy resources in the frontier. by lt stEPhEn P. FAinEr Global Issues and Threats Division Intelligence Coordination Center Adapting to New Crude