It's cold up there!
Trip Start
Dec 11, 2007
1
Trip End
Dec 14, 2007
Anchorage,
Alaska,
United States
Tuesday, February 5, 2008
Alaska's economy is based on hydrocarbons. The reality is that the amount extracted from Prudhoe Bay decreases yearly in a scheduled process that acknowledges the amount left in the bay and the demand for a consistent level of domestically-provided oil. "The TAPS (Trans-Alaskan Pipeline) is only 2/3rd full."[1] Given this situation, the state governor, Sarah Palin, and both U.S. Senators, Lisa Murkowski and Ted Stevens, support further leasing, both on- and off-shore. The oil industries' multinational corporations, such as Shell Oil, are very interested in drilling off-shore based on the estimated number of reserves, especially in the Outer Continental Shelf (OCS).
From Shell's perspective, major competition in the Arctic has already started. Both Norway and Russia began using their own semi-privatized oil companies to drill off-shore. In 2007 Norway opened a new gas field in the Barents Sea named Snohvit with Statoil as its main partner[2], and in late 2006 Russia announced that it would use Gazprom to construct the world's largest off-shore gas field, Shtokman, completely on its own.[3]
In the U.S., however, tensions between the main stakeholders have halted progress. Shell Offshore Inc. was supposed to start drilling Alaska's OCS in the winter of 2007 after leasing through the U.S. Minerals Management Service (MMS) and acquiring appropriate State of Alaska permits. However, in July the 9th Circuit Court of Appeals issued a temporary stay overturning the MMS authorization based on concerns of environmental groups and the indigenous population. The Court will now decide whether environmental harms were properly considered by MMS.[4]
Of note, too, is the large role the federal government plays in the State of Alaska. The federal government owns 60 percent of Alaska,[5] and administers it through a number of agencies, including MMS, the Bureau of Land Management (BLM), the U.S. Fish and Wildlife Service, etc. Some of the more controversial proposed on-land drilling sites, such as the Arctic National Wildlife Refuge (ANWR) 10-02 area and the National Petroleum Reserve-Alaska (NPR-A) are federally owned. Mr. Mike Nizich, Governor Palin's staff action officer, said that there is a lot of coordination at many levels between the federal government and the State, but agreed that there can be issues that require coordination and compromise. This tension between the federal government and the State of Alaska is common to Arctic states, as the northern part of the state is typically providing resources to the southern, more populated part of the state.
Environmental groups can interject their concerns at any point in the leasing, permitting, and drilling phases. Some groups, such as World Wildlife Federation's Alaska office, use a "soft power" approach by trying to work with industry in order to influence them prior to drilling.[6] Others use a "hard power" approach, such as the Pacific Environment group. As seen in the Shell Oil Alaska case, Pacific Environment blocked exploratory drilling through legal means.[7] In this situation, they teamed up with the Inupiat, the indigenous people of the North Slope Borough to file this lawsuit. As explained by Mr. Kevin Banks, Director of the Oil and Gas Division of Alaska's Department of Natural Resources, the indigenous personnel in the North Slope Borough live with two economies. The first is the world-wide economy, which requires dollars. The second is their subsistence economy, which requires access to animals for hunting. In this situation, the Inupiat have nothing to gain in the first economy since off-shore drilling does not provide them with dollars from a property tax as on-land drilling does. And, they have everything to lose in their second economy as they rely on the bowhead whale for subsistence.[8] [The fear is that seismic testing and drilling will interfere with the migratory patterns of the bowhead.] Therefore, it is to their benefit to team with an environmental organization to attempt to block off-shore drilling. [The U.S. Congress is currently working to pass a law that will provide the Inupiat with tax dollars for off-shore drilling in the OCS. This may make off-shore drilling more palatable, although even within the Inupiat there may be a split between the younger generation and the older generation if the benefit is tax dollars, but the subsistence hunting is lost.[9]]
The indigenous groups, who account for 15 percent of the total Alaskan population[10], such as the Inupiat are concerned with preserving their way of life and culture. They also have health concerns with the increased commercial activity in their region.[11] They have a few channels to express their issues and concerns, including teaming with environmental groups. They can also use the state legislative process since they have elected representatives from their borough.[12]
There is one more factor at play. Alaska is in the unique position of being considered "America's Wilderness" or "America's Last Frontier" by all United States citizens. As such, it is subject to the opinion of the "Lower 48" on many issues. For example, when Congress passed the bill in 2000 to allow drilling in 10-02 area of the Arctic National Wildlife Refuge, 56 percent of Americans surveyed, as opposed to 29 percent, said that it is not worth the risk to the environment. President Clinton vetoed the bill, stating that the coastal portion of ANWR is a "national monument."[13] [This occurred even though Congress originally set aside of the 10-02 area was for oil and gas drilling]. Drilling in ANWR was again blocked, this time in Congress, in 2007 despite the support of both Alaskan Senators and the Bush Administration.
Between these three groups - the oil industry, environmentalists, and indigenous personnel - and with the additional tension provided by the State of Alaska and the federal government, there is a concern of whether it is possible to have a "win-win" solution. Alaska clearly relies on oil for its economy, and has not looked into diversifying it.[14] So, the oil (and gas) industry is critical. However, as noted above, the fate of Alaska is not entirely in the hands of Alaskans. Yet, it is expected to provide resources for the entire country, and to do so with stability.
Visually, it is best to imagine this situation as a gas station, let's call it the Energy Security Gas Station. A car - representing the U.S. and Alaska - pulls up to a pump to get some gas. The pump itself, representing the oil and gas industry, is available for use. However, this is not a self-service station. The gas attendants are the indigenous people and environmental groups, and they decide whether it is in their interest to fill the car with gas. Meanwhile, the master power switch to the pumps is controlled by the federal legislative branch, which also deems whether it is in their interest to allow gas to flow from the pumps.
[1] Kara Moriarty, interview, 13 December 2007.
[2] The Snohvit project is the first gas development in the Barents Sea and has involved the construction of the first LNG plant in arctic conditions. "Total Announces Snohvit Oil and gas Starts Production" Gulf Oil and Gas http://www.gulfoilandgas.com/webpro1/MAIN/Mainnews.asp?id=47 76 accessed December 19, 2007.
[3] Jorn Madslien, "Shock as Russia Goes Solo on Gas Field," BBC News accessed December 19, 2007.
[4] "VICTORY! Pacific Environment and Partners Stop Shell from Drilling!" Pacific Environment http://www.pacificenvironment.org/article.php?id=2550 accessed December 19, 2007.
[5] Colleen M. Williams, "Alaska's Resource Development Council," Alaska Business Publishing Company Inc. http://www.accessmylibrary.com/coms2/summary_0286-26329994_I TM accessed December 19, 2007.
[6] Interview with Mr. Bubba Cook, WWF, Anchorage, Alaska, December 13, 2007
[7] Interview with Rebecca Noblin, Pacific Environment, Anchorage, Alaska, December 13, 2007.
[8] Interview with Kevin Banks, Alaska's Department of Natural Resources, Oil and Gas Division, December 13, 2007.
[9] Interview with Michael Nizich, Office of the Governor of Alaska, Juneau, Alaska, December 14, 2007.
[10] "Building the Alaskan Highway" PBS http://www.pbs.org/wgbh/amex/alaska/peopleevents/p_natives.h tml accessed December 19, 2007.
[11] Think this is in the WWF Arctic Bulletin, but not sure
[12] Interview with Michael Nizich, Office of the Governor of Alaska, Juneau, Alaska, December 14, 2007.
[13] "Most American Want Arctic Refuge Protected from Drilling, New Poll Shows" Common Dreams Progressive Newswire http://www.commondreams.org/news2000/1019-03.htm accessed December 19, 2007.
[14] Ibid.
