In the Arctic Ocean, an Alaska Native corporation seeks to fill void left by Shell

Deadhorse, Alaska

Drilling on Alaska’s North Slope in Deadhorse. Photo: Mia Bennett

When Shell aborted its $7 billion Arctic drilling efforts in the Beaufort Sea in September 2015, environmentalists breathed a sigh of relief. The multinational corporation’s 28-vessel fleet, including its drillship and drill rig, quietly sailed south from Alaska towards warmer waters, avoiding any such catastrophes like the Kulluk’s grounding in 2013. Those opposed to drilling for oil in the Arctic Ocean felt even more encouraged when the U.S. and Canada jointly banned new leases for Arctic oil and gas drilling in December of last year. Expanded Arctic fossil fuel exploration, it was hoped in some circles, would be postponed indefinitely, at least in North America.

Yet little attention has been paid to what happened to Shell’s leases after the oil company quit Alaska. Just days before the moratorium was announced, 21 leases in a part of the Beaufort Sea Lease Area called Camden Bay were purchased in 2016 by a subsidiary of Arctic Slope Regional Corporation (ASRC), the wealthiest Native corporation in Alaska. At about precisely the same time that ASRC was criticizing Obama’s ban on further developments in the Outer Continental Shelf, the protests at Standing Rock against the Dakota Access Pipeline were exploding. If you thought that all indigenous peoples were uniformly opposed to oil drilling, think again.

According to a list provided by the Bureau of Ocean Energy Management, most of the leases purchased by ASRC Exploration are set to expire at the end of this year. Two are valid until summer 2019. In order to prevent the expiration of nearly all of the leases, as Alex DeMarban at Alaska Dispatch News writes, ASRC Exploration requested unitization of the offshore leases from the U.S. Bureau of Safety and Environmental Enforcement (BSEE). Unsurprisingly, under an administration that’s more pro-oil than the previous one, BSEE approved the unitization of 20 of the 21 units.

The benefits of unitization are that whatever happens in one lease now applies to all other 20 leases, since they’re now considered part of the same area. Petroleum News explains, “Unitization binds together a group of leases, which often have multiple owners, to encourage orderly and thorough exploration and production with minimal waste of dollars or resources.” For ASRC, this means if they find oil in one lease area, the rest of their leases stay active and exploration can continue.

The next challenge for ASRC will be to successfully obtain an extension of the leases from BSEE. Shell wasn’t able to do this earlier, but that was under the Obama administration. Under Trump, things could be different.

Ty Hardt, Senior Director of Communications at ASRC, wrote over email,

“As we mentioned when we first announced the acquisition of the leases in Camden Bay, while regulatory and permitting uncertainty eventually drove Shell out of Alaska, we know there is still tremendous potential in Alaska’s offshore. We also know responsible resource development translates into economic stability for our region, and every community across the North Slope of Alaska will benefit from responsible development.”=

Since its formation in 1971 under the Alaska Native Claims Settlement Act, ASRC has transformed into a major economic force in Alaska and beyond. In 2010, Forbes ranked it the 190th largest private company in the U.S., just behind Burger King, with revenues of $2.33 billion. The corporation represents the interests of some 13,000 Iñupiat shareholders, most of whom reside in seven villages scattered across Alaska’s North Slope. Every quarter, Iñupiat receive dividends from ASRC, whose value often reflects whether oil has been up or down.

ASRC’s active involvement in Arctic industrial development puts a spin on the usual narrative that’s woven of Arctic indigenous peoples being both victims of outside exploitation and staunch protectors of the environment. The regional corporation’s bread and butter has been oil field services for a long time, but it’s also been involved in mineral exploration for decades. In 1991, for instance, the Alaska legislature awarded $2 million to the company for coal exploration and feasibility studies in northern Alaska. Even back then, potential export markets were Asia and Europe via a “northern Arctic Ocean sea route,” as a 1992 report from the Alaska Department of Natural Resources referred to it. Since the late 2000s, ASRC’s interest in oil exploration has grown.

Apart from natural resource developmente, ASRC, like all Alaska Native corporations, is also able to expand rapidly in government services largely due to the 8(a) Business Development Program. This is intended to help businesses owned by people who have been historically disadvantaged to compete in the marketplace by allowing them to receive government contracts without having to compete with other bids. Unlike other companies classified under the 8(a) program, Alaska Native corporations have no upper limit on the size of government contracts they can receive. This exception has allowed some Native corporations, like ASRC, to grow so big that not only are they attempting to fill the shoes of Shell on the North Slope. They’re also doing things like hiring cyber security engineers in Saudi Arabia.

I asked Hardt, the ASRC communications director, what he would say to those who would argue that ASRC’s oil exploration might exacerbate Arctic climate change and jeopardize the well-being of future generations of Iñupiat shareholders. He responded,

“What jeopardizes future generations of Iñupiat on the North Slope is the threat of a failing economy and a diminishing number of opportunities for our people. We believe offshore exploration and development in the Alaskan Arctic can be done safely and successfully, which has proven to be the case in other regions, such as the Canadian and Russian Arctic.”

His words resonated with a conversation I had in March with Crawford Patkotak, Chairman of ASRC’s Board of Directors, at the Ukpeaġvik Iñupiat Corporation’s (UIC) Arctic Business Development Tour in Utqiaġvik (Barrow), Alaska last March. Patkotak stressed the need for self-driven development rather than government handouts for Alaska Natives. He noted,

“We had to remind Congress that [the Alaska Native Claims Settlement Act] wasn’t going to be a welfare bill. It was a rightful claim to not only continuously practice our traditional way of life, but having rights to resources that will improve and enhance the welfare of Iñupiat people. So over the years, seeing environmentalists, animal rights groups, that find ways to systematically strip our rights to develop our own resource – based on that whole theory of climate change…”

Anti-whaling and seal-clubbing protestors aside, one could argue that ASRC is simply a for-profit corporation that doesn’t really have the best interests of all its shareholders in mind. After all, Native corporations have had their fair share of scandals, from fraud and self-dealing within the Cape Fox Corporation to the dissolution of the 13th Regional Corporation after some pretty heinous corporate mismanagement. So maybe ASRC, in exploring for Arctic oil, is really just looking out for its wallet rather than its shareholders.

This is certainly a possibility, but Arctic oil is no easy game to play. Instead, ASRC could just stick to its tried and true practice of winning 8(a) contracts. But that doesn’t necessarily help to build an economic base for the future, which is what ASRC is trying to do in spurring Arctic oil extraction — even if the economics of it seem crazy at the moment. And beyond mere dollars and cents, the story here is also about protecting not only indigenous rights to traditional cultural practices, but protecting indigenous rights to develop. In some cases, the two are even intertwined. Economic development can generate the funds necessary to support traditional cultural practices that, for better or worse, might not be viable on their own anymore in an economy that has both subsistence and market practices. Making a sealskin boat for whaling, for instance, doesn’t come cheap. Sure, the sealskins and caribou intestine thread come from the land, but the wood has to be purchased, and later the motor and fuel, and so on and so forth.

sealskin boat Barrow Utqiaġvik

Women in Utqiaġvik working on the boat’s outer skin by stitching sealskin pieces together with caribou intestine thread. The men are working on the frame of the boat. Photo: Mia Bennett.

The words of an Elder I spoke to in Utqiaġvik reflected the determination of some Iñupiat to move forward with economic development. I asked Wesley Uġiaqtaq Aiken, a former whaling captain and World War II veteran, how he felt about oil and gas exploration. He mentioned the recent discovery of oil at Smith Bay on the North Slope and recalled how in days long past, Iñupiat used to haul seeping oil that had dried up on the bay’s surface to burn on shore. Looking to the future, Aiken remarked,

“I’m glad these young people are willing to go further out on the land – not the ocean. If they open so-called Alaska Native Wildlife Refuge – that one’s got natural gas out there. There must be something out there.”

He was hopeful, but also wary of outside intervention whether it was for or against oil drilling. Underscoring the importance of recognizing and upholding Native rights to the land and sea, the Elder reflected, “The Arctic Ocean is my beautiful garden – nobody messes around with it.”

Sunset-Barrow-Alaska

Looking out over the Arctic Ocean in Utqiaġvik (Barrow), Alaska. Photo: Mia Bennett

Explosions in the Arctic: Mining gravel in Alaska

It’s the Fourth of July in the United States of America, which means fireworks and explosions galore. That means the time is ripe to discuss explosions in the Arctic, from dynamite detonations in Alaska to crater eruptions in Siberia. Today I’ll start, fittingly, in the American Arctic.

Dynamite explosions in Alaska

When people think of Arctic resources, they usually think of oil, gas, or minerals like gold and silver. But in general, those are more lucrative for export rather than for use by the Arctic’s four million residents. For people living in urban settings in the Arctic, gravel is a hugely valuable commodity. It’s used in almost every aspect of construction on permafrost, since a gravel pad needs to be laid down before a building can be put on top of the shifting terrain. Gravel is used for constructing roads, driveways, and runways, too. And the oil industry needs gravel in the Arctic in order to build artificial islands and drill pads.

Gravel, however, is scarce in much of the North American Arctic, and it’s availability can often be a deciding factor for many things. Trucking in gravel from the south is massively expensive, and when a town lacks any roads to the outside world, it’s all but impossible. Earlier this year, I heard a representative from Olgoonik Corporation, based in Wainwright, Alaska, state, “What’s the first stage to starting economic development in Wainwright or anywhere on the North Slope? It’s getting the gravel that you need. That creates the platform. How are you going to do that?”

Back in the 1950s, the Canadian government, when it was choosing a site for its administrative center in the Western Arctic, decided on Inuvik in part because of the ample availability of gravel along the shores of the Mackenzie River. When the Inuvialuit, the indigenous people residing around Inuvik and the Mackenzie Delta, were negotiating their land claims agreement with the Canadian government, they made sure to include access and rights to gravel. The Inuvialuit Settlement Region has a Granular Resources Management Plan, and “How do I access my personal gravel allotment?” is even a frequently asked question on the Inuvialuit Regional Corporation’s website. This likely stems from the fact that every Inuvialuit beneficiary is allowed “up to 32m³ of borrow material (i.e. sand and gravel).”

Across the border in Alaska, gravel is just as important and gets scarcer as you move west. When I traveled to Utqiaġvik (formerly Barrow), the northernmost community in the United States, last March for the Ukpeaġvik Iñupiat Corporation’s (UIC) Indigenous Business Development Tour, I had the opportunity to witness a rare explosion of dynamite in a gravel pit. Like the Inuvialuit Regional Corporation, UIC closely manages its gravel resources, which it does through a subsidiary, UIC Sand & Gravel, LLC. During the business tour, a UIC representative explained, “Nothing in Barrow happens without a gravel source – they are the backbone and the heart of the community for any future development. They are a critical component to our future success.”

After learning about the importance of gravel to Alaskan Arctic communities, we piled into a tour bus and went out to the mine site. Some of us stood out on the road for a good 15 minutes as the countdown proceeded. The temperature was in the negative 20s, and probably closer to -40 with the wind chill. People were pretty darn ready for the mine to blow. It felt like an eternity to us, but UIC had been waiting much, much longer – over a year, in fact, to obtain the permits. In the still air, someone cracked a joke about the Arctic lemmings that would be saying goodbye today. The clock approached 0, and then the mine blew.

I don’t think I’ve ever seen an explosion on this scale before, even though we were a mile away. In a loud puff, the sooty mushroom cloud expanded and dissipated quickly over the cloudless tundra.

explosion1

explosion2

explosion3

Crazily enough, UIC let us explore the gravel pit after employees checked for any unexploded ordinance. There were about 20 of us in safety vests clamoring up the rocks in a surreal black and white landscape.

There’s a Scottish photographer, Robert Ormerod. He’s interesting in finding out what happened to people who wanted to be astronauts when they were children. What did they end up doing when they grew up, he wonders?

As one of those people with space dreams as a kid, this was pretty much the closest I’ve ever come to walking on the moon.

gravel-pit-alaska-UIC

The bits of rocks would be sorted, crushed, and turned into gravel for use in the town of Utqiaġvik. Next time you see a driveway in the North American Arctic, think of all the work that went into obtaining the fine little pebbles that, down south, seem pretty much expendable. As one UIC representative explained, “That’s 1.5 years of permitting that went up in a few seconds. We got the permit last Thursday and were blowing stuff up yesterday. It was a quick turnaround, and it’s exciting that we got to see it.” In a few days, the area would become “no blast” – I think because that’s when mating season starts for those pesky but adorable lemmings.

collared-lemming

A collared lemming.

Gravel

Check out that fine gravel blast.

Drilling in Arctic Refuge to close deficit? Let’s be real.

The White House's Budget for 2018 proposes to open Area 1002 in the Alaska National Wildlife Refuge to oil and gas lease sales beginning in 2022/2023.

The White House’s Budget for 2018 proposes to open Area 1002 in the Alaska National Wildlife Refuge to oil and gas lease sales beginning in 2022/2023.

The White House’s budget will be delivered to Congress today. Called “A New Foundation for American Greatness,” the 62-page document proposes the coastal plain of the Arctic National Wildlife Refuge (ANWR) to drilling. Selling leases in Area 1002, as it’s known, would begin in 2022/2023, providing $900 million in revenue, which would help close the federal deficit. The budget estimates drawing in another $900 million from a second leasing round in 2026/2027. In total, the Trump budget proclaims in an associated document, called “Major Savings and Reforms,” that opening ANWR to drilling would reduce the federal deficit by $1.8 billion.

Major-Savings-Trump-Budget-Alaska-Arctic

The “Major Savings and Reforms” to be made by drilling in ANWR.

The White House proposes to share revenues “equally with the State of Alaska.” The $900 million or so that would come in the next ten years, however, will just be a drop in the bucket for a state that has faced year after year of severe budget deficits since the price of oil crashed in 2014. This year, the budget deficit was estimated to be $2.92 billion. If faced with a worst-case scenario where an approximately $3 billion budget deficit becomes the norm for the next ten years, $900 million looks like an even paltrier amount in comparison. Revenues and royalties could be generated once commercial drilling began in ANWR, but that would take years. In the meantime, Alaska could have been striving to develop alternative industries like wind and tidal energy rather than banking on potential profits from opening up an ecologically sensitive area to drilling.

Obama and Trump’s budgets compared

Budget

A comparison of Obama’s 2017 budget with Trump’s 2018 budget reveals that the former mentions climate change 36 times, while the latter only mentions it once.

As the potential opening of ANWR indicates, the replacement of Barack Obama with Donald Trump in the White House has caused federal priorities in the Arctic to shift dramatically. Comparing Obama’s final budget, for fiscal year 2017, with Trump’s 2018 budget further illustrates those contrasts.

The Obama budget highlighted topics like “Coastal Resilience,” explaining, “The Budget also provides the Denali Commission—an independent Federal agency created to facilitate technical assistance and economic development in Alaska—with $19 million, including $5 million to coordinate Federal, State, and tribal assistance to communities to develop and implement solutions to address the impacts of climate change.” The Obama budget also sought to invest $100 million across a number of additional agencies to deal with climate change while allocating $150 million for a Coast Guard icebreaker in the Arctic to tackle related problems.

Issues like improving American Indian and Alaska Native access to healthcare were also prioritized under the Obama budget. One line-item for 2017 estimated that standardizing the definition of who qualifies as American Indian and Alaska Native under the Affordable Care Act would increase the budget deficit by $520 million over the next decade. While the previous White House was spending money to try to improve healthcare for vulnerable and historically disadvantaged populations, the current White House wants to “save money” by cutting billions of dollars in funding to the Medicaid healthcare program for low-income individuals and food stamps.

Climate change or “other change”?

Another stark contrast is that the Obama 2017 budget mentioned climate change 36 times. The Trump budget mentions it zero times.

That should come as no surprise seeing that Secretary of State Rex Tillerson hardly dared utter the phrase while speaking at the Arctic Council Ministerial Meeting in Fairbanks earlier this month. Reading stiffly from a set of prepared remarks, Tillerson said, “And finally, the Council has strengthened resilience at the national and local levels in the face of environmental and other change.” When the nation’s top diplomat won’t even call a spade a spade, the prospects for agreement between the U.S. with the other Arctic Council member states, let alone the rest of the climate-concerned international community, are dim.

(For fun, you can compare Tillerson’s stilted six-minute remarks in Fairbanks with former Secretary of State John Kerry’s 23-minute off-the-cuff speech at Iqaluit two years prior:)