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A Closer Look at Alaska and the Oil Industry

An interesting article, from FuelFix.com:

The ritual has been going on for centuries in this small town at the northern tip of Alaska: twice-yearly hunts and harvests, with celebrations centered on the prized bowhead whale.

Some Inupiats fear that this tradition – and their subsistence way of life – could be jeopardized by offshore oil drilling, as Shell Oil Co. conducts a fresh search for Arctic crude and other companies plan similar pursuits. But others have adopted a more pragmatic approach.

They know that life on the barren, snow-packed land is sustained as much by the oil money that flows through the North Slope as by whale, seal and caribou.

The roadways, indoor plumbing, high school and community center have all been financed by Alaska’s oil wealth, notes Oliver Leavitt, a former vice president of the Arctic Slope Regional Corp. and one of the patriarchs of a prominent Barrow whaling clan.

“The infrastructure that you see in Barrow is what was brought in by oil,” Leavitt says as he slowly flips over playing cards during a game of solitaire in the local search and rescue office. “Before the discovery of oil, there was no education past eighth grade. This place has been transformed because of oil.”

And yet this revenue stream is drying up, as Resourceful Earth has previously noted, due to declining oil production in Prudhoe Bay. This could lead to a shutdown of the Trans-Alaska Pipeline System, something that Alaskan’s do not want to see. Interestingly, the sources quoted appear to prefer increased drilling in Alaska’s onshore areas as opposed to offshore drilling:

Even oil development skeptics in the area say they would rather see it happen onshore – in the 22.8-million-acre National Petroleum Reserve- Alaska or the Arctic National Wildlife Refuge – than in the Chukchi and Beaufort seas.

Napageak, the former mayor, said onshore development is less risky and offers more benefits for Nuiqsut and other villages near the reserve.

Leavitt agrees that it’s safer to search for oil on land. “The more the environmentalists lock up the land where the oil may be, the more they’re going to have to go offshore,” Leavitt says. “And there’s more danger there.”

It’s hard to argue that offshore drilling is more prone to oil spills than onshore drilling. Could the actions of environmentalists actually be making Alaska drilling more difficult than it needs to be, by forcing production offshore?

Finally, what was most noteworthy to me about this article, was Shell’s understanding of the locals and the efforts undertaken by Shell to avoid disturbing the village:

Slaiby said Shell has worked hard to minimize its footprint in Barrow and Wainwright, where the company stationed camps and workers during its preliminary drilling last summer. Shell’s crew camp in Barrow is on the outskirts of town; workers living there were discouraged from shopping at the local grocery store, or participating in whale harvests or even using local taxis to travel around town.

“What we’re really trying to do is make sure we are not disrupting people’s lives,” Slaiby says, adding that charter flights and Shell-provided groceries were designed to ensure the influx of workers didn’t inflate prices for food and travel.

A massive increase in natural resource production in certain areas can bring large changes to those who were already living there. We’ve seen this in North Dakota. The fracking boom has unfortunately also brought some crime to the area as well. Similar sentiments have been expressed in other areas impacted by the fracking boom.

The ability to minimize any unwanted changes might go a long way in convincing locals that your presence is on net, beneficial, rather than a detriment they’d prefer to keep out. Note that in this case it’s much easier as Shell is the only company out there, whereas the fracking boom in North Dakota and elsewhere is being led by many more companies, with many more employees.

Read the whole article here.

 

 

 

Taxes on oil developments also funnel money into municipal coffers – ensuring a steady stream of cash that pays for education, government services and infrastructure in the villages.

Many are worried that the money will dry up, as surely as declining Prudhoe Bay oil production is starving the pipeline, threatening to make it unusable if its flow drops too low. New oil development – whether offshore in the Beaufort and Chukchi seas or on land – offers the promise of new crude supplies for the pipeline and a fresh source of revenue for the region.

Oil dividends help blunt the high cost of living on the United States’ northernmost edge, where commodities are flown and barged in at great cost.

In Barrow’s grocery store, hothouse tomatoes were selling for $6.29 per pound in October, milk ran $9.99 per gallon, and a package of romaine hearts was $4.59.

“That’s our garden out there,” says whaler Ron Saganna, gesturing to the Beaufort Sea and repeating a refrain commonly heard on the North Slope, where nearly year-round snow and cold preclude farming. “Over 50 percent of our food source comes from the ocean.”

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