As Alaska goes through growing pains caused by proposed new oil and gas development and increased shipping along its Arctic shores, the state's senators want to convince Washington, D.C., lawmakers that the state needs additional federal funding for major infrastructure projects. But they agree that the nation's only Arctic state does not need additional federal regulations.
Sens. Mark Begich (D) and Lisa Murkowski (R) come from different political parties, but they both support new oil and gas development in Alaska. They insist that the state should receive a share of the royalty money from oil production off Alaska's Arctic shores. They also want to expand Coast Guard resources in Alaska.
The following is a recent interview with Sen. Begich on Alaska's future and its relationship with Washington. Click here to read the interview with Sen. Murkowski.
EnergyWire: People in Alaska say the state is on the brink of change. Do you agree?
Sen. Mark Begich: I agree. I think there's quite a bit of opportunity for Alaska. Oil and gas in the Arctic is just one piece of the equation. Consider Shell Oil Co. and the incredible effort and resources that are attached to their project. When Statoil and Conoco get geared in over the next two years, it will mean an additional thousands of jobs for Alaskans. It will be an opportunity that's just unbelievable.
But along with that, we're seeing an opening up of the Arctic for everything from tourism to shipping to fisheries to mineral exploration to science research.
That's the Arctic piece of the equation. There are many other things happening in Alaska that are also going to move the economy forward.
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| Sen. Mark Begich. Photo courtesy of the Office of Sen. Mark Begich. |
The second fastest growing industry in the state over the next eight years will be the mining industry. It will probably grow by around 20 percent in jobs. And those are pretty good jobs. They start paying at $80,000 a year, and they go up from there.
They're not just concentrated in one area. It's in southeast Alaska. If you look in the interior, you have NANA [a Native corporation] which is now developing its second phase of the Red Dog mine on the coast. You have Fort Knox gold mine, Donlin Creek, which is just now beginning the exploratory stage. All of these are creating a huge increase in the mining industry and the kind of jobs that will be related to it.
And those all will have ripple effects. You have to ship this product, which means more port development. Along with the port development are the fishing industries. They need to grow and move a lot of the fleet that's been stationed on the West Coast back up to Alaska. That will require more port capacity.
There are a lot of areas of Alaska that have really been moving over the last few years in the right direction.
EnergyWire: How have the economics of Alaska changed since you entered politics in the 1980s?
Mark Begich: The economy used to be solely based on oil and gas. Now it's much broader. We've got the fifth busiest air cargo business in the world in Anchorage. The fishing industry is more Alaskan-ized than ever before, which means more business. Sixty percent of all live-caught fish come from Alaska in some form or another. Tourism has grown significantly over the years. Our military is more stable, especially now with the focus on military in the Pacific Rim. Alaska is going to be an integral part of that. And then when you look at the shipping that's increased along the Bering Sea, Alaska has come a long way toward diversifying its base.
EnergyWire: The U.S. military has indicated that it's not interested in building a new port in Alaska.
Mark Begich: The military has reassessed its allocation of resources in the globe and now they're focusing more on the Pacific Rim countries. That means Alaska, Hawaii and part of the West Coast will be critical pieces of the national military strategy.
But they don't need to build a port [in Alaska]. The port will be built by the private sector. That's the reality. First we don't have the resources to do that. Second the private sector's needs are going to outstrip the government sector's needs on ports.
In order to service what's going on along the coast -- you can watch all the ships go by. Not only oil and gas, but shipping. You can tap into that or you can watch it go by and let Russia built ports. I think we have the capacity here. There are lots of ideas on port development. But it's not being done by the federal government or the state government. It's being done by the private sector and our regional Native corporations. That's who's really focusing on port development.
EnergyWire: If the oil industry discovers significant amounts of oil in the Arctic, how will that impact Alaska and its people?
Mark Begich: It would mean a lot of jobs. There's no question about it. Because you have to bring that oil to land and they'll need to build a 400- to 500-mile pipeline. That's the equivalent of almost two-thirds of the Trans-Alaska pipeline. That was a big project in itself.
You have a whole new exploration renaissance up there. It's going to mean a lot of jobs. Shell alone had 1,200 to 1,800 jobs when they were operating this summer. Three years from now it will probably mean 5,000 jobs. So Alaskans will have a huge opportunity.
Also the OCS [outer continental shelf] is multiple disciplinary. It's not just ports. It's going to require onshore and offshore, a lot of different types of businesses that are going to be associated with it. So from that perspective Alaska has a huge opportunity to gain from this development.
EnergyWire: A lot of people in the Native communities say, sure there will be jobs. But they've always gone to people from outside the state.
Mark Begich: Training is a piece of this. We talked about the need for training at my recent hearing. We've got to plan for it now. The union halls have an enormous amount of training for pipeline welding, and the construction training center in Fairbanks is ready to prepare people for work. I was just out at the operating engineers training facility where they train over 800 people a year in Alaska just outside of Wasilla. So union training halls have incredible capacity and can increase their capacity based on need.
The question is, are Alaskans ready and wanting to work? And I think they will be. And now's the time to prepare for that.
EnergyWire: How do you assure the local communities that their subsistence lifestyles will be protected in the face of all of this change?
Mark Begich: We have such a unique relationship with the industry. The North Slope Borough has a separate agreement with Shell Oil Co. And they will require one with all the rest [of the oil companies] that do business there. And the federal government echoes that through its regulations and guidelines.
You don't have the Gulf of Mexico stop drilling when there's whaling going on. We do. And that's important. Some people were concerned that Shell had to stop this year because of ice and whaling. Well, that's the agreement. When subsistence hunting season begins, they have to shut down their drilling operation. And when there's ice, they have to shut down the operation. The agreement we have with Shell is working. And we have to keep the local community fully engaged with what's going on up there.
EnergyWire: Several coastal communities in the Arctic are hoping to build deepwater ports. Is that possible?
Mark Begich: I think the opportunity is there and it's incumbent upon us to consider it. Because if we don't, I tell you there will be other countries that will move forward. Why not figure out if it works for us? We'd manage it, we'd profit from it. Can we benefit with the jobs that go along with it? I think it would be foolish for us not to consider it.
EnergyWire: Do you envision construction of more than one port?
Mark Begich: Yes, I do because you have to have servicing ports that may not need the full deep water, but they'll be needed to station certain ships during the offseason. That's still dependent on how the industry looks at their delivery system up there of the oil and gas. But I think there's no question there's an opportunity up there for us to have a variety of ports.
The industry is going to be the big driver. They'll be the ones who pay for it. There's no free ride. Ports are needed for their servicing their vessels for exploration and development.
EnergyWire: In Alaska, some communities would like to see construction of a statewide system of roads and railroads linking the coastal villages with Anchorage and Fairbanks. Is that possible in the short run?
Mark Begich: I'm not sure you could get to that point.
But I will say this. There is a huge gap on the level of the state to recognize how big this is going to be, and putting in the resources necessary for training and infrastructure needs. This is going to be a big operation and a huge future for Alaska. I think the state government is slow to react because I don't think they see the big picture here yet. That's going to be one of the biggest challenges.
You'll hear it from industry. But a big gap right now is that the state does not recognize their opportunities and their role. They tell you that they're doing some things. But it's small potatoes.
When they do this [$453 million general bond that was approved by voters Nov. 6], for example. It's great. But it's a standard old "Let's give everybody some money around the state so that everybody is satisfied." And the legislators can walk around and say they got money for their districts.
The problem is that if you look at Seward, Seward got $10 million in that bond. Their need for the preliminary first phase of a port is $80 million. Long term it's probably a half-a-billion-dollar port. So $10 million is nothing compared to what they need.
This is the challenge. The governor wanted a pact that made everyone happy. The only thing wrong with that is that you're not going to have a cohesive and aggressive infrastructure plan that we need to service the mining, the shipping, the tourism and the fishing industries that are coming. It's not a question of "if" -- they're coming.
It's one of the rants that I get on every time I go back to Alaska. I see this gap. They're not recognizing that they have to quit playing regional politics and figure out what's good for the state overall and put the money into it.
When I was mayor of Anchorage in '03, and I said, "OK, we're to get some stuff done here." We had not built a new road in town in 20 years. We had a convention center that was at capacity. We had a museum that was falling apart. We had a library system that was collapsing under its own weight. And we decided to be very aggressive about it. So we built a museum. We built a convention center without one tax dime going into it. We developed more roads in the last five years I was mayor than they did in the previous 20 years. And that created better infrastructure.
EnergyWire: Are other lawmakers in Washington beginning to support more U.S. Coast Guard resources for the Arctic?
Mark Begich: I'm not sure we're ready yet. But there is clear indication from the president to bring money and begin planning for a new icebreaker. We held off on the two icebreakers that were going to be shelved and sold for parts. Those will now get renovated.
The Coast Guard [appropriations] bill we passed out of the Senate -- I sponsored that bill. The House also has a bill, and we're working out the differences. This may be one of the few things that gets passed in the lame duck. I think if it does that it's an indication that there's a collective desire to do things around the Coast Guard.
EnergyWire: What are your top priorities for Alaska in Washington?
Mark Begich: First, making sure that there's no interruptions in continued development in the Arctic. Along with that, making sure that the resources in the Arctic are not just federal valued but that we have revenue sharing. We need to make sure that the state and local communities and the tribes all benefit from the Arctic. [Revenue sharing from Arctic oil leases] also would mitigate some of the costs associated with development.
Besides revenue sharing in Arctic development, the other priority is education -- making sure that we are training up our people for these jobs of the future. Making sure that we have the right kind of education. They need early education, career education. That's going to be a focus for us.
Continuing to make sure fisheries will be a priority, not only the kind in Alaska but globally because it's a big business for us. And our military -- we are a critical piece of the Pacific Rim. And the new strategy of the Pentagon and Defense Department is more Pacific Rim-focused. Alaska fits in with that pretty significantly.
EnergyWire: Is support growing in Washington to give Alaska a share of the revenue from offshore oil development in the Beaufort and Chukchi seas? Could revenue sharing be approved by Congress next year?
Mark Begich: I think there's a possibility, because two years ago before the Gulf [of Mexico] oil spill, I was able to convince [Sens. John] Kerry, [Lindsey] Graham, [Barbara] Boxer and [Joe] Lieberman to include in an energy bill they were working on a revenue-sharing provision [that would give Alaska] 37-and-a-half percent [of Arctic royalty revenues].
They were agreeable to that. And they are not necessarily OCS supporters. So I feel like with some new people being added -- [North Dakota Democrat Heidi] Heitkamp, [Indiana Democrat] Joe Donnelly, who voted in support of [the Arctic National Wildlife Refuge] on the House side.
We do have a chance because it is about fairness. It is about making sure that as we develop OCS. I have developed a bill for OCS in the past that would allow revenue sharing for anywhere in the country. If you have OCS off of your state, you could get a 37-and-a-half percent share of the benefits.
EnergyWire: What's your focus on the fisheries front?
Mark Begich: Next year the Magnuson-Stevens Act comes up for reauthorization. That's the big driver of how the fisheries industry is managed nationwide, especially for Alaska. We want to make sure that we continue on the path that has allowed Alaska to become one of the most sustainable fisheries in the country, if not the world. We want to make sure that we are improving the legislation where we need to and making sure the resources are there. Because it has been very successful in building fisheries into a multibillion-dollar business with thousands of jobs in Alaska.
EnergyWire: Will the Senate pass the Law of the Sea treaty during the upcoming lame-duck session?
Mark Begich: If we have a shot at, it could be this lame duck. If we can get enough people to say yes. But at the end of the day, we're going to have to pass this treaty at some point because it ensures that we establish a clear position of where we are in the Arctic. It also protects our sovereignty and resources. So it's hard to say where the new members will be on this. But if we don't get it this session, we'll be going back at it next year.
Right now it's just Iran, Libya, North Korea and the United States that have not signed it, and that's not good company to keep.
EnergyWire: Is it possible to get this completed in the lame duck?
Mark Begich: I'd say it's 40-60 against it, only because time works against us. But ... we'll get a better sense once we see the agenda from the leadership.
-- Margaret Kriz Hobson
