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. Mukowski on Alaska's future and its relationship with Washington. Click here to read the interview with Sen. Begich.
EnergyWire: People in Alaska say the state is on the brink of significant change. What do you see happening in the state?
Lisa Murkowski: We're looking at an evolving northern landscape in the Arctic as more is happening, as we're seeing the northern waters open up. Not only are we seeing an interest in the exploration for oil and gas up there, we're also seeing a level of commerce that I think those of us born and raised here never thought we would see.
The container ships are moving through. The crew ships are coming through. It's a whole new level of maritime activity that is causing people to say, "Wow, there is so much on the horizon." You couple that with our continued planning for how we're going to move Alaska's natural gas [from the North Slope oil and gas fields]. We continue to talk about how we could deliver it to Asian markets possibly in a [liquefied natural gas] pipeline.
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| Sen. Lisa Murkowski. Photo courtesy of the Office of Sen. Lisa Murkowski. |
There's a great deal that's happening in the state or at least poised to happen. With those opportunities there are a lot of challenges. But Alaskans have never shied from challenge. So it's an interesting time right now.
EnergyWire: If Royal Dutch Shell finds a mother lode of oil next summer in the Arctic, how will it affect Alaska and its people?
Lisa Murkowski: You have prospects out there that cause Shell and others to be very interested. This is not the first time that they have explored. Twenty years ago, Shell did exploratory drilling in the Beaufort and Chukchi [seas]. At the time it just was not economically feasible. The technologies have come a long way since then. They're very bullish on the prospect.
It's not just Shell. It's ConocoPhillips and Statoil. There's a great deal of interest in what that could mean to not only the northern slope area that would be host to offshore activity, but to other parts of the state as well. Dutch Harbor down in the Aleutian Islands would be the maritime servicing area. There would be contractors providing services out of Anchorage and the Fairbanks area. It could really be quite an economic boom for the state.
EnergyWire: A lot of Native communities are wondering how oil development will affect them, if they will actually benefit.
Lisa Murkowski: And appropriately so. I think we want to make sure that those that will see that stepped-up activity, such as the communities of Barrow or Wainwright -- you look at a community like Wainwright, which has several hundred people. It's not a place where you can easily import shiploads of contractors. The infrastructure and services are really limited.
The question is, what opportunities will be made available for the local people? I've been pushing to make sure that the local Natives are hired, for instance, by some of the shipping companies. The Native people up there know the waters. They know the ice. They know the shoreline like nobody else in the world.
I want that local knowledge to be tapped into. I want these young men who grew up on waters whaling with their uncles or their grandfathers, I want them to be piloting some of the service vessels. I want them to be engaged in some of the opportunities. Not just being a cook or something like that in a service-related job. We need to make sure that they have the training, whether it's maritime or onshore. We have to pass the jobs to the local people.
The infrastructure is very, very limited up there. Even in Barrow, the largest community up there on the North Slope. So as there are physical facilities up there being built, I want to make sure that the local people are engaged with that and that it's not just outside contractors coming up and bringing their own laborers.
We have a college up there, and through the community college we've got job-training programs where we've been teaching folks how to operate heavy equipment. They should be the ones that are moving the equipment to build the [dirt] pads to build the hangers on. There's no reason why we need to bring people in, whether it's from the outside in the lower 48 or even from Anchorage or Fairbanks. We need to make sure that local people have those jobs.
EnergyWire: Shell's efforts to explore for oil this summer riveted people's attention. But do you see other economic changes coming to the state?
Lisa Murkowski: I clearly think it's beyond Shell's operations. Shell is the big name out there, the one that's venturing first into the offshore. But even if Shell weren't advancing its prospects offshore, what we're seeing in the Arctic is a new level, an unprecedented level of maritime activity.
We have crew ships moving through the Arctic. Barrow is not a cruise destination and probably never will be. But you do have more vessels that are moving through the area.
We need to make sure that there is a level of [Coast Guard] rigor or enforcement of those ships. In this new area, the Coast Guard has [to police] a lot more water than they had in the past. The Coast Guard wants to make sure that in this new area everybody knows and understands what the rules of the road are.
So when we're talking about maritime activity, whether it's commercial or otherwise, you have more support requirements up north. Whether it's building out infrastructure for our Coast Guard so that they can do their jobs. We've got researchers that are coming up in much higher numbers. Those people need to have a place to stay when they're out in the field or in the town.
They're all going to need to have services. It is more than just Shell.
EnergyWire: The people in Nome, Kotzebue and Wainwright are interested in building a deepwater port. Is it likely that new ports will be built in Alaska?
Lisa Murkowski: It's more than inevitable. I believe it's a requirement. We've been pushing, we got the funding for a study of the deepwater port. The Coast Guard, the Army Corps, the Navy and basically anybody that has a vessel in the Arctic recognizes that with the increased level of activity up north you have to have a deepwater port closer than what you currently have, which is in Dutch Harbor.
Going down 1,000 nautical miles for your supplies is one thing, but you need to be able to tuck into a safe place [along Alaska's Arctic coasts]. There is no place right now to tuck in. ...
This is a priority for the people of Nome. The people of Kotzebue are looking at that as well. You got Port Clarence [near Nome] that's also a deepwater port. But the infrastructure has been neglected. Is it possible that that could be the best place? It's imperative that we have a deepwater port study, and yes it is something that I believe is going to be essential.
Russia is building up its port infrastructure on the other side of the Bering Strait, recognizing the increasing volume of container ships, LNG vessels that are coming through. They want a good port in the storm. They've really gone all out on the Russian side to make sure that that is there.
I believe that on the U.S. side we need to have adequate facilities, and they need to be closer than we currently have down in the Aleutians.
EnergyWire: Kotzebue's leaders argue that they'd like to have a port and more roads in the region to encourage mineral development in the Ambler area. Will port construction lead to greater development in interior Alaska as well?
Lisa Murkowski: Part of Alaska's struggle has always been our relative lack of infrastructure. Whether it's roads or ports. We made the headway that we needed to on airports, and that's been what's connected us. But quite honestly that's a pretty expensive way to go.
If we don't have access to the deepwater ports, it's very difficult to make an economic project. Red Dog mine has been able to be the lead exporter in zinc not only because of the resources available, but because they're close to the water. But they still have to lighter out [their zinc exports from shore on smaller ships to transport barges].
You've got places like Ambler and other areas that have resource potential. But until they have the opportunity to move the resource [to market], it's never going to be developed. I don't care what the price of the mineral is.
So infrastructure is key, and it has been a stumbling block for us. So if there are areas that we can develop out, either the ports or the roads, it allows us to be a player in different markets.
EnergyWire: Who will pay for the infrastructure?
Lisa Murkowski: This is where the concept of revenue sharing is so critical, in my opinion. Allowing us to retain some of the money from the oil leases and the royalties for Alaska exploration will help the state, whether it's in building critical infrastructure like the deepwater ports and airfields or as we attempt to strengthen emergency response capabilities.
This is something that makes sense for a state like ours. We're clearly lacking in the critical infrastructure. But when you have a discussion about revenue sharing, it's important for people to recognize that every state with onshore oil development on federal lands currently receives about half the revenue. And then you have the coastal states along the Gulf of Mexico that get a cut of the revenue from the production off their coasts.
But as we look to Alaska's potential offshore production, this state is bearing similar if not greater risks than those that are producing on the land. It makes sense to advance revenue sharing for Alaska. In the Arctic where our infrastructure is really quite limited, a source of revenue is going to be crucial to us.
EnergyWire: Are your colleagues in Washington coming around to that point of view?
Lisa Murkowski: As people come to recognize the potential that we have offshore in the Arctic and the benefits to the country, I think that there might be greater appreciation for what revenue sharing will yield. But it's not an easy lift, particularly at this time when on the federal side people are looking for money under every rock. So to suggest that the federal share should be reduced to help the states -- that may be a tough argument during difficult budget times.
But I think you need to look to the equity. There are those who somehow think that because it's offshore you don't have impacts to the onshore lands. They need to go down to Port Fourchon in Louisiana. They need to go up to Barrow and look around at what is been happening this summer. I do think that the case can be made, the argument should be made.
But as you know we've had our political battles in the past. This is just something that chairman of the Senate energy committee [retiring Sen. Jeff Bingaman (D-N.M.)] was not willing to entertain. I'm hopeful that some of that resistance may be pushed back. I've talked to Sen. [Ron] Wyden [Ore.] about this a great deal. He's going to be the top Democrat on the committee next year. He has expressed support for revenue sharing.
He has suggested that maybe we need to talk about what is the right percentage. He has not been philosophically opposed to it. So I think we have room to start that conversation. I'm looking forward to that.
EnergyWire: If Shell discovers a significant quantity of oil in the American Arctic, does it awaken Washington to the fact that we are an Arctic nation with new national demands?
Lisa Murkowski: Those of us in Alaska who've been following our state's oil and gas development over the years anticipate that what Shell and the others with leases up there will find will be big. This could be transformational.
When you think about the discovery of oil in the Prudhoe Bay and the construction of the Trans-Alaska pipeline -- that was so transformational to our state 35, 40 years ago. I think we are on the cusp of a similar transformation with our offshore resources.
What's important is how we work to ensure that we gain the benefit of the resources, we gain the benefit of the jobs. We need to do it right by Alaska's people and by Alaska's environment. This is a challenge to us. And we want to make sure we get it right.
I was in high school living in Fairbanks when the Trans-Alaska pipeline was under construction. And I found my little town of Fairbanks go from being a little town in interior Alaska to being kind of this boomtown with a lot of new people from Oklahoma and Louisiana. They all sounded funny and stayed up late. It was a different world.
As Alaskans, while we are excited about the opportunities that lay ahead, there were an awful lot of people who were not pleased with the fact that Alaskans hadn't been trained up for those opportunities. We didn't have the welders that we needed, so the welders came up from Oklahoma and from Louisiana. And they got great jobs.
For a lot of Alaskans -- we were all working. But we were doing the service end of the industry. Now we're saying that this time we want to make sure that Alaskans are trained for these opportunities. So your question about what this will mean to the Natives on the North Slope is an important one. We don't want to be caught behind this time. There should be plenty of jobs to go around for everybody. But we want to make sure that Alaskans are able to enjoy that benefit. We will certainly share the stresses and see the changes.
EnergyWire: Native leaders in Alaska are saying they want to be part of the decisionmaking process for Arctic development. At the Arctic Imperative Conference this summer, former North Slope Borough Mayor Edward Itta said that Native leaders didn't have a seat at the table in the past.
Lisa Murkowski: They didn't. It's as simple as that. They didn't.
Mayor Itta is a leader for his people. And when he was mayor of the North Slope Borough he recognized that he needed to be tough, he needs to be a good negotiator for his people, he needed to change that dynamic.
I had some conversations [about this] years ago. I had the folks from Shell come in and tell me, "You have to get the whaling captains to come around and see our point of view. There's no way that we could explore and produce under the terms and conditions that they are setting out for us."
And I'd say, "Look, you have to be talking to the Natives. You've got to be working with them, because if you work against them this is never going to happen."
And then I'd have the Native leaders coming in and saying, "You've got to tell Shell that they've got to have us more at the table." We'd do this shuttle diplomacy going back and forth.
The fact of the matter is, Shell got off to a pretty rocky start when they first came back [into the state to explore in the Arctic in 2006]. They basically said, "This is what we're going to do." And the Native leadership said no.
If you tell people in the lower 48 what Shell was required to do as a condition of their 50-some-odd permits the summer, they'd say good heavens I can't believe this -- that they would have to be out of the water when the whales are coming through.
I had Sen. [John] Hoeven [R-N.D.] up in Alaska in August, and I was telling him what some of the terms of the permits were. He said, "How can you possibly do what you need to get done?" I said that's the price of doing business here.
You have to make sure that you are working with those who live in the region, those that subsist in the region. That means as a condition of the permit, you've got to be out [of the Beaufort Sea] when the whales are moving through and well within the window of when the ice is going to be coming back. This is not a situation where the oil companies can direct operation on their terms.
So now we're listening to our indigenous people, listening to Alaskans on how we balance the development of our resources with care and concern for the environment and the people who live here. We've come a long way in 35 years.
EnergyWire: It sounds like you're saying you're confident the two sides can negotiate their differences.
Lisa Murkowski: There's risk in every business venture. And I think what we're dealing with is a series of agreements and memorandums of that are really considerable. Some would say [the limitations on industry are] difficult. Some would say that's not necessary.
I want to make sure that those who are operating in Alaska and in our waters off our coast are operating to the highest standards. I want to make sure that those who live in the region that will be impacted are heard, that they're at the table, that the conversation is more than in one ear and out the other.
I need to know that this is working for Alaskans, not just for those who produce in Alaska. So there's a very healthy tension out there. But if Shell does this right, it builds up that trust, it builds up that credibility, and I think it allows for an opportunity to access what I believe will be an extraordinary resource.
EnergyWire: What are your other priorities for Arctic development?
Lisa Murkowski: The role of the Coast Guard as a federal presence and enforcer.
The Coast Guard plays an amazing role in Alaska. And I'm exceptionally proud of them. They're not only handling many of the permits that Shell is dealing with offshore. They're also the ones that are picking the fishermen out of the water. They're enforcing the regulations against pirate fishermen that are illegally catching our fish out in Arctic waters.
Whether it's Shell's activities in the North or the fact that you've got an unprecedented increase in shipping traffic in and around our Arctic waters -- we need to make sure that our Coast Guard is prepared. And right now we don't have the icebreaking capacity that we need as an Arctic nation.
In my view we don't have the sufficient presence out on the water for the Coast Guard to do their jobs. There's the national security cutter the Berthold that was up in the Arctic waters this summer. That ship is exactly the type of vessel that we need to have in Alaska waters. Right now the Berthold is home ported in Alameda, Calif. I was told it was a 24- to 26-day run to get from Alameda to get up to the Nome area.
We need to have a national security cutter home ported in Alaska. We need it sitting in Kodiak so it can get out to the Arctic. We don't have the capacity and capability right now to do the fisheries enforcement that we're seeing in that huge North Alaska area.
So as we talk about things like revenue sharing, as we talk about infrastructure, it's important that Congress understands that if we're to step up to our role as an Arctic nation, we've got to have sufficient support for the Coast Guard in terms of icebreaking capacity and those vessels that can endure tough waters.
EnergyWire: Rear Adm. Tom Ostebo, who heads the Coast Guard's Alaska unit, has suggested that the Coast Guard needs more Coast Guard resources in Barrow each summer.
Lisa Murkowski: They're looking at building a facility to put an aircraft in Barrow. Right now they're leasing a hangar that's not adequate. They can put one helicopter in. And maybe they can get a second one in if they move one sideways and twisted it and then maybe leave the door open.
But Kodiak is where the helicopters are based for search and rescue. That's 1,000 miles from Barrow. If there's an incident off of Barrow, that helicopter must come to you from Kodiak. So we need to have some assets in position [in the Arctic] at least during the summer months when you got activity out on the water. The question is, how can we pull this all together?
EnergyWire: Can you convince Washington that the Coast Guard needs to have a larger Arctic component?
Lisa Murkowski: For them it's so far away. It's out of sight, out of mind.
Last year the Coast Guard had probably one of the better PR events when they escorted the Russian fuel tanker to Nome because Nome was locked into ice. The eyes of the country, even around the world people were watching them with some fascination.
A lot of people learned for the first time that we really don't have an operational icebreaker right now. There's a national lack of awareness. We're trying to wake the rest of the nation up to the fact that we are an Arctic nation.
What does that mean if you're from Iowa? If you're a farmer growing corn and you're looking at the price of corn, you should be interested in the fact that corn and other products are moving around the globe. If we can open up routes that allow you to ship food north instead of taking longer routes, that might be important.
Somehow we have to make the Arctic relevant to others in this country. How we do this short of sending them to North Slope, that's our challenge.
-- Margaret Kriz Hobson
