Arctic Energy Projects Create Alaskan Jobs

November 5, 2015 in Blog

Even as stifling federal regulations are making it more and more challenging for companies to operate in the Arctic, each energy project, including the proposed Alaska LNG project, represents a significant investment in the local economy and a wellspring of job opportunities on the ground. Not only will these projects directly create jobs in local communities, but they will also trigger ripple effects that will boost other parts of the local economy, as Alaska Dispatch News described:

“Shell supports several hundred high-paying jobs in Anchorage and across the state that in turn support stores, restaurants and other businesses as workers’ incomes bounce around the economy.”

Alaska LNG

As one of the larger energy projects proposed in Alaska, Alaska LNG would produce natural gas from Alaska’s North Slope production fields, turn the gas into liquefied natural gas (LNG) that is 600 times smaller in volume, and transport it to world markets. If approved, the project, which Alaska Gov. Bill Walker (I) called “our number one get-well card” that “best serves Alaska’s future,” has the potential to create up to 15,000 jobs just during the design and construction phases alone.

Even though Alaska LNG is still awaiting a decision from the federal government, it has already enlisted the services of local firms – an encouraging glimpse of the many more opportunities that will be created if the project is approved. If it isn’t, an industry observer based in Alaska told Alaska Dispatch News yesterday that that would “tak[e] away the potential for a lot of work”:

“All of us are concerned that it will be derailed for political or economic reasons or whatever. … If that happens, that takes away the potential for a lot of work.”

Oil and Gas: A Job Creator in Alaska

The role of the oil and gas industry in creating Alaskan jobs cannot be overstated. According to the Alaska Oil and Gas Association, the 111,500 Alaskan jobs supported by the industry in 2013 represented a third of all Alaska jobs and also a third of Alaska wages. Throwing up roadblocks in the path of oil and gas development in Alaska will only make it tougher for the industry to continue being a job creator in the state.

For example, when regulatory hurdles imposed by the federal government made it prohibitively costly for Shell to keep up its Arctic exploration program, Gov. Walker said it was a “big loss in terms of the potential for jobs,” that “[a]ny company leaving Alaska is disappointing,” and that “[a]ny action that limits our ability to explore for more oil…creates unnecessary uncertainty and burden on our economy.” Gov. Walker also expressed concern about the negative “ripple effects” of the red tape discouraging investment in Alaska’s energy sector, as the New York Times described:

“… [I]n the short term, [Gov. Walker] said, he feared ripple effects on the many subcontractors supplying Shell with goods or services. About 600 to 800 people were also working directly for Shell in Alaska at any given time in rotating shifts, according to the oil and gas association. Alaska’s unemployment rate was 5.5 percent in August, just slightly higher than the national rate of 5.2 percent.”

Senator Lisa Murkowski (R-AK), lambasting the federal government for repeatedly putting barriers in the way of Arctic drilling, said these decisions inevitably “mean fewer jobs, less security for our country.” Her colleague, Senator Dan Sullivan (R-AK), put it bluntly: “Now, countless jobs will be lost.” Rep. Don Young (R-AK) said the federal government’s “regulatory actions have not created security to invest in Alaska – they have scared off investment at the expense of the Alaskan people.” Alaska House Majority Representative Ben Nageak (D-Barrow) mourned the opportunities lost because of “strangulation” by “our draconian and poisoned federal government”:

“We stood on the cusp of another economic boom that could have propelled our young people and their children to better futures. Instead, due to the strangulation of Shell’s proposal by our draconian and poisoned federal government, one well coming up dry is all it took for the company to say it’s not worth it anymore in the Alaska Arctic.”

The pain is also acutely felt by Native Alaskans, who called the challenging regulatory environment created by the federal government another step “by the current administration to put us back to poverty and cut our legs out from under us as we try to live the American dream and provide opportunity for our people.”

In Short

After the federal government has, in the words of Senator Murkowski, “repeatedly denied Alaska’s best opportunities” in a “destructive pattern of hostility toward energy production” in Alaska, Arctic Energy Center hopes that it will take a different tack going forward: by approving proposed energy projects in the Arctic and allowing them to create Alaskan jobs and to provide Alaskan families with much-needed relief.