Restricting One-Third of the Arctic Is a Bad Policy

March 11, 2016 in Global Opportunity

Yesterday, the United States and Canada released a joint statement announcing common goals on climate, energy, and Arctic leadership, including restricting almost a third of their Arctic regions from development and incorporating the Indigenous perspective in the conversation about climate change. In many ways, these goals conflict with one another, as Alaska Natives have historically been among the most vocal supporters of Arctic oil and gas development. But even more troubling is the two governments’ misguided rejection of the opportunities manifest in the abundant energy resources that exist in the American and Canadian parts of the Arctic – beginning with the opportunity to strengthen North American energy security for decades to come. This is especially relevant as geopolitical tensions intensify, and as the global demand for energy continues to increase.

The statement declares that the two countries would take “concrete steps” to achieve their goals of “protecting at least 17% of land areas and 10% of marine areas by 2020” and eventually “substantially surpass[ing] these national goals in the coming years” by working “directly with Indigenous partners, state, territorial and provincial governments to establish…a new, ambitious conservation goal.”

Although vagaries abound as to what the two administrations mean by “protecting” 27 percent of the Arctic, it is safe to assume – given the Obama Administration’s track record of kowtowing to activists while throwing Alaskans under the bus with its recent Arctic policies – that this “protection” would entail cordoning the area off from development entirely.

That would be a tragic mistake.

The Arctic Energy Center has written about the rich potential of the American Arctic many, many times, but here, we delve into the opportunities teeming in Canada’s Arctic. Considering Canada’s long-standing status as one of America’s strongest allies, the shared Arctic opportunity is immensely important.

Canada’s Opportunities in the Arctic
Canada has long been a pioneer in Arctic oil and gas development: The first commercial Arctic well that was ever drilled was in the Canadian Arctic in the 1920s, a project that was subsequently expanded to include 6 artificial islands, 253 new wells, and a 520-mile pipeline. Exploration in the Canadian Beaufort Sea began in 1957, and since then, 92 offshore wells have been drilled in the region with innovative techniques that have “become foundation for activities across the global Arctic.”

Canada’s contributions to improving the technologies and know-how of Arctic oil and gas development were made clear – and called “foundational”– in a report released by the National Petroleum Council (NPC), an advisory committee established by the Secretary of the Interior and chartered by the Secretary of Energy:

“From the first major onshore Arctic-like development in North America at Norman Wells to extensive onshore and offshore exploration in the Arctic Islands and Canadian Beaufort Sea, activity in Canada has been foundational for development of offshore technology for oil and gas exploration and development. Together with U.S. advances, the learnings from Canada activities from the 1960s to 1980s remain key to how some of today’s largest and most complex offshore Arctic projects are explored, developed, and produced” (pg. 1:16).

After producing over 270 million barrels of oil (as of September 2014), Canada’s Arctic still has at least 790 million barrels of oil equivalent in reserves – and the opportunity to continue being a leader in developing and refining innovative ways to drill in Arctic conditions.

Keeping Canada’s energy sector strong is also critical to improving the country’s economic prospects, especially after they have just been downgraded.

Canada’s natural resources sector, which includes energy, minerals and metals, and forestry, accounts for one-fifth of the country’s GDP and half of its capital investment, provides 1.8 million jobs, and has contributed $26 billion per year in government revenue from 2009 to 2013.

Yet, despite the large role that Canada’s energy sector plays in supporting the national economy, it faces challenging circumstances that threaten its future – and its ability to continue serving as a strong driver of economic growth. Oil sands, which account for more than half of Canada’s oil production, are meeting increasing public opposition that is “effectively halting expansion” of projects. Prospects are dimming for other promising energy ventures as well. For example, British Columbia’s fledging liquefied natural gas (LNG) industry, which could contribute $7.4 billion annually to Canada’s economy, now has to contend with an even more burdensome regulatory regime, leading one project developer to threaten to pull the plug on its $27 billion LNG venture. With Canada’s economy looking “tepid,” “bleak,” “weak,” and “weakening,” it would be unwise for the Canadian government to wall off another avenue of energy development.

The Indigenous Perspective

For all the talk about respecting Native voices, Alaska Natives have historically been among the most vocal supporters of Arctic oil and gas development, as Richard Glenn testified in Congress last year on behalf of the Arctic Slope Regional Corporation (ASRC), which represents 12,000 Iñupiat Eskimo shareholders:

“ASRC supports the responsible development of America’s Arctic oil and gas resources in the Beaufort and Chukchi Seas. The development of Arctic oil and gas resources provides our communities with the means to preserve our traditional way of life and culture while also allowing our residents to enjoy a greater quality of life. Put another way, our communities cannot survive without continued resource development in our region” (pg. 3).

In another announcement, ASRC stated,

“Absent any responsible resource development onshore and offshore, we are facing a fiscal crisis beyond measure. The federal regulatory environment has proven to be a burden for any development, whether onshore or offshore. With this type of uncertainty, we will continue to see good opportunities slip away because no one wants to do business in Alaska.”

Native support for Arctic oil and gas development stems from a long history of partnering with the industry, from offering traditional knowledge of the Arctic environment, to offering contracting services to operators, to spearheading their own exploration and production projects.

From the very beginning, Iñupiat involvement has been critical to facilitating Arctic oil and gas development, as explained in the NPC report:

“A key to the eventual development of North Slope hydrocarbon resources came as a result of the relationship developed between the Iñupiat and the U.S. Navy and USGS [U.S. Geological Survey] in the early part of the 20th century. The Navy/USGS looked to the inhabitants of Arctic Alaska for their expertise and knowledge of their environment, and the Iñupiat looked to the Navy/USGS for a chance at an improved quality of life” (pgs. 1:26-27).

Using Shell’s most recent project as a more contemporary case study, local consultation was required every step along the way, beginning with the lease sale, which stipulated that that the company must “consult directly with potentially affected North Slope subsistence communities” in order to “discuss potential conflicts with the siting, timing, and methods of proposed activities and safeguards or mitigating measures which could be implemented by the operator to prevent unreasonable conflicts.” U.S. Fish and Wildlife Service (USFWS) and National Marine Fisheries Service (NMFS) regulations required similar consultations concerning potential conflicts between drilling and subsistence activities.

Pursuant to these stipulations, Shell met with subsistence communities in Barrow, Wainwright, Point Lay, Point Hope, Kotzebue, and Deering and with subsistence groups including the Alaska Eskimo Whaling Commission, the Nanuuq Commission, the Eskimo Walrus Committee, the Beluga Commission, the Ice Seal Commission, and the Native Village of Barrow. The company also held one-on-one meetings with representatives from the North Slope Borough, the Northwest Arctic Borough, the Iñupiat Community of the Arctic Slope, and the Village Whaling Captain Association.

As described by the Natives themselves, this kind of industry-indigenous consultation proved productive and helped inform industry practices that avoided disturbing Arctic wildlife and interrupting subsistence activities:

“North Slope lead­ers say that as a res­ult of con­ver­sa­tions with in­dustry, they are con­vinced that de­vel­op­ment can be done safely, and that re­sponse and mit­ig­a­tion plans would be in place in case of any ac­ci­dents.

[North Slope Borough chief administrative officer Jake] Adams [Sr.] said one way the oil in­dustry won them over is by en­sur­ing that whal­ing will not be im­pacted by ex­plor­at­ory drilling.

He de­scribed how Shell and oth­er in­dustry rep­res­ent­at­ives have worked with Nat­ives to un­der­stand the mi­gra­tion pat­terns and be­ha­vi­or of bowhead whales and oth­er wild­life and altered their op­er­a­tions to pro­tect the an­im­als.

‘The pro­cess has been to sit down with them, work with them, talk to them about when they shouldn’t have any activ­it­ies in the area, when we are go­ing after whale,’ he said. ‘When we’re done, we no­ti­fy them that we’re done for the fall and they can re­sume.’”

Shell also hired Iñupiats as Protected Species Observers, required by the Marine Mammal Protection Act to be “aboard the drilling unit(s) and all transiting support vessels” to monitor the presence and behavior of protected species, and as local subsistence advisers to act as a bridge between local communities and the company.

Alaska Native corporations, which have been called “the sophisticated business powerhouses of the Alaskan business world,” have also pursued commercial partnerships with industry by offering contracting services to oil and gas companies:

“The successes of ANCSA corporations in the oilfield service industry is a story of alliances, a recognition of the importance of the Native community to the oil industry, a recognition of the Native community in Alaska, and a recognition by the oil industry of its social responsibility to the Native community. This success began slowly, with a few contractors, and increased to the point where many of the major oilfield service companies (drilling companies, security companies, camp services, engineering companies) are Native owned” (pg. 47).

Indeed, NANA Regional Corporation, which represents 14,000 Iñupiat shareholders, explained that its contracting relationships with the oil and gas industry dated back to the 1970s:

“As Alaska’s North Slope oil fields were developed and the trans-Alaska oil pipeline constructed in the 1970s, NANA was instrumental in developing early contracting relationships between Alaska Native corporations and the petroleum industry. These relationships began in the 1970s, in ventures like catering, camp services and security services. They were broadened in the 1980s to include fuel and utility services, interests in oil and gas drilling rigs, and ultimately a working interest in a producing oil field, the Endicott field” (pg. 47).

Lastly, given that the U.S.-Canada joint statement specifically emphasizes including the Native perspective in the climate change discussion – “Canada and the U.S. will continue to respect and promote the rights of Indigenous peoples in all climate change decision making” – it is important to remember what Natives have actually said about climate change:

“Finally, for those that wish to prevent Arctic development in the name reversing global carbon dioxide levels or addressing global climate change, we note that, with or without Arctic development, planes will still fly, trains will still run, and oil and gas resources will continue to be developed around the world and in the Arctic. Shutting down United States’ Arctic oil and gas development will not alter the world’s course, but will only negatively impact those who depend on development for their continued survival: our communities, our State, and our country” (pgs. 6-7).

In Short

While Arctic Energy Center respects efforts to protect the global environment, we would encourage the American and Canadian governments to resist the temptation to make commitments for legacy-firming purposes at the cost of Native lives and livelihoods, our respective economies, and the future energy security of North America as a whole.

 

(Image Credit: Stephen Crowley / The New York Times)