Mikkelsen A., Langhelle O. (eds.) Arctic Oil and Gas. Sustanability at Risk?
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136 Nigel Bankes
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138 Nigel Bankes
7 Expanding oil and gas activities
on the North Slope of Alaska
Aslaug Mikkelsen, Sharman Haley and
Olaug Øygarden
The culture is the most important part of Alaska. Its cultural groups really
define Alaska. When people think about Alaska they don’t think about oil
and gas development, they think about the Eskimos and people in the Arctic.
The face of Alaska really is the Native people.
(Inupiat woman)
When you start seeing the world from the north, it’s not remote – it’s where
we are. It’s home I guess.
(An employee at Arctic Slope Regional Corporation)
Introduction
The present oil fields on the North Slope of Alaska are mature, and the companies
want to expand and open new areas. The prospects are promising, both onshore and
off. The primary controversy over expanding oil and gas development concerns
sustainability of the subsistence economy and culture. The line of conflict runs
between those who argue that oil and gas activities have minimal impact on subsis-
tence livelihoods, and those who see the oil and gas as a threat to the local
communities.
The oil and gas revenues, activities, and the increased contact with the outside
world have modernized the North Slope communities. The communities have
become dependent on the oil and gas revenues to maintain the new infrastructure,
modern equipment and lifestyle. In this situation, onshore oil and gas activities
have broad support on the North Slope as long as there are sufficient environmen-
tal protections. Opposition to development on land is focused on specific areas
that have particular environmental, wildlife and subsistence values. Some Native
1
people also express growing concern about the increasing encroachment of devel-
opment on their lifestyle, values and traditions.
Offshore development faces sharper conflict. The federal and state authorities
who have the decision authority offshore want to expand oil production to
increase the domestic oil supply and bring in new revenue. But they face nearly
universal opposition from Inupiat people and local and regional authorities who
fear that oil spills will harm marine resources, and industrial noise will disturb
and deflect migrating whales and other marine mammals.
Underneath these relatively clear lines of conflict lies a much more complex arena
of issues, perceptions and themes in the discourse among stakeholders. There are
groups of indigenous people that are more dependent on subsistence living than
others. These groups are stronger in their voice against further oil and gas develop-
ment. Others believe that embracing the job opportunities that development brings is
the path to the future. They hold the opinion that those who want paid work can get
it, so remaining in a traditional lifestyle is a personal choice. But in counterpoint,
educational attainment among Natives is relatively low, so even with improved
educational opportunities, it will take an estimated 20 years for the Native popula-
tion to reach the level of educational attainment that would make them attractive
workers for the industry. In the meantime, they argue, the subsistence activities will
be destroyed. Taking kids to schools far away also makes knowledge transfer on
whaling and other subsistence activities impossible.
Social problems, such as lack of education, lack of employment, lifestyle health
problems like diabetes, mental health problems, drug and alcohol abuse and poverty,
characterize the present situation in the villages. The oil and gas companies are chal-
lenged to take responsibility for the situation, for mitigating negative impacts and
providing a positive future for the coming generations, but the companies are of the
opinion that they are paying enough and that the governmental authorities have the
obligation to provide infrastructure and help to the communities.
These issues will be explored from the various stakeholder perspectives in the
sections that follow.
Alaska today
Oil and gas activities in Alaska are expanding in the Arctic, not to the Arctic. The
largest oil field in North America is Prudhoe Bay, located on the North Slope of
Alaska (Map 7.1). The Prudhoe Bay field was discovered in 1968 and started
production in 1977. Over the past 30 years, oil facilities on the North Slope have
expanded from one field to an industrial complex, including 23 producing reser-
voirs, with 115 gravel drill sites and 20 processing facilities, 960 km of permanent
roads and trails, 725 km of pipeline corridors, and 353 km of transmission lines
(National Research Council, 2003). While oil and gas deposits lie both onshore
and offshore, on state, federal and private lands, existing development lies prima-
rily on state-owned land. Active leasing and exploration is ongoing further west in
the federal National Petroleum Reserve–Alaska (NPR-A), in state and federal
waters to the north, and in the foothills to the south. The eastern frontier, the
coastal plain of the Arctic National Wildlife Refuge (ANWR), requires congres-
sional authorization before exploration and development can proceed.
Although indigenous hunters had used the Prudhoe Bay area of northern
Alaska for thousands of years, the area contained no permanent human settle-
ments until the construction of the work camp at Prudhoe in 1968. The nearest
settlement is the community of Nuiqsut on the Colville River, which defines the
boundary between state lands to the east and the 9.4 million hectare NPR-A to the
west. The 1998 development of the Alpine field eight miles north of Nuiqsut
140 Aslaug Mikkelsen, Sharman Haley and Olaug Øygarden
Expanding oil and gas activities on the North Slope of Alaska 141
marked the first time – aside from the gas wells that provide energy to the
community of Barrow – that industrial facilities were located close to people’s
homes. The oil lies under land owned by Kuukpik Corporation, the local village
corporation established under ANCSA (see Textbox 7.1).
The discovery of Prudhoe Bay precipitated massive economic, political and
social changes for everyone in the state. In the following year (1969) state lease
sales in the area elicited bids on 412,548 acres and brought in US$900 million
to state coffers – an amount nearly 10 times total state revenues the previous year.
But the oil needed a pipeline to an ice-free port, and the pipeline could not be built
until long-standing land title disputes were resolved. The Alaska Native Claims
Settlement Act of 1971 (ANCSA) awarded rights to 44 million acres and granted
about US$1 billion in cash to 13 regional and 216 village corporations organized
to benefit Alaska Native shareholders; construction of the trans-Alaska pipeline
commenced in 1974. With 800 miles of pipe costing US$8 billion, this was the
largest and most expensive human-made structure in the history of the world.
During the construction boom, the population of the state grew 25 per cent and per
capita income increased more than 50 per cent. Since then, more than US$280
billion dollars worth of oil has been produced from Alaska’s North Slope. While
the Alaska economy has always centered on resource extraction – particularly furs,
gold, salmon and timber – North Slope oil has been worth seven times more valu-
able than all previous resources combined (Cole and Cravez, 2004).
Alaska’s North Slope is the homeland of the Inupiat people. For thousands of
years, the Inupiat have extensively used the land and sea for hunting, travel and
other subsistence activities. Prior to the development of oil at Prudhoe Bay, the
Map 7.1 The North Slope of Alaska.
142 Aslaug Mikkelsen, Sharman Haley and Olaug Øygarden
cash economy on the North Slope was quite limited. Before oil, in the Barrow
census area in 1969, the annual income was, in 2006 equivalent dollars, US$8204
per person, less than half the income in urban Alaska. In the 1970 census, more
than 90 per cent of homes had no flush toilet, nearly 80 per cent had no running
water, and 70 per cent had no telephone. Since oil, per capita incomes have more
than doubled – though they are still only 80 per cent of the income levels in urban
Alaska. All the communities now have modern housing with plumbing, well-
equipped schools and Internet access. Despite substantial improvements in the
material standard of living and increasing dependence on the cash economy,
it remains a mixed subsistence and cash economy. Cash is needed for snowmo-
biles and rifles, as well as for heating and electricity. Market food costs are high –
220 per cent of urban food costs
2
– and subsistence resources are needed for food
as well as for cultural purposes. A total of 57 per cent of households still rely on
bowhead whale, caribou, fish, and other subsistence foods for half or more of
their diet (NSB, 1999), and villagers plan to continue the mixed subsistence
lifestyle in future generations.
Today, nearly two-thirds of the 7253 North Slope residents live in Barrow; the
rest live in villages ranging from 200 to 700 people. Access to all North Slope
communities is by air. Three-quarters of the North Slope’s residents are Inupiat;
44 per cent speak Inupiaq at home and 14 per cent (primarily elders) are not fluent
in English (US Bureau of the Census, 2000). Nearly one-fourth of the adult popu-
lation has not graduated from high school. About 60 per cent are employed full
or part time. The Borough government is the largest employer for Inupiat resi-
dents and the village corporations are second. Trapping and crafts also provide
some earned income. Employment in the oil industry is notably low.
North Slope oil field operations provide employment to over 5000 non-residents,
who rotate in and out of oil work sites from Anchorage, other areas of the state,
and the lower 48 states. Census figures for the North Slope do not include this
transient population.
For additional background to the conflicts and the institutional framework of
Alaska and the North Slope, see Textboxes 7.1–7.4, and also Chapter 6.
Stakeholders and coalitions to the oil and gas
activities on the North Slope
3
The history and institutional framework of the North Slope define some of the
key stakeholders to the oil and gas activities. The main Native influence is chan-
neled through the Inupiat-majority North Slope Borough government and the
regional and village ANCSA corporations, which up till now have been in favor
of onshore oil and gas development and against offshore activities. In addition to
this, the indigenous people have influence through their tribal governments and
the Alaska Eskimo Whaling Commission (AEWC). These three groups of actors
were often mentioned as the most powerful locally and they are also deemed to
be politically skilled. Regional tribal organizations, such as the Inupiat
Commission of the Arctic Slope, do not seem to be as influential.
Expanding oil and gas activities on the North Slope of Alaska 143
Textbox 7.1 The history of Alaska land ownership
The United States bought Alaska from Russia in 1867. The land area of
Alaska was 375 million acres and it had about 35,000 inhabitants, most of
them indigenous people. Alaska was first administered as a territory, and
did not gain statehood until 1959.
Close to 1900 the US Congress opened Alaska to homesteading and
other programs that allowed individuals and businesses to apply for land.
Congress also acknowledged, beginning in 1884, that Alaska’s indigenous
people had a right to land, but it would take nearly 100 years for land claims
to be linked to land title. Big changes in land status began when Alaska
gained statehood and got rights to select about 104 million acres of federal
land. Alaska could choose from lands that were not reserved for national
parks, military bases or other purposes.
In the 1960s, when the state began selecting lands, Native groups saw
increasing threats to lands they had traditionally used and they organized
statewide to press their land claims. By the end of the 1960s, land claims
blanketed Alaska. The Secretary of the Interior responded by halting all
land transfers until the claims were settled. In 1971, Congress passed the
Alaska Native Claims Settlement Act (ANCSA). It was settled with a grant
of 44 million acres and payment of 1 billion dollars. Native regional and
village corporations were established to manage these assets.
The years from 1971 to 1980 saw a bitter controversy over how much
land would be added to national parks, wildlife refuges, and other conser-
vation units in Alaska. In the end, the 1980 Alaska National Interest Lands
Conservation Act (ANILCA) added nearly 104 million acres to the conser-
vation system in Alaska. About 56 million acres were designated as ‘wilder-
ness,’ the most protected classification. ANILCA generated management
issues and conflicts that are yet to be resolved. A major unsettled issue is
whether the coastal plain of the Arctic National Wildlife Refuge (ANWR)
– known as the 1002 area, referencing section 1002 of the Act – should be
designated wilderness or opened to oil and gas activities. This has been a
recurring and bitter political fight in the national political arena ever since.
Federal protections for subsistence practices in rural Alaska did not
come before 1980 with the passage of ANILCA. Title VIII of ANILCA,
entitled ‘Subsistence use in Alaska,’ focused largely on a priority for
subsistence harvests within the fish and wildlife management regimes.
However, the statute also included protections for subsistence use practices
within the context of federal land use decisions, reflecting the understand-
ing that the opportunity to engage in the subsistence harvest of fish and
wildlife resources rests upon secure resource populations and intact
productive habitats (McIntosh and Brelsford, 2006).
When the transfer of land is complete, the state will own about 28 per cent,
the Native corporations 12 per cent, and other private owners about 1 per cent.
The federal government will retain nearly 60 per cent of Alaska, largely in
national conservation units.
144 Aslaug Mikkelsen, Sharman Haley and Olaug Øygarden
Textbox 7.2 A new institutional framework
The Alaska Native Claims Settlement Act established 12 Native regional
corporations in Alaska and one in Seattle for Alaska Natives living out of
state. All Native individuals conceived before the Act was passed and received
approximately 100 shares in both their regional and village corporation. These
shares cannot be sold, but they can be passed on as inheritance. Several corpo-
rations have issued new shares for the so-called ‘afterborns.’ The regional
corporations hold surface and sub-surface rights to their land and the village
corporations own surface lands in and around the villages. Under sub-section
7(i) of the Act, 70 per cent of natural resource revenues accruing to the
ANCSA corporations must be shared with the other 11 corporations.
The Arctic Slope Regional Corporation (ASRC) is the regional corpora-
tion for the North Slope. It owns approximately five million acres of land.
Its 2005 net income was 127.5 million dollars. About 400 of its 6000
employees are shareholders. The ASRC has 9000 shareholders, and in 2005
the dividend paid to these was $28.61 per share.
The North Slope Borough (NSB) was organized as a regional govern-
ment in 1972 and adopted a Home Rule Charter in 1974. It was established
by village leaders – the whaling captains – who saw the need to cooperate
to manage the impacts and secure benefits from oil development. The oil
industry and many of the state elected leaders opposed incorporation of the
Borough because it meant another layer of taxation and regulation on the
industry. The Borough has powers of taxation, education, planning and
zoning, and provides municipal services such as police powers, utilities,
infrastructure maintenance, and housing. The income of the NSB is
predominantly from taxation of oil and gas infrastructure in the region, but
they also receive additional funding from state and federal sources.
Constituency to the Borough is not ethnically prescribed. The individual
villages all have both a city administration and a tribal village council.
Textbox 7.3 Leasing and permitting
The rights to subsurface mineral resources are transferred from landowners
to companies through lease sales. A lease does not authorize subsequent
exploration or development: for this the company must obtain a variety of
permits from state and federal agencies, including right of way for the
pipeline and access corridors, water use, coastal zone management plan
consistency review, lease operations, land use, fish habitat authorization, air
quality control, storage of drilling wastes, disposal wells, discharge preven-
tion, and contingency planning.
Expanding oil and gas activities on the North Slope of Alaska 145
On state lands onshore and in the three-mile band of state waters near
shore, the Alaska Department of Natural Resources (ADNR), Division
of Oil and Gas, is the agency responsible for the leasing and permitting
processes. In the federal National Petroleum Reserve–Alaska (NPR-A),
it is the Bureau of Land Management (BLM), an agency within the US
Department of Interior that manages leasing and administers the National
Environmental Policy Act (NEPA). The NSB must also review and approve
the proposed exploration and development activities for consistency
with their land use management plan and regulations, with particular
concern for fish and wildlife populations, habitats and subsistence
activities.
Offshore beyond three miles, the managing agency is the federal
Minerals Management Service (MMS). It administers the lease sales and
the NEPA review process for the outer continental shelf. The National
Marine Fishery Service is also involved to protect marine resources
covered by the Endangered Species Act and the Marine Mammal
Protection Act. The Borough has far less regulatory power offshore.
The National Environmental Policy Act was signed in 1969, coinciding
with the Prudhoe oil field. Under this Act, any activity that involves federal
action or approval requires an environmental assessment. If the federal
agency in charge, on the basis of this assessment, finds that the activity is
likely to have significant environmental impact, an environmental impact
statement (EIS) is required. An EIS is a long, public process and it can take
several years to complete. The core of the process is the development of
different activity alternatives and the environmental, and to some extent
social, impacts of these. The process starts with a series of public scoping
meetings, a draft EIS is then presented for a new round of meetings and a
commenting period before the final EIS is issued and a decision is made.
The first EIS was written prior to the 1973 construction-start of the Trans
Alaska Pipeline. At this time, there was also an Environmental Studies
Program initiated for the offshore by the MMS. Most of the subsequent oil
field developments on the North Slope did not require an EIS, as the Army
Corps of Engineers made the assessment that there would be no significant
environmental impact. The current policy, however, is to prepare a compre-
hensive EIS for an entire, area-wide lease sale or for a whole set of contem-
plated developments all at once.
Planning and zoning powers
The Coastal Zone Management Act as implemented in Alaska prior to 2003
gave broad powers to the local coastal policy council – in this case the North
Slope Borough – to set environmental standards for development projects.
For each project proposal, the local council determines whether the project
is consistent or inconsistent with their coastal management plan (CMP)
and policies therein. The state Division of Governmental Coordination (DGC)