Mikkelsen A., Langhelle O. (eds.) Arctic Oil and Gas. Sustanability at Risk?

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distorted the facts; they’ve even distorted the pictures. I mean you see

pictures ... of this huge Brooks Range mountain range, ... taken with a tele-

photo lens [so] the coastal plain is foreshortened. Remember that once you

get to the mountains you’re not on the coastal plain anymore. That area is

protected and it will remain protected. The area we’re talking about is the

coastal area.

There are also different visions of development. One informant says: ‘If you

went out on the street here in Anchorage or anywhere in United States of

America, and asked people about this, and they’ll say, “oh well the whole area is

going to be developed.” It’s nonsense. If you develop it to the same degree as the

North Slope, it is much less than 1% [of the surface area].’

There is uncertainty on how much oil there is in ANWR. The US Geological

Survey (USGS) estimates that there is an excellent chance (95 per cent) that at

least 11.6 billion barrels of oil are present on federal lands in the 1002 area, and

a small chance (5 per cent) that 31.5 billion barrels or more are present. But the

proportion that would be technically and economically recoverable depends upon

the state of technology and the price of oil. The USGS estimated that, with 1996

technology and prices (US$24/barrel in 1996 dollars), there was a 95 per cent

chance that 2.0 billion barrels or more could be economically recovered, and a

5 per cent chance of 9.4 billion barrels or more. Roughly one-third more oil

may be under adjacent state waters and Native lands (US Department of the

Interior, 1999).

Another argument for the opening of ANWR has been that production from

Prudhoe Bay is declining: from its peak of 2 million barrel a day, it is now down

to 700,000 barrels a day. The pipeline from Prudhoe to Valdez, the Trans Alaska

Pipeline System still has plenty of capacity left to take ANWR oil. Some of the

supporters of development argue that this ‘would give people the confidence to

come here and continue to explore because they know that their delivery system

is going to be viable, and [it] will continue into the future.’

Consultants and oil and gas representatives argue that the industry is much less

interested in ANWR and its potential than they are in National Petroleum Reserve

and the offshore areas. Perhaps the most significant evidence of this is in the

lobbying effort in front of the federal Congress. The state of Alaska has provided

millions of dollars per year for a lobbying effort, but in the last two or three years,

the oil industry has not contributed to this lobbying effort. Actors such as Arctic

Power are not happy about this, and say that it is probably because the companies

know that it would be seen as very partial. Several state-connected informants

also argue the Alaskans are in desperate need of additional development, ANWR

being one of them.

Kaktovik, situated on the coast of the Beaufort Sea in the eastern ANWR, is

the village closest to the prospective oil development. Most of the people in

Kaktovik support the opening of ANWR, although a substantial minority has

recently spoken out to oppose it.

The village corporation owns surface rights to

92,000 acres in the refuge, and the ASRC owns subsurface rights as well.

166 Aslaug Mikkelsen, Sharman Haley and Olaug Øygarden

Expanding oil and gas activities on the North Slope of Alaska 167

Representatives from the village, and from Barrow, lobby for the opening of the

refuge. Since the Inupiat own some of the land, the former Mayor of the NSB,

George Ahmaogak, also strongly supports this cause. His argument is that, unlike

in NPR-A where the federal jurisdiction supersedes the Borough, the local people

would have more control over how development happens on their own land.

The Gwich’in are Athabaskan Indians, and live in both Canada and Alaska.

In Alaska, they mostly live in Arctic Village and Venetie, south of ANWR. They

call themselves the people of the caribou. Their major subsistence resource is

the Porcupine caribou herd, which migrates thousands of kilometers each year

from its winter habitat south of the Brooks Range to its summer calving area

on the coastal plain of ANWR. The Gwich’in oppose the opening of ANWR

because they fear it will harm the caribou herd. According to one oil and gas

consultant, however, the Gwich’in have lost some legitimacy as bearers of ‘the

Native voice’ in this case since the other Native tribes support the opening.

However, one informant pointed to the fact that, in 1984, the same people who

now represent the Gwich’in in the battle against the opening of ANWR, leased

their own land in the area to a company for exploration drilling. The operators

found no potential for development on these lands. The informant accused

the Gwich’in of resisting the opening of ANWR just because they themselves will

not benefit from it.

Many stakeholders complain about the flux in environmental and developmen-

tal policies. ANWR is often used as the example. The coastal plain, the §1002

area, requires Congressional action to be opened for development. It actually

happened in 1995, but President Clinton vetoed it. At this writing in 2008, the

out-going Republican president and key Republican leaders in Congress are still

pushing to open the ANWR to oil and gas development, but the Democratic-

controlled Congress is against it and the two leading Democratic candidates for

president have also gone on record opposing it.

Relations with environmental organizations

In the Native fight for protection, it might have been expected that environmen-

tal organizations could have been allies. However, the most important argument

for their position is the value of lands as habitat for wildlife, for people to know

that there are wild places left like they were before Western humanity arrived. In

spite of the fact that many environmentalists do not object to subsistence hunting,

they are perceived by many Native people as so extreme on conservation that they

do not see them as partners.

A representative for a local corporation said:

We try to stay away from the environmental groups. We think that, if you look

at the ANWR model, what has happened with the Gwich’in, is that they

fundamentally bought in and were utilized by the environmental lobby. We

don’t want to be utilized by anyone’s lobby other than our own. But to that

extent, it creates more work.

A Native woman said:

I think the environmental groups have a difficult relationship with Native

communities because we see things in a very different light. For environmen-

tal groups it’s mostly about protecting at all costs, and for the Native commu-

nity it really is having respect for the environment. That means using what

the creator has given us to use in a respectful way. We see ourselves as the

first stewards of the land and of the environment. It’s been our job to do that

for centuries. Whaling is for instance a matter of cultural survival. And we’ve

had many, many disagreements with environmental groups who would rather

see a people die than a whale die.

The Alaska Coalition holds the position that everyone should have a say as to

what happens to the land and is opposed to the expansion of oil and gas activities

in the Arctic. However, their representative adds that it is not a simple question.

Some places are more suitable for development than others and some places are

more important to protect than others. The answer has to be given case by case.

They argue that the United States has an unsustainable energy policy, it revolves

around oil and gas only, and this needs to change. The coalition looks at the local

people as legitimate decision makers, but that this means that all local people in

a democratic sense should have a say, not just the leaders. The next tier for them

is that the lands are a part of the greater United States, they are connected envi-

ronmentally, and they are a part of our common, national heritage. The conflicts

that are built into this position are seen in the debate about opening ANWR.

Conclusion

As we have seen over and over again, the primary controversy over expanding oil

and gas development in Alaska concerns sustainability of the subsistence econ-

omy and culture. While there is broad agreement that a mix of development and

subsistence is desirable, there is little agreement on the nature of the trade-offs

involved, what the best mix might be, or how to achieve it. Can science and tech-

nology resolve these disputes? Must some areas be off limits, or do environmen-

tal performance standards and conflict avoidance agreements provide adequate

protection for subsistence values? If zero risk is impossible, how much risk is

acceptable? How much cost can the industry afford to pay for a design that mini-

mizes risks for local stakeholders? Can a process of consultation avoid animosity

and mistrust, clarify the core issues and build a respectful cooperative approach

to problem-solving? We have no answer to these questions.

Owing to the strong position the indigenous people hold on subsistence activ-

ities, we might expect them to be allied with the environmentalists. There is

agreement between indigenous people and environmentalists on issues like oil

spill, air pollution from outside, but on others they still disagree. The Natives’

primary goal is to utilize the natural resources to survive and make a living, while

the environmentalists hold a pro-conservation position. Conservation in this sense

168 Aslaug Mikkelsen, Sharman Haley and Olaug Øygarden

sometimes means untouched, which for non-Alaska environmental groups

may mean prohibiting subsistence hunting. This position is more visible as oil and

gas, climate change and other human activities displace animals from traditional

hunting areas and force local people to use larger motorized vehicles to travel

further to find game. The environmentalists’ idea of the pristine wilderness is

opposed to the Natives’ view of Nature as the resources you use to survive. This

may also explain why most Natives support the onshore oil and gas activities that

are not defined as a threat to their living. The supporters of both onshore and

offshore development accept that they must be as careful as possible to not inter-

fere with the subsistence activities of the locals, but they use arguments of a

secure national oil and gas supply as the main argument for having to use all the

resources in the area. No stakeholder group objects to the right of the Natives

to sustain their culture and traditional lifestyle, but the long-term effect of the

oil and gas activities on subsistence and the realism in this position is not

openly debated. The dependency on oil and gas revenues for modern technology,

welfare and living standards blur the clean-cut positions of those who are in favor

of and those who are against further oil and gas development in the North

Slope of Alaska.

The most persistent lines of conflict arise from structural differences in stake-

holder interests. Locals will always prefer technologies that entail lower risks to

the environment, while companies will always prefer technologies that are cost

lower. Whalers will always be less tolerant of risk to the marine environment

(approaching zero tolerance) than companies who find the current EIS risk

projection (10–11 per cent risk of a spill of 1000 gallons or more over the life of

the field) acceptable. Federal and state decision-makers will always give more

weight to the interests of national and state-wide constituents than will local and

regional officials who must advocate local interests. Inupiats who retain their

cultural values will always adopt a longer-term time horizon, past and future, than

company officials that face short-term shareholder demands and high discount

rates. Arctic residents will always care more about local control than their coun-

terparts. The art of negotiation and conflict resolution entails finding enough

interests in common to forge a politically acceptable compromise among these

competing interests.

Other sources of conflict are avoidable. For example, our key informant inter-

views turned up some disparaging attitudes that would, if openly expressed, only

serve to balkanize stakeholder groups and preclude constructive dialog. For

example, the stakeholder who dismissed cumulative effects as ‘nonsense’ and a

‘political ploy’ because he or she couldn’t imagine how covering ‘one per cent’ of

the surface area with infrastructure could possibly affect wildlife was displaying

closed-minded ignorance and animosity toward other stakeholders. Wildlife biol-

ogists have no problem explaining how linear structures might fragment habitat,

or how industrial noise or low-flying air craft might disturb wildlife and affect

populations. Economists have no problem explaining how industrial infrastruc-

ture for one project will lower the development costs for adjacent projects, so the

spatial impacts will tend to expand.

Expanding oil and gas activities on the North Slope of Alaska 169

Notable in the discourse is what is not discussed. While there is a great deal of

attention to the sustainability of subsistence activities as the foundation for

Inupiat identity, cultural values, social well-being, and the economic base for

communities, there is less attention paid to the sustainability of the cash side of

the mixed economy. NSB personnel are acutely aware of the reality that Prudhoe

Bay production is declining, NSB tax revenues are declining, and the North

Slope economy is already shrinking in terms of population and employment.

Perhaps this bedrock reality is so compelling that the need for additional devel-

opment is a given, such that mitigating adverse impacts on subsistence becomes

the policy variable and subject for debate. Or perhaps, as expressed over and over,

local people see the development as unstoppable, and that their only hope is to

slow it down, minimize the adverse impacts and maximize the local benefits.

Still, there was remarkably little discourse regarding avenues to maximize local

benefits and economic sustainability through increasing revenues, employment,

business income or diversifying the economy for the near and long term. A few

stakeholders that we did not manage to interview do take the position that tourism

would be a preferable economic activity for Kaktovik than oil and gas develop-

ment in ANWR.

Other notably absent issues include climate change and pollutants. While

climate change is of major concern in Alaska, it is not linked in local discourse to

the question of expanding oil development. Inupiats are active stewards of

the environment and all forms of pollution are of concern to them, but not neces-

sarily on their list of urgent priorities to warrant much discussion in our inter-

views. Contaminants in the food chain are less of a problem in Alaska than in

other regions of the Arctic. The primary source of these contaminants is long-

distance atmospheric transport from Europe and northern Russia, or old, aban-

doned military sites, not the local oil and gas industry. The prospect of an oil spill

offshore is a significant concern for potential contamination of marine life – the

lingering effects of the Exxon Valdez oil spill in the south of Alaska are an

omnipresent reminder of these risks. But development to date has been mostly

onshore, and the risk of contamination from onshore spills was, at the time of our

interviews, perceived as small. Spills of drilling muds, waste water, hazardous

materials and even oil pan drips from vehicles are closely monitored and, while a

perennial concern, are not a major source of contention. There is some air pollu-

tion from industrial activities and flaring of gas but, except for Alpine, these are

remote from human settlements and not a major concern at this time.

However, attitudes are changing in the wake of a major pipeline leak at

Prudhoe Bay in March 2006. With 4790 barrels of oil covering two acres of tundra,

this was the largest spill ever on the North Slope: five times larger than then next

largest spill in 1989. The pipeline had leaked for at least five days before the

snow-covered spill was discovered, and clean-up was hampered by bitterly cold

temperatures with wind-chill approaching 50∞ below zero [Celsius]. Investigation

revealed that inadequate monitoring and maintenance of the pipeline failed to

detect and correct unexpected levels of internal corrosion, and that many miles of

pipe in the older sections of the field were similarly vulnerable. Indeed, a second,

170 Aslaug Mikkelsen, Sharman Haley and Olaug Øygarden

smaller leak followed in August. Partial shut-down of the field cost the state

treasury millions of dollars per day in lost production taxes and royalties. The

incidents resulted in criminal and civil investigations by federal and state environ-

mental regulators, federal prosecutors, pipeline regulators, and members of

Congress.

While the oil spill surprised and shocked some people, it did not dampen the

enthusiasm and support by others for expanding the oil and gas activities. The

incident, however, is a reminder of risk and unpredictability that is inherent in oil

and gas activities, and incidents like this may also change the attitudes of impor-

tant stakeholders in the oil and gas industry. In the years to come, Alaskan

Northern villagers may face the problem of increased burdens from oil and gas

where they want it least – offshore. To reconcile the traditional ways of life will

not be less challenging. The question is what alternative development paths there

are for these settlements. This is the paradox of the situation of sustainable devel-

opment in this area.

Notes

1 In this chapter, we use the terminology preferred in Alaska, where Native with a capital

‘N’ refers to Alaska Native, which includes seven major indigenous culture groups:

Inupiat, Yupik, Aleut, Athabaskan, Tlingit, Haida and Eyak. In the context of Alaska’s

North Slope, Native and Inupiat are used interchangeably.

2 Bret Luick, March 2007 Food Cost Survey, University of Alaska Cooperative Extension

Service.

3 Our informants for this chapter will not be identified since, in conjunction with their

consent to be interviewed, we pledged anonymity. See the Alaska methodology in

Chapter 3.

4 The North Slope Borough Comprehensive Plan, 2005. (Available online at www.

co.north-slope.ak.us)

5 http://www.anwr.org/features/kaktovik.htm

6 Uiniq Magazine, Fall 2005, published by the North Slope Borough.

References

Alaska Department of Revenue (2006) Spring 2006 Revenue Sources Book. Online.

Available HTTP: http://www.tax.state.ak.us/sourcesbook/2006/spr2006/oil.pdf (Accessed

19 November 2007).

Cole, T. and Cravez, P. (2004) Blinded by Riches: The Prudhoe Bay effect, UA Research

Summary, no. 3.

Griffith, B. and Cameron, R. D. (1998) Shifts in the Distribution of Calving Caribou:

Developing a Model for Assessing the Impacts of Development, Poster presented at (1)

Annual Conference, Alaska Chapter of the Wildlife Society, Girdwood, Alaska, January

16, 1998; (2) 8th North American Caribou Workshop, YT, April 21–25, 1998.

McIntosh, S. and Brelsford, T. (2006) ‘Raising the Profile Of Subsistence Uses’: Section

810 Analyses And Subsistence Protections, in BLM Alaska’s North Slope Energy

Initiatives, presented at Invited Session: Subsistence Research, Resource Management,

and Public Policy in Alaska, 66th Annual Meeting of the Society for Applied

Anthropology, Vancouver B.C., March 31, 2006.

Expanding oil and gas activities on the North Slope of Alaska 171

Minerals Management Service, US Department of the Interior (2003) Beaufort Sea

Planning Area Oil and Gas Lease Sales 186, 195, and 202, Final Environmental Impact

Statement MMS 2003-001. Online. Available HTTP: http://www.mms.gov/alaska/ref/

EIS%20EA/BeaufortFEIS/beaufortfeis.pdf (Accessed 19 November 2007).

National Research Council (2003) Cumulative Environmental Effects of Oil and Gas

Activities on Alaska’s North Slope, Washington, DC: National Academies Press. Online.

Available HTTP: http://www.nap.edu/books/0309087376/html/

North Slope Borough (NSB; 1999) 1998 Economic Profile and Census Report. Barrow,

Alaska.

US Bureau of the Census (2000) Population and Housing Characteristics. Washington,

DC: GPO. Online. Available HTTP: http://www.census.gov/main/www/cen2000.html.

US Department of the Interior, Geological Survey (1999) The Oil and Gas Resource

Potential of the Arctic National Wildlife Refuge 1002 Area, Alaska (1999), 2 CD set.

USGS Open File Report 98-34.

172 Aslaug Mikkelsen, Sharman Haley and Olaug Øygarden

8 Oil and gas activities at the

Mackenzie Delta, in Canada’s

Northwest Territories

Aldene Meis Mason, Robert Anderson and

Leo-Paul Dana

Introduction

Events in Canada have paralleled those internationally. Indigenous people in

Canada have been leaders in the struggle for recognition of traditional lands and

resources and access to their socio-economic benefits. The Canadian Government

has been one of the more progressive in recognizing these rights. In addition,

the governments in Canada have built sustainable development requirements

into all planning, policies and programmes since the Bruntland principles were

introduced.

This chapter focuses on the building of the Mackenzie Valley Pipeline running

from the natural gas fields in the Mackenzie Delta and Prudhoe Bay in Alaska to

markets in Southern Canada and the United States. This has been one of the grand

industrial projects of the twentieth century. In 1974, a consortium of multinational

oil companies (called Arctic Gas) made application to the Canadian government to

build the pipeline. At the time, most believed the application would be approved.

However, a moratorium was declared. After 30 years of events and interactions,

the parties are again engaged in a regulatory review process to determine whether

the current Mackenzie Gas Pipeline Project (MGP) should go ahead. Since the

regulatory review process began in 2002, the MGP projected costs have doubled

from CAD$6 billion to CAD$17 billion.

The chapter begins with an overview of Canada today with regard to the

current oil and gas industry in the Arctic. It then discusses the status of indige-

nous populations located in the North and their indigenous rights. The Mackenzie

Pipeline has been planned to cross the traditional lands of four distinct groups

of people and the impact will not be the same on all groups. The third section

presents the discourse. It describes the history of the Mackenzie Valley since the

Berger inquiry in the 1970s to the present. Three sub-stories are identified:

(1) land claims and other rights recognition; (2) socio-economic development

and (3) environmental protection. It then examines these main story lines includ-

ing international, corporate, state and civil sectors. Finally, the chapter concludes

by using the framework to summarize the discourse among the parties. It then

uses the key principles and concepts from corporate social responsibility (CSR)

and sustainable development to draw conclusions about the evolving modes of

social regulations (MSRs), resulting modes of development and the degree to

which these are sustainable. In the current arena, we see that sustainable develop-

ment concepts have become part of the emerging MSRs because the parties

(communities, state and civil) demand it. In addition, strategic CSR has taken on

more depth as a necessity for corporate success in this new flexible regime of

accumulation. This deeper strategic CSR is shaped by and includes sustainable

development principles and practices.

Canada today

This section will first present a brief overview of the oil and gas industry in

Canada, especially in the Arctic. Attention then shifts to indigenous matters,

especially the demographics of the Arctic, its population and socio-economic

circumstances. It then provides a brief look at indigenous rights.

Oil and gas activity in the Northwest territories

The Northwest Territories (NWT) covers approximately 1,171,918 km

. Oral tradi-

tions confirm Aboriginal peoples of the Arctic used oil and gas seepages for fire and

light and to caulk their canoes before the arrival of Europeans. The explorer Alexander

Mackenzie noted these in the eighteenth century. Although non-Aboriginal people

claim they were the first to find oil in Norman Wells in 1919, the Sahtu Dene say

that Francis Nineeye was the first to find oil. Taking a sample in a lard pail to Tulita,

he gave it to Gene Gaudet, the Hudson’s Bay Manager. The sample was sent out on

the boat. The Sahtu said they never heard of that oil again and there is no record. The

Sahtu Dene also guided the geologists exploring the region around Fort Norman to

Legohli (where the oil is; Auld and Kershaw, 2005: 60).

Oil and gas activity in the NWT to date has primarily centred on the Beaufort Sea

in the Western Arctic. The Beaufort–Mackenzie Basin contains large volumes

of discovered oil and natural gas resources, and has high potential for future discov-

eries. Petroleum exploration for oil and gas began in the mid-1960s, with the bulk

of exploration drilling activity occurring in the 1970s and 1980s. ‘A total of 183

exploration wells (and 66 development wells) have been drilled in the region, result-

ing in the discovery of 53 oil and/or gas fields’ (Government of the Northwest

Territories, 2001: 1), quoting a National Energy Board report from 1998 in the

Marine EcoSystems Overview of the Beaufort Sea Large Ocean Management Area

by North/South Consultants and Inuvialuit Cultural Resource Centre (2005: 9).

According to the World Wild Life Federation – Canada (WWF), 1 million hectares

of oil and gas leases are located in the Beaufort Sea (WWF, 2005b).

However, NWT’s energy resources are largely untapped:

Discovered reserves are estimated at 2.8 billion barrels with an undiscovered

recoverable resource of up to 10 billion barrels; the estimate for discovered

natural gas reserves is almost 11 trillion cubic feet (Tcf), with an ultimate

recoverable resource of at least 60 Tcf.

(NWT, 2006: 59)

174 Aldene Meis Mason, Robert Anderson and Leo-Paul Dana

The Canadian Potential Gas Committee’s (2001) Report on the Gas Potential

in Canada suggests that these are too low – marketable reserves are more likely

in excess of 60 Tcf in the NWT: 5 Tcf in the Mackenzie Valley, 30 Tcf in the

Beaufort Basin and 26 Tcf in the High Arctic.

The NWT is positioned to play a significant role in the North American market.

Canada’s total conventional oil and natural gas proven reserves are estimated at

4.3 billion barrels and 58 Tcf, respectively, at the end of 2004. To date, the most

significant development has been the Norman Wells oil field. This field is Imperial

Oil’s single largest producing source of conventional crude oil for the North

American market. Natural gas production is currently on a scale of about 70 million

cubic feet per day (NWT, 2006: 59).

Although vast reserves are here, oil and gas development in the NWT is still

in the early stages. The challenge is to get the product to market. If the pipeline

is approved, a boom will occur. The preferred solution has been a CAD$17 billion

12,220-km pipeline up the Mackenzie River Valley, a route that crosses the tradi-

tional land of four indigenous groups: the Inuvialuit, the Sahtu Dene, the Gwich’in

and the Deh Cho. The anticipated value of the oil reserves from the Mackenzie

Valley Gas Project hovers around CAD$3 trillion.

Overview of NWT socio-economic indicators

The NWT total population in 2005 was 42,982 (males 22,093 and females 20,889).

The Aboriginal and non-Aboriginal population were almost balanced – 21,413

versus 21,569. (In Canada, Aboriginal people include the Inuit, Métis and First

Nations. ‘Indigenous’ is not a term which is commonly used.) The average annual

population growth rate was 0.3 per cent. Households with more than six people

were 7 per cent in the NWT, and 12.7 per cent in smaller NWT communities,

compared to 3.1 per cent of Canada. About 79 per cent of families in 2001 were

couple families and 21 per cent were lone parent families. This rises to 28.3 per cent

in smaller NWT communities and compares with 15.7 per cent for the rest of

Canada (NWT Bureau of Statistics, 2006).

About 44 per cent of Aboriginals 15 years and older speak an Aboriginal

language; in smaller communities this rises to 61.9 per cent. Although 67.5 per

cent of people have a high school diploma or further education, in smaller

communities only 36.8 per cent do. Fifty per cent have graduated from high

schools as compared to 75.9 per cent for Canada. Labour force participation

is about 75.6 per cent and the unemployment rate is 10.4 per cent; 69.7 per cent

of males and 65.7 per cent of females are employed. Of those employed, 85.9 per

cent worked full time and 11.6 per cent part time, and 75.6 per cent worked more

than 26 weeks. Average family income is CAD$91,362 while 16.2 per cent

of families earned less than CAD$25,000 and 61.1 per cent earned more than

CAD$60,000. The cost of living index compared to Edmonton, Alberta, ranges

from 147.5 per cent in Inuvik to 162.5 per cent in Tuktoyaktuk. The 2004 Food

Price Index compared to the Yellowknife NWT is 140.5 per cent and 206.4

per cent in Tuktoyaktuk.

Oil and gas activities at the Mackenzie Delta 175