Alaska divided as Shell halts Arctic drilling: heartbreaking news or a miracle?
The news was shocking: Shell was shutting down, friends from other time zones said. The company would cease offshore oil drilling operations in Alaska’s Chukchi Sea.
Shell, which has spent billions on its Arctic effort, said on Monday that Arctic oil reserves were insufficient and the regulatory environment too unpredictable to continue.
As the news spread, some Alaskans expressed dire worries about the ripple effect on the state’s oil-dependent economy, which has already suffered a blow from low oil prices. Others saw the move as a reprieve for the state’s fragile northern ecosystem that many Alaska Native communities rely on for food.
Ahtuangaruak is Inupiat, a longtime member of the regional tribal council concerned with the environment and cultural preservation. The chance of an oil spill in Arctic waters threatened Alaska Natives’ tradition of living off the land, she said. People in the village rely on marine mammals for food, and the village has already taken six bowhead whales this season.
The news lifted a burden on villagers’ souls, she explained. “Many people are hoping for these (oil) jobs, but we have a beautiful ocean out there that has many opportunities for protecting our way of life.”
State representative Ben Nageak, also Inupiat and from Barrow, took the opposite view, calling the news “heartbreaking”. Along with a hoped-for gas pipeline, new sources of oil are seen as ways to stem Alaska’s budget woes.
“We stood on the cusp of another economic boom that could have propelled our young people and their children to better futures,” he wrote in a statement. But “a draconian and poisoned federal government” shut it down, he said.
Just like Alaska Natives cutting wood for heat in winter, Alaska depends on resources to survive, he said in an interview. Certainly a possible spill would be a catastrophe, but there were safeguards in place and the opportunity for Alaska’s economy was essential.
“It’s our bread and butter,” he said.
Meanwhile, environmental groups saw the news as a victory.
“I was stunned and I was wondering if it was a practical joke because it was too good to be true,” said Margaret Williams, director of the World Wildlife Fund conservation group’s US Arctic program.
Most Alaskans will receive a checks of more than $2,000 from the state in coming weeks, a dividend from invested oil earnings called the Permanent Fund dividend. This payout is the largest ever, and there are some who feel the time has come to use the money elsewhere to fund government.
“Shell’s announcement to me is another clarion call to the state and those managing the Permanent Fund that we need a new model of managing our funds and we need to diversify the Alaska economy,” Williams said.
To offset losses from Shell, the state could explore becoming a laboratory for renewable energy, she said.
Alaska governor Bill Walker used the moment to make a push for natural gas development, and for the opening of protected federal land in the Arctic National Wildlife Refuge. Walker, who spent time with Barack Obama during his recent visit, said he called the president to set up meetings on the pullout.
Shell has more than 200 employees in Alaska, along with several thousand contract employees. Neal Fried, a state economist based in Anchorage, said there was a lot of uncertainty for the state because of the price of oil, but Shell had been a bright spot.
“For our economy, it’s an important story,” he said.
In terms of immediate job-loss numbers, he said, the impact is small, but the real unknown is what will happen over time because of opportunities lost and the effect on business confidence.
Kara Moriarty, president of Alaska Oil and Gas Association, called Monday a “sobering, devastating day for Alaska.”
“We know the oil is there. They were only allowed to drill one well. Nobody does that. They had so much committed they needed to make that one well be the prize winner,” she said.
And that well didn’t produce up to expectation. Other productive fields required many attempts before companies were able to find productive ones, she said. But regulations made further exploration
“There is a very low likelihood that I’m going to see Arctic production in my professional lifetime,” she said.