Commonwealth North is Alaska's premier non-partisan public policy forum.
Join us to learn more about critical policy issues facing Alaska.
An answer to dwindling domestic energy production and foreign oil dependency. Development of Alaska’s ample natural resources would provide a solution to the energy gap of the 1980's.
Open the original report (PDF, 5 MB)
This web version was produced by machine from the original report so that it can be read and searched online. Tables, charts and photographs are not included, and older scans may contain small errors. The original PDF is the authoritative version.
ENERGY CRISIS
WHY NOT ALASKA?
SOLUTIONS TO THE NATIONAL ENERGY CRISIS:
WHY NOT ALASKA?
A Report by
Commonwealth North
Prepared by the Energy Committee
November 1979
Second Printing December 1979
Except for reviews for the public press, this report may not be reproduced in whole or in part without written permission. For information, please write Commonwealth North, 935 West Third Avenue, Anchorage, Alaska 99501.
INTRODUCTION: WHY IS ALASKA BEING IGNORED?
WHAT IS ALASKA'S ENERGY POTENTIAL? 0.22000-
USGS ESTIMATES OF OIL POTENTIAL ESTIMATES FROM THE STATE OF ALASKA THE ARCTIC NATIONAL WILDLIFE RANGE
GEOTHERMAL, TIDAL, WIND AND SOLAR
WHY ISN'T THE ENERGY INDUSTRY MORE BULLISH
WHAT IS MOTIVATING THE FEDERAL GOVERNMENT IN ITS POSTURE TOWARDS ALASKA? sccesceeevecne
THE ENVIRONMENTAL COST OF DEVELOPMENT oe
THE NATIONAL MEDIA "BLACK OUT" 02eecee
WHAT SHOULD THE FEDERAL GOVERNMENT BE DOING?..
WHAT SHOULD THE ALASKA STATE GOVERNMENT BE DOING?..
WHAT CAN THE PRIVATE SECTOR DO? -ceecccccecevece
RECOMMENDATIONS FOR ACTION... 2 cence cece c cece c cece
"The report is an eye opener. The role that Alaska can play is far greater than I -- and I assume most other reasonably well-informed people -- had any idea. It is literally a national disgrace that Alaska's resources should not be made available to meet our national need."
~ Milton Friedman, Economist, Senior Research Fellow The Hoover Institute, Stanford, California
Director of Research, I found the report to be factual, enlightening and compelling. It clearly shows that a cando attitude coupled with existing U.S. energy resources even now offers our great nation an opportunity to escape from the energy track into which we have carelessly fallen."
"In the face of the critical energy problems confronting North America and particularly the United States, I commend this report illustrating the important role that Alaska is able to play."
"This report makes clear the urgency of our nation gaining an understanding of the mineral reserves in Alaska. A crucial factor in the ultimate disposition of Alaskan lands must be a careful assessment of their energy potential. If any energy-related crash program is needed in this country, it is to survey these vast lands."
"The report's timing is propitious; it comes at a time when the Congress is considering legislation to classify millions of Alaskan acres into various land use patterns. In its deliberations, Congress must recognize the manifold potential of Alaska to supply this nation with much-needed resources such as oil, gas and minerals, as well as great
A serious loss of petroleum imports would take the United States to the edge of calamity. There is no possibility that the nation could respond quickly enough with synfuels, shale oil, solar power and wind power. None of these could prevent long lines of out cities and an emasculated defense system. Energy riots could spread across the land, since an energy disaster will fall most heavily on the urban poor.
Ever higher costs of gasoline and heating oils are already disastrous to the poor and the elderly. Those high costs, and the prospect of ever-multiplying petroleum prices, demonstrate the unleashed economic power of oil-rich countries and disclose their great political power.
There is little the United States government can hope that our statesmen must never face the temptation of going to war to save oil fields threatened by a Soviet-backed invasion from a "People's Republic."
Many members of the United States Congress appear willing to risk a national disaster by failing to secure energy supplies needed for the critical 10 to 20 years just ahead. Alternate energy sources will not be developed overnight. Conservation can help, but cannot reverse America's dangerous dependence on foreign oil producers.
House and Congress appear ready to withhold from the nation the abundant energy and mineral resources of the huge State of Alaska.
Recognizing the danger of national dependence on uncertain energy supplies, the Board of Directors of Commonwealth North asked the Energy Committee to address the question of Alaska's potential to help solve the nation's energy shortages. We accepted the task with a mixture of trepidation and enthusiasm.
Trepidation, because the nation's "Energy Crisis" has been debated and discussed almost to exhaustion over the past six years. The American people are weary of hearing conflicting information, viewpoints, and ing Alaska makes public acceptance of an objective
Our enthusiasm stems from those same factors. The need for reliable data upon which concerned Americans can rely with confidence was never greater. And weary or not, the nation must continue to face the energy challenge until it is overcome.
Our purpose is not to deal with, let alone solve, all of our country's problems concerning energy. Our contribution, an objective appraisal of Alaska's role, is merely a building block for the final answer. Having said that, we believe it is an important element of the whole picture.
We also know this. The material in this small study is not widely understood by the American people. Since no one is wise enough to reach sound conclusions from inaccurate data, we feel this project is justified if for no other reason than to help set the record
Our hope, of course, is that it will generate a return to positive, creative leadership and a strengthening of national security and enlightened productivity.
Those are important and worthy goals. We are proud to have made this effort motivated solely by a sense of dedication to the needs of our great nation, and in a wider sense to the health and stability of the world as a whole.
Energy Committee Commonwealth North
November, 1979
The questions posed to the authors of this report by the Board of Directors of Commonwealth North were essentially two-fold:
study:
What is Alaska's potential for meeting the near-term (next 5 to 15 year) energy needs of the U.S.?
Why is Alaska not on the national agenda for meeting the energy crisis?
following points summarize the conclusions of this
Conservation and solar energy, however wholesome and attractive for the long-term, will not, within the next five to fifteen years, reverse the ever-weakening national energy picture nor check the devastating U.S. dollar drain overseas to buy foreign energy.
While alternate energy technology is developing, the near-term solutions to the nation's problems lie in oil, gas and coal, which presently supply 92% of our national needs. Hydro and nuclear power provide only 8%.
Alaska currently produces 1.6 million barrels of oil per day (18% of all U.S. domestic production), and could be producing 4.5 to 5 million barrels per day.
Five million barrels per day of Alaska oil would reduce the overseas flow of U.S. currency by nearly one half.
Official government publications and the national media largely ignore Alaska's energy potential, and there is a virtual "black-out" of information about the State's enormous reserves of oil, natural gas, coal, hydro and alternate energy resources.
Responsible estimates of potential recoverable oil in Alaska range from
22 to 138 billion barrels. The larger figure compares favorably with Saudi Arabia's 110.4 billion barrels of estimated reserves. Coal reserve estimates range between 1.8 and 6 trillion tons.
The 49th State is a potential world power in the energy arena.
Many Americans think Alaska's oil
and gas resources are being actively sought and produced, but the reverse is true. Only 7 oil rigs are at work in the State, compared to 366 in Louisiana and 807 in Texas.
The main deterrent to Alaska becoming part of the solution to the national energy crisis is the Federal government. Less than one third of one percent of Alaska is privately owned, and no Federal lease sale of on-shore oil potential land has taken place in Alaska Since 1966.
The White House and many leaders of Congress are pushing for legislation that would place 123 million prime acres of Alaska in permanent, exclusive land classification, and yet the exploration of the resource base in these areas is in its infancy.
There are 250,000 square miles of Alaska, and another 300,000 square miles off-shore. Outside of
Prudhoe Bay and Cook Inlet, only
136 wells have been drilled in these oil and gas potential regions since 1900, compared to over 2 million wells in the rest of the United States.
The vast majority of the on-shore potential oil and gas areas in Alaska are unexplored. The majority of this acreage will be off limits to exploration if the Alaska lands legislation passes.
According to the Louis Harris Perspective #56 (1979) eighty-seven percent of the American people believe that those
Alaska lands which are rich in energy
and mineral resources should not be
placed in restrictive wilderness cat~- egories by the Federal government.
One such area, the Arctic National Wildlife Range has the greatest oil and gas potential of any area in North America. Reports, downplayed by government, say it could contain enough oil to supplant all foreign imports for up to ten years.
Only one half of one percent of
the Arctic Range would be needed for exploration and production of oil and gas. No scientific evidence exists showing that such activity would threaten the wildlife with extinction or even population reduction.
Congress is about to lock up energy potential lands in Alaska before they have been explored and inventoried.
Exploration in the Arctic does not
mean callous disregard of other values. As proven by Prudhoe Bay's oil field development and the Trans-Alaska Pipeline, resource use can take place skillfully and carefully, providing energy America needs without destroying Alaska's beauty.
The Arctic’s energy resources can he tapped without harming the land or the wildlife.
16. The reasons Alaska is being overlooked by most Americans as a major energy supplier are the following:
a. Honest ignorance on the part of the media, Members of Congress and the public at large about the incredible dimensions of Alaska's potential.
b. False fears that finding and producing these resources will harm Alaska's environment.
ethic have been placed in key decision-making positions in the Federal Administration. deliberate government policy aimed at stopping exploration for and production of energy in Alaska, as illustrated by the lease sales of oil and gas potential land, and by the Alaska Lands Bill, which they are promoting in Congress.
d. Politicians who, pressured by illinformed environmentalists at home, fail to connect Alaska as wilderness to a lock-up of their energy needs.
18. If government at all levels encourages the finding and transporting of Alaska oil, the control over the U.S. by the OPEC nations can be substantially retrates the positive impact Alaska oil can have on this situation. The illustration assumes that annual U.S. oil consumption will be held constant, through conservation or the production of other energy alternatives.
ALASKA'S POTENTIAL FOR REPLACING FOREIGN IMPORTS
18.8 Million Barrels per Day U.S. Oil Consumption
ALASKAN a
PRODUCTION
SOURCES
SOUTH 48
SOUTH 48
IF SOUTH 48 PRODUCTION DECLINES, THESE BARRELS WILL HAVE TO BE REPLACED BY ALTERNATE SOURCES,
Such as Conservation, Synfuel, Solar or Foreign Imports
INTRODUCTION: WHY IS ALASKA BEING IGNORED?
North Slope oil production at Prudhoe Bay, the largest oil and gas field ever discovered in North America, thrust Alaska into the national energy spotlight. The Trans-Alaska Pipeline delivers 1,475,000 barrels of oil per day to the ice-free port of Valdez, where tankers carry it to the people of the south 48 states. Oil rigs in Kenai and Cook Inlet swell the total daily Alaska oil Alaska already provides output to almost 1,600,000 barrels, over 18% of America’s accounting for over 18% of the. nation's domestic oil production. domestic oil production.
And yet, because most of the vast sedimentary basins with oil and gas potential have yet to be tested tential of America's largest state, one-fifth the size of the entire continental United States, is truly unknown.
It is safe to say that Alaska is rich in oil and gas. These fossil fuels are the cheapest and most immediate sources of energy, as illustrated by the fact that As oil and gas account they account for three-quarters.
of all the energy consumed in the for three-quarters of U. S. Therefore, Alaska most all energy consumed in definitely holds enormous poten- the U.S., Alaska has © tial to alleviate the near-term enormous potential to national energy crisis. alleviate the national
The question naturally follows: crisis.
Why is Alaska being ignored?
Why, when President Jimmy Carter launched his national energy program after his Camp David Summit did he fail even to mention the exploration and production of new sources of oil and gas in Alaska?
Why, in fact, does this very real, and apparently obvious possibility seem to be a top priority on no one's list?
The oil companies appear to have cooled towards Alaska. The U. S. the small three man Alaska congressional delegation, spends inordinate time and effort on an Alaska lands bill which would withdraw or block access to the majority of the acreage in the State which isn't already classified as off-limits to exploration for critically needed minerals and energy resources.
THE EMERGING LAND PATTERN IN ALASKA
Black areas indicate federal and state parks and other restrictive withdrawals @ Gray areas are withdrawn for Alaska Native selections
White areas represent the remaining state and federal lands which may eventually be available for multiple use and energy extraction
Meanwhile Federal and State coastal zone management legislation, critical habitat areas established by both governments and a near total freeze on leasing of public lands, make Alaska off-shore oil a constantly
The American people seem oblivious. There is a very little awareness of Alaska's capacity to help solve two of the country's most severe problems, energy shortage and inflation. Insetting for "the last great wildlife Udall of Arizona calls it.
example: unless Alaska is "saved" (meaning placed in Federal wilderness status) it will be "destroyed and
There is no question that Alaska has certain prime land areas that must be and will be preserved. But the ‘ illusion that all of the areas The American people Congress is planning to withdraw seem oblivious. from multiple use classification have a Walt Disney cast of thousands of wild animals has no basis in reality. Most Americans will be surprised to learn that the tonnage of big game in the State of Pennsylvania equals, and may exceed, Alaska's.
In 1973, the late Alaska Senator Ernest Gruening, bluntly challenged the Federal Government's plan to withdraw vast regions of the State, saying, "The areas designated as National Parks, and I know them well, are not worthy of that designation and not up to National Park standards. Had any of them been, they would have been proposed long ago. Now they are just a pretext for massive withdrawals.”
Why then is Alaska not on the national energy agenda? Is it due to (1) the high cost of operating in a frontier region, (2) State tax policy and regulations,
This report seeks to find out why, and to make recommendations how Alaska can help the nation achieve energy independence.
(3) the attitude and direction of the U. S. Congress, (4) White House policy, (5) the power of the national conservation lobby (6) financing priorities of the oil industry, (7) genuine ignorance on the part of national decision-makers, the media and the American public, (8) the cost to the environment of such dereason?
This report, prepared by Commonwealth North, a nonpartisan group of Alaskans dedicated to discovering the facts on critical issues facing the State and the nation, seeks to review these questions and to make recommendations how Alaska can play a major role to help America in a time of crisis.
For years, Alaska has been viewed by its residents and leaders as an energy storehouse for the nation. Historically, most large oil companies high cost of exploration, production and transportation. Some small, independent oil firms and a few majors became involved; and after the discovery of a significant field on the Kenai Peninsula in 1957 and the subsequent giant find at Prudhoe Bay in 1968, oil company opinions began to reflect the optimism of Alaska's leadership. And yet, with the expense and uncertainty of bidding for leases on public land, the private sector downplayed the State's potential.
Admittedly, the estimates of oil and gas reserves in Alaska have always The estimates of been controversial, encompassing a ‘ wide range of figures. In 1967, oil and gas reserves prior to the discovery of oil at Prudhoe in Alaska have always Bay, Governor Walter Hickel announced been controversial. to the nation that the North Slope contained at least one billion barrels of recoverable oil. The oil industry he was soon called by President Lyndon Johnson to Washington, D.C. to meet with top U.S. oil men. They thought he
"Governor, do you know how much 100 million barrels of oil is, let alone one billion?" an oil company representative asked him derisively.
were extremely conservative. noo® warehouses over 24 billion warehouses over 24 billion barrels of barrels of oil...9.6 billion oil. The North Slope producers estimate will be recoverable. that 9.6 billion barrels of Prudhoe Bay oil will be recoverable.
Former Governors Egan and Hickel maintain that Alaska’s potential oi!
in place ranges from
300 to 600 billion barrels.
‘*Seward’s Folly’’ could tilt the world back into the U.S. dollar.
Former Alaska Governor William believes that over 20 billion barrels of oil will eventually be extracted from that one area in Arctic Alaska.
Both former governors, after decades of living and working with geologists and experts both in and outside government, maintain that the total potential oil that will be found on and off-shore Alaska will range from 300 to 600 billion barrels. Translated to recoverable reserves, with today's technology, that means 100 to 200 billion barrels tions prove true, our 49th state could rank in volume with Saudi Arabia for potential oil production.
Additional credence was added to these projections in September of this year at the Tenth Annual World Petroleum Congress. G. R. Harrison, senior vice president of Canada's Dome Petroleum Limited announced the discovery of a 12,000 barrel per day well in the Beaufort Sea east of Alaska. He presented a paper stating that "the strategic importance of the Arctic has been enhanced by the prospect of having oil and gas in quantities that may rival the Middle East."
disagree with this assessment. But the possibility remains that "Seward's Folly" could tilt the world back into
In November 1979, in spite of the OPEC price of $18 per barrel, other foreign oil is selling at an average of $23.50 and is over $40 on the spot market. The total 1979 price-tag for U.S. imports may go as high as $70 billion or even higher. The graph on page 5 dramatically illustrates this phenomenon.
The question of Alaska's potential will continue to be a tanis a thorough inventory of the State. Just as experts scoffed at the conservative announcement of Prudhoe Bay's potential years ago, the facts will never be known on the State's total reserves until wells are drilled. Seismic tests and core drilling have taken place only sparingly in Alaska's twenty-three oil © The number of wells provinces. And the amount of drilled, the only actual wells drilled is ridic- real proof, is very ulously small. See list below: small.
A. Number of wells drilled onshore
Prudhoe Bay & Pet IV---------~---~--- 454
Arctic Wildlife Range--------~------ 0 Cook Inlet Basin (Includes offshore) --694 Foothills & Brooks Range---~----~------ 24 Yukon - Porcupine--7-~----7-----~--- 7 3 Bristol Bay Tertiary-----------~------ 10 Alaska Peninsula---------------- eoece 16
B. Number of wells drilled offshore
Cook Inlet (see above)
Gulf of Alaska Tertiary--------------- 69
Central Chukchi Sear men rer r enn 0
outside prime oil and gas potential structures, designed to verify seismic data. 13
Brooks Range Divide
GRAY AREAS REPRESENT BASINS WITH OIL AND GAS POTENTIAL
A = NO. OF WELLS DRILLED
Test Well
his\
GULF OF we ALASKA TERTIARY
SHELF
THE EMERGING LAND PATTERN IN ALASKA
Qa areas indicate federal and state parks and other ~
‘Gray areas are withdrawn for Alaska Native selections White areas represent the remaining state and federal lands which may eventually be available for multiple use and energy extraction
AS a comparison, in the 48 states, for the period 1947 to 1978, a total of 336,435 exploratory wells were. drilled. The total of all oil and The average Alaska oil gas wells drilled in the search for well produces 3,863 oil and gas in the United States is barrels per day. The estimated to be 2,256,800. Therefore average well in the other Alaska, with all of its apparent states produces 16.
potential, has had only two one of total U.S. exploratory drilling.
Because of the lack of a transportation infrastructure (there are only 5575 miles of state-maintained roads and highways, roughly the same as Rhode Island, the nation's smallest state) and the other challenges ‘o£ operating on a frontier, the oil companies have produced oil from none but the very largest reserves they have located. The daily pro~ duction per well emphasizes this fact. The average Alaskan well produces 3,863 barrels of oil per day. The average well in the other states produces sixteen (16) barrels of oil per day.
figures from which to draw reliable estimates of Alaska's energy reserves are simply not available.
As the authors of this report have neither the expertise not the end of the spectrum of estimates, the following discussion of the most credible and oft-quoted sources is presented for the reader's review. Even if the most pessimistic estimates are Even without studying this relied upon, Alaska material, an obvious and immediate ranks as a world power conclusion presents itself. If the in the oil and gas most pessimistic figures listed below are relied upon (22 to 59 arena. billion barrels of recoverable oil), our most northern state could and should rank as a world power in the oil and gas arena, dramatically altering the national energy scene.
estimates peg Alaska’s recoverable oi] reserves as greater than Venezuela’s and perhaps equal to the Soviet Union's.
For comparison, according Petroleum Statistics 1978, 22 billion barrels is more than the total estimated reserves in Venezuela and nearly as much as in OPEC's Abu Dhabi. Fifty-nine billion is equal to the total reserves in the Soviet Union, which now ranks as the largest daily oil producer in the world.
The USGS Resource Appraisal Group is the source of the most conservative estimate of Alaska's hydrocarbon potential. Circular 725, published first in 1975, the Tatest USGS document available on the subject, pegs Alaska's undiscovered recoverable oil potential within a range of 12 to 49 billion barrels, and estimates natural gas potential at 29 to 132 trillion cubic feet. Added to the already proven recoverable oil reserves, the total becomes 22 to 59 billion barrels of oil and 61 to 164 trillion cubic feet of natural gas.
The Appraisal Group is currently revising their estidue to the unsuccessful drilling in the past two years in ocs waters in Alaska's Northern Gulf.
These estimates by the Appraisal Group, a small team of employees located in an office in Denver, Colorado, are prepared through computer projections extrapolated from theoretical models and
Scientific rock work done by
Billions of Barrels
ALASKA
Billion Barrels
ALASKA* VENEZUELA
A OPEN FILE 50
ALASKA’S ESTIMATED RECOVERABLE OIL POTENTIAL
Billion Barrels
Saudi Arabia
Billion Barrels
MEXICO
Billion Barrels
Source of International Estimates
Critics attack USGS data as a product of
Proprietary information must be added to the total data base.
the past seventy years.
Critics attack much of this data in which rocks were studied academically. But information on geologic changes and structure is so scant, the critical guides to oil and gas deposits (permeability, porosity, organic content and structural traps) cannot be evaluated with any assurance. And geochemistry, the now sophisticated science of chemical analysis of source materials, has only recently been adopted by the Survey.
The other principal data used by the USGS is supplied by the American Petroleum Institute (API). These figures are accumulated from estimates provided by oil companies who have deemed it appropriate to release such information to the public. Traditionally, vital exploratory information is kept confidential. For obvious competitive reasons, oil companies are notoriously secretive with information they are willing to share.
Dr. Joseph Barnea, senior fellow of the United Nations Institute for Training and Research (UNITAR), claims that USGS figures nearly energy and mineral reserves.
"I have fought with the USGS personnel for years," he says. from the private sector. On that basis, wise and rational policy makers. Proprietary information must be added to the total data base, and it can be done without revealing specific numbers for regions for which private enterprise is in competition."
As there are so many unknowns on the Alaska frontier, everyone's figures are vulner- There are so many ’ able to honest challenge. One unknowns, everyone's definite conclusion can be figures are vulnerable drawn. It requires an equal to honest challenge. act of faith to stake the nation's future on the relatively pessimistic USGS figures as to judge the estimates of former governors Hickel and Egan
The most recent inventory of Alaska's oil and gas potential was produced in two volumes by the State of Alaska in October, 1977. Based on a study by the Department of Natural Resources in 1974, the report lists the estimated speculative oil resources on and offshore, excluding the Arctic National Wildlife Range, as 76.1 billion barrels of recoverable oil and 439.6 trillion cubic feet of gas.
In the discussion of procedures, the authors of the earlier document write, "It is therefore the figures could be 25% too high, but with the addition of a few giant oil fields, they may be 50% too low."
1 When these percentages are Neither the state nor calculated and added to the poten- ‘ tial of the Arctic National Wild- the USGS has any estilife Range, (14 billion barrels; mates of the heavy see discussion below) and already crude oil potential discovered reserves (9.9 billion in Alaska. barrels), Alaska's potential would be somewhere between 68 and 138 billion barrels of recoverable oil.
To date, drilling companies have written off as a ‘‘dry hole’’ anything short of a giant field.
The unexplored sedi- Alaska loom in importance.
It is important to note that neither the figures from the State nor the USGS make any reference to heavy crude oil. Heavy crude has such a thick density it generally was not conuntil very recently.
At the world conference on Heavy Crude Oil and Tar Sands at Edmonton, Alberta in June of 1979, experts agreed that heavy oil normally doubles the size of estimated reserves of lighter crude.
In Alaska, there is no data on heavy crude, except for an estimated 1.9 billion barrels at Prudhoe Bay. But the lack of information may only indicate the absence of interest on the part of the oil industry. To date, facing the costly economics of oil recovery in Alaska, the drilling companies have written off as a "dry hole" anything short of a giant field of light or medium range crude.
But, as the cost of oil escalates worldwide, the feasibility of producing heavier crudes will come within reach.
Ten new production break-throughs ence. In some countries, heavy crude is already in production. Depending on the depth at which it is found, it most definitely promises to be a cheaper product than oil from highly-touted shale.
As the nation takes stock of its oil reserves, the unexplored sedimentary basins in Alaska loom in importance. Many of them may soon be "off limits" to drilling because of Federal land withdrawals. One of these, and by far the most highly rated, is the Arctic National Wildlife Range.
In estimating the most promising areas for discovering future giant oil and gas fields in Alaska, nearly all knowledgeable petroleum geologists will rate as number one, the Arctic National Wildlife Range. This
8.9 million acre reserve is lo- The most promising area cated on the North Slope, adja- for finding another giant cont to the Prudhoe Bay oil field. oil and gas field is in the All of the same structures that ‘ ‘ snags underlie Prudhoe Bay continue Arctic National Wildlife east under a good portion of the Range.
Range.
In January, 1973, Don C. prepared a report on the geology and mineral evaluation of the Arctic National Wildlife Range. an “enormous oil and gas reserve may be trapped in the Marsh Creek anticline, just south of Camden Bay on the Arctic Coast.”
No seismic tests or core drilling have ever taken place commended that the area be strongly urged that this exploration be done before the Wildlife A reserve of 14 billion Range is withdrawn from all such barrels of recoverable activities. It is especially recommended that exploration for oil and gas in the Coastal Plain be allowed."
oil can be calculated.
tion house nearly all of the calculated reserves of the Prudhoe Bay oil field. In the Wildlife Range, up to 1800 feet of Sadierochit are exposed, making it a "prime target for oil and gas ex~
The Marsh Creek anticline offers a potential oil bearing structure of an incredible 46 miles in length with a width of 3 miles. Based on the rea reserve of nearly 14 billion barrels of recoverable oil can be calculated, which exceeds the potential of the
The study was buried super-giant Prudhoe Bay field. and never became public, In the spring of 1976, USGS prepared a report on the hydrocarbon potential of the Arctic National Wildlife Range for the U. S. Fish and Wildlife Service. The study for "official use only" rocked the Department of the Interior, but it was buried and never became public.
BROOKS
ARCTIC NATIONAL WILDLIFE RANGE
Agreeing that the Marsh Creek anticline may include significant rants further evaluation, the Mull- Kososki study shows an area further east as having even greater potential. This region underlies the Arctic Coastal Plain south of Barter Island.
The squelched report states "all of the reconnaissance geological and geophysical criteria point to this area as having a_hydrocarbon resource potential that could approach that of the Prudhoe Bay area."
The report stressed that region-
al reflection seismic geophysical This was not what methods must be conducted in the Secretary Andrus area to determine the importance of wanted to hear.
Barter Island area. This was not what Interior Secretary Cecil Andrus wanted to hear.
port was eventually made public in 1978, with Arthur Grantz replacing The new version was released with a companion press release, in which Secretary Andrus stated categorically that the Wildlife Range "is unlikely to hold a 'super giant' accumulation such as Prudhoe Bay." He went on to say that "the remote rewildlife resources outweigh the possibility that significant amounts of oil and gas exist there in commercially attractive concentrations."
Subsequent pages of the press release, however, hinted at the great potential of the Range, and when the authors were interviewed by the Associated Press in Anchorage, the story came out that there could well be another Prudhoe Bay in the Range.
Under the terms of the Act which created the Wildlife Range in 1959, Andrus can open it to seismic testing and drillfused to do so. But how credible are his reasons?
About 750 human beings enter the range each year.
press concern over the Porcupine caribou herd, estimated to number over 100,000. The herd winters south of the Brooks Mountain Range and summers to the north near the potential oil bearing areas.
Calving, the most sensitive and vulnerable time for the herd, takes place along the Arctic Coastal Plain from the Canadian border west to Marsh Creek, from early May to early June. Exploratory drilling activities, however, take place in the winter months, because of the summertime risk of melting permafrost.
Alaska's Governor Jay S. Hammond, who came to Alaska as a wildlife biologist in the 1940's, told the Western Governors Conference in June 1979, "There would be little hazard to the caribou." During earlier tion activities" on the Alaska Peninsula, his studies showed that "rather than a decline in the herd, there was a ten-fold increase."
Animals known to exist on the Northern portion of the Arctic Range year-round include moose and muskoxen. Summer residents include the caribou, eagles
About 750 human beings, including hunters, back packers, bureaucrats and the mostly-Eskimo residents of the villages of Kaktovik and Barter Island, enter the Range each year.
The U.S. Fish and Wildlife Service hedge when they are asked for accurate inventories of the amount of wildlife on the Range. The credibility of their "“pball-park" estimates is challenged by those who visit. One delegation of Congressmen flew into the Range and landed this summer (1979). They saw a total of two rabbits.
Former Interior Secretary Walter J. Hickel had a similar experience: "As Secretary, I flew over a great portion of the Range by helicopter and fixed-wing aircraft in August of 1970. We counted less than a dozen Should we keep under caribou, two bears and a moose. It lock and key 9 million was not a scientific inventory by any means, but I have wondered ever acres, home of a sparse since, should we keep under lock and wildlife population? key 9 million acres, home of a sparse wildlife population? In all likelihood, there would be very little adverse impact from the introduction of seismic work and test wells."
Does exploration in the Arctic mean harmful exploitation? Most long-time residents with many years of living and working in this unusual and challenging terrain say no. The most evident proof: the activity on the North Slope to date and the construction of the Trans ton i Alaska Pipeline. (See Section V). a ee an
Jay Cordell Moore, a petroleum harmful exploitation. consultant from Springfield, Illinois, writing about the Arctic Wildlife Range, says, "The best evidence available at this time indicates that a seismic survey of the new high resolution type, which causes little or no damage to the ecology, could be completed within six months from the time the first 'echo' is received."
An oil structure of 50,000 acres would involve just one half of one percent of the Range.
He goes on to say that, "Even if oil or gas should be present, and if wells are drilled, the wildlife need out that a structure covering 50,000 acres would be only just over one half of one percent of the total Range.
Obviously Secretary Andrus does not believe it is worthwhile to find out what resources are actually there. In a fund-raising appeal for the Sierra Club Legal Defense Fund, in Sept- Morris Udall writes, "We must remind the American people of what Secretary of the Interior the Alaska Arctic Game Range: Whatever oil and gas is there would last for maybe a week, maybe two weeks, maybe a month at the consumption rate of the American people. Are we willing to trade that pristine wilderness for a two-week supply of oil and gas that might or might not be there?"
The Secretary's figures don't wash. Either he is ately misleading the public.
For sake of argument, when one totals the potential oil estimated in the two studies menreport on the Marsh Creek anticline (14 billion barrels of recoverable oil) and the Mull- Kososki report on the Barter Island areas (9.6 billion, or Prudhoe Bay equivalent), the combined sum is 23.6 billion barrels.
This total figure may be speculative, but consider what it would mean to the nation. At the present level of U. S. consumption, (18,842,000 barrels per day), that one corner of Northeast Alaska could provide America's entire oil needs for over 3 years.
A far cry from Cecil Andrus's estimate of two weeks.
In terms of foreign imports, the That one corner of northeast Range could replace them entirely for Alaska could replace all ten years, saving the nation approxi- foreign oil imports for mately $70 billion (1979 figure) each year. Over a ten year period, the reduction in balance of payments would be an incredible $700 billion, and probably more.
ten years.
The authors of this report do not imply that the 23.6 billion barrel figure is a sure thing. But it is a possibility, thereby questioning the reliability of the Secretary's statements.
To further illustrate his zealous commitment to his position, when questioned by Senator Henry Jackson about the Carter Administration's recomthe Arctic Wildlife Range as a Federal Wilderness with no development allowed, Andrus suggested that the same oil reserves could probably be tapped through offshore drilling in the Beaufort Sea. A curious suggestion, as the oil potential areas are some 30 miles inland.
There is a wide range of energy resources in Alaska in addition to oil. The following graphic illustrates the potential of Alaska's energy resources, including oil, natural gas, coal, hydro, solar, uranium and geothermal.
Electric Uranium Power
76 potential sites Estimated total output: 172 billion kilowatt hours per year.
ALASKA'S ENERGY RESOURCE INVENTORY
USGS ESTIMATES: 22 to 59 USGS: 55 to 158 trillion
1.8 to 6 trillion tons
BILLION BARRELS cubic feet.
STATE OF ALASKA State of Alaska: 439.6 trillion Estimates of recoverable coal ESTIMATES: 68 to 138 cubic feet are in the vicinity of one BILLION BARRELS (estimated recoverable re- trillion tons. At the current (estimated recoverable reserves, on and offshore) rate of production, that would last America for over 1000
492,572 acres of Alaska have been classified by the U.S. Bureau of Mines as known geothermal resource areas. Another 10.8 million acres are termed “geothermal resources provinces.”
serves, on and offshore)
May have more potential in Alaska than most Americans hours in summer balance long winter nights. Reserve base is, as yet, impossible to quantify. As elsewhere worldwide, solar remains a distant hope, not part of the shortterm answer.
Theoretical estimates:
No proven reserves, but trace elements are found throughout the State.
In addition to the wide-ranging estimates of Alaska's potential recoverable natural gas mentioned above, there are 26 trillion cubic feet at Prudhoe Bay already located and waiting for a means of transportation to market.
A pipeline project, endorsed by President Carter, would move Great natural gas reserves this valuable resource through ° Canada to the Mid-Western states. are predicted to be in the The $15 billion project remains Beaufort Sea. entangled in financing and legal problems. The earliest delivery date of the first North Slope gas is predicted to be 1984.
Most experts in government and the petroleum industry believe that there are great additional natural gas reserves in the Beaufort Sea and along the Arctic Coastal Plain.
In addition, there are areas in which gas hydrates are found. -This phenomenon, pursued with great interest by the Russians in their Arctic, is best described in layman's language as gas which has been frozen and greatly condensed in low-temperature areas.
Although some oil companies LU aS have demonstrated interest in hydrates, the extent of the re-~- source in Alaska and the definitive, technology for its development are not yet agreed upon.
Other "new" sources of gas being located elsewhere in the world, including gas in geopressured zones and Devonian shale, may also have great potential in Alaska. But these sources will wait until the more readily retrievable natural gas. supplies have béen utilized.
North Slope gas is rich in gas. liquids, the feedstock for the petrochemical industry. Leaders in the Alaska legislature are attempting to bring these resources to the attention of the major national petrochemical firms in the hope that they be fully utilized ‘within the State and not burned to power the Prudhoe Bay field or move the methane through a pipeline.
The energy equivalent of 73 Prudhoe Bays.
By providing coal to other nations, Alaska can reduce worldwide competition for petroleum.
COAL
Alaska has enormous reserves of coal, the dimensions of which can only be described as astro- Geologist, estimates there are trillion tons of coal reserves in Alaska. "That's the energy equivalent of 73 Prudhoe Bays," he says.
Alaska coal is low in sulphur, therefore environmentally more acceptable than most other U.S. coal. Soft in nature, it adapts readily to synthetic fuel processing.
Readily accessible to ocean transport are 400 to 700 million coal in the Beluga coal field on Cook Inlet and 100 million tons of similar coal are adjacent to the Alaska Railroad at Healy (about 250 miles from a deep-water port).
One hundred million tons of bituminous coal in the Matanuska coal field are best suited to underground mining; shipping distance by rail to a port is about 55 miles. The vast reserves of both bituminous and sub-bituminous coal in Arctic Alaska on the North Slope (estimates range as high as 3.3 trillion tons) are presently remote from shipping facilities.
Although Alaska may have nearly half of U.S. coal reserves, the rest of the states, primarily Wyoming and Montana, have ample supplies for many years. By providing energy to other nations on the Pacific Rim, however, Alaskan coal can reduce the world-wide competition that continues to drive up the price of petroleum.
Coal-oil mixture (COM) is a process whereby coal is crushed and ground to a size mixture can be used by conventional oil burning equip- The export of a coalment. Tests have been con- oil mixture could have
These tests indicate a potential 40% savings in oil consumption. Research continues and is aimed at developing a COM fuel that could be as high as 80% coal by weight.
on OPEC pricing strategy.
Fixed power generating plants can use COM in place of oil thus providing a near-term solution to the heavy demands for reduction in the use of oil for power generation. At the same time, COM can provide a clean and efficient means of converting plants to the use of a coal-based energy source.
The large supplies of Alaska coal and oil which are available at tidewater could provide the raw materials for developing COM production facilities. The primary markets for COM may be in the Far East. Supplying this market could relieve the world-wide demand for crude oil and have pricing strategy.
oil from coal, oil shale and alcohol from vegetal matter (and also from coal) will help, but they can only fill the gap slowly. South Africa has struggled to produce liquid fuel
25 to 35 percent of the undeveloped hydro potential in the U.S.
from coal and is still far short of domestic requirements. Oil shale treatment requires vast quantities of water that is already scarce in the oil shale fields. Brazil, after intensive effort, finds that alcohol produced from crops provides less than a third of the energy expended in its production.
The potential coal resources in Alaska, along with half the U. S. fresh water supply, could provide the necessary comfuel production. Unfortunately, synthetic fuels are still expensive and should remain in the "long term" category. Reliance vide a solution to the immediate energy crisis and may actually divert attention from better alternatives.
The Alaska Power Administration and the Federal Power Comtential in Alaska amounts to 25% to 35% of the total undeveloped potential of all the United States. Potential hydropower sites in Alaska range from small sites suitable for billion kilowatt-hours per year that could be produced by the Rampart project on the Yukon River.
To understand what this amount of power represents, the average U.S. family uses approxyear. In other words, Rampart alone could provide the electricity requirements for over 3 million households, the equivalent of greater Los Angeles or all eight of the Mountain States.
Other sites with large pobillion kwh/year), Wood and Holy Cross (12.3 billion
Development of these, as well as forty-six other potential hydropower sites, is precluded by impending Federal Wilderness withdrawals. Of the 172 billion kwh/year potentially available in seventy-six Alaskan hydro-:
power sites, nearly ninety-four Nearly 94% of it cannot be percent or 161 billion kwh/year used unless the Federal land cannot be used unless the huge withdrawals are modified.
Federal land withdrawals are greatly modified.
However, efforts are being made to design and construct near Anchorage, which, if fully utilized, could produce seven billion kwh/year and substantially reduce consumption of oil and natural gas in Alaska.
It is certainly doubtful
that the historical pattern High voltage DC transof industrial use of elect: mission of Alaskaricity will require utiliza- generated power tion of a major portion of may soon be Alaska's hydro potential with-.
in the State, but rapidly in- feasible.
creasing costs of energy may make the export of Alaska-generated power feasible by high voltage DC transmission to energy-deficient states.
The vast, unused hydropower in Alaska may also be called upon to furnish hydrogen from water, to thus supply needed liquid fuels free from foreign control, and unlike oil from coal or oil shale, remain relatively free from cost escalation subsequent to construction. In Alaska the costs of hydroplant construction are
In the short term future, alternate energy sources will provide a small fraction of the potential.
higher than in other states but the cold weather is an exploitable asset; the steep thermocline, i.e. the difference between air and water temperatures, can be an important source of power.
With the enormous reserves of oil, natural gas, coal and hydro power in Alaska, alternate resources such as geothermal, solar, wind and tidal are seen by almost all authorities only as components of small scale or distant future energy development.
tities of geothermal potential, being fire" which circles the Northern Pacific. The State government is drilling a test well at Pilgrim Springs near Nome, hoping to demonstrate how near-surface heat can be utilized for some of Alaska's tiny rural communities. The main hurdle for the wider use of geothermal is its remoteness from large population centers.
Tidal movement in Cook Inlet, rising and falling some thirtyseven feet twice a day, is the second greatest in the world after the Bay of Fundy. This force can be harnessed for local power for the Anchorage area, if the costly installations are built water causeways.
Wind and even solar power have potential for isolated areas but promise nothing dimension-wise to compete with conventional energy sources,
WHY ISN’T THE ENERGY INDUSTRY MORE BULLISH ON ALASKA?
The oil industry is widely regarded, especially by its opponents, as the most effective, well-financed lobby in the nation. From the Alaskan viewpoint, however, the participation of the oil industry in the battle to awaken the American people to the potential of Alaska's energy resources has been low-key, even timid.
being an "enemy of the people and despoiler of the environment," many oil companies have chosen to abandon Many oil companies Alaska, and the U.S. as a whole, and have chosen to o where they are welcome, such as the Middle East, the North Sea, Indonesia, and most recently, mainland China.
When grilled by national very few company executives "come out swinging" to open up Alaska.
Commonwealth North talked with major oil company representatives and filed the following report:
The economics of petroleum development in Alaska are more severe than they are in almost any other area of the world. The decisive issue for most U.S. companies lies in the rate of return on investment. That rate is severely hampered in Alaska. The main culprit is not climate or other ‘ 4 8 hostile natural conditions. It is The main celpeit 1s government. government.
"Alaska is one of the prime areas left in the whole USA," says John Saint,
The legislature has increased taxes on the oil industry
13 times.
Vice President and General Manager of Sohio BP in Alaska, "It is also one of the most expensive, and one of the most uncertain as to taxation and the restraints under which we must operate."
There is no question that the industry has been bitten. The legislature of the young state, 20 years old last January, has increased taxes on the oil industry 13 times.
A $75,000 report, financed by the Alaska legislature and. conducted by Merrill, Lynch, White, Weld, studied the impact of these taxation policies on the oil industry. The findings released April 13, 1979 were as follows:
(1) The comparative state tax burden in Alaska is nearly twice as great as that imposed by any other state. In the majority of cases, it is closer to three times the burden.
(2) In those states where the ad valorem tax is equal to or greater than that levied by Alaska, the severance tax is Significantly lower or nonexistent.
severance taxes in Alaska exceeds the corresponding sum in every one of the other major oil producing states.
(4) Alaska imposes an income tax on petroleum companies which is nearly three times as much as the second highest major oil producing state.
It is not just the high rate of taxes which has discouraged investment by the oil industry in Alaska, it is the instability of the tax policy, and the fact that it has been changed so many times. The industry has thereby perceived an insensitivity by the legislature and the bureaucracy to the economic risks associated with investment in the admittedly difficult Alaskan terrain and climate.
"We haven't reached the point of saying the atmosphere in Alaska is so bad that under no circumstances will we put any money in there," says Sohio Chairman tainly we are headed in that direction."
A study by Arthur Andersen and Company, which reinforces the White, Weld conclusions, reports that Alaska "imposes the largest tax burden of any of the major oil and gas producing states." It indicated that the margin of the tax burden was substantially greater in 1979 than they had found in a similar study only a year earlier.
Robert R. Richards, economist and President of Alaska Pacific Bank, draws the conclusion that "The necessary investment of risk capital will be forthcoming Taxation policy, high only if the tax level and degree capital investment, of tax structure uncertainty is instability of govern- regarded as reasonable by business. mental policy and Richards continues, "Observ- delays.
ing industry activity in Alaska, there is reason to believe that taxation has passed the optimum. The only reason a sharper falloff in the investment activity has not occurred is because the North Slope lease holders are locked-in to a certain extent."
There are more wells drilled each year in the states of Utah, Michigan and even New York than in Alaska.
In addition to State taxation policy, high capital investment, red tape, climatic challenges, lack of a transportation infrastructure and bureaucratic delays have forced the oil companies to ignore many oil fields that would be readily producible elsewhere in the United States.
An exploratory well costs between $10 and $20 million in Alaska. In the rest of the U.S., the average is $250,000 to $2 million. In the South 48, it takes two or three months preparation before drilling can start. If oil is found, production can begin in three to four months. In Alaska, the process takes years, both before and after discovery. No wonder there are more oil wells drilled each year in such unlikely states as Utah, Michigan and New York than in Alaska.
To be able to produce petroleum economically in Alaska, the industry claims it cannot develop most of the giant field, defined as containing half a billion barrels of recoverable oil or more. There are only four such giant fields in the United States, one of which is at Prudhoe Bay.
The influence of “extreme pregovernment and the state government have frustrated many an Alaskan oil man. "They make it almost impossible to operate in a viable fashion," they say.
One oil man remarked, "We often wonder who is controlling this? The environmentalists seem to have much more say on things they know a lot less about than we do."
Some companies have left the State, and their management say there is no way they would come back into Alaska. It's just not worth it to them.
But in spite of costs, red tionists, the bottom line is the availability of land on which to drill. Apart from land recently transferred from the Federal government to Alaska's Native Community (10.5 million acres, less than one quarter of their entitlement), only one third of one percent of the State is in private ownership.
On State-owned land the lease sales of oil and gas potential acreage offered by the State of Alaska has come to an abrupt halt.
In the latter part of 1974 all lease sales stopped, and the State's sale of submerged lands in Katchemak Bay in Cook Inlet to the oil industry was withdrawn, requiring a $25 million pay back.
The picture from the Federal side has been no better, with the one exception of the Northern Gulf lease sale of 1976.
Recently the State held a small sale in the Copper River Basin. But critics labeled it to public pressure.
"The object of the exercise was not to discover oil, but to
The bottom line comes down to the availability of land on which to drill...only one third of one percent of the land is in private ownership.
The object of the exercise was not to solve a political problem.
solve a political problem. It was necessary to have a lease sale after a complete shutdown for five years," wryly remarks a high oil company observer.
"With so many regulations and restrictions placed on us by the State," another oil man said, "it's obvious they don't really want any more oil discovered."
Some of the executives working for the major producers on the North Slope would be con-
Alaska production tent to see the Trans Alaska Pipecould reach 5 million line filled to full capacity, two million barrels per day. barrels per day, the That is 500,000 barrels over equivalent of half of current production. They hesall foreign oil itate to predict that Alaska's imports. daily production could surpass the two million mark.
Others believe that Alaska production could reach 4.5 million to 5 million barrels a day. This boost to the nation would be the equivalent of half of all foreign oil imports.
PRODUCTION
SOUTH 48
To accomplish this goal would
require all-out government encouragement and cooperation, a turn-ofevents not anticipated by many in private sector.
Pessimism prevails. Even if land were available, maximum production would require a streamlined Federal permit system, removing of government is a relatively recent phenomenon. Since 1970, Congress has passed the following laws:
National Environmental Policy Act Clean Air Act
Clean Air Act Amendments
Clean Water Act
Marine Mammal Protection Act Critical & Endangered Species Act Historic Preservation Act
Solid Waste Disposal Act
Federal Water Pollution Control Act Amendment Coastal Zone Management Act
Some observors wonder if the
lack of enthusiasm in the oil Some Alaskans wonder if industry is partly based on corporate decisions in Houston and oil production is being
New York to hold back the pro- held up until prices go duction of Alaska crude until even higher.
international situation drives prices up even higher.
tive told one of Alaska's U.S. Senators recently, "In 1990, you' will be $90 a barrel. Then 11 see Alaska developed."
Most oil men interviewed, even
such opinions do not govern corporate policy.
"In 30 years of helping
decide company policy on these matters," said one, "we have never decided to hold back on
An adversary relagovernment and the oil industry.
production. Without exception our philosophy is to hurry up, never to delay. In some cases we probably would have been smarter to back off, but like in any business, there is always a compelling need for cash flow."
Privately, some oil firm executives predict "such a damn panic" in five or ten years that the laws will be altered. Others hope for a change in the political climate so that the leadership will either change its things going here in Alaska now," said one. "The adversary relationship between government and the oil industry is known worldwide. That makes it awfully tough to get corporate backing and the commitment of financing.”
Many oil industry executives perceive the Alaska State government to be neutral or negative on almost everything industry does. The Department of Natural Resources, in particular, has a reputation for developing road blocks rather than assisting industry in overcoming obstacles.
A recent glimmer of light has appeared in the Department's activity in support of a lease sale in the Beaufort Sea, north of Prudhoe Bay and the Arctic Wildlife Range. Some oil men hope this represents a new spirit of State cooperation with in-
The Department of Commerce and Economic Development has dedicated almost all of its efforts towards commercial fishing and the "renewable resource economy" of Southeast and coastal Alaska.
"We have seen the Department (of Commerce) show great interest in subsidies for fishing, timber, and even petrochemicals, but they have never done anything to encourage oil and gas discovery and development in Alaska," said one production executive in disgust.
"It is no mystery why the energy industry is not bullish on Alaska. It's hard to be positive and creative when obstructionism at every turn" If they think governsaid a beleaguered oil company ment can produce oil, government relations repre- they'd better think again.
were the enemy. Well, if we're the enemy, who's going to produce the resources America needs? If they think government is the answer, they'd better think again. Even the Soviet Union has reversed itself and let the individual prospector loose. Since then, the discovery rate have taken over.
Political debts have been paid with appointments to key positions in government.
FEDERAL GOVERNMENT IN ITS POSTURE TOWARDS ALASKA?
Those who place primary emphasis on the preservation of wilderness, regardless of other values or needs, have taken over the principal decision-making positions in government regarding the future of Alaska.
These power centers include the Domestic Council in the White House; the Secretary of the Interior and his immediate staff; the staffs of key congressional committees in both the U.S. House and the Senate and the Chairman of the House Interior Committee and his staff.
President Jimmy Carter dedicated by the nation's prehis election. Political debts have been paid with appointments of former full-tine employees to key positions in government.
and author on energy issues, has made a study of this phenomenon. "Though they number only several hundred in all," he estimates, "the jobs they hold are very powerful: fourteen key White
House assistants - including the President's key (conservation and consumer energy activists are now four Assistant Attorneys General in the Department of Justice and are Assistant Secretaries in the Departments of Health, Education and Welfare, Comand Housing and Development.
"All three members of the ity come from their ranks,"
he continues. "And a half dozen tons
of the most active critics of. Bigotry, clothed the Nixon-Ford policy on the in righteousness, exploration of the continental has taken over.’’ shelf are now Carter bureaucrats in various agencies.
exude party line and exclude from serious consideration any person or opinion which doesn't
The publisher of the Energy Daily, Llewellyn King, writes about the impact of this group on Washington, D.C.: "There is and is fouling the processes of government."
The network of the "preservation-first: appointees in government has virtually throttled the efforts by the Alaskan people to tell their story to Congress. The showdown of whether or not the State's resources will be utilized has come in the form of tion of Federal lands in Alaska.
that the natives were going to get that much land.’
Alaskans feel they are being robbed of their statehood.
It began when the long struggle by Alaska's Native population (Eskimos, Indians and Aleuts) for a settlement of their aboriginal land claims was resolved. On December 18, 1971 President Richard Nixon signed the Settlement Act which promised that 44 million of Alaska's 365 million acres would be deeded to the Native community.
Alaska's Senator Mike Gravel conservation lobby became during the Congressional debate over the bill. "They were mad as hell that the Natives were going to get that much land," he recalls. "That's why the Senate-House Conference Committee added section 17 (d)(2)."
This provision, known to Alaskans as simply "d-2," has become a symbol of what Alaskans vationist pressure, the Conference Committee gave the Secretary of the Interior the option to withdraw "up to, but not to exceed 80 million acres of Alaska" as national parks, forests, wildlife refuges and wild and scenic rivers. Most Alaskans now view this compromise as the “hole in the dike" through which outside interests would break down the victories won in the battle for Statehood, destroying the source of an on-going, stable economy.
Polls show the statewide sentiment runs over 75% against d-2, and is continuing to climb.
Two of the champions of Alaska statehood, Congressmen Wayne was Chairman of the pivotal House Interior and Insular Affairs Committee in 1958 when the Alaska Statehood Bill was passed.
"I think what Congress is trying to do to the public lands of Alaska at this time is a breach of faith with approval of Statehood," Aspinall said recently.
“While it is true that the public lands belong to the Federal government generally," he continued, "it also is true that there was an implied promise that the lands and other natural resources of Alaska should be used to help support An implied promise Statehood. We thought the (Federal) land would be taken up that the lands be in private ownership, that was used to support our hope -- that people would go statehood.
New York, also served on the Interior Committee. Ina blistering letter to the editor of the Albany Times Union, he wrote, "...the current shenanigans in Washington not only would break a congressional with the people of Alaska... those who place the needs of faith-breaking with Alaska. But as one who had a role in the pledge of two decades ago, I want no part of it."
d-2 is their top national prioris their champion. He and Ohio's heading a campaign to place, not 80 million acres in the four systems as permitted in the Settlement Act, but over 120 million acres in restricis known as the Udall-Anderson Bill.
‘¢7’m all for wilderness areas. I love to drive through them.”’
A majority of Americans want wilderness areas surveyed for energy and mineral resources.
The strongest, most effective conservation campaign in history.
The battle over wilderness is understood by very few Americans. "I'm all for wilderness areas," one senior New Jersey woman remarked recently. "I love to drive through them."
The irony is that no one can drive through a Federal Wilderness. No roads are allowed, no human activity is encouraged. Only back-packing and similar pastimes are permitted.
Three national surveys taken and White, Opinion Research Corporation and Cambridge Report 17, all confirm that a majority of Americans want wilderness areas to be surveyed for energy and mineral resources before deciding what to do with them.
And yet, the Udall-Anderson d-2 bill rings Alaska with enormous in size an area larger than California, before any credible inventories have taken place.
covered that 87% of Americans oppose what Harris calls the "Alaska Preservation Act" if the withdrawals contain rich energy and mineral resources.
To achieve passage of the Udall-Anderson bill, lobbyists mounted what Sierra Club Executive Director Mike McCloskey calls "the strongest, most effective conservation campaign in the history of this nation." The 435 members of intense pressure, both in their offices in Washington D.C. and from a grassroots campaign among their constituents in their home districts.
age, Congressmen were told bluntly, "We won't target you in the next election, if you'll vote for our Alaska bill."
"The environmentalists have become computerized and sophisticated," says Joe Chomski, a Washington and energy issues. "They have an excellent intelligence network."
In short, they know who are the good friends and supporters of most Congressmen. And they know how to work them over. The President The White House put its full personally teleweight behind the Udall bill. Con- phoned 40 House gressional liaison personnel swarmed Members, promising over Capitol Hill and President pork barrel projects.
Carter spent hours on the telephone.
Don Young, who fought the bill bitterly, the President personally called forty undecided House members, promising pork barrel projects in exchange for their vote on the Alaska Lands Bill.
In mid-May 1979, when the final vote was in, only 65 Congressmen withstood the pressure and voted against the legislation.
The Representatives who most strongly favored the bill came from Northern Tier states, beginning with Minnesota and Wisconsin, spreading to the eastern seaboard and including the heavy industrial areas such as Ohio,
New Jersey and West Virginia.
These states have in common a long history of intense resource development prior to the era of environmental concern and very few residents who have ever visited Alaska.
A subtle strategy emerged.
The Congressmen from large states such as California and Pennsylvania voted along rural and urban lines, once again illustrating that those most upset with pollution problems at home found a "cheap environmental vote" in the Alaska bill.
Both of the House Committees (Interior and Merchant Marine and Fisheries) which reviewed the Udall bill rejected it. In these Committees, 80% to 90% of the Members had visited Alaska and had some first-hand knowledge. Failing in Committee, Udall succeeded in using his influence to bring his bill before the full House.
As the bill generated a great deal of heat, lobbying and counter-lobbying, many Congressmen threw up their hands, saying,
"Who can we believe?"
A subtle strategy emerged. The word was spread that the only. source Congress could trust concerning the potential resources in Alaska was the United States Geological Survey and the Bureau of Mines.
Relying on this information only, members of Congress who support d-2 feel justified that they have not "locked up Alaska." In fact, million acres of Alaska are "slated for development and exploitation," and 95% of all proven or speculative oil, gas and coal deposits have been purposely excluded from the d-2 land withdrawals.
The facts show otherwise. No Alaska lands are "open for exploitation." All resource development activities on Federal lands in Alaska require an Environmental Impact Statement and are carefully reviewed by the Federal management agency responsible. But the emphasis on the USGS and the Bureau of. Mines is interesting and alarming. It documents the influence of tion at all costs.
In 1978, Alaska's senior Senator Ted Stevens discovered that an optimistic evaluation of Alaska's mineral potential prepared by the Bureau of Mines had been hushed up and shredded on the orders of Interior Secretary Andrus. This report never reached Congress.
To this day, the staff of the Alaska office of the Bureau of Mines fears that if it releases any more optimistic statements on Alaska's resources during this Administration, their jobs will be in jeopardy. No wonder. They need only observe what has happened in their sister agency, the U.S. Geological Survey.
Charges of "politicization"
of the USGS by the Carter Adminis- Charges of tration surfaced when its Director re ee was fired on July 26, 1977. Vincent eee of
E. McKelvey was the first USGS Director in the Survey's 98 year history to be
The Wall Street Journal analyzed the life-long geologist. It said in part: "Dr. McKelvey does not now and never has suited the Malthusian regulators who designed Jimmy Carter's energy plan. While you are trying to bulldoze a $100 billion tax/energy conservation program through Congress, it does not help to have the government's top expert on such matters
Most of the supporters of the Udall position don't realize they are locking up Alaska.
‘*They are turning a young, healthy giant running around talking about the vast resource base in the United States."
throughout the USGS and the "scientific bureaucracy" in general. The Survey, which had almost a century, found itself under close scrutiny by high level political appointees who entered tant Interior Secretary for Energy and Minerals, was the firing. She was 34 years old at the time. Before joining the Interior, she served as Acting Director of the Office of Technological Analysis for from the ranks of Ralph Nader's organizations.
The real tragedy is that most of the supporters of the Udall position on Capitol Hill do not know that they are locking up Alaska. They have been told, and they believe, they have left plenty of room for development.
"What they don't understand is that they are turning a young, healthy giant into a crippled monster," former Interior Secretary Walter Hickel maintains.
One-third of the State will be in wilderness or park classifications that will allow no resource development. Nearly another third of the State will be in wilderness study category, meaning that it will be placed on "hold" for three more years, and possibly kept in that status permanently. In order to force the Udall bill through the Senate, Secretary Andrus has threatened to extend the three year study time to twenty years.
The final third will be owned by the State of Alaska and the Alaska Native Corporations who will face a cumbersome, sometimes hopeless, process for gaining surface access to their lands. The prospect of trying to transport resources across surrounding Federal Wilderness areas will stifle, if not kill, nearly all hope of using the majority of Alaska's on-land energy reserves.
The Congressional scheme for Alaska enmeshes the entire State in An incredible tangle of an incredible tangle of procedures,: permits and public hearings that procedures, permits and will drive the already expensive public hearings. costs of energy production in Alaska so high that it will not compete.
Looking at a map of the State, chopped into seemingly hundreds of fragments, "It will be a management U.S. Director of the BLM, said.
Other states are beginning to realize that the Alaska situation is not unique. The same strategy gradually is being applied to the Most Alaskans are dedwestern states. mitted to protecting the wildlife and the
It was some three years ago when the Sierra Club first targeted beauty of the state. Alaska and d-2 as their number one priority. The Alaska population became to grow. The irony is that most Alaskans are dedicated outdoorsmen, committed to protecting the
‘‘We want to bring mining to a halt in Alaska,’’ Secretary Andrus admitted.
right lies and
wildlife and the beauty of the State. These were the main attractions for them to move to Alaska in the first place.
Much of the ill-feeling stems from first-hand knowledge of the areas Congress wants to lock up. Many of the withscenic or wildlife values. They have been deliberately designed to blockade access to rich mineral deposits.
The most glaring example is the Sun copper deposit owned by Anaconda. This rich deposit is a major part of $9 billion worth of precious resources in the Ambler District; it was included in a wilderness withdrawal after it was brought to the attention of the Secretary.
"We want to bring mining to a halt in Alaska," Secretary Andrus admitted during a 1978 meeting with former Secretary Hickel in Anchorage.
During the struggle to get a permit to build the Trans- Alaska pipeline in the early tion-minded Alaskans parted ways with the conservation organizations over the half-truths, out-— delaying tactics of the national Home."
"We finally won the pipeline battle," remarks one longtime Alaskan ruefully, "but the just moved into government."
SECTION V THE ENVIRONMENTAL COST OF DEVELOPMENT
In discussing the energy and resource potential of Alaska
Senator, he will agree that it Everyone echoes the dual should be developed. The caveat destiny of Alaska... is that development take place but who really means it?
with due regard for the beauty of the land and needs of the environment.
In listening to the debate, all sides accept this caveat as a given.
ations, the Senate...will need to strike a balance between the preservation of our nation's valuable wilderness areas and the development of our economic resources," writes New York Senator Daniel Patrick Moynihan.
While presenting awards to four Georgia Congressmen who voted for the Udall-Anderson representing a group called Georgians for Alaska said, "These members of Congress have met the very difficult challenge of providing balance to the development and the conservation of Alaska's bountiful natural resources."
states, "The Sierra Club and the other national environmental organizations have acknowledged the national interest in energy development in Alaska by designing the bill (d-2) in such a way that this kind of energy development can go forward."
Although the advocates of wilderness pay lip service to energy development, they fight against it almost without exception.
tives and spokesmen for chambers of commerce and other development-minded organizations all echo the dual potential and destiny of Alaska. The question the public must decide is who really means it?
A credible answer can only be found through observation of "not what they say, but what they do.”
When the record is examined, endorse only those sources of energy which they consider to be renewable; i.e. solar, wind and tidal power. They do not support the renewable resource of water -- (hydro), because they oppose the construction of large-scale dams. They tolerate, grudgingly, the use of geothermal steam (in small amounts, if the noise pollution isn't too great) and the creation of synfuels, if they can be produced without strip-mining or using large quantities of fresh water.
Their major platform for a national energy policy staunchly remains the non-production of energy and the cutting back on its use.
"One wonders if we were running that we all breathe less?" one un-
There are no known cases in which the wilderness advocates duction in Alaska or in any other domestic location. The record is Clear. Although they pay lip service to energy development, they fight against the production of the conventional sources of energy, almost without exception.
To examine the record of the other end of the spectrum, the oil industry, the most credible answers come from examining their recent projects. In Alaska, the obvious example is the Trans Alaska Pipeline, a massive engineering project, in fact the largest ever financed by free enterprise.
When the companies who dis- PRUDHOE BAY covered oil on the North Slope were ready to start production, they set out to build a pipeline in 1970. At the outset, they hoped to brush aside many legitimate questions raised both by environmentalists and by long-time Alaskans who understood the unusual challenges of construction in the Arctic.
The companies wanted to bury some 90% of the entire line, which almost all participants now agree would have been both an environmental and engineering disaster.
The toughest problem was that Legitimate questions certain kinds of permafrost would were raised about melt when hot oil moved through the line. Once liquid, they would the unusual challenges fail to support the pipe and cause of construction in the
Finally the companies drilled the entire pipeline route to determine where these dangerous permafrost ice lenses were located. In those areas the line was designed to be built above ground.
After answers to this and other legitimate environmental questions were found, Alyeska Pipeline Service Company built the pipeline, 789 miles from Prudhoe Bay to the ice-free port of Valdez. Termed an “engineering marvel" by the oft-critical New: York Times in an October 1979 article,
The environmental hysteria cost at least $3 billion.
the pipeline is effusively described by some admirers as a modern addition to the seven wonders of the world.
What was the cost of this project to the environment and to the economy?
Observers, including a number of nationally-known environmentalists who were named by the Federal government as watchdogs throughout the project, have gone on record saying the Trans-Alaska Pipeline is unrivaled world-wide in terms of adapting to the unique Arctic and sub- Arctic environment.
But the question of the cost of the project, almost $8 billion, remains a controversy. Were the pages and pages of environmental stipulations necessary? Were the battalion after battalion of Federal, State and private sector overseers really necessary?
President of Alyeska throughout the construction of the line, says, "The environmental hysteria and its attendant delay of the construction of the project cost at least $3 billion."
What does it mean to waste even $1 billion? The term is so commonplace but so misunderstood. To illustrate how much one billion is, Governor Dixie Lee Ray of Washington puts it like this: "A billion seconds ago we were still fighting World War II. A billion minutes A billion hours ago, man was living
Bill Aley, an Area Engineer on the pipeline project involved in environmental surveillance for a large portion of the line, recounts the day by day battle with "professional environmentalists" who constantly made outrageous demands on the construction crews.
66 one
exhorbitant, that the builders — of the Soviet Union.’’ just had to give in," recalls
Aley. "When a pint of oil spilled
out of a crank case, the companies
were forced to file numerous oil
spill reports and stop everything
reminded me of the Soviet Union
where everyone watches everyone
else and reports back to Moscow."
What most Americans did not realize was that as the price of the pipeline rose from the original $900 million figure to nearly $8 billion, the added costs became a cost of doing business, ultimately passed on to the consumer.
That extra $3 billion contributed to the rising cost of gasoline at the pump, and cut into the revenues of the State of Alaska. The State's royalties are based on the wellhead value of the oil which is determined after the cost of transportation has been deducted. The pipeline used a total of 8.2 square The widely promoted fears miles of habitat.
of the risks to Alaska's wildlife population were largely fiction. For example, out of a total land area of 586,000 square miles, the line used only 8.2 square miles of wildlife habitat.
The caribou herds have not been adversely affected; in fact, they have flourished along the pipeline route. The Central Arctic has a population of 7,000 and is in very healthy condition.
‘*We could produce energy so much cheaper if they would let us.’’
For cost comparisons, environmental acceptance and urgency of construction, it is interesting to look back at the Alcan Highway project during World War II. The nation's security was threatened by a powerful enemy already active.
A 1600 mile, passable highway was constructed through mostly uncharted wilderness from Edmonton, Alberta to Fairbanks, Alaska in just sixteen months.
After over thirty-five years of service, little if any detrimental impact on the environment is observed by the thousands of annual travelers.
Most oil company represen-— tatives in Alaska, however, have resigned themselves to the belief that the over-cautious excesses of the Trans-Alaska Pipeline have set the pattern for how all major developmental projects will have to be conducted in the decades ahead. The cost of protecting the environment, regardless of how another factor in the cost of doing business.
"It bothers me when there is such flagrant waste of money and resources," said one. "We could produce energy so much cheaper if they would let us."
But most others have thrown up their hands in despair. They simply factor in the price of mands in all projections for future energy development in Alaska.
Many Alaska observers suspect the national media to be prejudiced against their State. Research for this report shows that the problem is not prejudice. It's ignorance, born from the absence of firsthand knowledge.
Long distance telephone interviews with energy and environmental writers on The New York Times, Wall Street Journal, Christian Science «gs Monitor, Newsweek, Nation's Business, It’s not prejudice, United Press International (UPI), it’s ignorance. and the Associated Press (AP) revealed the most common source of information available regarding Alaskan affairs was that presented primarily the "Alaska Coalition" and
Other frequently mentioned sources of Alaska-oriented information were the U.S. Department of Interior, the Environmental Protection Agency, U.S. House Interior Committee, and the U.S. Senate Energy and Natural Resources Committee.
specific need, they generally reported they sought data from Alaska's congressional offices, and one person reported he had talked with Alaska's Department of Natural Resources Commissioner; however, the source of unsolicited Alaska-based information was described as being entirely provided by the national environmental organizations.
A one-sided information flow.
None of the news media representatives interviewed in Washington D.C. mentioned Alaska's citizen groups, such as the Citizens for the Management of Alaska's Lands, or the State of Alaska's d-2 information office as a source of information, solicited or otherwise.
A convincing summary of the information source scene regarding Alaska in Washington D.C. is the statement provided by a member of one of the nation's wire services in response to the question, "What are some of the sources of information available to you concerning Alaska?" The response: "The Interior Department, House Interior Committee, Senate Energy Committee, and environmental groups vitally interested in the future of Alaska. The State of Alaska may have an office here--other states do--you might check and see, I don't know."
In review, at the national news media level, the information regarding Alaska has basically been prepared and presented by the Federal government and national environmental organizations, which quickly reduces to the environmental element alone, because it has become a primary source of the information used by the Department of Interior, House Interior Committee, Senate Energy Committee, Environmental Protection Agency, and individual members of the U. S. House and Senate.
The dangers inherent as a consequence of a one-sided information flow are clearly evident in the legislation relating to the Alaska lands issue. Artfully employing the old vationist leaders have convinced the media and the vast majority of Congress and essential bureaucrats of the necessity of "saving" Alaska.
The "false dilemma" technique of disputation, described originally by involves presenting an issue as a dichotomy, that is, a situation in which only two mutually exclusive choices are possible. If one is rejected, the other must be accepted.
The key element in the effective use of the "false dilemma" is the selection of an alternative which is abhorrent and sure to be acceptance of the remaining alternative. Thus, in the case of Alaska lands, the preservationists have chosen to present ‘‘Ruin’’ is not the logical the issue as one in which Alaska alternative to ‘‘preserve.’’ will be "ruined" unless it is
"preserved."
Given the restricted options available as presented through the one-sided information flow, there is little wonder that many people reject “ruining” Alaska.
A much publicized example of the "false dilemma" was a statement by Congressman Morris Udall which was carried nationwide by the press. In a letter to Interior Secretary Cecil Andrus, Udall urged him to place an emergency freeze on Federal land in Alaska because "people with bulldozers and picks and shovels" were poised to tear up the land.
The truth is that any development activity on Federal land in Alaska requires an Environmental Impact Statement and upwards of 26 permits.
Fortunately the true options are much more positive. Wise resource development is one of the best examples of having one's cake and eating it too. In strong contrast to the "either/or" a great middle ground is available regarding wise resource use. Chief among these is the recognition that "ruin" isn't the logical alternative to "preserve."
The ‘‘false dilemma’’ has been effectively employed by the
From the North Slope of Alaska to the Gulf Coast of Louisiana, examples abound in which mankind and the other elements of nature can mutually benefit from resource development.
In Alaska, caribou stay close to the Alaskan oil pipeline for shade in the summer and for protection from the wind and snow in winter. They feed on pipeline right-of-way.
In off-shore Louisiana, the legs of the drilling rigs are a new home for organisms which provide food for the larger marine life. This has contributed to the fact that Louisiana fishermen now harvest six times the catch prior to offshore development.
Clearly, the "false dilemma" has been effectively employed by preservationists in their efforts to "lock up" Alaska, however the vast majority of Americans have been ill-used through employment of the technique.
WHAT SHOULD THE FEDERAL GOVERNMENT BE DOING?
If the Federal government persists in energy policies which result in rising dependence on imported oil, the American people face a future filled with chronic shortages and ruinous prices.
In a very real sense, the most recent windfall to OPEC was engineered in Washington, D.C. The OPEC nations merely formalized what had been made possible by spiraling U.S. consumption and lagging development.
There are very real problems connected with all the short and midterm options available to the uU.S., but they are not insoluble. The government machinery The heart of the matter is this: created by Congress is the government machinery which unworkable.
Congress has created to deal with
It is time for the U.S. Administration to do four major things: the American citizen for his energy consumption. (2) Allow the free Stop moralizing: price market to determine the cost of P bi P energy, (3) Remove regulatory energy at its full cost;. barriers so producers and consumers remove regulatory barriers; can respond accordingly, and encourage production.
(4) Encourage the exploration and production of domestic energy in potentially resource-rich areas such as Alaska and the Atlantic and Pacific outer continental
President Carter proposes to reduce U.S. imports to 4.5 million
By 1990, the President hopes to reduce foreign oil imports to 4.5 million barrels per day.
barrels per day in the next ten years and to finance a massive $142 billion conservation and synthetic fuels program with revenues from new taxes on decontrolled crude oil.
The heart of the President's plan is the creation of an Energy Security corporation with unprecedented power and authority to spend $88 billion (recently reduced to $22 billion) during 1980-90 to boost development of 2.5 million barrels of oil per day from substi-
Other elements of the program would establish a three-member. Energy expedite permitting and construction of critical energy facilities; provide new incentives for development of heavy oil, unconventional gas, and oil shale; require utilities to cut current oil consumption by fifty percent; set up a residential and commercial conservation program Gesigned to save 500,000 barrels of oil per day by 1990; provide $2.4 billion per year in aid to lowincome families; and supply a total of $16.5 billion during 1980-90 for improvements in mass transit and automobile fuel efficiency.
The President exercised his authority to decontrol crude oil prices June 1, 1979; however, he also asked Congress for a "Windfall profits tax" designed to recover fifty per-~ cent of the increased revenues flowing from higher prices.
Petroleum economist Richard J. Gonzalez has urged Congress to dismiss “the mistaken theory" that windfall profits will be realized by U.S. producers if crude price controls are removed. He charges that government controls have caused far greater windfall losses for producers during the past 20 years than the maximum gains that could be realized from immediate removal of price controls.
The President must know that unless individuals see an opportunity to generate a reasonable return on their investments, consumers are doomed to a future of steadily rising prices and shrinking energy supplies. Those profits, are the source of exploration capital. Most of this money is re-invested in new energy supplies and facilities, as has been the pattern historically.
The opposite equation is equally simple: static or falling profits mean less available capital and thus less exploration and reduced supplies of new energy sources which already are at a level far below consumer needs.
Whereas a windfall profits tax threatens to balloon government bureaucracy at the expense of those who actually produce energy, other alternatives are being suggested. One of the most interesting is a "plow-back device" which would require oil companies to dedicate inflated profits to additional energy exploration and production.
Some say that government controls have caused windfall losses for producers.
by the ‘‘new elite,’’ are the source of exploration capital.
In many cases drilling and production have completely stopped.
The OPEC nations claim (not without logic) that the uninflated price for crude oil has declined since 1974 based on what they pay for goods and services. This is due to depreciation of the U.S. dollar as well as inflation in the OECD economy. They claim the adjusted price of crude has declined from $11.45 in 1974 to $9.62 in 1978.
The net effect of the Federal regulatory system on the national energy scene is nearly inexplicable and the impact on Alaska is multiplied because of remoteness, challenging climate, and the resulting higher costs. Federal permitting and environmental requirements have become increasingly stringent. The trend raises a major obstacle in the way of the President's vow to speed domestic development. The net regulations are simply added costs and delay. In many cases drilling and production have completely stopped.
Added to the Federal regulations is the increasing share of authority by states which have their own coastal zone Management programs. CZM boards have veto authority over exploration and development of a lease off their coast, even if the lease is in Federal waters.
Complying with regulations sometimes becomes confusing because of the overlapping authorities claimed by State and Federal agencies.
Perhaps the best example of regulatory effects is the SOHIO Pactex line which was designed to move Alaskan and Asian crude oil east from California. It is contended by
Brown and his appointees that SOHIO pulled out just before they were ready to grant final permits because the company found a better profit elsewhere.
The facts show otherwise. The coup de grace was the time delay, the stuff of which life, money, and even environmental achievements are made.
permits, spent $50 million and five years. If the permits had been issued, the project would merely have moved from the regulatory to the litigation phase.
The fundamental question is the nearly impossible permit process itself. It is so formidable that few major energy projects can Federal officials must survive it. Unless Federal act in concert to cage officials act in concert to cage this regulatory monster.
this regulatory monster, the best laid energy plans will be doomed to failure.
rhetoric, the President has widened the distrust between the man on the street and the U.S. oil industry.
"We are requiring the oil industry to cooperate," he said. "if they do not cooperate volunuse the authority that I have to require the oil companies to meet the basic energy needs of our nation."
Simplistic jawboning has not,
and will not, convince the public that the energy crisis is nothing of the people stepped aside and let Americans get back to work.
but a hoax. If the Federal governdiscover a major cause why energy projects are not moving. The free market system that created our and put to the whip.
It is time for the old rivalries to die and it's time to change direction with intelligence. These rivalries producer, the new elite against the old guard.
government officials say, "Don't use Alaska's resources now, wait until we need them." The truth is the nation needs them now as the national econexploration were to begin immediately, it would be years before Americans would benefit from the use of America's own energy resources.
WHAT SHOULD THE ALASKA STATE GOVERNMENT BE DOING?
State governments nationwide appear to be in a no-win situation. Conflict between State and Federal government appears inevitable. The resources available to any given state to deal with large-scale energy issues are indeed minimal when considering the resources of the Federal bureaucracy.
The exception to this rule is when a given state has a great deal of resources on its State-owned land.
Alaska has probably the most of The leverage is there, any state in history. The leverage if the Alaska governis there, if the Alaska government ment ch: chooses to use it. chooses to use it.
State government easily gets caught in a squeeze play as it must operate within the Federal law, be responsible to Federal mandates, and at the same time respond to the needs of private citizens, local energy requirements, and private economic development.
Often the general population cannot understand "what's going on" back in Washington D.C. The State must attempt to communicate its analysis to all those concerned. State’s rights, like muscles, rough its staff, and communication with key national officials, the become weak and flabby unless State must assume the responsibility they are exercised. to challenge unwise and arbitrary Federal policies and clearly develop State related responses.
State's rights may be guaranteed under the U.S. Constitution, but, like muscles, they become weak and flabby if not exercised by the states themselves.
responsibility as a state.
The issues relating to Federal ownership of lands, a problem unique to the western states, impacts Alaska more than any other state. The central problem is to have access to its own land. It is clearly the responsibility of the State to identify those access problems which will inhibit its citizens from being responsive to national and local energy opportunities.
Herein lies the crux of the d-2 battle in Congress. If the State of Alaska acquiesces to the current Washington, D.C. position, it not only will hurt itself, but also a state, equal under law to all others.
Oil reserves, like wildlife, do not follow state, Federal and private boundaries. It is clearly necessary for a spirit of cooperation to exist between State and Federal government when considering lease sales of public lands and OCS areas.
Federal economic development policies for states are vastly different, depending on the Federal departments involved. The Department of Commerce has a different policy on development than the Department of the Interior. The State would do well to work more closely with the Department of Commerce as its views are more closely aligned with most Alaskans.
Alaska State government does not have a policy for economic development for the energy industry that clearly defines the boundaries within which industry must operate. Industry has no confidence in announced policies that have been changed whenever it became expedient.
No company is willing to invest in Alaska unless they can forecast their future costs with some confidence. The uncertainty dis- No company will invest courages companies from investing unless it can forecast opportunities when they do not ts future costs. have confidence in their ability to proceed if economic projects are identified,
Unless the State has clearly identified goals, it is impossible to ascertain when they have been achieved. The State should be expected to devise such a program. In a state as heavily influenced by government control of the land and resource revenues as Alaska, how can the private sector respond if it doesn't know which way the government is going?
A program must be developed to market the opportunities available in Alaska to those investors capable of developing what is desired, Disadvantages must be identified and solved. Advantages must also be identified and promoted,
An atmosphere of trust between government and industry must be created. This is even more important at the State level than at the Federal. Each An atmosphere of trust Must view the other as a resource must be created. to be called upon and assisted. Nothing can be achieved unless a positive, creative relationship is established. Areas of conflict must be identified and resolved. Very little can be achieved without this elementary cooperative attitude,
Very little effort is made to understand the impact of various legislation on private enterprise. State government must understand the difference between incentives
State government must understand the difference between incentives and subsidies.
and subsidies. States are competitive as well as private companies.
And the most effective State governments are those which lay down clear policies on environmental protection, taxes and incentives, and then hold true to those policies. Most companies ask for little more than fairness and consistency.
Most observers in the private sector agree that if government obstacles to increasing domestic energy production were removed, the private sector could get the job done.
But this is not the total story. Free enterprise, left to itself, without any tempering from government to guarantee fairness and responsibility, has proven on Public distrust of oil occasion to be callous and even son’ ‘ self-destructive. Land has been companies is not entirely desecrated and wildlife populations based on fiction.
nearly lost. Resources, even those on which industry depends for its survival, have been over-harvested, and in some cases, destroyed.
Public distrust of oil companies is not entirely based on fiction.
And yet, the nation faces a legitimate shortage of oil and gas. No alternative energy No alternative energy sources can come on-line fast sources can come on-line enough to check the wild escala- fast enough to check the tion in the cost of living and.. double digit inflation fueled by wild escalation in the the cost of imported fossil fuels. cost of living.
What then can the private sector do to rebuild a basis of trust with the people and the government, through which it can establish its own credibility and "get the job done?"
The following are several
suggestions prepared by the authors of this report:
can lead to either
of industry.
(1) Although public dissolutions is growing, an increase in confidence in the private sector is not occuring. The public is becoming increasingly critical and distrustful of public and private institutions. This can eaSily lead of industry. The private sector must accept its responsibility for this disturbing trend and act vigorously to reverse it.
(2) The private sector has the ability and the resources, if the need were perceived as meriting high corporate priority, to accomplish much more in the education of the American people on the real life meaning and significance of:
A. The costs of government regulation; who pays for it and how the payment is made?
B. Productivity; a word not understood but by a small
C. Research and development; Its role and how it is funded.
and sources in our economy.
E. Inflation; what it really is, what really causes it, and what can and cannot reduce it.
F,. Profits; their sources and actual size in America, their uses, their essential free society.
G. Social Services; how much should be provided and administered by government, the price tag, and alternatives.
H. Redistribution of income; it be accomplished by government? The mechanisms through which it has worked in the past and where and why it has failed.
Few of the foregoing subjects are understood by even a minority of Americans. Our schools and media in recent years have done little to product, prejudice. Indeed, both the academic world and the media establishment have contributed to
In like manner, the government has reinforced America's advantage of government growth as the "solver" of economic questions. While an increasing number of Americans criticize the of governmental management, the number who dispute government's role in economic management is decreasing nation-wide.
In short, unless the private $. sector reverses this trend, it will It Is an erroneous as continue to the point where our sumption that the market nation flirts with bankruptcy. place is understood by Leaders of industry, not just the population.
their public relations staff, must dedicate themselves to the solution of this problem. The idea that it can be cured with a one-shot advertising campaign has its roots in the erroneous assumption that the vital role of the market place is understood by a large segment of the population. It simply is not.
The growing tendency on the
Soliciting government solutions to corporate problems damages the credibility of businesssening of governmental regulations.
against the national interest and
a death knell for free enterprise.
It is still within the power today of American corporate management to eschew the short-term gains of enlisting government intervention into the private sector.
Soliciting governmental solutions to corporate problems not only contributes to increased regulation, but also damages the credibility of business leaders when they espouse a lessening of governmental regulations.
Another version of buckling to the power of government is the practice of corporate managers to lend massive political and financial support to the re-election of incumbents whose philosophies and actions have been inimical to the free market. Suicidal is the correct adjective for this game, and more businessmen are playing than ever before. An example is the percentage of monies spent by Political Action Committees (PAC's) which went to incumbents, whether they exhibited an anti-business posture or not.
In working with government, industry must move beyond criticism. Government does not have the experience or talent available to large corpora~ tions. Personnel are often young and do not understand. It is in industry's interest to involve themselves more at the lower levels of government to resolve these problems and educate willing to learn,
The authors of this report have stated the above in the belief that they are not mere philosophical meanderings, but are as concrete as the cost of sales and the prime rate.
In the long run, they are even more important. Unless the private sector bestirs itself to devote massive resources system of free enterprise will eventually atrophy to the point where cost of sales and the prime rate are no longer significant elements in our economic life. After all, they have been irrelevant to governmental economic management for decades.
Alaska holds no panacea for the entire national energy crisis, but it could provide one-quarter to one-half of the oil currently being imported from overseas. Its natural gas and coal reserves could also assist enormously in taking the pressure off domestic energy supplies. The authors of this report urge immediate action by government and the private sector in the following ways:
1. Congress must resist the pressure from the Alaska, and reserve final judgement until there have been thorough and credible inven-
’ tories of the resources of the State.
2. President Carter should direct the Secretary ef the Interior to expedite the leasing of onshore and offshore Federal lands in Alaska that have high oil and gas potential, so that these resources can help fill the dangerous energy gap America faces in the mid and late
3. The American people should demand that the Federal government back off and let the private sector produce the energy the nation needs. This means:
A. Streamline the permit system that now has Alaska and other parts of America
B. Provide incentives for energy production in difficult, isolated areas such as Alaska.
C. Hold the line on environmental protection, but understand the world of difference for and clean up the country. The latter could destroy its vitality.
D. Get the government out of the energy exploration business. Individuals find resources, governments rarely do.
price of energy. Instead of raising taxes on the energy industry to feed government, create a plow-back device so that inflated profits are dedicated to additional energy production.
The energy industry, faced with a deep credibility gap with the American people, must begin to put the health and economic life of the nation first. Corporate leaders must "come out swinging" to inform the public that:
In the near-term future, without domestic oil, gas and coal production, the nation will flirt with bankruptcy.
In spite of mistakes and abuses in the past, free enterprise has proven to be the best mechanism to solve a problem of this dimension.
The industry's commitment to care for the environment is not just corporate public relations. Even enormous projects such as the Trans-Alaska Pipeline, providing a half billion barrels of oil per year to the "South 48," can be built without harming the wildlife or the land.
The State of Alaska must take a much more aggressive posture towards:
which are being instigated by the Federal government.
The honest ignorance of the vast majority of Americans who have no idea of Alaska's potential to help solve the national crisis.
The creation of a transportation infrastructure within the State so that resources in the interior are competitive with world prices.
The establishment of a fair, consistent taxation policy.
E. Creative initiatives and incentives for the responsible development of Alaska's energy potential.
The national media must take a full, hard look at the Alaska situation for what it is. gating it objectively.
Commonwealth North is a non-profit corporation, organized and existing under the laws of the State of Alaska. Non-partisan in nature, its purpose is to inject enlightened vitality into the world of commerce and public policy.
As well as providing a forum for national and international speakers, working committees study critical issues facing the state and the nation and prepare well-researched action papers, such as this one.
The Board of Directors is chaired by two former
Alaska governors.
Governor William A. Egan Co-Chairman
Morris Thompson Vice-President
Robert Hartig Secretary
Carl Brady, Sr. Henry Hedberg
Dr. Glenn Olds
Governor Walter J. Hickel Co-Chairman
Helen Fischer Vice-President
William Sheffield Vice-President
Millett Keller Treasurer
Larry Carr Loren Lounsbury
Glenn Simpson
William J. Tobin
Malcolm B. Roberts Executive Director
Commonwealth North Energy Committee
Robert L. Hartig, Chairman Attorney, former State Legislatcr. former Assistant
Attorney General, geologist.
Retired engineer and environmental surveillance officer on the Trans-Alaska Pipeline.
John Bennett Major General (ret.); Executive Director, Expo '84.
David Dittman President, Dittman Market Research.
Former Speaker State House of Representatives;
President and owner of KHAR, KLUV-FM radio.
Charles (Chuck) Herbert Former Alaska Commissioner of Natural Resources, mineral and geological consultant.
Mechanical engineer, President Terra Incorporated
W. Stephen Jackson Peat, Marwick, Mitchell & Co.
Millett Keller Vice President, Alaska Pacific Bank.
Richard J. Miller, Jr. President, Alaska Bank of Commerce.
Executive, Sheffield Hotels.
Business Manager, Laborers & Hod Carriers Local #341.
Donald G. Wold Executive Director, Alaska Royalty Oil and Gas Development Advisory Board.
Rather than encumber the text of this report with footnotes, the main resource documents are listed below. The facts and figures on national energy use and projected costs have been reviewed by Dick Lindahl, Energy Statistician for the U.S. Library of Congress. For specific source reference to items mentioned in the report, please contact Malcolm Roberts, Executive Director, Commonwealth North, 935 West Third Avenue, Anchorage, Alaska 99501, (907) 276-1414.
Alaska Division of Energy and Power Development, Department of Commerce and Economic Development, Alaska Regional
Energy Resources Planning Project - Phase 1, Volume 1 October 1977.
Alaska Field Operations Center, Alaska's Mineral Potential,
Anderson, Arthur & Co., Prudhoe Bay Field and Trans-Alaska Pipeline System, February, 1979.
Statistics, 1978.
Department of The Treasury, Effects of Oil Imports on National Security, March, 1979.
"Electrical World", 29th Annual Electrical Industry Forecast, September, 1978.
Grantz, Arthur and Mull, C.G., Preliminary Analysis of the
Petroleum Potential of the Arctic National Wildlife Range,
Alaska, USGS Open-File Report 78-489, Menlo Park, Califor-
Hartman, D. C., Geology and Mineral Evaluation of the Arctic National Wildlife Range, Northeast Alaska, 1973.
International Petroleum Encyclopedia, The Petroleum Publishing Company, Tulsa, Oklahoma, 1978.
Klein, Robert M. et al, Energy & Mineral Resources of Alaska
ability, O11 & Gas, June, 1974.
A Gravity Study of the Northern Part of the Arctic National Wildlife Range, Alaska, United States Government Printing Office, Washington: 1978.
Miller, Betty M. et al, USGS Circular No. 725, Geological Estimates of Undiscovered Recoverable Oil and Gas Resources in the United States, 1978.
Moore, J. C., Exploration/Drilling, "Oil & Gas Journal", August, 1979.
Mull, C. G. and Kososki, B. A.;, Hydrocarbon Potential of the Arctic National Wildlife Range Alaska, U. S. Department of the Interior Geological Survey, 1976.
National Foreign Assessment Center, International Energy Statistical Review, July, 1979.
Richards, Robert R., The Impending Fiscal Crisis Facing Alaska State Government and Its Relationship to the
Future Stability and Growth of the Alaska Economy, March, 1979.
Schurr, Sam H. et al, Energy in America's Future, The
Stobaugh, Robert; Yergin, Daniel, Energy Future, Random House, New York, 1979.
United States Department of Energy, Energy Information Quarterly Report, July 6, 1979.
United States Department of Energy, Weekly Petroleum Status Report, July, 1979.