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Roads project gets $7M in capital budget

August 18th | Shady Grove Oliver Print this article   Email this article  

The planning phase for a proposed roads project on the North Slope came out of state budget discussions strong, as other road projects around the state withered for lack of funding.

The Arctic Strategic Transportation and Resources (ASTAR) project was penciled into the capital budget for a total of $7.3 million to be doled out over the next three years.

"This is a long process. That's one thing I want to make clear. This is not something that happens over five or 10 years; this is something that happens over 10 or 15 or 20 years," said Alaska Department of Natural Resources Commissioner Andy Mack. "You do the planning up front and the most important thing to us is that we do these things well. If we do them well, we think they'll have sustained success."

The project proposes a series of interconnected roads or right-of-ways spanning the North Slope Borough, among villages and the oil patch.

"We don't have any money to do construction. This is all about getting us to the point where we can do something," Mack explained.

The project stands at the confluence of certain local, regional, state, and federal economic interests, as well as those of industry, at a challenging moment in oil and gas history for Alaska.

North Slope Borough communities find themselves feeling the effects of high transportation and living costs being off the road system. The state's budget has been devastated by recent drops in oil prices. Industry will soon feel the effects of the state's canceling of oil tax credits. The federal government is amenable to oil and gas exploration.

"Big picture, the state of Alaska has found itself in the precise same position as other oil regions in the world and that would be that with the price seeming to be sitting in this $45-$55 a barrel [area], how do you live in that environment?" Mack said. "It has been challenging for countries across the globe, states here in the U.S., and certainly Alaska."

With oil and gas interests comprising more than 90 percent of the state's budget, any fluctuation has a ripple effect that extends far down the chain.

When the price of oil was double what it is now, at $100 a barrel, the state could afford to "front-end load" certain projects by providing tax credits, Mack said. With the consensus in Juneau being that was no longer affordable as the state had to make severe cuts to services with a shrinking budget, people at various levels are now figuring out a new normal.

"Really, what we started doing was looking for ways that we could soften the transition from a world where companies could have tax credits or qualify for tax credits and a world where there were no tax credits," Mack said.

Last year, with budget concerns at the forefront of state officials' minds, a new borough mayor was elected on the North Slope.

North Slope Borough officials, who have repeatedly stated the importance of having local voices in matters pertaining to state and federal decisions in the region, chose not to provide any comment on this project for this story. Despite several requests to set up an interview about the roads project directed to multiple officials over a two-month period, Mayor Harry Brower and his staff did not make time to speak with the Sounder.

According to state officials, however, Brower met with Gov. Bill Walker soon after taking office to talk about quality of life for residents of the Slope.

"One of the things that was raised is that it was becoming more difficult because of the shortened ice road season and a lack of year-round roads to get goods and services, in some cases, people, to the villages," Mack said.

Village residents wanted safer ways of traveling across the tundra in winter and summer.

Typically, residents of Utqiaġvik, and occasionally Atqasuk and Wainwright, travel by ice road to the Prudhoe Bay area where they can connect to the Dalton Highway and travel down to Fairbanks.

In summer, that passage is nearly totally impossible (and harmful to the tundra) given the boggy terrain. However, with fewer months of the year having ideal ice road conditions, the ground traveling season has been getting shorter and more dangerous, meaning more people must fly themselves or their goods in or out by plane.

"This is an issue that repeats itself across rural Alaska," said Mack. "It's an absolute financial burden."

Brower had noted the importance of considering transportation options, state officials noted.

"It resulted in us putting together a plan to enhance community infrastructure and that would be both year-round roads, probably starting off with some sort of transportation system to Utqiagvik that could be relied on, but not eliminating any other villages on the North Slope, and looking at other transportation options, whether it be marine, or potentially expanding air services," Mack said. "Really what [ASTAR] was was an effort to get into the planning process which is really critical to anything you do in that area."

Any roads across the Slope and among the villages would likely cross the National Petroleum Reserve-Alaska (NPR-A), which is managed by an Integrated Activity Plan (IAP) approved by the federal government. The plan dictates the terms of use for the 23 million-acre parcel of land, which includes oil interests, villages, and protected habitat.

The NPR-A is an area with a varied history when it comes to the success, or potential success, of oil and gas endeavors.

In the late 1990s, under the Clinton administration, the decision was made not to open the Arctic National Wildlife Refuge (ANWR) to leasing, but to concentrate sales within the NPR-A. Under the Bush administration, a U.S. Geological Survey analysis showed immense potential — nearly 10 billion barrels worth — beneath the surface, Mack said. At that time, there were lease sales and test wells aplenty.

"Frankly, the wells did not turn out like folks in industry had hoped they would," Mack said. "They turned out poorly."

In the mid-2000s, a handful of industry giants relinquished many parcels of land in the NPR-A in response to the unsuccessful tests. Under the Obama administration, a new analysis came to the conclusion there was merely a tenth as much recoverable oil as previously estimated.

Early this decade, the IAP was written which took a sizable portion of the NPR-A and placed it in protected status, meaning it would not be available for leasing or infrastructure placement.

However, since last year, there have been a few "remarkable discoveries" which have "sparked a lot of conversation and interest," said Mack.

"We are believers that there really is something significant there in the western part of the developed field, which is on state land, and the eastern quadrant of the NPR-A," he said. "There's significant geology and well results which contradict what we were seeing half a dozen years ago."

With prices at historic lows and the necessary end of the tax credit system in order to keep the state budget's head above water, the state is now looking for ways to boost interest in — or access to — the area.

"We are on the cusp of a new planning effort with lots of new excitement and in the middle of all that, we feel we have timed our request to fund an effort to really intensely look at this area," he said.

It coincides with a federal administration open to the potential for development and a local borough desiring of accessible transportation options for its residents.

A handful of conservation groups and individuals have expressed concern about the project and in particular, the potential for the state to overturn existing management plans in favor of ones more amenable to development. A Wilderness Society representative cited, in particular, a memo from Mack to the legislature in May.

"ASTAR is a three-year effort to re-write these integrated management plans, which will lay the framework for community connectivity and responsible resource development in the region," Mack wrote to the House Finance Committee.

In the letter, he cites ASTAR's potential to "demonstrate that these plans were not developed in the best interest of the state and ignored the needs of current and future local stakeholders, to appease special interest groups in the Lower 48."

"For decades NPR-A and ANWR have been political boundaries that have hampered the State of Alaska's ability to develop its resources," the letter begins. "Under the previous administration, the Department of Interior finalized plans in the NPR-A and ANWR which either blocked resource development altogether, or limited opportunities so drastically that it is not economically feasible for resource development to occur."

In terms of the resources within the lands potentially to be crossed by any roads built in the future, Mack said the funding provided in the capital budget will cover research into possible impacts.

"As we get into the NPR-A or the Outer Continental Shelf or ANWR, and we look at what is being proposed, it necessarily has impacts on the animals and fish and we have to understand that because that's an important part of the analysis and it's an important part of the communities' subsistence. So, we want to be mindful of what's going on," he said.

The roughly $7 million will go toward funding a handful of temporary jobs and research endeavors over the first planning phase, set to take three years.

"There's three big money buckets," he said. "One is non-permanent employees to supplement what we already do, Reciprocal Services Agreements (RSAs) with other agencies so we can make sure we are completely tuned up with how they view these issues and what the concerns are they might have, principally the Alaska Department of Fish and Game, the Department Of Transportation, and maybe Health and Social Services, and then contract work to bring in a principal contractor or two who can really provide us information about some of the issues when it comes to building topside infrastructure and what this might look like."

While the potential for future funding for any actual construction is still highly tentative, both supporters and opponents of ASTAR will be keeping an eye on what comes of the next three years-worth of planning to determine what impact a project of this magnitude might ultimately have.

Shady Grove Oliver can be reached at sgoarctic@gmail.com.

 

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