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New and Frozen Frontier Awaits Offshore Oil Drilling

Mark Begich

(The New York Times) –  WASHINGTON — Shortly before Thanksgiving in 2010, the leaders of the commission President Obama had appointed to investigate the Deepwater Horizon oil spill in the Gulf of Mexico sat down in the Oval Office to brief him.

After listening to their findings about the BP accident and the safety of deepwater drilling, the president abruptly changed the subject.

“Where are you coming out on the offshore Arctic?” he asked.

William K. Reilly, a former chief of the Environmental Protection Agency and a commission co-chairman, was startled, as was Carol M. Browner, the president’s top adviser at the time on energy and climate change. Although a proposal by Shell to drill in the Arctic had been a source of dissension, it was not a major focus of the panel’s work.

“It’s not deep water, right?” the president said, noting that Shell’s proposal involved low-pressure wells in 150 feet of water, nothing like BP’s 5,000-foot high-pressure well that blew out in the gulf.

“What that told me,” Mr. Reilly later recounted, “was that the president had already gotten deeply into this issue and was prepared to go forward.”

The president’s preoccupation with the Arctic proposal, even as the nation was still reeling from the BP spill, was the first hint that Shell’s audacious plan to drill in waters previously considered untouchable had gone from improbable to inevitable.

Barring a successful last-minute legal challenge by environmental groups, Shell will begin drilling test wells off the coast of northern Alaska in July, opening a new frontier in domestic oil exploration and accelerating a global rush to tap the untold resources beneath the frozen ocean.

It is a moment of major promise and considerable danger.

Industry experts and national security officials view the Alaskan Arctic as the last great domestic oil prospect, one that over time could bring the country a giant step closer to cutting its dependence on foreign oil.

But many Alaska Natives and environmental advocates say drilling threatens wildlife and pristine shorelines, and perpetuates the nation’s reliance on dirty fossil fuels.

In blessing Shell’s move into the Arctic, Mr. Obama continues his efforts to balance business and environmental interests, seemingly project by project. He pleased environmentalists by delaying the Keystone XL pipelinefrom Canada and by adopting tough air standards for power plants, yet he has also delighted business concerns by rejecting an ozone standard deemed too costly to the economy.

And now, the president is writing a new chapter in the nation’s unfolding energy transformation, in this case to the benefit of fossil fuel producers.

“We never would have expected a Democratic president — let alone one seeking to be ‘transformative’ — to open up the Arctic Ocean for drilling,” said Michael Brune, executive director of the Sierra Club.

Shell’s Arctic quest has consumed seven years and $4 billion over two presidential administrations, overcoming a raft of environmental concerns, the opposition of a wily and unpredictable Inupiat Eskimo leader and the fallout from the BP disaster. To do so, it mounted a relentless, two-front campaign.

After initial missteps in wooing Alaska Natives, Shell deployed a personable executive named Pete Slaiby, who traveled to remote villages and chewed raw whale meat while listening to local concerns.

The company’s efforts in Washington were even more strategic. Beyond the usual full-court lobbying effort, Shell abandoned its oil industry brethren and joined advocates pushing for a strong response to climate change.

Ultimately, Shell won the backing of a president it had viewed warily during the 2008 campaign. While he signaled conditional support for the proposal years ago, Mr. Obama came under pressure from rising gasoline prices and the assiduous lobbying of a freshman Democratic senator from Alaska eager to show he could make things happen in Washington.

There were skeptics within the administration, including Ms. Browner, who left the White House before the critical decisions were made. The president’s own Deepwater Horizon commission, while not recommending against Arctic drilling, urged the administration in 2011 to exercise the “utmost caution.” In a follow-up report last month, it gave the administration a barely passing grade on preparations for this summer’s drilling, saying that there is still no proven method for cleaning oil spilled in ice and that the Coast Guard lacks an adequate response capability in the region.

Frances Beinecke, president of the Natural Resources Defense Council and a commission member, characterized the exploration as “a reckless gamble we cannot afford.”

But the president concluded that the reward was worth the risk, and created an unusual interagency group, overseen by Heather Zichal, who was an environmental adviser to the Obama campaign, to clear Shell’s path through the often fractious federal regulatory bureaucracy. Mr. Obama has long viewed offshore oil resources as insurance against global supply disruption as well as a component of an energy strategy that includes renewable sources, conservation and innovative technologies.

The move also provides the president a measure of political cover. “Alaska tends to be a litmus test for the energy debate,” said Amy Myers Jaffe, director of energy policy research at Rice University. “When Romney says the president is anti-drilling and causes high gas prices, Obama can turn around and say, ‘I approved drilling in Alaska.’ ”

Other oil companies are already lining up to join Shell in the Arctic, which company executives say could eventually yield a million barrels a day of crude — or more than 10 percent of current domestic output. Among the Inupiat who live closest to the proposed drilling, the project continues to generate tension and debate. Although they depend on oil production for jobs and tax revenue, they rely on the ocean for much of their food and culture.

“I’m worried because we live off the ocean, the bowhead whale, the beluga, the walrus, the bearded seal,” said Tommy Olemaun, president of the Native Village of Barrow, an Eskimo tribal organization. “The ocean is our garden.”

The sweeping tundra on Alaska’s North Slope is a barren land, oddly majestic in its flat, white emptiness. The smallest movement stands out against that blank canvas — the bobbing of a solitary loon or a tiny sea duck plunging for food.

Through much of the year, there is no break between the treeless coastal plain and the frozen seas. But as winter eases, gray misty clouds start appearing over open water, announcing another whale hunting season.

The natural world holds a mystical grip on the nearly 5,000 Eskimos of the North Slope, where the migration patterns of the bowhead whale dictate the rhythm of life. All other activity stops when the Inupiat load up their sealskin boats with gun-fired harpoons. Whale meat is carved at the beach and shared among the community along with mythical tales of whales giving up their freedom to nourish the people.

Bow-shaped whale skulls are displayed in front of public buildings, and baleens — the bristly plates that filter krill in the whale’s mouth — as trophies in offices and homes.

In early April, Roy Nageak, 60, a whaling captain, got off his snowmobile and climbed a high ice ridge four miles offshore in search of a navigable hunting trail. “Those oil guys can think whatever they want, but we know how harsh this ocean is,” he said. “They don’t know what they are getting into.”

But the Eskimos have also come to rely on the oil industry. Before onshore drilling began in the 1960s, many North Slope communities lacked running water and relied on kerosene lanterns for light. Residents chopped ice on nearby lakes and transported it by dog sled to preserve their food. There were no high schools or fire stations.

Since the construction of the Trans-Alaska Pipeline in the late 1970s, the North Slope has produced as much as one-fifth of the nation’s oil, and taxes on the industry finance theNorth Slope Borough government’s $350 million annual budget. Over the past 50 years, nearly all of Alaska’s prosperity has been driven by oil production and crude prices. Residents pay no state income tax, and in fact receive checks — totaling roughly $5,000 for a family of four last year — from the Alaska Permanent Fund, a corporation largely financed by oil revenues.

The state ranks third behind Texas and North Dakota in oil and gas production, which accounts for a third of the state’s employment, about 100,000 jobs.
Those oil guys can think whatever they want, but we know how harsh this ocean is. They don’t know what they are getting into.” – Roy Nageak, 60, a whaling captain from Alaska’s North Slope, where temperatures can reach 50 below zero. CreditJim Wilson/The New York Times

Geologists with Royal Dutch Shell first cracked rocks in Alaska looking for gold and oil nearly a century ago. Yet Shell’s first venture into Arctic waters came in the 1980s, when it drilled 16 exploratory wells. It abandoned the costly project as oil prices slumped.

When prices spiked again in the early 2000s, Shell joined the scramble among nations bordering the Arctic to accelerate exploration. The company bid $44 million to lease Beaufort Sea prospects in 2005 and $2.2 billion for leases in the Chukchi Sea in 2008, and expected to be welcomed back to the Arctic.

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But the Exxon Valdez disaster in 1989 had changed attitudes, especially among villagers. They feared that drilling would disturb the bowhead migration, forcing the whales away from their food and their pursuers dangerously far offshore. They also feared a spill could poison the whales.

Suddenly, Eskimos were put in the agonizing position of choosing between their two worlds.

“The bowhead whale and the materials it provides is the meat of my life,” said Vernon Rexford, an Eskimo carver. “They talk about the jobs, the promises of education and support for the economy, but that is counterfeit compared to the dangers of an oil spill.”

A Charismatic Obstacle

Edward S. Itta, a straight-talking Inupiat Eskimo, emerged as Shell’s biggest obstacle in Alaska.

As a young man, he had worked as a roustabout on a Prudhoe Bay oil rig. Later, as the borough’s public works director, he came to appreciate the importance of oil revenue to building roads and power plants. But his real gravitas grew from his acclaim as one of the area’s finest whaling captains, a record that elevated him to president of the Barrow Whaling Captains Association.

In 2005, when he first ran for mayor of North Slope Borough, whose 9,400 residents live in an area the size of Utah, he campaigned as a whaler opposed to offshore drilling. And he easily defeated a candidate more accommodating to the industry.

Mr. Itta had no real authority over drilling in federal waters, but Eskimos possess a special moral authority when voicing concerns before Congress or other government entities. Mr. Itta enhanced that aura with a poetic sense of language and an ornately beaded leather vest.

“We consider both the sea and the land and the Inupiat Eskimos to be one,” he once told a government panel. “Therefore, the fate of the ocean is our fate.”

When the administration of President George W. Bush learned that Mr. Itta was considering a lawsuit to stop the drilling, Interior Secretary Dirk Kempthorne invited him to Washington in early 2007. They sat in front of a blazing fireplace in the secretary’s office, where Mr. Kempthorne explained the importance of exploiting the Arctic’s major oil and gas fields and, as a concession, offered to exclude a wetlands area rich in caribou and molting geese.

Mr. Itta lectured the secretary on North Slope culture and told him he intended to sue the government for not adequately studying how Shell’s plan would affect whales and other wildlife. Shell, underestimating Mr. Itta’s resolve, swiftly moved forward with plans to begin drilling in the Beaufort Sea that summer. For a local representative, it hired George Ahmaogak, a tough-talking former borough mayor who used a take-it-or-leave-it approach with his fellow natives. The Shell hat he wore at public meetings became a source of scorn.

That summer, a federal appeals court made preliminary rulings in Mr. Itta’s favor, paralyzing Shell for another drilling season.

Mr. Ahmaogak quit his Shell job in 2008 to run against Mr. Itta, who won in a landslide.

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