McGuire pushes Alaska’s role in Arctic

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Senator has pitched state’s interests in DC, concerned about agenda for Arctic Council; wants to see state leaders work together

Steve Quinn

For Petroleum News

In less than a month, the United States takes over as chair for the Arctic Council, a consortium of eight Arctic nations trying to work together with policy decisions.

Sen. Lesil McGuire has been on the front lines of Arctic policy issues and co-chaired the state’s Arctic Policy Commission.

McGuire, an Anchorage Republican, sat down with Petroleum News to give her views on what this change means for the country and Alaska.

Petroleum News: The U.S. takes over as chair for the Arctic Council next month, what should this mean for Alaska?

McGuire: It should mean for the state an opportunity to highlight our best practices, our local and traditional knowledge, our regulatory system, our university, our people who are resilient and innovative. Alaska is an Arctic state. Fundamentally because of our geography we could be our own nation. Because of that we have aspects of our culture, our economy and our destiny that are wholly distinct from the contiguous 48 states in a way that Hawaii does as well.

This opportunity for us to align ourselves with the seven other Arctic nations, to chair the subcommittees, to chair the Arctic economic council, to be on the world stage is a chance that Alaska has been looking for and a chance it really needs. When you think about the fact that the trans-Alaska pipeline is in a decline stage volumetrically, it couldn’t come at a better time for us.

We are reinventing ourselves as a state. As an economy, we are only 55 years old as a state. The majority of the time, the trans-Alaska pipeline’s revenues have led to a boom or bust economy.

The Arctic Council post is a chance for us to learn from other Arctic nations. How have they created a robust economy with good paying jobs and a healthy society at those higher latitudes?

Petroleum News: That’s what is should be. What do you fear it could be?

McGuire: When Dan Sullivan was in the Bush administration, he was one of the assistant secretaries of State; he was the primary architect of the original Arctic policy of the United states, a robust Arctic policy. It hasn’t been touched until the Obama administration came along and arguably in preparation for the second time we would ever chair the Arctic Council.

The State Department has come forward with a strategic plan that makes me very nervous for the future of our state. The number one and number two priorities are mapping of the Arctic Ocean and accordingly handing out uses, which will make it more difficult for Alaskans to access their resources.

The second was to address global warming. In of itself that priority wouldn’t concern me. But when it’s in the context of an Arctic policy, it concerns me greatly. The premise is that if we lock up development in Alaska’s Arctic, it will go a long way toward reducing global warming. There are people who truly believe global warming is strictly manmade. They do not believe the earth has been hotter or colder and that it’s a cyclical process at all. They think it’s exclusively a manmade issue.

At its worst, I think this Arctic Council chairmanship can be used as a platform for environmentalists to gain a further toehold into the state of Alaska.

Petroleum News: Speaking of local voices what are your thoughts on Craig Fleener being appointed as the governor’s Arctic liaison?

McGuire: I like him. Fundamentally, he agrees with Rep. Herron and me: Arctic development for the people of the Arctic. Having an indigenous person speaking on behalf of the cabinet is important. He was an early appointee and that was not lost on the State Department and Congress. It’s a team. It’s a nice going back to D.C. and you’ve got the Alaska House, Senate and administration saying the same thing. He understands that Canada has done an exceptional job leading North America and North American values over the last two years.

Petroleum News: You recently addressed the U.S. Senate Energy Committee, chaired by Lisa Murkowski. What was your message to the committee?

McGuire: My message is that Arctic development for the people of the north of the Arctic is the goal for the Arctic Council chairmanship, and it benefits America from a variety of points. I talked about the fact that America is an Arctic nation because of Alaska but fundamentally we all benefit from that status and have already been benefitting. And the number one issue is energy.

The major Arctic infrastructure project that has been built and been a tremendous success has been the trans-Alaska pipeline. But that’s not Alaska’s pipeline; it’s America’s. At one point it provided 20 percent of the domestic energy going into the Lower 48.

All of that is American jobs and energy and revenue that come directly into our free democratic nation as opposed to the policy that came out by virtue of demand in 2012 where 40 percent of America’s domestic energy supplies were still based on importation from countries like Venezuela, Nigeria and the Middle East, where dollars are going into value systems that are fundamentally antithetical to American values.

There is discrimination against women; there is violence and mutilation against women. There is kidnapping and direct violations of human rights. Not to mention some of those countries oppose America in a much more threatening way. My first message was the Chukchi and the Beaufort hold trillions of cubic feet of gas and millions of barrels of crude oil

When Sens. (Bernie) Sanders and (Al) Franken were questioning us about global warming, my response was you have to look at the consumers not the producers. Alaska is a place where we only have 735,000 people so we are not the contributors to global warming. You will still have the demand on the earth from India and China and other growing nations as they seek to improve their quality of life. They will be looking to energy to do that pursuing air conditioning and fuel for their cars.

It is a goal for all of us to think about a day when renewable energy is a reality because they can be more sustainable at lower prices. We are not there yet. The technology is not there and the price point is not there.

So while the world is dependent on hydrocarbons, we ought to be a supplier of that. Why would we hamstring Alaska as a potential supplier of hydrocarbon energy for the world when places out there will continue to produce to meet that demand in more environmentally unfriendly ways, in ways that exploit workers and in ways that, again, that fund systems that are fundamentally antithetical to American values?

The other point that I made is that Alaskans should be able to address the issue of global warming that has been presented to us by ourselves using our sovereignty. One concern that I have is the idea that we are not supposed to have an economy, not develop our own resources, not build our own ports, not fund the movement of our own villages in places where there has been erosion.

As I said to Sen. Sanders and others over the course of a few days, should we sit back and wait and why should we wait for a federal government that has not found the ability to fund polar-class ice breakers over the last two decades? Russia is ebbing toward 40 and China is ebbing toward 11. It makes no sense for Alaska to sit on its hands and wait for the federal government to help us.

That’s another message that I had. Developing Alaska’s Arctic, America’s Arctic, is an important part of improving the quality of life for Alaskans. We tried in our Alaska Arctic Policy Commission to think about social issues as well. When you look at suicide rates and drug and alcohol addiction, much of that is linked to people who feel they have no hope. A lot of what drives hope is a job and a sense of self worth. When you get north of Fairbanks, the job opportunities change; there is no question about it. With the opening of the Northwest Passage, both lanes for the first time in 2007, there is a chance for the upper part of Alaska to change in an unprecedented way. Now a child in Barrow may have more opportunities than a child in Anchorage and that’s purely with the opening of the Northwest Passage.

So that is part of what I wanted to say. Alaska produces less than 1 percent of the U.S. greenhouse gas emission. I felt it was important in that hearing to say we are not the issue when it comes to global warming to the extent that it is manmade. It’s not the producing. It’s the consumption.

So that’s not us. Sen. Sanders said it was ironic that we want to develop our resources when it was global warming that opened up the Arctic.

I flip it around. You in the Lower 48 have been the consumers of energy and to the extent that that’s the cause let’s talk about your reduction. There will always be demand, there will be global demand. Let Alaska be an environmentally friendly good steward of the environment and produce our resources.

Petroleum News: You also mentioned in your speech that the U.S. is behind, especially with ports and spill response. Meanwhile the federal treasury took in $4 billion from lease sales. Talk about that.

McGuire: from my perspective I look at the Gulf of Mexico as a comparison zone. The idea of offshore drilling and revenues is unique to a few places in the United States. The Gulf in 2006, there was a policy lead by Sen. Mary Landrieu that allowed for the return of those revenues taken in lease sales to contribute to the Gulf states to help with infrastructure. The other part of it was revenue sharing, so not just direct improvements with infrastructure but revenue sharing with the local governments. I think it’s important that Alaska is treated the same way. The government has taken $4 billion in lease sales yet at the same time has been unwilling to invest in a single polar-class ice breaker, unwilling to invest - or even partner - in a single port.

These are issues of national security from a variety of standpoints. We have had cruise ships that have come from all over the world pulling up in tenders in Point Hope and Barrow. Think of the issue of how Russians are building up their fleet. We don’t have a polar-class icebreaker to respond to search and rescue situations that are happening.

The very people in this hearing were talking about protecting the environment. One of the best ways Alaska has protected the environment is through prevention. Having polar-class icebreakers ready to respond and having Arctic ports with those icebreakers, those booming systems and the manpower ready to respond is one of the biggest things we can do to protect ourselves.

Over 400 new vessels last year alone passed through the Arctic and down through the Bering Sea. The Bering Sea is the world’s garden of fish. It’s certainly Alaska’s garden. My concern as you look into the future that a spill will come and, without anybody out there, there is nobody to respond.

Petroleum News: Well, with that in mind, what are your thoughts on Shell returning to explore? Are they ready to go back out there?

McGuire: I haven’t spent as much time the last two months as I did with the interim. I think they did everything right at what they do best. Their main weakness was shipping. I know they worked to improve their shipping policy. If there were anybody who is going to explore offshore, I would put my money on Shell. From the drilling expertise, they’ve got it. Shipping and getting those assets to the Arctic, those are very challenging. I understand that it’s a unique environment. I think Shell will be ready. I believe they will be excellent stewards of the environment. I think ConocoPhillips and Statoil will follow them and do an excellent job as well. I think it will be an important chapter of Alaska’s history.

An analogy I use a lot is that this is a race to the moon and it’s interesting that it’s a race with the same country: Russia. The Arctic is open. It’s the new silk highway. It’s the new place for opportunity. There are $100 billion ready to be invested. It will go somewhere. To sit back and say we are going to be a snow globe and we are going to resist any of it, is denying Americans a chance at real opportunity.

Petroleum News: So what can be done, either by lawmakers, members of the administration or business leaders?

McGuire: Get involved. The main point that I’ve been making in going to Washington, D.C., while having this team of Lisa, Dan and Don leading these committees where there is a subject matter over lap in the Arctic. Alaskans are some of the most environmentally conscious people I’ve ever met. We don’t want to muck up the environment that our kids and grand kids are going to grow up in. I think that people are always amazed to hear by what we have done with by way of environmental protections, permitting processes, and spill response plans - and we need to get that word out.

Indigenous people are vital to this discussion. Their local and traditional knowledge is vital as we move forward. Talking to friends and relatives in the Lower 48 is particularly important. It reminds of the debate we’ve had over the last 30 years. The influencing is one person at a time.

Harkening back to the trans-Alaska pipeline, if you look back at the testimony in the 1960s, there is testimony of people wondering how can you build an 800-mile long, 48-inch pipeline in an Arctic environment like that. We did it. We did it well. It was jobs not just for Alaskans but Americans. Think of what else is to come?

Petroleum News: A gas line?

McGuire: Yes.

Petroleum News: What are your thoughts of how things are right now?

McGuire: I’m concerned that in this cycle of the gas line that we are back into a position where we have people in power competing on the fundamental direction. It’s frustrating to me because when I introduced my bill and Chenault introduced his bill to create the Alaska Gasline Development Corp., I thought we created the perfect safety net, that we would have a project to move forward if the producers decided to, but we always had this plan B.

My concern is that we have devolved back into a debate over the order of those two projects. I worry it’s going to end in more epitaphs saying I tried to build a pipeline that would commercialize North Slope gas, so I’m concerned.

Petroleum News: What would you like to see accomplished between now and the end of the year?

McGuire: I would like to see the leaders in the House and the leaders in the governor’s office spend more time in dialogues understanding each other’s position. I know Mike Chenault very well; I’ve served with him for 15 years. I know his heart is in the right spot and that he wants to get gas to Alaskans. I also happened to believe that Bill Walker wants to get gas to Alaskans. These issues often come down to misperceptions or misunderstandings about people’s motives.

I’d like to see them get into a room and break bread together. I know they have stated to do that. I’d like to see them do more of that. I think those two men have the power to make or break Alaska’s future right now with respect to the commercialization of North Slope gas.

I don’t think we have the kind of time people think we do. That’s the part that really bothers me. I don’t think we did three years ago. You may recall I said I thought we were late to the Asian LNG party. We were late then; we are certainly very late now, possibly terminally late. I think any filibustering going on between the branches of government puts us in a terminal position to acquire Asian contracts at that higher price per mcf.

Petroleum News: So are you at all optimistic progress can be made, possibly through a special session.

McGuire: I’m always optimistic. I lead through optimism. I’ve seen amazing things happen. I saw Sean Parnell come from a position opposing Mike Chenault and me on a plan B entirely to embracing it. I’ve seen people who oppose LNG entirely to embracing it. I think that as a small state when people take a chance to get together and recognize they don’t have the luxury of opposing one another in a way that you might be able to in a larger state with millions of people. We have to get along like a family. I liked Dan Sullivan’s speech when he said we are in this together in sickness or in health. We don’t have the luxury to disagree for too long. We don’t want to be known as someone who killed an opportunity. Alaskans are motivated by making great things happening.