Providing coverage of Alaska and northern Canada's oil and gas industry
March 2017

Vol. 22, No. 12 Week of March 19, 2017

Westlake: Resources slot a natural fit

Kotzebue Democrat, Resources vice-chair says heís enjoyed hitting the ground running with ANWR resolution, intense oil tax debate


For Petroleum News

Rep. Dean Westlake wasted little time rolling up his sleeves and getting to work - once the courts offered the final word on his election. Westlake, of Kotzebue, narrowly won his election over incumbent Bennie Nageak, in a race that required the Alaska Supreme Court handing down a decision on what ballots should be counted.

Westlake landed a post on the House Resources Committee as the vice-chair alongside co-chairs Geran Tarr and Andy Josephson. The Democrat also became chair of the House Arctic Policy, Economic Development and Tourism Committee. He quickly introduced HJR5, a resolution endorsing ANWR exploration. One day before the House Resources Committee passed the committeeís oil tax and credit bill, HB 111, Westlake sat down with Petroleum News and discussed his first few months in office.

Petroleum News: Youíre among five freshman lawmakers on the Resources Committee. What made you go for a seat on Resources?

Westlake: Because in House District 40, we provide the resources for the rest of the state of Alaska. Itís my house district and I want to have a seat at that table - period.

Petroleum News: Again, among five freshmen plus an incumbent serving her first year on Resources, so what have you learned so far, slightly more than half way through the session?

Westlake: That you need to build a consensus in whatever youíre doing, and bringing your perspective, your professional perspective in my case. I was the director of village economic development.

Taking it from the village level to the state level, and knowing the barrier issues out there in rural Alaska: Itsí been a tremendous boost. Not many legislators can say they went over to the U.N. and presented on barrier issues to rural economics. These things are important to us in rural Alaska.

Petroleum News: You quickly got busy with an ANWR resolution. Talk about that: What made you jump on that right away?

Westlake: Because we need jobs. For me there are two competing values when we start to talk about ANWR or any kind of resource development. My perspective, a lot of what I see is through a lens of wages versus the optic of taxes. I donít know how to explain it any better. As Iím looking at wages, a vast majority are looking at taxes.

Because the wages you pay, they are going to be spending that money here; youíve got such terrific local hire and itís spent within the state so it helps us all.

Petroleum News: Did it help you that Lisa Murkowski told the Legislature there is value in resolutions while many have long felt they are simply formulaic that pile up and end up in the trash?

Westlake: On this one, there is absolute value in the resolutions. Itís expressing the will of the people. We can only take it to that expression, then itís up to, say in this case, the federal government on whether they think itís worthy to pursue. We here in the state think itís been worthy for quite a while.

Petroleum News: So when you go down south, what do you tell people about ANWR?

Westlake: I tell them that the perception is that itís the whole refuge and that isnít the case. If you shrank it on a one-to-one scale to the size of a football field, the place for the drilling itself is about the size of a postage stamp on that very same football field.

Petroleum News: Are you hopeful that you have an administration and a Congress that can advance this?

Westlake: Absolutely. I think itís crucial for the nation and itís also beneficial for Alaska. We are a resource rich state. There is so much more we can enjoy by responsibly developing our resources.

Petroleum News: It was your committee (Arctic, Economic Development) that had the ANWR bill first. You got some helpful amendments from Rep. (David) Talerico to advance that. So those first few hearings as chair, what kind of learning curve was that for you?

Westlake: Thank goodness for Rep. Talerico. It was a very learned experience. We turned around and worked it together. Itís been a wonderful first year for me having people from both the majority and minority side coming over to say this is what you might want to reconsider or this might be helpful. So the conversations Iíve had with both sides have been fulfilling.

Petroleum News: So what was your reaction to President Obama removing the Beaufort and Chukchi from the five-year plan?

Westlake: That is where I think we missed the boat when we didnít have coastal zone management in place. Itís where if you had coastal zone management, you could have a federal authority who could work with local entities at that level. There would be no middle man. You could do that and get the will of the people who reside there.

Petroleum News: Then, there is the argument of stateís rights versus the federal oversight and some feel the state wonít afford the local communities the same rights they want from the feds. Are you seeing that?

Westlake: You know I see that a lot where the differences between the state agencies and the federal agencies play out very differently because we have so many federal lands around us in House District 40, so yes there certainly are issues there.

Petroleum News: Now Obamaís removing the Beaufort and the Chukchi from the five-year plan, that canít be fixed quickly, so when you think back to Shellís efforts and them withdrawing, does that reduce your confidence that it can be drilled?

Westlake: For me personally and professionally is when I sat on the Northwest Arctic Borough Assembly, is we had the offshore oil companies coming to us. You had Statoil; you had Conoco; you had Shell. They were all there. What was so gratifying to me was they said you are concerned about your seals, here is money to go study it and we are hands off so the Native village of Kotzebue did that: Did a fantastic job. They funded the beluga whale commission. We found out things we didnít know before. They turned around and helped the schools as well. They said do what you will with the money, we just want to see the results with what youíre doing. State government has never done that. The federal government has never done that. It took private industry to come out and make that happen. For that we are grateful.

Petroleum News: Shell encountered what some supporters say were too many regulatory hurdles but they also had the mishap with the rig down near Kodiak. Does that give you concern?

Westlake: Any mishaps that involved our oceans, absolutely. House District 40, we are very adamant about that. Thatís why we always start with subsistence first. This can be based on a bottom line. Our line goes one more past the corporate bottom line. Itís what do the people get. For us itís the bounties received from the land.

Petroleum News: You were immersed in HB 111 for about three weeks. Many people in this building 8 or 10 years, they are used to this kind of debate. Iím sure youíve heard about or read about it, but now itís right there in your face. What are you making on the debate over oil tax debate on taxes and credits?

Westlake: Thank God Iím over here because Iím here at a time when we get to redefine Alaska. Not many states get to do that. Here we are. We are running out of money quickly. We need to bring in spending. We need to stop the hemorrhaging. Iím so grateful people sent me here to be part of this.

Petroleum News: so what are your observations as things are now?

Westlake: Well ultimately itís going to go to the Senate side. Iím sure there could still be amendments to it. Meanwhile, more than likely it could be a thing between the majority and the minority. When itís coming out of the House and going to the Senate, you can only point it in a direction. They are the ones who ultimately aim it. Then it comes back to us. Thatís when I believe the real work will be done.

Petroleum News: What areas trouble you?

Westlake: There are some things that are troubling. Itís about compromise. The oil and gas industry is our bread and butter as is the mining industry. Iím not ashamed of that. I try to work with them as diligently as I can, then we can move forward with a compromise where no one is really happy where we can live with the results. Like I said, once it comes back from the Senate, we all are going to have to roll up our sleeves.

Petroleum News: What changes can you accept?

Westlake: I was particularly struck by Rich Ruggiero. There were some great ideas in there. I thought it was a great presentation. Iíd like to see more give and take. We look at the oil industry as deep pockets and this is how much you made and this is what you made this quarter. Sometimes we forget the upfront costs. If they are going to move a drill rig or if they are going to sink $100,000 into the economy with no guarantee of getting results that is a very, very big proposition. Looking at what they have to spend and what we get in return, there certainly is room for improvement.

Petroleum News: What about the credits? Some believe itís not affordable, particularly if prices stay at this level; others say itís whatís driving the successful finds.

Westlake: For me the cashable credits are troublesome. You look at the non-producers, those who are vigorously searching for that oil pocket. We would like to see that oil in the pipeline. There is no one who wouldnít like to see that oil in the pipeline. Itís a matter of how do we incentivize that.

Petroleum News: That seems to be a question that comes around every year or every two years.

Westlake: It is. I wonít second guess the legislators before me. They acted on the information they had - just like Iím doing the same now. Iím sure behind me there is going to be someone who has to deal with it. Worldwide this is a changing structure. Iíll leave it at that, this is so dynamic.

Petroleum News: You like to speak from the perspective of economic development, but you are in the majority which is pursuing some significant changes. Can there be areas where you may be torn between the two priorities?

Westlake: The wonderful thing is we find ways to work around it. Itís not as big a challenge is what I thought it was going to be of this is what we are going to need and this is why we need it, then bringing that village perspective into the equation.

Petroleum News: Local knowledge seems to be a theme that gets played out and sometimes gets forgotten. Where does local knowledge help either in Juneau, perhaps D.C. or even Paris which you spoke of?

Westlake: I really want to make a distinction here. You have local knowledge and you have traditional knowledge. The world as we know it is changing so quickly in our traditional world. There were two hunters who went out in the ocean in their 60s and things have changed so much they didnít come back. For us, you see the ice leaving earlier. Iíve got at least three villages where itís spotty. We have had some barge service but not very much. The rivers have dropped so low. In another village, we have not had barge service in 30 years because the channel shifted and everything has to be air lifted. Itís a changing world out there. We use traditional knowledge and we use local knowledge because itís been changing so quickly. People look at the temperatures today with all the snow we are getting this time of year and 50 below temperatures - they forget this used to be normal. Now you are seeing less and less of it.

Petroleum News: When you are sharing the traditional knowledge, what kind of shock is there to people hearing it for the first time?

Westlake: For traditional knowledge is where the caribou is coming through, when the caribou are mating, when the seal are around - all of those things that have been with us since they came around. We knew their cycles. Now caribou are breeding later if itís warmer. Things like this, itís just changing. Traditional knowledge is when do the lesser coho hit; when do the greater coho hit; when do the rest of the salmon come through?

Petroleum News: Whether you guys are here or not, you have a May trip to Fairbanks for Arctic Council business. The U.S. hands over duties as chair to Finland. Some deem it very important as closure for the two years as chair. Why was this important to the state?

Westlake: I donít think we can or will completely disassociate ourselves when our fishing is at stake, when our subsistence way of life is at stake and when all this traffic is flowing. I recently read that Panama Canal is losing money because ships are starting to do the pole crossing, the Northwest Arctic passage if you will.

We need to be at the forefront of this. You look at Russia building all the infrastructure over there. Granted, they have deep water while we donít for the most part. The Arctic is where the resources are at. The Arctic is free from any kind of real protection. There is nothing out there. You donít have a Coast Guard station. Iím thinking about the barge with no people out there and a transmitter dropped. We learned more from an empty derelict barge that was floating free, went to the Russian side and drifted back over here than we did from anything else. That should be our warning that we need to know more about the Arctic. It would place everybody in good stead.

Petroleum News: The Trump administrationís views on climate change differ from those who signed the Paris Agreement and those who have years of involvement with the Arctic Council. Do you have any concerns the U.S. could either withdraw or be a voice against the work thatís being done?

Westlake: On the federal level, I donít know whatís going on. From the local perspective, for us, I know our world is changing. Unequivocally, I can say that. Iím not going to say what the cause is. For me that seems to be where the difference is on the federal perspective. Itís a causal issue rather than if itís an issue. For me, I can say unequivocally when you see salmon dying on the river because there is less volume and they are not getting enough oxygen. I can say when Iíve got four villages when you either get no barge service anymore or itís sporadic at best, that for us, itís a changing world and we live in it.

Petroleum News: So the chairmanship goes to Finland for the next two years and the Finish government has said it will use the Paris Agreement to drive its agenda, what kind of role would you like to see the U.S. or Alaska have these next two years?

Westlake: I think Alaska, being the reason for the U.S. in there, has to be involved, absolutely has to be involved. I donít know if this means the governorís office doing something over there, but we certainly need to follow within those parameters and speak as a unified voice. Our concerns are also Canadian concerns and Greenland concerns. Everyone who lives out there, we all have the same issues.

Petroleum News: Back closer to home in Juneau, what are your goals for your two years here?

Westlake: Iíve been invited to the ICC meeting (Inter Circumpolar Council) in April, so up there to listen to them and taking lead from them. Meanwhile, Iíve got several issues. When we talk about ANWR, Iím also working on a bill to keep the caribou sustainable because if you have business in there, we have a vested interest to make sure the caribou stock do well.

These are things Iíve learned from being on the ground, being in the Assembly when big business came into town. So Iím working on a couple of things there. For next year, Iíd like to see, with possibly this year filing the bill, I would like to see some form of coastal zone management coming back, and talking with industry about it. Iíd like to have a local authority where there is no middle man but if the feds want to talk, they can go directly to that source and consult with the state and move forward together rather than a unilateral Washington decision or a unilateral Juneau decision. You need the local input because we are the ones who live there.

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