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Providing coverage of Alaska and northern Canada's oil and gas industry
March 2014

Vol. 19, No. 11 Week of March 16, 2014

McGuire works Alaska’s Arctic issues

Anchorage senator concerned federal government doesn’t see people issues in the state; plan doesn’t match other Arctic nations

Steve Quinn

For Petroleum News

When Sen. Lesil McGuire says she wants Alaska to have a seat at the table for domestic and international Arctic policy, she doesn’t mean being one of dozens who take notes and listen to presentations. No, McGuire wants someone from Alaska in a leadership position when the United States takes over as chair to the Arctic Council, succeeding Canada. McGuire, an Anchorage Republican, serves as co-chair to the Alaska Arctic Policy Commission with House Rep. Bob Herron. Both lawmakers traveled to Washington, D.C., to meet with high-level officials to advance the state’s position on pending federal appointments that include the Arctic Council Char, special representative to the Arctic and Arctic ambassador.

They met with Alaska’s congressional delegation and federal officials such as: Ali Zaidi (deputy director for energy policy); Tommy Beaudreau (Bureau of Ocean Energy Management director); David Balton (principle deputy assistant secretary of state); and Kerri-Ann Jones (deputy assistant secretary for oceans and fisheries). The names may not mean much to the average Alaskan, but they are among many who will decide Alaska’s role developing our nation’s Arctic policy.

McGuire, who is the Senate’s Rules Committee chair and serves on the Senate Resources Committee, returned from D.C. in plenty of time to cast a floor vote on Gov. Sean Parnell’s LNG bill, SB138.

McGuire sat down with Petroleum News to discuss what she learned in Washington and SB138.

Petroleum News: What’s the underlying mission of the trip?

McGuire: Alaska wants a seat at the table to continue to set that policy for how that development will be handled and discuss our share of the revenues (from Arctic oil development), the fact that the White House policy still has gaps in it — severe gaps that don’t address people. We were polite to say thank you to the White House for continuing to include me and Bob in the dialogue, which they did all throughout starting this time last year in weekly teleconferences; then they met with us in Unalaska and Barrow. We want to say thank you because we pushed them beyond their first drafts, which were literally just about the environment, climate change and the ice flow. They still have not gotten to the fundamental point of a people centered policy. We gave them examples: Canadian Arctic strategy; the Norwegian Arctic strategy; the Finnish strategy. Out of the eight Arctic nations, the U.S., which is just coming out, it’s which one of these is not like the other seven?

When you look at Alaska’s policy you can see that it looks a whole lot like the other seven sovereigns so the conversation was polite but firm to say please continue as you move through other iterations of the strategy to really look at the other Arctic neighbors and look at the Alaskan policy to see that it really is the most relevant. You are talking about economic development benefitting the people. You are talking about those who live here and are going to be the best stewards of the environment. The revenue share ought to be part of that because we are already bearing the cost.

We have villages that we’ve had to relocate and the state is bearing the costs. You’ve got $2.5 billion that have gone into the federal coffers by virtue of the Beaufort and Chukchi leases. When we were at the department of state with assistant secretary of state Kerri-Anne Jones, she had lined up nine other cohorts from national security administration on and on. These folks sat with us and we got to paint a first-hand experience of what it’s like to visit these communities.

We met with Ali Zaidi who handles the Arctic portfolio and has been described as the president’s sharpshooter. He’s very, very bright. He gets it. He understands right away. He says, you want an Alaskan named the Arctic representative. You want an Alaskan to be named the chair of the Arctic council. He walked through what his perception would be, which is very textbook State Department. That’s the notion that the president will take that role ceremonially and will appoint sort of the Secretary of State then there will be a worker bee behind it.

Bob and I said to each other, he doesn’t know what he’s talking about. We later learned actually that is the way years ago sovereigns carried it out. It’s really been with Canada with the forward thinking of Stephen Harper (who) said absolutely not, it’s going to be (Inuk) Leona Aglukkaq, someone from Nunavut, someone who gets what it means to be a northerner. I’m going to appoint her not ceremonially but literally to be the chair of the Arctic Council. So we walked in as Alaskans right behind that thinking demanding it be an Alaskan (next year when the U.S. takes over). So good for us. It may just happen. We’ll see.

Petroleum News: So that’s what you mean by having a seat at the table? Someone in charge?

McGuire: We had three goals in mind.

The first was meeting Ali Zaidi, White House domestic policy counsel. There are 22 agencies identified within the federal government that all have something to do with the Arctic. He’s the guy that synergizes all of that. Then you’ve got the Department of the Interior and Assistant Director Tommy Beaudreau who is an Alaskan. He’s absolutely sings the praises of Alaskans and gets what it means. I’ll relate two stories. The first is a recent hearing about NPR-A development and the common misperception inside the beltway how all indigenous people represent a monolithic view of development. He said ‘that’s absolutely wrong and I tell my colleagues that all the time.’

The second was the sheer disappointment we got to see on his face when he described getting ready to walk into a meeting with Shell to present to them what he felt was a successful drilling season, here we are moving forward and the only thing we feel we’ve got to work on was logistics, then the reality of the 9th Circuit Court opinion coming down. He said, ‘I had a very different meeting Shell than I thought we were going to have.’ You could feel the disappointment. I felt as an Alaskan that we had a friend in Washington, D.C., to feel that disappointment along with us. He understood how important the University of Alaska is and investing in that, and using our Arctic university system to establish base lines to bring about more confidence in Arctic development. He gets that.

Third was Lisa Murkowski. That was a big day for me and Bob with Lisa Murkowski to brief her on who we talked to, get information on what she’s hearing and let her know we are pushing the same message and backing her up. We pushed at both places our disappointment in Izembek. It’s integrated into philosophy on the Arctic. If the federal government doesn’t trust the state to manage a 10-mile road for their own safety of their own people, then how are they going to trust us with the Arctic?

Petroleum News: So if your end game is getting an Alaskan in a key role, what are the chances of that really happening?

McGuire: We would like to have the ambassador/representative position be an Alaskan. We also would like the Arctic Council chair position. The feedback we got is that it’s complex and there will likely be a few people appointed to fill a variety of those positions. I got the impression — and Bob did, too — they heard us loud and clear. We think an Alaskan will be in that mix.

Petroleum News: What else in addition to Alaskan leadership drove the mission of your trip?

McGuire. Infrastructure investment and partnership on that. We talked to them about my infrastructure bill. We’ve got to get building ports. We have to start investing in vessel tracking systems. At the same time, we hope the federal government is going to start taking a harder look at making the Arctic a priority. Lisa’s staff had gone through the budget and they only found a couple of places where the Arctic was mentioned and they found more in the Antarctic.

Petroleum News: Your colleague on the House side, Ben Nageak, said he’s disappointed that the Shell 9th Circuit Court decision has stopped getting oil spill response facilities in place. What are your thoughts on that?

McGuire: I’m very concerned that the momentum has stalled. From an oil spill response point of view and from a workforce development point of view we were reaching a point where our expertise was starting to peak. Now you have this tremendous uncertainty and people pulling back. That’s a very dangerous place for all of us to be. The response capability has been on the part of Shell. What we had was our private sector partners helping us and we don’t have them. Ben is absolutely right. We were having breakfast with our colleagues and sharing that exact fear. We were telling them, how would you like to live in a state like ours when you are that exposed to new vessel traffic from all of these countries and you don’t have a polar class ice-breaker.

Petroleum News: So whose name comes up in discussions for those seats at the table?

McGuire: Fran Ulmer’s name comes up; (former North Slope Borough Mayor) Edward Itta’s name comes up; (current Northwest Arctic Borough Mayor) Reggie Joule. The village CEOs have specifically requested an indigenous person. We on the commission have requested that it be an Alaskan. Another name to be aware of is Ambassador David Balton. He is someone being considered for these positions. He says what you guys are asking for is kind of unprecedented. I got the impression from him that this has been a hot topic for him.

Petroleum News: Do you think it helped that a Republican and a Democrat are the leaders of this commission going to Washington, D.C., pushing Alaska’s agenda?

McGuire: I do. I really do. They read our report. They digested it. Every place we went. They knew about the report. They knew what was in it. They wanted to be part of this. That’s the exciting part because the Alaska Arctic Policy Commission is community-based, bi-partisan, bi-cameral effort to say here is who we are as a council.

We made another huge pitch to invite the president. We are going to send a long two jackets with our logo — one for him and one for the First Lady — and invite them to come up. We have two meetings this summer, once in Anchorage and one in Seward. Anchorage is where our largest workforce is and Seward is where we have all of the Arctic shipbuilding and training. In August we are going to Nome and Kotzebue. We are going to invite them up.

This is the year of the Arctic. This is like Kennedy getting a flag planted on the moon. We are in a race with the same people as we were back then.

Petroleum News: The Legislature strongly supported the forming of this commission, but under its breath there was also the whispering of, ‘here we go, another commission.’ Did you really think there would be value to this? Did you feel you would have to convince skeptics?

McGuire: There has been value to every single commission that I’ve chaired. That’s a fact. I don’t take them on if I’m not going to do them well. I feel honored by my leadership to allow me to be the person to head this up. I knew we were behind. I knew we had so much to get into this policy. Alaskans’ voices have so much value. My only concern was we were behind and how do we catch up? I had no doubt this would be a success. The question was how do we work as quickly as we could with the resources that we have? I look forward to augmenting the work we’ve done now in this next year. The two areas we are going to continue working on is the area of national security because we need to come up with delegated channels for communication between the National Guard, the Coast Guard, the Navy, the Air Force in respect to search and rescue, oil response and acts of war. The other one is plan out spill response.

Petroleum New: Onto SB138. There are various concerns out there with AGDC’s role and with TransCanada still having a strong part in this project. Do you have any concerns about the bill?

McGuire: my greatest concern is that we bring the public along with us. I look back now and was and am confident in SB21. I know it was the right decision to reverse our course on ACES, to make Alaska more competitive. I look back know and think to myself that could I have done a better job on to bring along members of the public who felt opposed enough to bring along a referendum. Do I have all of my neighbors out there with me? The areas where they are going to want more clarity is why keep TransCanada as a partner?

For me, in the interest of momentum, we need to keep TransCanada as a partner because the market to Asia is assured right now and has been for the last five years, but the future is uncertain. So to stop where we are right now and go out to bid and restart the process with someone who doesn’t have the rights of way and permits is going to add years to the project. No. 2, I did not personally support the contract with TransCanada through AGIA, however, it was voted on and that has led to an expenditure with public money. My feeling at this point is let’s get the full value of those dollars. We can do that by signing this agreement. All of this information will become the property of Alaska.

TransCanada is a proven pipeline builder. I have been to parts of Canada where I’ve seen their work. It is on time. It is on budget. And it is done well. They are a good pipeline builder. I believe strongly in the fact that Alaska is looking for alignment. That is the one thing we have not had with these various proposals. When I can look across the table and you’ve got all three of the major leaseholders, the state and the pipeline builder willing to work together, I think that’s great.

On AGDC, if you’ve followed my line of questioning, that was one of my early areas of interest. Remember I had a bill and (Speaker Mike Chenault) had a bill to create an agency. Mine was under the railroad; his was AHFC. Irrespective, we had the same idea. I have a great belief that we need to have that notion, the ability to commercialize North Slope gas if we need to. I think that having this subsidiary under AGDC in statute gives us momentum. There’s an ability for them to move more quickly. There’s an ability to share information that I think is going to benefit the big project. I think ultimately the most important part to me is that AGDC remains in effect, remains funded and has the ability to press forward with an in-state gas line should the big line fail. That was the assurance that I needed.






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