Herron: Alaska needs Arctic policy voice

Bethel Democrat has key seat on Arctic Policy Commission while advocating for state to have crucial role in advancing its interests

Steve Quinn

For Petroleum News

Rep. Bob Herron hasn’t sat in his office for too long during the Legislature’s interim. He’s been to Barrow and Unalaska for work as co-chair with the Arctic Policy Commission. He shares these duties with Sen. Lesil McGuire, both of whom are also Arctic policy co-chairs representing the Pacific Northwest Economic Region group.

Herron steadfastly believes Arctic policy and Alaska having a voice at an international level should be a statewide priority.

Herron is a Bethel Democrat who aligns himself with the State House’s Republican caucus, but that doesn’t mean he completely agrees with some of the heavier hitting legislation. Herron supported a change to the state’s oil tax system, but not the new law ushered in called Senate Bill 21.

Herron discussed both issues plus a few others with Petroleum News.

Petroleum News: What do you see as the value of the commission to the state?

Herron: Arctic policy, Arctic issues — pardon the pun — is hot right now. I’m not trying to make light of it. We live in the Arctic. We live in Alaska. Under the definition of the Arctic by U.S. law, almost half of Alaska is within those boundaries, including the Bering Sea, which is very important to many people not only around the world, but specifically Alaskans, especially along the Yukon River and the Kuskokwim because both of those major tributaries flow into the Bering Sea and the Bering Sea — quote-unquote — feeds Alaska in so many different ways.

So should we be involved in Arctic policy? You bet we should be. Should we be defending and protecting our own interests? Should we be making sure that Arctic policies at the international level, national level and sub-national level are in our best interests? You bet. The only reason the U.S. is an Arctic nation is because of Alaska. So Alaskans should be, must be and will be a part of that debate.

Petroleum News: What have you learned so far since the commission has been formed?

Herron: A lot of people are looking at Alaska and doing their studies and we don’t even know what they are doing. We need to be out there telling people that we are not just a bunch of frontiersmen or indigenous people who have been here a long time. We’re not just here because it’s fun and cool; it’s our lives. The executive branch — the Parnell administration — has got to do its job. The Alaska Legislature, when it comes to Arctic policy, has to have an important role in that — maybe in a parallel track with the administration.

We are going to make policy decisions that affect Alaskans. We are going to make budget decisions that affect Alaskans, yet should we be sensitive to international and national Arctic policy decisions? I believe we should. One of the things the commission is learning is that it’s a very large project; it’s a very large issue; it’s dynamic; it’s ever changing. There is a very large interest by the public sector, the private sector and by the people who live here.

There are a lot of studies going on and there are a lot of studies under way that people don’t know are taking place. There are hundreds of silos of research projects that don’t know about one another. We are learning that a lot of those projects are proprietary or the people doing the research think they are proprietary. Alaskans should be concerned about what is being studied and how can Alaskans benefit from it.

Petroleum News: OK, let’s go with that. How can Alaska benefit from an Arctic policy?

Heron: There are two kinds of people I like to characterize and they are not bad people. The first is you’re in some large city in the Lower 48 who will never, ever get to Alaska. They want this place that’s pristine and untouched. They don’t recognize there are people who live up here and have families with a whole infrastructure that’s been going on for a long time. So somehow these people want to take a snapshot and that’s the way they want Alaska to be forever.

Then there is the other side, people who have been to Alaska but would never live here. They want to make rules about how we should live up here. They want to put us in a snow globe. They want us to be in this perfect zoo, this little ecosystem that’s perfect. They want us to be this nice little people who live in nice little igloos with subsistence lifestyle and pat us on the head and say everything is perfect. They want to make decisions for us.

So the commission has decided that we are not going to be part of those two scenarios in a negative way. We are going to be proactive. We are going to be partners with our federal counterparts. We want to be part of a decision process where we are not merely stakeholders. We are sovereign citizens of this land. When you are a sovereign citizen, you don’t come begging to your partners with whom you are going to set national and state policy. We are going to be equal partners. That’s what Alaska needs to demand of this Arctic policy debate.

Petroleum News: You folks had a meeting in Unalaska recently. Do you see that as a particular hub for Arctic oil production and exploration?

Herron: I didn’t realize this until we saw a presentation and that’s during Captain Cook’s voyages around the north Pacific, he limped into Unalaska with a broken rudder. The history in Unalaska for the last couple hundred years is remarkable. The most recent history comes during World War II and now the fishing industry.

Just the strategic location of Unalaska and Dutch Harbor is tremendous. Unalaska is considered part of the Arctic. It has a deepwater port that is strategically located. It’s year-round. It will play an important role as will other ports like Nome, which is not as large as far as capacity or Port Clarence below the Bering Straits. Future infrastructure we build on north of the Bering Straits is going to play a key part.

Yes, Unalaska has been for centuries and will continue into the future to play a huge role for Arctic exploration.

Petroleum News: Still on the Arctic, Shell got off to a slow start last summer and had to postpone operations until next year. Do you have any concerns about further delays?

Herron: Sure we’ve got to be prudent and do things correctly, and I think that’s the intent of everyone involved. You’ve got to look at it from a half full glass rather than a half empty glass. I tend to use this philosophy in everyday life: things I attempt are not failures; they are successful attempts. I’ll give them the benefit of the doubt. It didn’t work out the way they wanted. They took those steps. Those are lessons that are hard learned. Sometimes you have to take those steps that don’t succeed. I hope they and other members of the industry keep at it.

Herron: I voted no on SB 21. I signed the referendum because I believe SB 21 went too far. Did there need to be changes to ACES? Absolutely. I said that all along. It went too far, too fast. So should SB 21 be overturned and then rethought? That’s why I signed the petition and that’s why I’m going to support the ballot initiative.

On the House floor, I advocated for changes. I debated and talked with my colleagues. I told them it went too far. The question I asked was, is this being fiscally conservative? Is this fiscally responsible?

What I mean by that is, if it were my household, and of the two wage earners, one of them lost their job for whatever reason. So you cut back on the extras and you pay your mortgage and you feed your kids. You spend on what’s necessary. But your savings account you protect it at all costs. You save it for real emergencies, catastrophic events.

So where I disagreed on SB 21, the tax is immediate (Jan. 1, 2014), so we’ll just take from the savings account to sort of back feed it. I disagree with it. I asked literally every oil company who came to my office to confirm that I was voting no and I asked them this. I don’t care what the formula is, but let’s call the “n” number “x,” so the way SB 21 is we come to a certain date and revenue drops to that “x” factor in the formula. What if it was played out three or four years? In the first year there would be 25 percent reduction in taxes, then the next year there would be 50 percent until the fourth year we would have 100 percent of that “x” factor. I asked all of the oil companies if they would accept that. They all said yes because they were getting that number that advocated for.

That’s why I believe SB 21 was too much, too fast. That’s why I voted no. I don’t think it’s fiscally conservative or fiscally responsible.

Petroleum News: OK, on to the second issue of drafting a regulation that clearly and concisely defines new oil.

Herron: Whoever writes that regulation is going to be the wordsmith of 2013. There will be so many ‘ifs,” “ands” and “ors.” I just don’t think they are going to come up with regulatory language that makes sense. I don’t think I’ll understand it. I just don’t know if I’ll know what new oil is. Maybe my glass has changed from half full to half empty. I’m just not confident that the regulation will make any sense to me.

Petroleum News: On to the gas line issue, what would you like to see happen to advance a gas line project, be it the larger line or the smaller line?

Herron: I was on an ExxonMobil-sponsored trip to Coldfoot to see what their crews are doing on the ground. I asked them that specific question. When is the line going to go? They said we are not going to come up with an answer until we have gas tax certainty. I think we have a ways to go yet. Whether it’s a small line or a big line, the producers are going to need gas tax certainty. So is that going to be a debate in 2014 or a debate in a special session? Probably (a special session). I don’t know when that special session is going to be. I’m just a believer the producers are not convinced they have gas tax certainty.

Petroleum News: What else did you learn on that trip?

Herron: That the producers are serious about spending billions on a facility on the North Slope. But what I took away still is they are not prepared to make the decision until they get the gas tax certainty.

Petroleum News: There are two schools of thought: You don’t provide gas tax certainty until you have a firm project on the table; you won’t get a firm project without the gas tax certainty. The negotiations rest with the executive branch. What would you like to see happen?

Herron: I think for some, let’s give them the certainty. For a lot of legislators, it’s show me first, then if it’s going to work then you will get the certainty. We want to push the envelope. We want the project that makes the most sense. I agree with critics and pundits who have commented on this since I’ve lived in Alaska. We are going to move forward. It’s going to take the producers as well to push gas through any vessel, any gas line. At the moment for me, it’s show me what you got. Show me what makes sense. This is why you need gas tax certainty — then we’ll talk about it.

Petroleum News: Do you have any closing thoughts to what we discussed?

Herron: There’s a lot going on in our state. For Alaska and the United States, plus the Yukon and Northwest Territories, and their national government, we have much more in common than we do differences. The things that Alaska, Yukon and the Northwest and how much these jurisdictions have in common and can benefit from the Beaufort Sea, I believe we have tremendous opportunities in the next three to four years with Canada being the chair of the Arctic Council and the United States coming up after that.

That’s why I think the Alaska Arctic Policy Commission in its preliminary report to the Legislature in 2014 and its final report in 2015 right before the U.S. takes over as chair of the Arctic Council is important.

The Legislature in working with the Parnell administration or any future administration — it doesn’t matter if you are a legislator from Ketchikan, Barrow, Bethel, Anchorage or Fairbanks — these issues of the Arctic are going to play a huge role in our daily lives. Whatever the Arctic policy is, it all has to be about what benefits Alaska, because we know many of these policies are going to impact us and not in a policy way. The Legislature and the Parnell administration, we have so many things to deal with, so many constituencies that are asking for help. By the constitution we are required to assist them. Because of the opening of the Arctic and the potential of oil and gas — and many other minerals — these policies affect us.

What our Canadian partners do in relation to Prince Rupert is going to have a tremendous effect to Alaskans. One of them is the great circle route. Right now we’ve got 3,000 quote-unquote innocent passage ships going through our waters because it’s the shortest route. If Prince Rupert opens up for all the resources Canada wants to export, that number of ships could go up to 6,000 annually. It doesn’t take but a few close calls and one disaster and Alaska could be impacted in a negative way, tremendously for a long, long time.

What Arctic policy means to any Alaskan — it doesn’t matter where he or she lives — is if we are not on top of it, if we are not talking about Arctic policy, all the way from oil and gas to ships coming through our waters, we have to be aware of it and protecting ourselves. At the same time, those policies have to benefit you and me, not benefit just someone else. If it doesn’t benefit Alaska, we should work to minimize those potential impacts to us.