Welcome to AlaskaJournal.com - Alaska's longest running weekly business publication, covering issues that matter in the 49th state
width
Web posted Sunday, October 3, 2004

Villages consider drilling as fishing declines

By Tim Bradner
Alaska Journal of Commerce



 
Matin Moore, city manager of Emmonak, looks over documents that detail acreage that could be available for drilling near his village and its neighbors.
PHOTO/Tim Bradner/AJOC

Ten years ago, the last thing Martin Moore thought he would be doing is pushing for offshore drilling near his village of Emmonak on the Yukon River delta in Southwest Alaska.

Times change, though. A decade ago, the chinook and chum salmon that swim up the Yukon River every year brought a modest but steady cash income for local Yupik fishermen. With commercial fishing complimenting subsistence hunting and fishing, and occasional local construction jobs, life was good.

Now the markets for salmon have evaporated, Moore says. Worse, the salmon runs themselves have been poor to nonexistent in recent years.

Moore, a former state legislator and long-time Yupik leader, is now Emmonak's city manager, and he is worried. Cash income from salmon is mostly gone and there are no other near-term possibilities of economic activity in the region.

State funds are being slashed and heating oil in Emmonak costs $3.29 a gallon this year. "Our options are limited," Moore said.

But the Yukon River Delta, beneath the waters of Norton Sound, there could be trillions of cubic feet of natural gas and even some oil, according to the U.S. Minerals Management Service.

Moore not only supports exploration, but he's now working to get support for new lease sales from federal and state agencies. He's also trying to stoke up interest in exploring among oil and gas companies.

Emmonak's local village corporation and four others nearby are willing to offer their own lands for exploration. The villages own half a million acres in the delta region, Moore said.

Besides Emmonak, the other village corporations are Kotlik Yupik Corp., Choolunawick Corp., Bill Moore Slough Corp. and Nunapiglluraq Corp.



 
Burton
PHOTO/Tim Bradner/AJOC

As the economy shifts, so do attitudes

Attitudes toward oil and gas development are changing in rural Alaska. Influential Alaska Native groups are now on record supporting exploration, even in the offshore, but the process of converting opposition to support has taken a number of years, Moore said.

Last year, delegates to the Alaska Federation of Natives convention adopted a resolution favoring outer continental shelf (OCS) oil and gas development, as well as other development methods.

Supporting offshore exploration, or even local onshore petroleum development, is quite a turnaround for Emmonak and the other communities.

For years, Yupik people in the area opposed offshore development over worries that an offshore spill might harm the region's fisheries.

Concerns for the environment still exist, but the collapse of commercial salmon fishing in the region and a dearth of economic alternatives leaves oil and gas as the only choice, Moore said.

"It could certainly help us bring down the cost of fuel and electricity," he said.

The positive experience that Alaska Native people on the North Slope have had with oil and gas development has also helped change peoples' minds in other parts of rural Alaska, Moore said.

Emmonak isn't interested in becoming a major industrial support center for offshore drilling, he said, but if developing local energy resources could lower fuel and electricity costs it could spur the formation of local businesses. Electricity now costs 34 cents a kilowatt hour in Emmonak, Moore said. That is about three times what electric consumers pay in Anchorage.

A few jobs on the offshore drill rigs would be welcome, too. Seasonal or week-on, week-off jobs fit well with small community life. Moore said one current economic bright spot are a few jobs for local villagers who work seasonally on large catcher-processor vessels in the Bering Sea.

The ships are harvesting Community Development Quota fish allocations owned by the regional fisheries nonprofit, the Lower Yukon Economic Development Corp.

"People can make $15,000 to $30,000 a season and the income helps," in offsetting the loss of income from local salmon fishing, Moore said.

Industry must also play a role

Johnnie Burton, director of the U.S. Minerals Management Service, said she would be delighted to issue OCS leases and get exploration going in Norton Sound. But industry hasn't expressed much interest in the area in recent years, she said. This is partly because the region's remote location and that its geology is prone to natural gas rather than oil.

A lot of natural gas would have to be found before a pipeline or liquefied natural gas project would be feasible. The best way to stimulate exploration might be to find some way of using the gas in the region, Burton said.

Every January, the MMS issues a request for expressions of interest in Norton Sound, and for the past two years there have been no responses. If a company were willing to explore, the MMS would conduct a lease sale, Burton said.

Her advice to Moore and other community leaders is to put out the welcome mat for the petroleum industry. "Let them know you're open for business. Invite them out to look around, so they see there's been a change in local attitudes," she said.

One suggestion is for local communities to write letters in support of the MMS's next five-year lease sale plan, which will be published in January.

Pat Galvin, petroleum land manager at the state Division of Oil and Gas, said his agency can assist Emmonak and other communities in the Yukon Delta in doing a resource evaluation. But he said so little is known about the region's potential for oil and gas that it will be difficult to attract industry.

Local communities in the Bristol Bay region have also asked the state to help spur onshore exploration, but in contrast, that region has a long history of exploration and quite a bit more is known about the geology, Galvin said. The state recently issued an exploration license to a local company to explore in the region. A conventional state lease sale is planned there later this year.

Prices don't follow return of fish

The loss of the Southwest region's salmon industry has been devastating, Moore said. "We had 20 years of steady income from chinook (king) and chum salmon," but that ended in 1998 and 1999, when markets went soft. The region suffered a double hit in 2000 and 2001 when the chinook and chum runs failed.

The salmon runs are gradually coming back, but the markets aren't, Moore said. Chum salmon that sold for 66 cents a pound in 1988 went for 5 cents a pound in 2003.

The Wade Hampton census area, which includes Emmonak and other villages in the Yukon-Kuskokwim Delta region, is one of the poorest in Alaska, and even the United States.

According to U.S. census data, the region had an average per capita personal income of $15,900 in 2002, compared with an Alaska statewide average per capita income of $32,799 that same year.

Neal Fried, an economist with the state Department of Labor and Workforce Development, said per capita income figures for the Wade Hampton census region really aren't that unusual compared with other parts of rural Alaska.

What brings up per capita income figures in other rural census areas are higher incomes in larger hub communities, like Bethel, Nome and Kotzebue. The Wade Hampton district has no hub community with higher incomes to bring up the average, so its per capita income profile is actually typical of many small villages in other areas, Fried said.

share on facebook
Alaska Journal on Facebook
width

AlaskaJournal.com | AlaskaStar.com | AlaskanEquipmentTrader.com

Add to My Yahoo! | Contact Us | Jobs | Subscribe | Privacy and Legal Information

Copyright © 2007-2008 Alaska Journal of Commerce & Morris Communications Inc

Explore the Kenai | Visit Homer Alaska | Fishing Report