Resource Development Council

From The President - Wendy Lindskoog

Alaska has tremendous potential to lead the U.S.

economically, but barriers to prosperity stand tall

When one assesses all the exciting possibilities Alaska has to expand its economy through the responsible development of natural resources, there is no reason the 49th state should be in recession. In fact, Alaska has the potential to lead the nation economically, providing it with the resources it needs to rebuild a declining manufacturing sector.

We know trillions of cubic feet of natural gas and tens of billions of barrels of oil lie under the North Slope and in the nearby Chukchi and Beaufort Seas. We know that Alaska has world-class mineral deposits yet to be developed. Of the 30 minerals the U.S. purchases abroad, 22 are found in Alaska. We know our coal reserves alone could top six trillion tons and our forests are capable of a sustainable harvest that would employ thousands if only access were provided. We know our commercial fishery accounts for half of the total U.S. production.

Alaska has the resources and the raw materials to cut America’s reliance on foreign sources for oil, minerals and the many consumer products we import daily from China and other producing nations. Responsible development of Alaska’s resources can create thousands of jobs across America, contribute billions of dollars to the national treasury, and cut both our trade deficit and national debt significantly.

The statehood battle was won over 50 years ago only after Congress recognized Alaska’s vast wealth of natural resources and what those resources could do for America. Yet all is not well in Alaska.

Although better off than most, our state is still suffering through a shallow recession. The trans-Alaska oil pipeline is running at one-third its original capacity and oil production continues to decline. Our natural resources are here waiting to be developed, but government controls limit out ability to access lands for the extraction of minerals, oil, gas and timber. Moreover, a great measure of uncertainty and anxiety confronts Alaska as industries face what seems to be an endless list of new federal mandates, rules and undesirable decisions. More and more projects are challenged economically with the rising cost of permitting and defense litigation. Favorable developments could be postponed or discarded. Much of Alaska’s potential for economic prosperity could be blocked by these decisions and government-imposed roadblocks, partly driven by environmental politics.

At two recent RDC breakfast meetings, former RDC president John Shively and Senator Lisa Murkowski expressed the challenge. In a presentation entitled, “What the hell is going on in this country?” Shively warned that if balance isn’t restored soon to the public policy arena, those forces fighting against resource development will drive Alaska and the nation into a second-world economy.

The Chief Executive Officer of the Pebble Partnership cited numerous state and national examples, including new critical habitat designations over vast resource deposits, a federal decision that could lead to the shutdown of the Red Dog mine, litigation by environmental groups challenging oil, gas and mining development, and water discharge standards for cruise ships which are more stringent than those standards set for drinking water in Southeast Alaska communities.

Shively warned that regulatory hurdles are also hindering the economy. Referring to a Wall Street Journal article titled, “Permits drag on U.S. mining projects,” Shively said regulatory woes are a national issue. The article pointed out that obtaining the permits and approvals needed to build a mine in the United States takes an average of seven years, among the longest waiting time in the world. Shively said that Australia and Canada have tough environmental laws on par with America, but their permitting process is much shorter – one to two years in Australia.

Shively referred to recent studies by a Canadian-based institute that measures the regulatory and business climate for the oil and gas industry across the world. He noted that Alaska’s ranking is deteriorating compared to other jurisdictions and is among the worst in North America. “We have gotten worse, and in some ways significantly worse in just one year,” he said. “This, in my mind, is what is making it difficult to do business in Alaska, in terms of what’s contributing to the fact that we are losing jobs in this state.”

Shively said a recent lawsuit could lead to the end of Alaska’s coal exports out of Seward. Likewise, an appeal of a water discharge permit needed to develop the Aqqaluk deposit at Red Dog could result in the shut down of the mine, causing severe economic ramifications to Northwest Alaska and the loss of hundreds of jobs.

The Alaska business leader said groups bringing lawsuits against development projects typically litigate numerous issues in a single suit in hopes that one will stick. He said litigants should be held financially liable for every issue they lose. “It might make them think twice and it might take some of the clutter out of the judicial system,” Shively said. He suggested groups be held similarly responsible for permit appeals.

In a presentation before RDC two weeks later, Senator Lisa Murkowski demonstrated a strong command of the issues and addressed the economic consequences to Alaska and the nation of regulating greenhouse gases through the Endangered Species Act and the Environmental Protection Agency (see related story in this newsletter). We appreciate Senator Murkowski’s leadership and her vigilant efforts to protect the very foundation of Alaska’s economy.

Let’s hope Americans are not driven to their knees before balance is restored. Alaska can do so much for America if federal policy makers and regulators would stop building barriers blocking the responsible development of our natural resources. But that work must also start at home in Juneau.

While this legislative session saw some of RDC’s priorities pass, other opportunities to make Alaska a more attractive place for industry to invest were lost (see related column on page 3). Our collective interests under the RDC umbrella will continue to work hard to convince lawmakers and regulators in Washington and Juneau to strike a balance that protects the environment while allowing Alaska to harvest its natural resources for the good of society – just as Congress intended when it voted for Alaska statehood 51 years ago.

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