While oil and gas development in the Yukon is frozen solid, news last week reminded us this isn’t the case with our circumpolar neighbours. Announcements from Alaska and Russia breathed new life into decades-old projects that many environmentalists and market observers wrote off years ago.
Julian Gignac’s article in last month’s Yukon News reported on plans for seismic exploration this winter in the 1002 area of Alaska’s Arctic National Wildlife Refuge (ANWR). If the U.S. Bureau of Land Management approves, Inova AHV-IV Commander vibrator vehicles weighing 30,000 kilograms will soon be trundling across the landscape supported by a small army of snowcats, tractors, 150-person sleigh camps and so on.
The 1002 area is a strip covering about 610,000 hectares. That’s about eight per cent of ANWR’s land, or double the size of the country of Luxembourg.
Rough estimates from the U.S. Geological Survey suggest it could hold between 5.7 and 16 billion barrels of oil. The upper end of that range is more than a trillion dollars worth of oil, while even the lower end would be a major boost to Alaska’s battered economy.
Supporters hope it could keep the two-million-barrel-per-day Alaska pipeline full for decades. They have been pushing for development almost since the ink was dry on the 1980 law that created the 1002 area and kept open the possibility it might be drilled some day.
The application was made by SAExploration, a global exploration company, and two aboriginal development corporations. One of the latter is Arctic Slope Regional Corporation, which is based in Barrow, Alaska and represents 13,000 Inupiaq shareholders.
Arctic Slope claims to be the biggest Alaska-owned company. It owns almost five million acres of land on Alaska’s North Slope, including potentially rich oil, gas and base metal resources.
ANWR is also home to the cross-border Porcupine caribou herd and its critical calving grounds. The Vuntut Gwitchin First Nation, Yukon and Canadian governments are dead set against the seismic exploration proposal and oil production in any part of ANWR.
However, Canadians don’t vote for the U.S. Senate or House of Representatives. And Alaska’s congressional delegation is firmly in favour of drilling in ANWR. Representative Don Young told CNN he had voted to open ANWR to drilling more than a dozen times over his political career in Washington, which dates back to the 1970s.
Alaska Senator Lisa Murkowski remembers her father, then the senator, trying to convince President Bill Clinton not to veto pro-drilling legislation in the 1990s. Former Senator Ted Stevens famously wore Incredible Hulk ties when pushing ANWR in Washington, to remind everyone how serious he was.
In late 2017, as the ANWR exploration clauses moved forward as part of President Donald Trump’s tax cuts bill, Murkowski put on her own Incredible Hulk earrings in homage to Stevens. The legislation she helped push through envisages multiple oil rounds of oil leases in the 1002 area over the next few years.
We don’t know if oil production will ever actually happen in ANWR. Global energy markets, a future Democratic president, or other factors could derail the hopes of Murkowski and Arctic Slope.
Meanwhile, the Russians are pushing Arctic development that is, if anything, even more bold than Alaska’s.
Not only is the massive Yamal liquefied natural gas (LNG) project on the Arctic coast ramping up, but Russia plans massive investments in Arctic railways to stimulate further development.
The first phase of the Yamal LNG plant opened around the time the law enabling ANWR drilling passed in Washington. Phase 1 is producing 5.5 million tonnes of LNG per year, complete with ice-class tankers to get the gas to market through the Arctic Ocean. The first shipments have already arrived in China, which owns a stake in the project. By 2021, Yamal LNG plans to triple its capacity to 16.5 million tonnes per year.
To put that in perspective, if Yamal was a separate country and exported that much gas in 2017, it would have been fifth in global market share behind Nigeria.
Now Russia has announced plans to spend over US$100 billion over the next five years on a massive Arctic infrastructure plan, including a railway connecting isolated regions of Yamal to existing rail lines. Demand for steel, cement and railcars is supposed to boost the national economy, and enable a massive expansion of Arctic resource development. The Putin government has enlisted some of Russia’s top oligarchs to share the costs and the benefits.
To get an idea of the rough scale of the project, picture a $20-30 billion LNG plant and tanker port on the Yukon’s northern coast, connected by rail to Inuvik.
The origins of the Yamal railway project go back even farther than ANWR and the Carter administration. It revives a concept originally launched by Stalin with forced labour from the gulags. An estimated 300,000 prisoners finished several hundred kilometres of the project in the 1950s, suffering severely as they struggled with massive river crossings and permafrost. By the time Stalin’s successors cancelled the project, it was known as the Railway of Death.
Now, the Russian government hopes that buoyant global energy prices and modern technology will enable the project to succeed. Moscow views the project—and its ability to boost cash-rich energy exports—as a critical part of its response to Western sanctions.
As with ANWR oil production, time will tell whether the Yamal railway project actually happens or not. The financial, engineering and environmental challenges are significant.
Yukoners can only sit back and watch these projects. Our environmentalists will be appalled by the carbon emissions and drilling in pristine wilderness areas, while our economic developers will be shaking their heads at lost opportunities.
Keith Halliday is a Yukon economist and author of the MacBride Museum’s Aurore of the Yukon series of historical children’s adventure novels. He is a Ma Murray award-winner for best columnist.