As the federal government debates whether to share revenues from offshore development with the states nearby, and regulators clamber to get some policy in place to help smooth the transition into a new era of trans-Arctic shipping, one group is not waiting for anyone to give them the green light.
Arctic shipping is going to break records this year, according to a recent story in the Financial Times. The Times reports that the Northern Sea Route -- the one above Russia that allows ships to transit from Europe to Asia in record time -- has attracted a record number of trend-setters this year. Russia has granted permission for 204 ships to sail across the passage this year, a huge jump from the 46 ships that went through the passage in 2012. Two years ago, only four vessels reportedly went through.
The reason for the push is cold, hard economics. The Northern Sea Route cuts sailing time from Rotterdam to Kobe, Japan by 10 days. Each of those days represent huge savings to shippers grappling with sky-high energy costs. Russia, in its infinite wisdom, has set up an escort service with nuclear-powered icebreakers based in Murmansk, and those transiting the route must sign on for a pretty penny, but the savings are still significant enough for hundreds to consider the risk and savings attractive.
Those following the Arctic shipping trend predict this is just the tip of the iceberg. Some expect a quarter of Asia-Europe trade could go through the passage in 15 years. And by 2012, it is predicted some 25 m tones of liquefied natural gas and oil could be transported over the top of Russia. But with that increased interest comes increased risk, risks known all too well by those following the ever-expanding Arctic activity governed by little in the way of safety measures.
Meanwhile, in Alaska's Arctic, the fact that all this activity is coming, ready or not, is not lost on the people of the area. An incredulous Charlotte Brower, mayor of the North Slope Borough, recently told federal lawmakers that the Korean government sent her a request to use her port in Barrow.
"What port," she laughed.
Not only does Barrow not have a port, it doesn't have enough beds to house floods of people needing a place to stay, and what facilities it does have cost a hefty price. The U.S. Coast Guard set up a base in Barrow last year, but this year, moved to Kotzebue because it could rent space for its helicopters there for less money, Brower said.
At the same time, Shell recently headed back into Arctic waters despite being hog-tied by its two drill ships needing repairs. Shell will be surveying the floor of the Arctic, looking at ice gouging marks to tell where the best place would be to run a pipeline from its wells to shore. While offshore drilling is on hiatus in the north as oil companies wait for the federal government to figure out how restrictive it will be, Shell's actions speak louder than words. The company, and others, for sure, intend to continue with offshore drilling in the Arctic, and the need to prepare for that possibility continues.
There's no question that building the facilities needed to support trans-Arctic travel, not to mention Arctic drilling, is going to cost a pretty penny. The question is, who is going to pay for it. At a recent hearing before the U.S. Senate Energy and Natural Resources Committee, U.S. Department of the Interior officials testified that revenue sharing as proposed in a measure brought forward by Alaska's Sen. Lisa Murkowski and Mary Landrieu, (D-La.) was characterized as being too costly. The offshore oil and gas resources belong to the entire country, the federal administration testified, and revenue sharing would take that revenue stream from benefitting the larger good of all its citizens.
So if not revenue-sharing then what? Where should the funding to build ports, purchase and house emergency response equipment, emergency responders, create effective communication systems, and manage all that infrastructure come from? The state of Alaska? The North Slope Borough?
It should come, many would suggest, from those who stand to profit from this ballooning expansion -- from oil industry, from Arctic shipping companies, and from the federal government, if that's how funds are funneled. It's a simple fact that it costs money to make money, and those with dollar signs in their eyes looking north need to realize that to responsibly expand into northern waters, some significant investments must be made in the sustainability of that expansion. No one likes to see their profit margin infringed upon, so it is going to take the unified voice of Alaska, fearlessly demanding appropriate compensation, to get industry and the federal government to listen and open its pocketbook. But ultimately, there is so much to gain that asking for tangible help with the development of Arctic infrastructure is a small price to pay.
Perhaps the next time Korea calls, mayor Brower should reply, "Sure, you are welcome to come to our port, as soon as you help us build it."
This article originally appeared in The Arctic Sounder and is republished here with permission. The views expressed here are the writer's own and are not necessarily endorsed by Alaska Dispatch, which welcomes a broad range of viewpoints. To submit a piece for consideration, e-mail commentary(at)alaskadispatch.com.