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Will Arctic offshore oil development revive Adak's economy?

Jim PaulinDutch Harbor Fisherman
File photo

It's looking like Adak might finally get the big economic development project the Aleut Corp. has been hoping for ever since the Navy pulled out in the late 1990s. This time, it's offshore oil support, perhaps starting with Shell later this year, then accommodating other oil companies hoping to hit it big in the Arctic Ocean in coming years.

Offshore Systems Inc. and Aleut Enterprises LLC are exploring a partnership for supporting the oil industry at the former Adak Naval Air Station, according to representatives of both companies. They emphasized Adak's extensive underutilized infrastructure and don't want to disrupt existing business relationships in the Aleutian Chain.

Aleut Enterprises president Rudy Tsukada said Adak is not intended to compete with Unalaska/Dutch Harbor, since the parent company has shareholders living in both communities. Aleut Enterprises is a subsidiary of the Aleut Corp., the regional Native corporation.

Tsukada said Adak is "fully operational" for business later this year, if needed. Adak's docks, warehouses and land are now available for oil equipment storage, perhaps for use as winter storage assuming this summer's exploration projects go ahead as planned, Tsukada said. This would save the demobilization expense of returning equipment to Seattle or the Gulf of Mexico, he said.

While the homes that once accommodated some 5,000 military personnel remain on the island, Tsukada said he doesn't foresee oil company employee housing as a big part of Adak's future. OSI spokesman Jim Butler emphasized that while the company is eager to apply its marine logistics experience in Adak, it does not want to inconvenience another major customer, the fishing industry. He cited OSI's long -- nearly 30-year -- fishing support sector role.

OSI fuels up and offloads frozen seafood from large commercial fishing vessels, primarily factory trawlers, at its port and warehouse facility on Captains Bay Road in Unalaska. Originally established as an oilfield support firm, OSI has returned to that role locally with expanded landfill dock space and a pier built specifically for oil rigs two years ago, where the Kulluk is now moored until the ice is clear in the Beaufort Sea for exploratory oil drilling.

Adak's advantages, over mountainous Unalaska, include more flat ground, and a better airport with two 7,000-foot-plus cross-wind landing strips allowing direct flights from Seattle or Houston. Adak's airport is far friendlier to large jets, compared to Unalaska's 3,900 foot strip where frequent flight cancellations led Alaska Airlines to discontinue 737 jet service.

The long docks built for Navy vessels are better suited for the big oil support vessels, like the ones now anchored in local bays in fisheries-oriented Unalaska, waiting for ice conditions to improve in the Arctic.

As for worker housing, Butler said about 200 beds are now available in duplex houses in Adak. Some facilities, unused since the Navy's withdrawal, will require repairs, Butler noted.

Marine and aviation fuel sales are another big selling point. Aleut Enterprises boasts 20 million gallons of fuel storage capacity on its web site, adakisland.com. The Aleut Corp. acquired the former military base under the terms of the Alaska Native Claims Settlement Act following the closure of the Cold War outpost near the maritime border of the former Soviet Union.

The planned civilian conversion has been largely limited to fuel sales and small-scale fish processing, presently conducted by Icicle Seafoods. Bigger ideas have not panned out, including air cargo transshipment between Europe, Asia, and the U.S. West Coast, nor did hopes of locating a prison on Adak some 1,100 miles west of Anchorage.

Shell says it has spent $4 billion preparing to explore for oil, and its rigs and vessels are now in Unalaska/Dutch Harbor waiting for ice to melt in the Arctic to allow drilling to proceed.

Shell spokesman Curtis Smith said that while the company has the capability to work through the ice, it has promised to wait for open water. The project remains controversial.

Contact Jim Paulin at jpaulin(at)reportalaska.com. This article was originally published in The Bristol Bay Times/Dutch Harbor Fisherman and is reprinted here with permission.