Work toward deep-water port in Alaska Arctic on hold, Army Corps says

Proposed Arctic development off the coast of Alaska just suffered another hit.

The Army Corps of Engineers said Monday it will put on hold efforts to study the creation of the first deep-water port that would support vessels in the Arctic following Shell's decision to end its drilling campaign in the U.S. Arctic Ocean.

Shell's announcement in late September that it would stop drilling in the region raises questions about the port project's "overall justification" and the economic assumptions about a port's economic benefit to oil and gas exploration in the Chukchi Sea, the Army Corps of Engineers said in a press statement.

Working with the state, the Corps in 2011 began studying the feasibility of a port deep enough to handle large oceangoing ships. The best option for initial investment called for expanding the port of Nome some 550 miles northwest of Anchorage and dredging the harbor to 28 feet.

But the bulk of the project's economic benefits were related to the reduction in travel costs for oil and gas support vessels in the Chukchi Sea. The Corps said the economic benefits of a port assumed the development of three exploration wells in the Chukchi Sea by the year 2020.

The Corps announced it would "pause" the feasibility study for one year, rather than terminate it.

"During the next 12 months, the Corps and its partners will monitor Arctic activities to determine if there may be the potential for federal interest in continuing the study," the Corps said in a statement. "At the end of the pause, the Corps, State of Alaska and city of Nome will assess whether to proceed with the study as is or change the scope of the study to analyze other options."


Sen. Lisa Murkowski, R-Alaska, said it's "disheartening to see the negative impacts of Shell's decision continue to ripple throughout Alaska."

She said the Obama administration recognizes the "pressing need" for Arctic infrastructure, and she's hopeful the Corps will move ahead with the project in the coming year.

Joy Baker, Nome port director, said the city is "disappointed" but is pleased the Corps is not ending its effort at this point. The city plans to work with Congress, the White House and others to push for a deep-water port. A conceptual analysis pegged the cost of the project at $210 million.

She said a draft feasibility study was close to being finished by the Corps' office in Alaska.

"The city is fully intending to pursue project authorization based on broader justifications of national security, life and safety, protection of the environment," Baker said. "We believe there's a broader purpose for the facility than just the economic benefit of the oil and gas industry."

With ship traffic steadily growing in the U.S. Arctic Ocean as sea ice retreats, the U.S. Coast Guard has recently said it would maintain a beefed-up presence, including two helicopters, to respond to vessels in distress and other needs.

After completing one well in this summer's drilling season in the Chukchi, Shell announced it was canceling exploration plans for the "foreseeable future." The Obama administration also announced it was canceling planned lease sales in the U.S. Arctic Ocean in 2016 and 2017, further reducing prospects for petroleum exploration in the region.

"Typically, a study found to be not economically justified would be terminated; however, because of the dynamic nature of the oil and gas industry and the strong interest in enhanced Arctic marine infrastructure, the Corps and its partners have decided to pause the study, rather than terminate it," the Corps said.

The Corps said questions and comments on its decision will be considered in determining future steps about continuing the feasibility study once the "pause" ends. Comments may be submitted to

Alex DeMarban

Alex DeMarban is a longtime Alaska journalist who covers business, the oil and gas industries and general assignments. Reach him at 907-257-4317 or