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Rural Alaska

Fuel crisis threatens remote Alaskan island village

  • Author: Jill Burke
  • Updated: September 27, 2016
  • Published September 23, 2012

While Shell Oil searches for petroleum riches beneath the Arctic Ocean north of Alaska's coastline, the fate of a remote island located a bit south in the Bering Sea hinges on obtaining fossil fuel. Where Shell seeks resource extraction, the tiny Native village of St. George needs the consumer products that come after crude is refined. Where Shell is looking for long-term gains, St. George is looking to survive next month and through the winter.

There is an urgent need to make sure the remote village 750 miles west of Anchorage will have fuel this winter to heat homes, power vehicles, and sustain the diesel electric plant for the some 100 residents of the island. After two decades, the island's only fuel business is dissolving. But this isn't the first time the people of the Pribilof Islands have faced uncertainty.

They are survivors of a foreign occupation, enslavement, war, and servitude. Then, they were abandoned by the U.S. government itself. Through it all, they endured and adapted. Now, however, they confront yet another threat -- the very topic the U.S. presidential election may turn on, the economic well-being of families.

Solving St. George's fuel crisis won't alleviate problems hanging like a dark cloud over this steep-cliffed perch, a 35-square-mile patch of America anchored in the Bering Sea at the birthplace of the winds. But it is a start.

'St. George could go away'

Families on St. George, like many families across Alaska, live disconnected from road systems and major urban areas, distancing them from a Western economy that descended only recently and which now seems vital to their survival. These more than 200 small communities struggle to create jobs. They struggle to pay bills. Frightening energy costs keep them nearly bankrupted.

Which is not to say their lives aren't rich or their futures promising. But they face serious challenges -- storms they must endure and overcome.

St. George faces the same cracked American dream that haunts various corners of the nation. Times are tough. Communities do not have equal opportunities. Infrastructure costs money, as does food and heat. At some point, it all comes to a head.

After 20 years, a joint venture between fuel supplier Delta Western and Tanaq Corp., a business established to benefit Alaska Native shareholders from St. George, is ending.

Delta Western managed most of the bulk fuel tanks on the island, and is said to be pulling out. The company did not return calls, but sources from the village, the state and Tanaq agreed Delta Western no longer wants to manage the operation.

"If no entity steps up to manage the fuel tanks and retail business in St. George, there will be no fuel on the island to operate the electrical utility, heat buildings, personal residences, or for vehicle fuel. St. George could go away," warned Scott Ruby, director of the state's Division of Community and Regional Affairs.

"It's difficult to tell people that you may need to leave your home," Pat Pletnikoff said during an interview earlier this week from St. George, where he was born and raised -- and now serves as mayor.

A time of triage

Finding someone to act as a distributor is one problem, but Tanaq is pulling out of the fuel business, too. That leaves St. George without the financial backing to make the crucial fall fuel purchase that gets the community through winter.

Pletnikoff thought a Sept. 14 deadline for St. George to place a fuel order with its own money was unreasonable and rushed. He's thankful that with the help of a federal profit-sharing fishing organization called a CDQ (part of the Community Development Quota Program), the village was able to scrape together enough money to make the order. Still, it's no long-term fix, and the mayor is disappointed the village corporation can't or won't do more.

"We were feeling here in our little village that we were being somewhat treated less than shareholders should be treated," Pletnikoff said, declining to elaborate.

How much village corporations and regional corporations should help their member communities is a matter of great debate across the state. Some have become global companies. Others have stayed more local. For Pletnikoff, the debate is hitting close to home.

'Marginally profitable'

Under the 1971 Alaska Native Claims Settlement Act, Congress established Alaska Native village and regional corporations to help give the state's indigenous residents a good shot at -- but not guaranteed -- long-term financial success. It was seen as enlightened alternative to the federal reservation system that American Indian tribes were subjected to in the Lower 48.

"It's not in our best interests to continue to be a fuel operator or partner with a fuel operator," said Leo Merculief, president and CEO of Tanaq Corporation, the St. George village corporation, during a phone interview from his home in Washington state. "It is not part of our business model, unfortunately. We wish there was something we could to do to help."

Tanaq does not have the expertise or qualified personnel to run a tank farm and distribution site, Merculief said. And there is another strike against maintaining the joint venture, he said. No matter the approach, it will always be what he calls "marginally profitable."

When it comes to managing fuel needs in remote, rural areas, Merculief said, "you can't always mark up the fuel to a point where you are going to make a healthy margin on it."

The power plant uses diesel, which sells for $6.30 a gallon. Gasoline is $6.26. Home heating oil costs $6.40 a gallon, although elders receive a 35-cent discount.

Negotiations are said to be under way. Perhaps someone will buy the fuel operation from Tanaq, including the tanks and other equipment. But with a deadline looming for the partnership to cease, the village is nervous about its future.

From seal killers to fisherman

With 35 square miles of land, St. George is the southernmost of the Pribiloff Islands. Here, flapping wings, gusting winds, and a crescendo of roaring barks fill the air. Nearly 2.5 million nesting seabirds and 1 million breeding fur seals come to the island every year.

Today's St. George residents are descendants of laborers who worked in the commercialized fur-seal trade, relatives of ancestors who suffered centuries of exploitation and injustices.

In the late 1700s, Russians enslaved Aleut hunters from Russia and mainland Alaska to work the seal's breeding grounds. After America purchased Alaska in 1867, the U.S. government continued the practice. In exchange for labor, the Aleuts were given food, housing and medical care, but they were barred from owning their own homes until 1966. They were civil servants living in a company town built around the lucrative fur trade.

But the Aleut people saw little, if any, of the profits -- money that could have funded the United States' $7.2 million purchase price for Alaska many times over.

In the early era of contact with the Russians, sickness wiped out nearly 80 percent of the Aleuts. Then, during World War II, Alaska Natives on St. George were evacuated to the mainland, forced to live for more than two years in an abandoned cannery and mining camp. At the camp, sickness and hunger again invaded their lives.

Around 1912, the fur seals in the Pribilofs suffered a huge population decline, dropping from millions to just 216,000 animals. With intentional conservation efforts, the population rebounded. But for reasons not known, fur seal numbers again began to drop -- about 6 percent a year over the last decade to more than 800,000 today. Speculation on causes includes competition for food with Bering Sea fisherman, increased predation by bigger marine mammals, or disruptions from ships in the harbor. No one knows for sure.

The U.S. government eventually paid the Pribilof Aleuts $8.5 million for wrongs spanning several generations. In 1983, when the U.S. ended the commercial harvest of seals and abandoned the islands, it gave St. George $8 million to rebuild an economy no longer centered on the controversial seal harvest.

It was a difficult transition. Residents were nervous about how they would survive and earn money.

'Everyone is going to want a piece of that action'

Tanaq Corp. invested in the island's harbor. But by the 1990s, some residents complained the federal government had shirked its financial obligation to make the community whole, forcing Tanaq to spend money out of a sense of honor to its people that otherwise could have been invested for larger shareholder returns.

These days, the island is doing what it can to lure halibut to the hooks of fisherman and lure tourists to the island's incredible rookeries, among the top bird-viewing locations in the state, if not the nation. Some 210-plus bird species nest on St. George, one of the largest coastal sea bird colonies in the northern hemisphere. The island's prolific seal and sea lion beaches -- plus its reindeer herds -- are other attractions.

Although commercial seal hunting ended three decades ago, Native islanders still hunt seals for food and personal use, as they did before outsiders arrived. Reindeer and wild berries are also harvested.

Because its small population means there's no high school, students in ninth grade and above either do course work online or leave the island to attend high school elsewhere.

During a climate change symposium in Washington D.C. this summer, Pletnikoff explained to the crowd the challenges his community has faced after the government said it was time to stop killing fur seals and become fisherman.

In 2012, St. George residents are striving to earn money and be good environmental stewards. Believing that the Northern Sea Route -- a melting Arctic passage that navigates from the Pacific, through the Bering Strait, across the top of Russia and on to the Atlantic -- will deliver more and more ships to Alaska waters, Pletnikoff worries about exhaust and pollution.

With the tens of billions of barrels of oil believed to be buried under the Arctic Ocean, he predicts "everyone is going to want a piece of that action." His role, he suggested, is to steer his people into the future without sacrificing the region's rich marine environment to the prospect of new opportunities.

But heightened global interest in Alaska's Arctic offshore oil could be a plus for St. George, too.

"St. George can play an important part as a port of protection for ships during the winter," Ruby explained. "St. Paul is farther north and its harbor can freeze up. There was a ship that grounded a couple of years ago because it couldn't get into St. Paul and had to try and hold its place in an oncoming ice field. With increased ship traffic because of the northern shipping routes, St. George could play a vital role."

The price of hope

While it attempts to solve its fuel crisis, St. George has also taken steps to cut its energy costs and deliver power more reliably. The Alaska Energy Authority (AEA) is funding several expected improvements.

But before AEA spends a dime it wants to ensure it's not sinking money into what might become a "stranded investment." Sandra Moller, deputy director of rural energy for the authority, used the phrase to describe what happens when projects are built but cannot be maintained.

If, for example, St. George had no way to bring diesel to its community or distribute it, the power plant slated for improvements could not operate.

Before it gives any project a final go ahead, the AEA requires recipient communities to produce a good business plan and demonstrate stability. This means having no major federal tax issues, paying employee taxes, holding regular elections, and maintaining good financial records.

If all checks out, St. George is in line for $5.2 million in energy improvements (a refurbished generator, a new modular power plant, wind turbine, and power-line repairs).

"They have a lot at stake," Moller said. "We are trying to be a resource for the community. Our role is to assist where we can."

In addition to needing to assure AEA that it can supply diesel to its power plant, St. George faces other obstacles.

It's behind on paying off more than $559,000 it owes for fuel loans taken over the last three years, and may owe as much as $491,000 in retirement contributions for public employees, according to the Alaska Division of Community and Regional Affairs. St. George's projected revenue for 2012 is just $377,000, not nearly enough to pay off these debts and cover day-to-day expenses of running a city. Still, the mayor believes city finances are manageable.

"We are paying our debts. It's a work in progress," Pletnikoff said. "It's a beautiful place and we are working to resolve our own problems."

Weathering the storm

With winter approaching, islanders at what is known as the birthplace of the winds are preparing for nature's gusts and the man-made tempests that have also blown in.

How much of a bellwether St. George islanders will be for villagers across Alaska facing winds of change remains to be seen.

"I remain optimistic," Pletnikoff said. "We are resilient."

Contact Jill Burke at jill(at)

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