Energy

A Tiny Alaska Village Stares Down Big Oil


This summer, four-year-old Micah Kinneeveauk helped catch and kill his first seal. His proud grandmother plans to reward him with a special dessert at Thanksgiving: A big bowl of ice cream flavored with caribou meat and fat. Hunting seals and whales in the Chukchi Sea and caribou and polar bears on the tundra has provided food, clothing, and rites of passage for centuries in tiny Point Hope, Alaska, a barren gravel village of 800 Inupiat natives located 125 miles north of the Arctic Circle. Many of the people live largely on what they catch.

That’s why Micah’s grandmother, Caroline Cannon, sees trouble in Royal Dutch Shell’s plans to drill for oil in the Chukchi and Beaufort seas. In the long shadow of the Exxon (XOM) Valdez and BP (BP) disasters, she’s unconvinced by Shell’s assurances that it has helicopters, robots, divers, and skimmers available to respond if it loses control of a well, along with a cap-and-containment system similar to the one that ultimately plugged the BP gusher. “There is no technology to clean up an oil spill, and it’s devastating if it happens,” says Cannon, who serves as the village president. “I have 25 grandchildren. That’s why I oppose offshore drilling 2,500 percent—I want them to have a chance to have the same kind of subsistence life I have.”

Many of Cannon’s fellow villagers feel the same way, and the town has been remarkably effective at delaying the company’s plans to begin work in the region. Point Hope successfully challenged government-issued permits for emissions from the rigs, preventing Shell from drilling this summer. It also sued to challenge the government’s lease sale, convincing a court that more public comment and environmental studies were needed. Although Shell won its first lease to extract oil from beneath U.S. Arctic waters in 2005, it has yet to drill a single well, despite spending what it says is almost $4 billion on leases, research, engineering, lawsuits, and government-ordered studies.

Part of Shell’s problem is that it doesn’t have much to offer the villagers to help win them over. The company predicts that development of the offshore fields would create 35,000 jobs a year in the state and bring $4 billion to local governments by 2057. Shell says Point Hope would get its share of the wealth. “We are committed to providing the village … with the same opportunities for jobs and shared services as other villages,” says spokesman Curtis Smith.

Many of the residents of Point Hope say they aren’t interested. The ramshackle village has a grocery store, a Chinese takeout, and not much else. They don’t want Shell coming in and building up the place. They aren’t expecting to be offered jobs on the rigs. They don’t want money. Mostly, the people say, they want to be left alone. “No matter how much money you’ve got, that money goes,” says Ronald Oviok, who says he has caught more than a dozen whales in his 69 years. “I’ve got no money. I don’t really care for money.”

Point Hope is exploring further legal challenges but likely can’t keep Shell from drilling forever. This week the EPA issued revised emissions permits, and in August Michael Bromwich, the chief U.S. offshore oil regulator, approved the company’s plans to explore in the Beaufort Sea provided it also wins permits from the U.S. Fish and Wildlife Service and the National Marine Fisheries Service, which are under review. A U.S. decision on the Chukchi Sea is still pending. “We are accustomed to making decisions that may not make everybody happy,” Bromwich said after meetings with native leaders and Shell executives in Alaska this month. “We have to make decisions based on the best information we have available and the appropriate balance.”

The eventual payoff for Shell will be worth the headaches. The Chukchi holds an estimated 15 billion barrels of oil—about as much as Alaska’s North Slope has produced since 1977. “Chukchi fields truly have the potential to be absolute world class,” says Pete Slaiby, Shell’s vice-president in charge of Alaska operations. That assumes the company can get to them. The Chukchi Sea is buried in ice for eight months every year, meaning Shell can only drill from July through October. That short window came and went this year, and the company must soon decide whether to begin planning to drill when the thaw comes next year—or to brace for yet another summer in court.

The bottom line: Shell, which spent nearly $4 billion for rights to drill in Arctic waters, has been stymied by villagers suing to stop the oil giant.

Klimasinska is a reporter for Bloomberg News.

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