Oil boom brings hope, anxiety to Alaska town

Kim Murphy / Los Angeles Times Published Oct 10, 2012 at 05:00AM

WAINWRIGHT, Alaska — It was the down slope of August, and in the icy winds and freezing rain that masquerade as summer on the Arctic coast, Shell Alaska had to move its community barbecue indoors to the school gym.

Billed as the oil company’s thank-you to the Inupiat Eskimo village that is about to become a base for offshore drilling operations, the event featured free hamburgers, beans and something rarely seen up in the Far North — plates heaped with fresh watermelon, oranges and bananas. Shell Alaska Vice President Peter Slaiby was in the middle of the room, raffling off jackets emblazoned with the Shell logo.

“Lord Jesus, thank you for this food,” said a woman who stood up to bless the gathering. “We thank you for Shell and its employees. We thank you for their safe journey here.”

Wainwright, a town of 550 people on barren bluffs of tundra 800 miles northwest of Anchorage, seems an unlikely venue for an oil boom. But the discovery of a massive undersea pool of oil just offshore in the Chukchi Sea has, for many, turned caribou dreams into lucrative oil services contracts that will create thousands of jobs across the North Slope.

These days in Wainwright — a collection of makeshift wooden houses, dry-docked whaling boats, churlish dogs on short chains, and snowmobiles in varying stages of repair — people are building new homes and reporting for new jobs as oil spill response workers. Hardly anyone looks twice at a new Hummer parked in front of the village market.

Yet some see the coming bonanza as a threat to a culture that has coexisted precariously with the ice for thousands of years.

“We just need to stop them, but we can’t,” said Sandra Peetook, who manages the small and now bustling hotel in town. “They’re not worried about our land or how we get our food or how we feed our people. They are just worried about what they are going to drill out of the oceans.”

Shell has spent $4.5 billion amassing an armada of drill ships and response vessels, and this month it began preliminary drilling in the Chukchi. A two-story workers camp on one of Wainwright’s muddy streets houses the oil company crews; a communications center with VHF radios and satellite phones coordinates boats and helicopters plying the coast. Dump trucks rumble constantly toward the edge of town, where ConocoPhillips is helping put in sites for a helipad and another workers camp.

Just southeast of town, the villager-owned Olgoonik Corp. plans to convert an abandoned U.S. military radar station into an onshore base for future oil operations.

“It’s creating opportunities. It’s put some people to work here already. Imagine what happens when they start pulling up all that oil they’re talking about discovering,” said John Hopson, a whaling captain who also runs Wainwright’s public works department. “They’re going to go get it. But we have to work to make sure the benefits flow through here, too.”

Over the last three decades, the onshore fields of Prudhoe Bay have put millions of dollars of dividends in villagers’ pockets and built schools, clinics and offices. Yet unless new revenue-sharing legislation is passed, production offshore will bring natives far fewer rewards — most money from the outer continental shelf goes to the federal government — even though operations there are seen as riskier to the ocean and the wildlife that is essential to human survival on this forlorn coast.

The Eskimos fear that a disaster like the BP spill in the Gulf of Mexico could wipe out what remains of a fragile civilization that has lived with its face to the Chukchi Sea for generations. Spring and sometimes fall bring the hunt for the bowhead whale, beluga and walrus. Summer is for caribou and bearded seals. In early winter villagers plumb holes through the ice for rainbow smelt.

Although federal officials have promised that the chance of a big oil spill is remote, many here are skeptical. Villagers also worry that the flood of strangers into Wainwright could prove more toxic than the hydrocarbons under the sea.

“The people who’ve attended the meetings have asked, ‘What’s going to be the benefit to us? What about our schools, what about housing?’ There is no answer. They just come here and they give us food and think that’s going to suffice,” said fourth-grade teacher Edna Ahmaogak, who was sitting in a class full of students on the afternoon of the barbecue as hubbub from the Shell festivities filtered down the hall.

“Are we going to have helicopters overhead, scaring away our herds? If there’s an oil spill, what about our whales, what about our bearded seals? Are they going to give us those?” Ahmaogak asked. “Or are they going to give us cold sandwiches?”

Shell, keenly aware of the need to share the bounty, is awarding many of its construction and oil services contracts to native corporations such as Olgoonik, signing agreements so far with 26 indigenous-owned companies. At Shell’s camp in Wainwright, many of the oil spill response workers who go out daily on practice runs are from Wainwright and nearby Barrow.

“We do it because we will not be successful in Alaska if the communities we work in are not,” Slaiby said. A veteran of drilling operations in Brazil, Syria, the Gulf of Mexico and the North Sea, Slaiby has become a ubiquitous presence at community meetings across the North Slope, with his jeans, khaki shirts and willingness to partake of the cold melange of raw whale skin and blubber known as muktuk.

Slaiby has deployed his considerable resources — patience, teams of skilled corporate lawyers and a willingness to spend millions of dollars on new technology and environmental mitigation — against conservationists bent on protecting one of the last untouched seas on Earth and Eskimo villagers fearful of losing their seagoing livelihood. For Slaiby, it’s been worth it because of what Shell executives often refer to as “the prize”: an undersea oil formation 70 miles off the Chukchi coast known as the Burger prospect — potentially so rich it could rank as one of the top 10 oil fields ever discovered in America.

“We are really appreciative of all the goodwill and progress we’ve made this year in Wainwright,” Slaiby said as he rose to speak at the barbecue. He pointed out that most of the Shell workers stationed in town so far were not drillers but biologists, commissioned under a $5 million-a-year Shell-funded research program to document the fish, mammals and birds whose life cycles are now as interesting to Shell as to those who live here.

“We’re taking the time to understand what’s happening around here,” Slaiby said, “and I think we’ll have something here that’s sustainable.”

Shell has also agreed not to operate in the nearby Beaufort Sea during whaling season; it pledged not to dump its drilling muds into the sea. It promised to call off its helicopters whenever hunters are in an area; it painted its boats blue, a color the Eskimos said would not scare the animals of the sea.