Now, why would the state be building roads out in the middle of nowhere?" is the way one individual phrased his question to me the other day. He was referring to my announcement of a few weeks earlier that the state is looking to provide road access on the Alaska Peninsula that would over time connect communities between King Salmon and Chignik, spanning a distance of more than 250 miles.
The basic answer is that building and maintaining transportation systems are among the primary obligations of federal, state and local government. Like education and public safety, transportation is a public responsibility, precisely because it is not expected to make a profit. Building roads is the type of responsibility Thomas Jefferson said government should assume, as the private sector would not.
The more specific answer in the case of the Alaska Peninsula is that road access will facilitate exploration and development of petroleum resources on state and Native corporation lands. The Bristol Bay Native Corporation, along with a number of the area's civic organizations and other groups, has asked my support to make this happen.
Bristol Bay, as Alaskans know, is renowned for its fish - the mainstay of Western Alaska's economy for decades. While salmon still return each year, high energy costs are among several factors reducing the net value of the fishery, leading to significant economic hardship on the region.
Local residents would see numerous benefits from having on-shore land made available for oil and gas licensing and leasing. For instance, ice plants could produce ice much more cheaply using local natural gas than barged-in oil, reducing a significant cost for fishermen and processors. Natural gas would also lower costs for heat and electricity for Bristol Bay residents, just as it does for Anchorage residents.
Another significant benefit would be a road linking the communities between King Salmon and the deepwater port of Chignik. This road would be built initially to access areas licensed or leased for exploration and development. When completed, it would provide residents the benefits of lower prices for shipped cargo, easier access to neighboring villages, and consolidation of facilities - including schools, landfills, clinics, visitor lodging - plus numerous other public safety and social benefits.
This administration is working hard to restore fisheries to its rightful prominence in the region's economy. We also want to help bring cheaper energy for residents.
The state's experiences in Cook Inlet and on the North Slope have proven that fisheries and wildlife populations can co-exist with oil and gas development. Residents of the Bristol Bay region recognize this, which is why many of them today endorse and encourage oil and gas development. I am encouraged by their "can-do" attitude and their enthusiasm for exploring new and innovative ways to improve their living conditions and economic well-being.
The state and the Bristol Bay Native Corporation recently agreed to gather and share geological and other information on state and corporation lands. One option under consideration is packaging lease offerings containing acreage from both entities. Innovative private-public initiatives such as this can be an effective way to achieve results not possible by either entity acting on its own.
The road is key for this overall economic development to occur. It will encourage activity by leaseholders in an area that has similar geologic characteristics to Cook Inlet and has the potential for hundreds of millions of barrels of oil and its equivalent in natural gas. The road will enhance oil and gas lease values and increase returns to the state, thereby off-setting a good portion of the road's construction costs. The estimated cost is $285 million. This is only an estimate; hard numbers won't be identified until a design-build work sketch is complete.
The Department of Natural Resources has just begun the public comment process, which will include best-interest findings for both an exploration license, and a competitive oil and gas lease sale.
A solicitation for proposals has been issued for an exploration license in the uplands north of Bristol Bay. The deadline for prospective interest is Aug. 25, and for a proposal, Sept. 25, respectively. Information regarding this request is available on line at the Oil & Gas Division's Web site at www.dog.dnr.state.ak.us/oil/.
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