19 AUG 1976

A Local Energy Policy for Barrow
and Other Alaskan Arctic Communities:

Mayor Eben Hopson’s Prepared Testimony
Before the PL 94-258 Gas Rate Hearings, Barrow, AK

I regret that I am not able to be in Barrow to work with you personally on the problem of setting a fair price for gas in Barrow. As you know, I have worked on the problem of access to natural gas for the community of Barrow for many years, and I have a strong personal interest in this problem.

The people of Barrow have provided nearly all of the initiative leading to the political decision to provide civilian access to the gas of the South Barrow gas field. It is amazing to look back from these times of concern about our problem to the twelve full years following the end of World War II that it took us to convince Congress of the fundamental fairness of providing for our use in Barrow of the gas under our land. We never did convince the Navy, and in this matter of providing Barrow access to gas, the Navy has always had the attitude of compliance with policy directives about which it never has really approved.

The Navy has just been following orders. But is did so in a manner which put our people in the position of helping to amortize the Navy’s investment in the South Barrow gas field. We have always questioned the fairness of this position. We feel that the gas was our gas taken from us in the name of national security through processes that would not pass muster in the light of contemporary standards of justice and equity.

When Congressman Melchor came to Barrow last summer to ask for the Borough’s active involvement in writing new legislation for the exploration and development of the Naval Petroleum Reserve No. 4, I saw this as an opportunity to work for a more enlightened national policy toward access to, and the price of, natural gas in Barrow. In fact, I saw the need for new NPR-4 legislation as an opportunity to perhaps influence our nation’s government to begin to develop Arctic resource policies needed all across the Arctic, not just here in Barrow.

In Barrow, it is true, we are more sensitive to the need for a deliberate Arctic policy than are people elsewhere. For a national Arctic policy should protect people, and Barrow is America’s largest Arctic community. If America’s emerging Arctic policy is to have any point to it, this point should be aimed toward communities like Barrow. The problems and opportunities in Barrow should be seen as those of all Arctic communities across the entire circumpolar region. They are international in nature, and American Arctic policy toward these problems and opportunities should be aimed at providing international policy leadership. The implementation of H.R. 49 provides an opportunity to begin asserting this leadership.

We went to great pains to insure that H.R. 49 established as national policy our right to access to natural gas at a just price that we can afford to pay. I feel that this is our right as Inupiat people, but I also feel that this is a right for all communities in Alaska in or near developing oil, gas and coal reserves, or adjacent to pipelines, roads or railroads that transport energy fuels. America’s emerging Arctic policy should regard all of Arctic Alaska as a special regional problem and challenge for which special national policies should be formulated. For those of us who live and work in Arctic Alaska will be providing an important service to the rest of America that is dependent upon the natural resources of the Arctic.

Both the land and the people of Alaska will withstand a great deal of pain as they yield up the energy and other natural resources that will be so badly needed in the near future years of our nation. A great deal of money will be spent, but few Alaskans will become wealthy. Most will not benefit at all financially from the exploitation of our resources, but their lives and families will be changed in ways that few thought possible.

What I’m suggesting is that seeking and developing Arctic energy reserves will cost most Arctic dwellers more than it will pay them, and an enlightened Arctic policy should take this into account, and soften the social and economic impacts as much as possible. I feel that the special considerations mandated for fixing the price of gas for Barrow should be obtained for all Alaskan communities involved in the nationally important work of Arctic energy resource development. I feel that Alaskan communities should be guaranteed access to Arctic energy fuels wherever possible, and that natural gas price policy determination for Barrow should be made with this larger context in mind.

I’m hoping that many of the advantages and accommodations gained locally in Barrow through the implementation of H.R. 49 will serve as useful precedents for the State and other local governments as other Federal onshore and offshore lands are explored and developed. As this development takes place, I’m hoping that providing access and low price for energy fuels for Alaskan communities will be included in the normal costs of development and transportation of these fuels. This way, financing a local energy policy for Alaskan communities will be included as part of the price of development, just as the cost of environmental protection and safeguards are already factored into the costs of oil and gas development. These costs would include transporting fuel to communities within a reasonable distance of producing wells and pipelines.

Thus, if gas is discovered within reach of Wainwright, the cost of development of NPR-4 would include connecting Wainwright to gas. And if a gas pipeline is built down the coast through Canada, Kaktovik would be connected to gas. But the same kind of policy should apply to Fairbanks. The same kind of price setting policy mandated today for Barrow should be obtained for these and other communities as energy fuels are developed or transported nearby.

I realize that you must confine yourselves to the consideration of the price of gas in Barrow, but I feel that what is done for Barrow will serve as an important precedent for the rest of the State.

Here in Barrow we are concerned about the reliability of our gas supplies. We are told that we may be running out of gas in the South Barrow gas field. If new wells have to be drilled, we want to be sure that the cost of the exploration and development is included in the program for exploration and development of NPR-4 and is not included in our rate base for gas in Barrow. It seems fair to us that Barrow be charged only for the costs of lifting gas for our use. There should be no charge for the gas itself. This kind of pricing policy would help us overcome the severe price escalation resulting from the development of scarce energy resources in remote Arctic environments and would be an important part of America’s overall Arctic policy.

To sum up, I feel that part of America’s emerging Arctic policy should be a local energy program through which Alaska’s communities involved in Arctic oil and gas development will be provided access to energy fuels at low cost, with the costs of this access born as a cost the development of Arctic oil and gas fields and related pipeline development and operation. Like most national policy, this kind of local energy policy for Alaskan communities will be developed through a kind of evolution. I feel that decisions relating to the implementation of Section 104(e) of Public Law 94-258 (H.R. 49) ought to be regarded as an early part of this larger evolutionary policy development.