The Arctic Slope Regional Corp. and six communities’ Alaska Native corporations will become partners in Shell Oil’s planned exploratory Chukchi Sea drilling, the companies announced Thursday.
According to a statement from ASRC spokesperson Ty Hardt, its interests and those of the communities represented by the corporations -- Barrow, Point Hope, Wainwright, Kaktovik, Atqasuk and Anaktuvuk Pass -- will be represented by a new limited liability corporation called Arctic Iñupiat Offshore.
“AIO and Shell Gulf of Mexico Inc. (Shell) have entered into a binding agreement that will allow AIO the option to acquire an interest in Shell’s acreage and activities on its Chukchi Sea leases,” Hardt wrote. “This interest will be managed by AIO.”
ASRC’s president and CEO, Rex A. Rock Sr., will also become AIO’s president. While he confirms that the corporations have made an investment with Shell, he declined to state its size.
“Our region has always been a leader in strategic partnerships that provide meaningful benefits to our shareholders, to our people.” Rock said in the statement. “I am humbled to acknowledge that this arrangement balances the risk of (outer continental shelf) development borne by our coastal communities, with the benefits intended to support our communities and our people.”
According to Rock, the corporations and communities which AIO represents are deeply affected by the outcome of drilling like Shell’s, so they felt the need to be a part of it.
“It will benefit village economies,” Rock said.
Shell Alaska’s vice president, Pete Slaiby, calls Thursday’s news “an important day for our Alaska venture.”
“A regional alliance with so many respected Alaska Native corporations provides Shell the opportunity to collaborate with savvy and experienced North Slope business partners going forward,” Slaiby said in the statement. “It also underscores our commitment to provide opportunities for North Slope communities to directly benefit from Shell’s activities offshore (of) Alaska.”
Slaiby told reporters Thursday that the company has not made a decision on whether to go ahead with any future plans for exploratory drilling in the Chukchi.
“It’s about what it takes to move us forward,” Slaiby said.
Joe Balash, commissioner of the state Department of Natural Resources, calls the agreement a historic win-win because it directly links Native corporations to the benefits of oil exploration. While the state doesn’t have an immediate stake in its outcome, he says drilling ventures like AIO help prop up both the Permanent Fund Dividend and businesses operating in the state.
Alaska's U.S. senators also offered their praise of the announcement in matching statements Thursday.
“Shell’s decision to invest in the future of the region and its people should be applauded,” said Sen. Lisa Murkowski. “This announcement ensures that the people of the North Slope Borough share directly in the oil and gas bounty off of their coast. It also gives locals a say in what happens near their communities. I think that’s a wise decision on Shell’s part.”
“It’s exciting to see Alaska Native corporations take a stake in responsible development in their back yard,” said Sen. Mark Begich. “As I continue to press the federal government for reasonable permitting timelines and a quick resolution to too much litigation, it’s good to see Shell partner with local communities and corporations. Hopefully, we’ll see this partnership pay off in the very near future.”
Shell has suspended any Chukchi Sea drilling this year, after a series of setbacks involving both of its 2012 exploration platforms. The grounding of the drilling rig Kulluk near Kodiak and Coast Guard safety citations against the drillship Noble Discoverer culminated in a $1.1 million fine from the Environmental Protection Agency last year for Clean Air Act violations.
ASRC has also been in the news as one of six Alaska Native corporations taking a high-profile stand against Ballot Measure 1, announcing their formation of the group No One on One to prevent the measure’s proposed repeal of Gov. Sean Parnell’s oil tax reforms under 2013’s Senate Bill 21.
In addition to Shell and ASRC, the corporations involved in the venture include:
Ukpea?vik Iñupiat Corporation (Barrow)
Tikigaq Corporation (Point Hope)
Olgoonik Corporation (Wainwright)
Kaktovik Iñupiat Corporation (Kaktovik)
Atqasuk Corporation (Atqasuk)
Nunamiut Corporation (Anaktuvuk Pass)
Corey Allen-Young contributed information to this story.
This is a developing story. Please check KTUU.com and the Channel 2 newscasts for updates.