A fierce fight for Alaska's riches

KAKTOVIK, Alaska - For most of the year, it brings to mind the surface of the moon, this snow-covered treeless plain that rolls into the frozen Arctic Ocean so seamlessly it's impossible to tell where tundra ends and ocean begins. Snowdrifts take the shape of waves, frozen in action.

In the nearby Inupiat Eskimo village of Kaktovik, houses are built on metal stilts to keep them steady above the permafrost. Food is either hunted or flown in, and polar bears wander by for leftovers.

Here on the edge of the Arctic National Wildlife Refuge on Alaska's North Slope, the temperature 30 below zero on this sunny day on the cusp of spring, people seem content to operate in a separate orbit from the rest of the country.

But now, this remote and isolated spot, closer to the North Pole than Washington, D.C., finds itself in the midst of a national debate. On one side, oil companies clamor to tap the billions of barrels of oil said to lie beneath the refuge. On the other side, environmentalists say drilling will despoil one of North America's last pristine ecosystems. This is land where 129,000 caribou migrate each year to their calving grounds, where polar bears come to den, and wolves, wolverines, arctic foxes, geese, millions of migratory birds and many other species come to feed on an explosion of growth that emerges after the winter freeze on the Arctic tundra.

This month, a task force led by Vice President Dick Cheney, the former CEO of one of the world's largest oil services companies, is expected to propose a new national energy policy that would open up the refuge's oil reserves - estimated at 3.2 billion to 16 billion barrels - to exploitation. President Bush, also a former oilman, has become an outspoken proponent of drilling in ANWR, as the refuge is commonly called. A fierce battle in Congress is expected to ensue, with one senator, Democrat John Kerry of Massachusetts, threatening a filibuster to keep the refuge inviolate.

Hearing the state's future debated four time zones away in Washington, D.C., doesn't sit well in Alaska, said Dale DuFour, facilities manager at the Kaveolook School in Kaktovik, which owes its modern conveniences to oil revenues flowing from the vast Prudhoe Bay field, which lies due west of Kaktovik along the North Slope's coastal plain.

"This Kerry fellow in Massachusetts, saying we're going to protect the wildlife refuge," he said. "It's like me telling people in Massachusetts that they can't cut their grass."

"The majority of Americans want some places to be left the way God made them," countered Adam Kolton, Arctic campaign director for the Alaska Wilderness League. "You cannot explore, drill and extract oil from the wildest place left in America and do no harm."

That viewpoint is not popular in Alaska - three-quarters of state residents support drilling in ANWR, according to a recent poll. And in Kaktovik, a village poll conducted last month registered 78 percent support.

One reason so many Alaskans favor opening ANWR is that they have a vested interest in future oil production. Thanks to oil, each of the state's 626,000 residents gets a $2,000 annual check, just for living here, from the state's $26 billion Permanent Fund, fed by revenues collected from Prudhoe Bay oil. Thanks to oil, they pay no income tax, no state sales tax.

But that bounty is threatened because Prudhoe Bay's production is declining after nearly a quarter-century of pumping - from a peak of 2 million barrels a day in 1988 to just half that today - and the Permanent Fund is edging into the red, paying out more than it's earning.

For decades, Alaska's economy has depended on the extraction of natural resources: oil and gas drilling, logging, fishing, mining and hunting. But most of all oil, which contributed $2.4 billion to state coffers last year, financing 80 percent of the state budget.

Oil has made possible a busy network of air travel - jets, bush planes, float planes - that transports ordinary citizens around a vast state, one-fifth the size of the continental United States and much of it devoid of roads. Oil has turned this wild and remote place into a modern society, with satellite dishes in rural villages and money to send high school basketball teams on chartered planes to basketball tournaments at more than $10,000 a trip.

Anchorage, population 260,000, has a $70 million performing arts center, a municipal library, a convention center and arena - all built by state money amid the oil boom.

If the oil dividends can make life almost cushy, they also foster a certain dependency in a state that proclaims its rugged independence. Despite the extreme climate they endure, Alaskans have become among the most cosseted of Americans. They get more money from the federal government per capita than the residents of any other state - $8,521, according to a census survey last year. This is partly because so much of the state (68 percent) is made up of federal lands - and it's expensive to run such a vast area, larger than Texas and California combined.

But it's also because Alaska's three representatives in Congress, Sens. Frank H. Murkowski and Ted Stevens and Rep. Don Young, powerful Republican senior members and leaders of influential committees, can direct federal largess to their home state. Here, the term "Stevens money" is part of the vernacular.

The paradox is that many Alaskans who moved here were attracted by the isolation, the fishing, hunting, the wildlife - the idea that "you could take off with a small boat and wouldn't see anyone all weekend," said Wayne Weihing, a former pulp mill worker in Ketchikan.

Oil dividends have made the isolation more tolerable. Rural villages, which before the oil boom were required to send their children to boarding school after eighth grade, now have high schools. The state has a network of homes that provide assisted living for the elderly.

Here in Kaktovik, 225 miles north of the Arctic Circle, residents have running water, flush toilets in many houses, a "washeteria" for laundry - as well as a modern school, fire station and power plant. Before the oil boom, washing anything meant going to the lake, chopping up ice, hauling it home and heating it up. "It took all day," said Eve Ahlers, who settled here at age 5 with her family in 1953. Before then, the family had lived a nomadic life following the game across the tundra with a team of sled dogs. The first winter, the family lived in a wall tent.

"The most important changes for me are heat and health care," Ahlers said. "When I first came to the village, I had a little sister who died because we didn't have heat in the tent. And I had a brother who died at age 13 of TB because we didn't have any health care."

An oil field mechanic at Prudhoe Bay can make as much as $120,000 a year working 12-hour shifts, two weeks on, two weeks off.

"There's no place else you can make this kind of money and work six months a year," said Tom Whitstine, 63, who has returned to the North Slope twice after attempting retirement at his home north of Anchorage.

"It's a hard place to leave," he said on a recent evening, finishing a meal at an oil camp cafeteria with his two sons, who also work at Prudhoe. The salary, $50,000, and lifestyle enable him to spend stretches of time traveling with his wife around the country in their motor home.

New North Slope fields such as Alpine, owned by Phillips, and BP's Northstar, which is planned to start up in November, should keep production levels steady at 1 million barrels a day, but only through about 2006. New oil from ANWR could keep the pipeline pumping a decade or two longer, adding hundreds of millions of dollars to the state treasury.

How much oil lies beneath ANWR is in dispute. The federal government's most recent geological survey estimates a 95 percent likelihood that there are 5.7 billion recoverable barrels of oil in ANWR, a 50 percent likelihood of 10.1 billion barrels and a 5 percent probability of 16 billion barrels. While that is a large amount of oil, it is only a small fraction of the reserves of the world's leading oil-producing country, Saudi Arabia, which has proven reserves of 262 billion barrels.

Opponents of drilling, however, note that the same federal geological survey estimates that only 3.2 billion barrels of oil in the refuge are "economically recoverable" - that is, of high enough quality to warrant the investment - and that the oil wouldn't be available until at least 2010.

Based on conservative predictions, state petroleum economists estimate that ANWR's coastal plain would yield roughly 750,000 to 800,000 barrels of oil a day for the five to six years of peak production, beginning in 2015, doubling the state's production. At current levels of U.S. production, the ANWR field would boost national production by about 13 percent.

Even under the most optimistic projection, the North Slope would account for only about 10 percent of the United States' current consumption of about 20 million barrels of crude oil and petroleum products daily.

Pro-drilling forces say that with new technology, oil can be extracted without disturbing wildlife - evidenced, they say, by new, environmentally friendly technology used at Phillips' Alpine field. Using these methods, they maintain, drilling in ANWR would make only a tiny "footprint" and would be conducted only during the winter, on ice pads, with workers using ice roads that don't disturb the tundra.

Exploration would cease in the late spring and summer, say proponents of drilling, when the animals come down from the Brooks Range to the south and swarm over the marshy plain, intercut with swift streams and lakes. And exploration would be confined to the 1.5 million acres on the coastal plain, where the oil is believed to be. Actual drilling activity would disturb an even smaller area, some 2,000 acres, the Bush administration asserts.

Environmentalists dispute that claim, noting that Prudhoe Bay started off small, too, but subsequently expanded to more than 500,000 acres.

And their fears that oil would spoil nature's bounty have been heightened during the past month with a large, 92,400-gallon spill of crude oil and hot salt water at Prudhoe Bay's Kuparuk Field and the discovery that about 10 percent of the safety shut-off valves on another drilling site had been malfunctioning. The valve problem, blamed on a lack of lubrication, led one state official to warn of the potential of "catastrophic failure."

Preserving Alaska's natural beauty, they argue, has economic value, too, luring droves of tourists. Though fewer than 1,000 people visit ANWR each year - there are no roads in or out or places to stay - elsewhere in the state, tourism has become a $1 billion a year industry, tied with fishing as the No. 2 source of jobs and income. In 1998, the last time the state counted, 1.4 million visitors came to Alaska, up from 900,000 in 1990.

Many are drawn by the state's snow-capped mountains and glaciers, salmon streams, grizzly bear habitats and waterways through Tongass, the world's largest intact temperate rainforest.

This summer, 600,000 tourists on 500 cruise ships are expected to visit Ketchikan, a popular stop along the Inside Passage and the first port in Alaska on many cruise itineraries.

The refuge, covering 19 million acres, was created in 1960 during the Eisenhower administration, eight years before oil was discovered at Prudhoe. A dozen years later, in 1980, Congress set aside the 1.5 million acres on the coastal plain - known as the 1002 area - for later review because of its potential oil deposits.

The issue of drilling was moot over the past eight years because Clinton threatened to veto any bill that would open the refuge.

Now, the pro-drilling forces have their best chance in Congress in two decades, though a filibuster by foes such as Kerry would require 60 senators to override, and both sides say that seems unlikely. President Bush has used the California electricity crisis and high oil and gas prices to argue for immediate action. Murkowski and Young, the Alaska lawmakers, have filed bills that would open the refuge to exploration.

Even Americans who have never set foot in Alaska are getting to know the state through TV ads as both sides launch media offensives in Washington and in key senators' home states.

An Audubon Society ad shows footage of the Exxon Valdez spilling crude oil. Arctic Power, a nonprofit group funded largely by the state and oil companies, expects to spend more than $2 million this year, promoting drilling and warning that America faces a dire future if it can't meet its energy needs. One of the group's commercials features honking horns and long lines at gas stations during the 1973 Arab oil embargo.

The outcome of this debate will have a profound effect on the long-isolated state left out of national weather maps, cut off from interstate highways and connected to the lower 48 through an arduous drive through Canada.

"Alaska is a place seeking its natural place in the universe," said Florian Sever, a former pulp mill worker in Sitka.

Tom Weglin, a BP production operator, spoke of Alaska as being "an oil state" while riding on a plane packed with oil field workers heading from Anchorage to Prudhoe Bay, a route that parallels the 800-mile Trans-Alaska Pipeline. "A lot of people's lives revolve around oil," he said as the plane passed over the jagged white peaks of Denali National Park.

"It directly affects what goes in your pocket. In states like Maryland where you don't have oil, it's not an issue, other than when you go to fill up at the gas station and there's no gas."

Trimble Gilbert, an elder of the Gwich'in Indian tribe and a minister, lives in a log cabin on a snowy hill in Arctic Village that is dotted with spruce trees and looks out on the Brooks Range.

His people are fighting to keep the oil interests out of the refuge on the other side of the mountains, fearing that drilling would disrupt the migratory path of the 129,000 caribou through the region in late July.

The herd has provided food, clothing and shelter for the Gwich'in for centuries, and the tribe has long held the philosophy that those who extract the oil will be here only a brief time, while the land and its animals are here to stay.

"If there's an oil spill, they're going to leave with the money anyway," Gilbert said. "They're not going to stay around. We're the only ones who are going to be left with the junk."