Arctic Imperative Summit Oil and Gas Program Arctic Resources Girdwood, AK Sunday, August 26, 2012

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1 1 Arctic Imperative Summit Oil and Gas Program Arctic Resources Girdwood, AK Sunday, August 26, 2012 REMARKS BY: CRAWFORD PATKOTAK CHAIRMAN, ASRC BOARD OF DIRECTORS Good morning and thank you for joining me in discussing such an important topic to every Alaskan including the Alaska Native community. I see many familiar faces here in Girdwood and I know we all share a common concern for the future of our great state. My name is Crawford Patkotak, and it s my privilege to currently serve as chairman of the Arctic Slope Regional Corporation board of directors, as well as ASRC s senior vice president of Shareholder and Community Programs. I proudly call Barrow home, where I have been a whaling captain since 2008 and currently sit on the Barrow Whaling Captains Association board of directors. My wife Laura and I have six children and 4 grandkids. (recognize other panelists) Some of the most familiar faces are actually right here on this panel Mayor Brower, my cousin Hugh, Deputy Secretary Hayes, Mr. Slaiby to all of the panelists thank you for being here. For those who need a refresher, ASRC has grown from very humble beginnings to the largest locally-owned and operated business in Alaska, a title we have held onto now for 17 straight years. ASRC is a for-profit corporation, formed in connection with the signing of the Alaska Native Claims Settlement Act of 1971 and is owned by more than 11,000 1

2 Iñupiat shareholders of Alaska s North Slope region. The Corporation is committed to not only increasing the economic and development opportunities for those shareholders, but also protecting and preserving their Iñupiat culture and traditions. The foundation of our success will always be the balance between the preservation of that livelihood and the company s economic interests. The topic today, Arctic Resources, is something ASRC is very familiar with as our people, the Iñupiat of Alaska s North Slope, have subsisted off of this land, our garden, for generation after generation. The Arctic is host to world-class conventional resources, such as oil, gas, coal, minerals and potentially fisheries but it is also home to world-class caribou herds (or as we call it the tuttu ) whales (which we hunt in the spring and fall) other marine mammals and waterfowl that the Iñupiat depend on for their sustenance. As stewards of these lands and resources, we need to carefully balance and mitigate the impacts of developing one group of resources in order to protect the long-term sustainability of the other. ASRC is poised and ready to participate in further Arctic development but it needs to done on terms that are compatible with our traditional values and heritage. There are several messages that you will hear time and again from the people and the leadership of our region with respect to the Arctic. It is great that we have a consistent viewpoint and voice in our region despite the differences in which entity is making the presentation. We all believe that we need a seat at the table, a collective seat so that the issues and concerns of the Iñupiat are heard and addressed. We cannot state 2

3 3 enough times through our multiple groups that development must not just protect our traditional resources but it must provide support to our communities and culture. By this we mean financial support. We can t make this happen on our own but we can through meaningful partnerships and revenue generation and sharing. This means that we, the people of the Arctic, whose lands and waters hold the resources for development must receive our fair share from the projects that move forward. The developers and the agencies that regulate them must always remember the people of the land first and foremost; that we are the Arctic experts. We are not looking for a handout but we are looking for the acknowledgement that our region is important and that we are included at every level. NPR-A We believe that responsible exploration and development in the National Petroleum Reserve-Alaska, 23-and-a-half million acres to the west of Prudhoe Bay, can be accomplished while respecting the Iñupiat culture and lifestyle, and that s why ASRC was involved in the previous NPR-A Integrated Activity Plans for both the Northeast and Northwest areas of the Reserve. That s also why we are so frustrated at the Department of the Interior s decision to lock up the reserve s potential. The area was set aside as a reserve by President Warren Harding in 1923 to ensure the U.S. Navy and other military operations would have enough petroleum during times of war. Why? Because the area contains some of Alaska's best potential for onshore oil 3

4 and gas. However, nearly 90 years later, the reserve has yet to commercially produce any hydrocarbons even though the area is estimated to hold nearly a billion barrels of recoverable oil and more than 50 trillion cubic feet of natural gas. We believe the reason that the NPR-A has not been allowed to live up to its potential is the repeated confusing and misleading decisions of government agencies like the Department of the Interior and the Army Corps of Engineers. Two weeks ago, Secretary Salazar announced that his Department prefers an alternative alternative B-2 to be exact to the NPR-A s Integrated Activity Plan and Environmental Impact Statement that keeps roughly half of the reserve off-limits to oil and gas exploration. Just as damaging, this preferred alternative could serve as a roadblock for a pipeline to carry oil from offshore wells in the Chukchi Sea to the Trans- Alaska pipeline. Even if that pipeline is eventually allowed to be built new regulatory hurdles will add to its cost, and the time it will take to be built. These delays will have real implications on our shareholders, Alaskans and domestic energy supply. Make no mistake the BLM s overall vision of the petroleum reserve is critically important to ASRC, and to our shareholders. The four communities within the boundaries of the NPR-A lie within our North Slope region. ASRC is committed to both increasing the economic and shareholder development opportunities within our region and to preserving the Iñupiat culture and traditions, we have a very large stake in present and future management plans. As I said, we support responsible development of oil and gas resources in Alaska, and believe that Alaska oil and gas is an integral component of the nation s energy strategy. As the Alaska Native corporation for the North Slope region and largest private land owner we are frustrated that our voice was apparently not heard in this discussion, but those voices that had similar goals of the present administration were. The BLM s preferred alternative is one of the most restrictive management plans it could have developed, based on the initial alternatives from the draft Environmental Impact Study. 4

5 5 ASRC has participated, commented and worked with the Interior Department since the first NPR-A Integrated Impact Study and Environmental Impact Statement in 1999, and despite the Department s statements of working and collaborating with Alaska Native groups we feel that our efforts have been rejected. A significant amount of time, effort and costs are incurred by ASRC and other native entities each time the Department initiates a new Environmental Impact Study for the Reserve; however, there doesn t seem to be any recognition of those efforts in the Preferred Alternative. Still, we remain committed working with the Department of the Interior, and will study the final decision when it s released later this year. OCS It s not just onshore development that holds enormous potential for the state, our shareholders and even the nation we believe responsible development along the Alaskan Outer Continental Shelf, or OCS, is one of the keys to our long-term energy needs as well. ASRC is working toward meaningful alignment with the Outer Continental Shelf through recognition that we need to have a seat at the table, since exploration and development is moving forward. We recognize that new oil into the Trans-Alaska Pipeline is the lifeline for our North Slope communities and is necessary for the region s long-term sustainability. The OCS could hold more than 25 billion barrels of recoverable oil and more than 130-trillion cubic feet of natural gas. That means greater energy independence for the nation, and as importantly, thousands of well-needed jobs. While there is significant economic potential in the OCS, development must take place with local input. This situation is precisely where ASRC must strike a balance between the economic and subsistence needs of our shareholders. They depend on the land 5

6 and sea for subsistence resources; therefore, we continue to work towards establishing a meaningful seat at the table. New Investment/Arctic Infrastructure We understand there are new entities, including private equity funds, that would like to invest in Arctic infrastructure. Because of additional activity in the fields of tourism, shipping, oil and gas exploration and development as well as fishing, the need for Arctic infrastructure is only expected to grow. In some cases, this infrastructure could be a matter of Arctic preparedness and national security. As the largest private entity on the North Slope, we d like to tell these entities - some that are involved in this conference - that ASRC is Open for Business. Speaking of Arctic infrastructure investment, ASRC has recently entered into a partnering agreement with the Alaska Industrial Development and Export Authority (AIDEA) to do a prefeasibility or concept engineering analysis on a potential Deep Water Port location within our region of the Arctic. The study will focus on a multi-use port for servicing multiple industries, including our own coal resources. As part of the analysis we are evaluating the suitability of both the off-shore and on-shore related infrastructure. This is an important step by ASRC and demonstrates our desire to have some control and financial returns on future Arctic development. Closing Comments For the Iñupiat, the Arctic is our identity. It provides for our sustenance and our economic sustainability. If the future of the Arctic means continued development, then that is our destiny as well. We will be at the forefront as the discussions move forward 6

7 7 ensuring that our voice is heard on the important issues and that ASRC and its shareholders take advantage of the economic returns that we deserve as the people of the North. Thank you. 7