The state’s newest Department of Natural Resources Commissioner, Andy Mack, is one of several new additions to Gov. Bill Walker’s cabinet. Here are a few questions that couldn’t be included in the Alaska’s Energy Desk profile of him that ran earlier this week. This interview has been edited for clarity and length.
Alaska’s Energy Desk: The Governor just appointed John Hendrix as the oil and gas advisor, which is a role historically played by the DNR commissioner. What’s the division of responsibility between you, Hendrix and Keith Meyer at the Alaska Gasline Development Corporation?
Mack: I wouldn’t necessarily agree with the fact that the role of oil and gas advisor is historically the DNR commissioner. Every governor has the prerogative and the ability to rearrange their staff how they feel will best suit the needs of the state of Alaska.
The DNR commissioner has very specific regulatory obligations. I think that people shouldn’t forget that there’s some history there and there’s a fairly long history of having people in the Governor’s office with specific oil and gas experience.
Now, with respect to John Hendrix I think, number one, he’s got some incredibly valuable experience that is very valuable to the Governor. He has more flexibility than I do though in the sense that he can talk very broadly about policy without worrying as much about the regulatory functions of DNR. So, the distinctions in the roles between myself and John Hendrix are that he doesn’t have a specific regulatory function.
Now, on important decisions, let’s be clear, everybody in the State of Alaska, I think would agree, that the DNR commissioner should be in full consultation with the folks in the Governor’s office.
The second part of the question was on the role and the relationship between the new head of AGDC. It has been discussed quite a bit in the press that the work in the pre-FEED process has been moving along and that that process is, people can see the finish line there and they can see the conclusion of that process. Then really the question is raised well what do we do next?
There was a stage-gate approach which basically said we’re going to walk through this process we’re going to try to work together in an aligned manner and after pre-FEED there are subsequent steps and decisions to be made by the participants in AKLNG.
It’s no secret that not only are there economic headwinds in the oil industry, but there’s significant economic headwinds in the gas industry too.
There’s been certainly pretty open statements by all of the parties involved and a fairly open discussion about the concerns with being able to move some of the future stages in the AKLNG process.
I think Keith Meyer has been tasked with is ensuring that timing wise the state’s interests are protected. And that we, to the extent possible, move that process along, that project along.
Alaska’s Energy Desk: You’re originally from Soldotna, can you tell me what that experience growing up in Cook Inlet has taught you about resource development there?
Mack: I was born in 1964 in Soldotna and, as a young kid, I had many friends whose families were engaged in the oil and gas industry either as direct employees or as service-side providers.
Nikiski and Kenai and Soldotna and the surrounding areas — it was this incredibly vibrant community and it really was full of hope and a big part of that hope was fueled by this engine, which was driving the local economy.
As I grew up and graduated from Soldotna High School and then went to college, things started to slow down as production waned in Cook Inlet and it got to the point in the 1990s where the economy and production levels were way down the price was was up and down in the 90s. It was actually, for me personally, hard to drive out past Kenai in a sense because there were lots of buildings that had been abandoned where businesses had once operated. People were very uncertain about their economic future and what has been kind of heartening is that a lot of that optimism and a lot of that economy has come back.
But again we’re now in a down-cycle on price so the ability and the willingness of folks to come in and invest in that region again is in question. And I think, I absolutely have personal experiences with that whole region, it’s a little personal to me and it’s very important that we simply understand that as a state what we do financially makes a huge difference.
Alaska’s Energy Desk: DNR identifies a lot of resources, like timber and oil, that the state has available to it for extraction. Are you having these discussions about resources that could be identified in the state that could be used specifically for environmental conservation and not necessarily for resource extraction purposes?
Mack: I think the question is, is there something that’s important enough for the state where they would say this is where we want to go on an issue like that?
So, that would probably have to be an organic conversation among Alaskans.
I think at the end of the day, the administration and the Governor’s going to say what’s in the best interests of Alaska and and that would be kind of the bedrock principle and there’d have to be a very, very forthright conversation about what Alaskans feel is best.
Do they want to extract resources or do they want to extract part of the resource and set aside some of it and that’s really a question for Alaskans.
Historically, the vast majority of Alaskans have come down on the side of – at this point we’d like to extract the resource — but that’s part of the ongoing discussion.
Alaska’s Energy Desk: What is your vision for oil and gas exploration in the state?
Mack: The ability of the state of Alaska to continue to generate income from oil and gas will be created by our ability to maximize access. We’ve had fairly good access to the areas that we own and we have the ability to lease. I think Alaskans should be very proud of the work we’ve done since oil production began.
As a general rule — it’s not a perfect record — but as a general rule I think we should be very proud of the work we’ve done and the standards we’ve insisted upon as a state in protecting the environment and also ensuring that we maximize production.
There’s tensions between pace and standards but generally speaking in the areas where we’ve had access, we’ve done a good job.
I think the challenge for Alaska is how to approach areas where we historically have not had access or the access is controlled by the federal government and I think part of my experience lends itself very well to ensuring that we can generate access.
I think access in federal areas is going to be driven by a number of factors. A big part and probably one of the principal facts is going to be whether or not local stakeholders, whether or not they support going into areas which are managed by the federal government. I think that there’s a number of things that you have to take into account. But certainly areas and local communities always have an interest in big development projects. Doesn’t matter whether it’s building a highway, whether it’s building a mine, whether it’s drilling for oil or gas.
Alaska’s Energy Desk: So when you say access to areas that are controlled by the federal government, Arctic National Wildlife Refuge? Are you thinking the petroleum reserve? What are those areas and what’s your strategy?
Mack: The answer is yes ANWR, the Outer Continental Shelf , and the National Petroleum Reserve – Alaska up in the Arctic area, certainly all oil plays that are very important.
Some of those areas are prolific and also economic in the sense that they’re companies that are willing to go out and do the work.
For example, there’s been lots and lots of discussion about what Shell has proposed and what they were doing in their exploration effort and that’s very expensive and very ambitious and very much a play where they were looking for a large field. That’s what their project required is that they find a large bunch of oil.
But, there’s other smaller plays along the North Slope there’s lots of activity. There’s a number of those more discreet probably lower profile plays/investments/projects that make sense.
My work both prior to Pt Capital and then at Pt Capital was really drilling down on, fundamentally what it would take to do those types of projects and do them in a matter which would result in a program that could actually lead to production but also in a manner that the stakeholders along the Arctic coast for instance could live with and support. I think those two are compatible concepts.
But, it doesn’t have to be that you have to go out and try to capture a basin, it can be a more graduated series of proposals which are smaller in nature but keep the economy of Alaska ticking along and ultimately do lead to production.
