New boom just like old boom?


Alaska pipeline/Bureau of Land Management

Thirty-six years ago, the late Joe McGinnis authored a best-selling book about Alaska titled “Going to Extremes.” It went to extremes. Widely popular outside the 49th state, it was not so popular within. Some Alaskans accused McGinnis of taking liberties with the truth.

He did.

McGinnis, the Christian Science Monitor wrote in a review at the time, “lived in Alaska through much of 1975 and 1976, years of pipeline boom and brawl that he has captured in the 18 distinct sections of this remarkable book. McGinnis discovered the wages of greed in the person of a used-up Valdez prostitute turned cocaine courier….”

McGinnis’s portrait of the 49th state was decidedly unbalanced and distorted and in that probably the most accurate picture recorded of Alaska during the years of oil pipeline construction when the whole state was unbalanced and distorted.

I arrived in Alaska not long before the pipeline started and lived through the early part of construction. What happened in the state then is more than a little pertinent to what could happen tomorrow if a natural gas pipeline starts construction.

But more on that later. First a little visit to yesteryear is in order.

F-banks crazy town

My most vivid memory of pipeline days is standing in line in a downtown bank in Fairbanks, watching a young guy cash a check, and seeing him get bundles of $20 bills which he then placed between the four fingers of his hand and the thumb and pointer finger.

Four bundles fit in there, and he walked out of the bank that way holding this fist full of cash.

A bundle of $20 bills is $2,000. After all these years, I finally looked it up.  Back then, I just remember thinking it was a shitload of money. Thanks to Google, I now know it was $8,000.

The young man walked out of the bank with $8,000 plainly visible in his right hand. I wasn’t far behind him. I remember standing next to him at a downtown stoplight on Cushman Street. His hand hung at his side stuffed with cash, and I thought,  “I should mug that guy.”

It was a thought driven not by any desire to commit a crime but by the recognition that someone acting so damn stupid deserved to have someone steal the money. And maybe someone did. By the end of the day, he might well have become the victim of a robbery.

There were so many of them a young cops and court reporter ignored them. They were too ordinary. Same for the other ways he could have lost the money in hours: gambling, drinking, drugs or hookers, or all four in one night of wild debauchery before heading back to work on “the pipeline.”

This was Fairbanks during construction of TAPS, the transAlaska pipeline system. There were  “working girls” on the streets downtown stopping cars to offer their services, bar fights erupting with a regularity seen only in movie Westerns, cocaine snorted through rolled twenties then tossed aside, and card games in which a 20-something from a lower-middleclass background could regularly see more money on the table than he ever imagined.

It was the Wild West, 1970’s style.

Boom, boom, boomtown

“How boomtown greed is changing Alaska” the New York Times headlined on July 27, 1975.

“The construction of the Alaska pipeline, now in the midst of a summer offensive of bulldozers and welding torches, will cost at least $6‐billion, will take another two years or more to complete and will finally mean a steady flow of oil each day from the edge of the Arctic Ocean south to the ice‐free port of Valdez,” wrote reporter Winthrop Griffith. “The project will also kill hundreds of men, turn many women into whores and shatter the quiet life‐style of the communities along its 798‐mile route.”

It was almost true. Thirty-two people died in construction of the pipeline, and the state was awash in whores, although the vast majority were imported from Outside. Still, there was no doubt but that the quiet was shattered not just along the pipeline route but just about everywhere in road-connected Alaska.

Anchorage might not have been as crazy as Fairbanks but it was a close. It was a working man’s Alaska escape full of strip joints, massage parlors, booze, drugs and after-hours clubs where you could gamble until you were broke and thrown out.

“Off-duty workers spent lavishly in Fairbanks and Anchorage, where crime rates increased dramatically. Gang -style murders were associated with the Teamsters Union in Fairbanks, which controlled much of the labor and supplies for the project,” the Alaska Humanities Forum would later report in its history of  “Oil Discovery and Development in Alaska.” “At one point the union was banking $1 million a week in dues. The boomtown atmosphere scared many local residents, who learned first hand what it was like to live on ‘the last frontier’.”

Round Two coming?

Alaska LNG is now out with its 289-page “Socioeconomics” report on what the fall out from construction of a gasline from the North Slope to the Kenai Peninsula might look like. To simplify, it says the gasline impacts might look a whole lot like the oil pipeline impacts.

The report is long and difficult to read, but Larry Persily, the former editor and publisher of the “Wrangell Sentinel” newspaper in Southeast Alaska and the one-time Federal Coordinator of the Office for the now-defunct Alaska Natural Gas Transportation Projects, summarized it in a Tuesday report for the Kenai Peninsula Borough.

Persily now works for the Kenai Peninsula Borough Mayor’s office. The Kenai, tagged to be the site of the liquefaction plant for shipping gas from Alaska to the world, stands to be one of the big beneficiaries of the gas pipeline, but it could also face big costs in the short term.

The Kenai is now home to a thriving summer tourism business and pipeline construction could make chaos of that.

“Hauling material from the ports at Anchorage and Seward to the LNG plant site in Nikiski would add to traffic on the Seward, Sterling and Kenai Spur highways,” Persily writes. “For example, looking at the Sterling Highway near the Skilak Lake Road intersection, about 40 miles southeast from the LNG plant site in Nikiski, Alaska LNG estimates about 90 trucks a day during peak construction. That would represent about a 3 percent increase in overall traffic at the location, but an 18 to 28 percent increase in truck traffic.

“’Project-related traffic would contribute to the congestion that already exists along sections of the Seward, Sterling and Kenai Spur highways,’ the report says. ‘The primary mitigation method for reducing additional traffic … would be to use barges and other vessels as much as possible’ to move material from Anchorage and Seward to Nikiski.”

The report also notes about a $3 million loss to Kenai commercial fishermen displaced by construction. It doesn’t get into conflicts with recreational fisheries, but the oil pipeline history was that many lakes along the Richardson and Denali highways were nearly fished out by pipeline workers looking for something to do in their limited free time.

12,000 pipeline workers plus…

The report itself estimates 12,000 pipeline jobs at peak employment.  A lot of those workers are expected to come from Outside as was the case during oil pipeline construction. The report warns that the Kenai and other areas should expect a housing shortage and an overwhelmed airport.

“Aside from well-paying direct and indirect project employment, many of the other jobs created in Alaska during construction — so-called induced jobs — ‘would be relatively low-paying jobs,’ adding to the housing concern,” Persily writes. “Those jobs could include restaurant, retail or lower-skilled service-sector employment.”

The report suggests “private charitable institutions in Alaska” might want to jump in to help provide housing.

The Kenai’s big issue is with aid to handle the variety of problems that come with what was called “boomtown” status during the oil pipeline. The major North Slop oil producers had suggested they might be able to help communities along the pipeline route with payment of $600 million in-lieu of property tax while the pipeline was under construction.

“…State control of the LNG project, an option advanced this summer by the governor, could change the funding source of the impact aid program if the North Slope producers take a reduced ownership share in the project,” Persily writes. “Further details of a state-controlled option are anticipated later in the year or next.”

Given the economic climate of these times – natural gas is now selling at less than $3 per MMBtu and experts says at least $7.50 per MMBtu is required to make an Alaska gas pipleine viable – pipeline construction any time soon seems unlikely, but Persily’s report, or the entire Alaska LNG report to the Federal Regulatory Energy Commission, is worth a read for anyone who loves the Kenai.

If you think it’s a zoo there now during the summer tourist season, the report will leave you scratching your head about how much worse it might get. There could be big benefits to the state of Alaska, at least in terms of jobs in the short term, in construction of a gas pipeline, but there are also some costs worth thinking about.







7 replies »

  1. I don’t understand why the port of Seward would have to be used to supply materials and equipment to the Kenai area? Why not use Homer or even Kenai? Seems like Larry is just bucking for a fancy highway thru the Cooper Landing area so Semi’s and Winnebagos can blast thru.

  2. Harry Crews wrote great stuff on the Pipeline. I think he was sent to Alaska by Playboy, which I always bought and read for the articles. As for the above guy’s “small army of third world nationals,” anything is better than Texans.

  3. Walker’s idea of having the customer finance the project does not put the state in a good position. The customer will then want to max their ROI. So they will want the state’s cut to be as little as possible. Seems like Walker is obsessed with creating his legacy, and not for getting the best deal for the state. The best deal for the state is probably another 40 year wait until global demand makes the project economically feasible. By then perhaps the pipeline would only have to go to the ice free port of Nome or Kotzebue.

  4. Sadly the gas pipeline was not built in the first 20-30 years after the oil pipeline when the men and women with the skills gained from the first construction were still living and working here, when the construction might have benefited Alaskans rather than imported workers.

    But, of course, building the gas line is not solely about the jobs that it would create. It is about the long-term economic benefit to the state. It is an opportunity for communities other than Anchorage to benefit from lower cost electrical generation and space heating. There are foreign markets interested in North Slope gas, so it will help to pay our government’s bills without raping Alaskans with an income tax that many of us cannot afford (at least not until we get lower cost electricity and space heating). It’s about providing a long-term economic engine to Alaska. Hopefully this time we will spend less on government and more on building a private market-based economy.

    It is unfortunate that the people who fully experienced the TAPS mess are not mostly still with us to impart their lessons to us, but I think we can probably find a few will explain a few things to us. For example, you don’t hire barroom brawlers as cops and put them out on the street with minimal training so they can cause more problems than they stop. Or, that locks on doors are a good thing and we ought to use them. Or, that you don’t have all your bars in a single strip down the main street of your town, making it easier for the prostitutes to play their trade and the revelers to go from one establishment to another.

    Yeah, building the gas pipeline will no doubt have negative effects on our state, but those negative effects will be outweighed by the positive and, if we’re smart and listen to the old-timers, we can mitigate a lot of those negative effects, maybe even turn them into positives.

    • it is most definitely about the long term benefit to the state. but the billion dollar question comes in figuring out where the state obtains the greatest long term benefit. there are plenty of foreign markets interested in the gas, but they’re not willing to pay much. the economics don’t provide cheap gas to any Alaska markets unless that cheapness is subsidized by sales to foreign markets. “the long-term economic engine” is dependent on getting high value out of the gas as we got out of the oil. it might be time we think about doing something else with NS gas. shipping it out on tankers. using it to produce electricity for server farmers. building a carbon-fiber plant (it’s the steel of the future) somewhere in state and starting a new industry. etc. because, at this point in time, the numbers for the dollars to be made in simply selling natural gas don’t look all that good.

      • Those are great ideas, but what you’re really saying is that Anchorage should get yet another industry that sucks the life out of the rest of the state. That carbon fiber plant is only feasible if there is a source of economical electric generation and space heating and Anchorage is the only place in the state that has that thanks to the sweetheart deal they have for Cook Inlet natural gas. The only way the rest of the state has any chance to participate in the wealth of this state is if they have actual access to the resources that make things like carbon fiber manufacturing economical.

        Trucking doesn’t do that. GVEA is planning to truck gas for a short term, but their studies have shown that they can only lower our electrical rate by 8%. Big whoop! That’s $20 for me. In the winter I pay over $200 a month for electricity (we sit in the dark a lot and heat with wood), while friends in Anchorage pay $45 a month and half of that is administrative fee.

        A pipeline is, long-term, the most economical and safest way to transport oil and natural gas. Trucking is an inherently dangerous proposition because the Dalton is such a challenging road.

  5. Until they find some funding and buyers for the product the chastity of Kenai is safe. Some modern projects house the mangy outsiders on ships or barges – that might alleviate the impacts a little bit. I would actually expect a small army of third world nationals this time around – that has been the trend for some years now in coastal mega projects.

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