Photo by AP Wideworld

Walker supports development but not all and not now, as oil prices are in free fall.

Alaska is at an infrastructure development crossroads. With a new governor, crashing oil prices and a $3.5-billion budget deficit, the state is struggling with the fate of several major public-works projects. The trouble has divided lawmakers over the state's energy and transportation future.

By an executive order issued in December, Gov. Bill Walker (D) ended new work and spending commitments on six of the state's energy and transportation developments, even though more than $1 billion already has been spent. The work is intended to revolutionize Alaska's economy and generate thousands of construction jobs over the next 20 years, boosters say.

The order covers a range of industrial infrastructure projects, many involving metals, oil, gas and other natural resources: the Ambler Industrial Access Road, Juneau Access Road, Susitna-Watana Dam, Kodiak Launch Complex, Knik Arm Crossing and the Alaska Stand-Alone Pipeline Project (ASAP).

The state is divided over development as declining oil prices cut public-works funds. Megaproject advocates say the state is desperate for better energy and transportation infrastructure, while opponents argue that the proposed developments are environmentally destructive and financially irresponsible.

John MacKinnon, executive director of the Associated General Contractors of Alaska, says stopping the projects is "foolish," and several members of the state Legislature criticized the governor's actions. In turn, Walker lashed out at lawmakers concerning a pipeline bill that would prioritize the $65-billion Alaska LNG project over ASAP.

Controversial Project Portfolio

The Ambler Mining Road concept provides access to an almost untapped reservoir of zinc, copper and gold and is intended to make Alaska less dependent on oil and gas for employment. "We need to strengthen the other pillars of our economy, besides oil and gas," said Nova Copper President Rick Van Nieuwenhuyse. In a 2014 Wilderness Society study, however, author Lois Epstein argues that the primary beneficiary of the project would be the mining industry, which provides less than 1% of the state's tax revenue. As of 2014, over $17 million had been spent on the project, and engineer Dowl HKM estimated a total cost of between $430 million and $990 million to complete construction.

Another megaproject, the Juneau Access Road, would connect the capital city with the North American intercontinental highway system. ASAP would help to monetize Alaska's stranded natural-gas resources in the North Slope production stronghold and further alleviate interior Alaska's heavy dependence on oil for its electricity and heat.

Likewise, the 520-MW Susitna- Watana Dam would provide interior Alaska "with affordable energy for a century," says Jomo Stewart, project manager, Fairbanks Economic Development Association. In an area dependent almost entirely on oil for electricity and heat, over $172 million already has been spent toward diversifying the energy portfolio, Epstein says. But the Alaska Energy Authority and other state agencies say the work already done on the dam could lose its value over time.

The projects "all have further economic benefits than just the construction jobs," MacKinnon says, alluding to the state's infrastructure needs. "The city of Washington, D.C., has more roads than we do. When you build roads and bridges, you promote development."