New natural resources commissioner says he’s working to put more oil in Alaska’s future

The new head of the Alaska Department of Natural Resources plans to take an aggressive approach to encouraging development in Alaska, one that includes working closely with local communities in an effort to boost oil production, which provides most state income.

"I am optimistic we can flatten out the (oil) production line, if not increase it over the next few years," said Andy Mack, who was appointed by Gov. Bill Walker in June to replace acting commissioner Marty Rutherford.

Though oil production is up slightly in Alaska, years of sagging production as the state's large oil fields have aged has contributed to massive deficits and an uncertain future, though the sharp decline in oil prices has been a larger factor.

Mack, a managing director of private equity fund Pt Capital before his move to the state, said he'll be hyper-focused on bringing together communities, regulators and companies to see projects developed in a responsible way.

"Everyone needs to be on the playing field," Mack said in a wide-ranging interview Friday with Alaska Dispatch News.

He's also dealing with a divisive issue he inherited. By Nov. 1, he may have to decide if he'll declare the Prudhoe Bay oil producers in default of their state leases if they haven't provided the gas marketing details sought by the state as part of BP's 2016 development plan. It's something the producers have refused to do for months with a plan that historically has been focused on oil development, not gas sales.

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Mack on Friday deflected questions about how he'll handle the default issue. Instead, he pointed to statements by his boss, Gov. Walker, suggesting that there would be a resolution to the issue and no default at the state's biggest oil field. A default could lead to a foreclosure or eviction effort by the state, though it's unlikely the oil companies would leave without a fight.

"We anticipate the process will work," said Mack, who oversees an agency that employs about 700 full-time employees.

Mack, 52, has a history working with oil companies and communities, including during five years as an adviser to former North Slope Borough Mayor Edward Itta starting in 2006.

During that time, Mack was part of the mayor's effort to shape a new approach to working with Shell — as the oil giant pursued controversial plans to drill in the U.S. Arctic Ocean — instead of fighting the company in court.

Mack provided input into a list of standards the mayor sought for offshore development. Released in 2009, the list set measures that helped protect the environment, such as a call for more scientific understanding of the region.

Shell adopted important conditions, at greater expense to its multibillion-dollar exploration effort. It agreed to a joint undertaking with the borough to boost scientific knowledge, and decided that cuttings, drilling fluids and gray water would be barged to shore instead of disposed of in the ocean.

"To Shell's credit, they agreed to effectively zero discharge in the Beaufort Sea, and if you think of the value of subsistence whaling and sealing in that area, it was a really big step," Mack said.

Mack, who has also operated Andrew Mack and Associates, an Anchorage consulting firm that focused on Arctic development, hopes to have similar success elsewhere in Alaska.  He has worked with the village corporation in Nuiqsut, an Inupiat community located near new oil projects in the National Petroleum Reserve-Alaska.

One project Mack hopes to see move ahead is Nanushuk, a large discovery in the Colville River delta by Denver-based Armstrong Oil and Gas and Spanish firm Repsol. Estimates confirmed in 2015 by a prominent engineering firm show it could produce at least 120,000 barrels of oil daily, an amount that would significantly boost production and state revenue in Alaska. The proposal is undergoing an environmental review by the U.S. Army Corps of Engineers.

At the very least, Mack hopes that communities and companies can have a common base of information that might contribute to new solutions and help resolve disputes.

"It's difficult to do these projects if local communities are unwilling to move forward and if they have serious, well-founded reservations," he said.

Mack, who was born in Soldotna and is a former civil and criminal defense attorney, said he was part of a successful effort led by the governor in July to get the Bureau of Land Management to begin an environmental review of a ConocoPhillips project in the National Petroleum Reserve-Alaska.

In mid-July, Walker dashed off a letter to President Barack Obama blasting the Bureau of Land Management for what he asserted was months of "regulatory foot-dragging" with the proposed Greater Mooses Tooth 2 project.

Mack said he offered advice on the letter and was part of subsequent meetings with federal officials that the letter prompted. A week after the letter was sent, the BLM announced it would begin an environmental review of the project.

"I was part of that, developing a strategy and understanding the arguments that are important to make," he said.

"It's a small thing, but it's a start," he said of BLM launching the review.

Editor's note: Alaska Dispatch News publisher and owner Alice Rogoff is a senior adviser at Pt Capital, an unpaid position.