Native Inc Oils Wheels in Alaska

Greg Palast

By Gregory Palast for The Observer/Guardian UK

Holy week is especially solemn in Chenega. On Good Friday 1964, a tidal wave swept over the Chugach native village on Chenega Island in Alaska’s Prince William Sound. Every home was washed out to sea. One-third of the residents drowned.

For nearly two decades, survivors stayed in a distant refugee encampment. Then, in 1982, Larry Evanoff, who’d lost his mother and father in the wave, sailed back to the Sound with his wife and two children, aged 7 and 14, and built a log cabin. For two years, alone, without even short-wave radio, the Evanoffs lived off what they could hunt and catch while they cleared the wilderness for a New Chenega.

On Good Friday 1989, the 27 returning families had just completed rebuilding their homes when the Exxon Valdez broke open. The oil slick surrounded Chenega in sludge, killing or poisoning every fish, clam and seal on which the remote island village subsisted.

This Holy Week has been special for British Petroleum, too. Having recently ingested Amoco Oil, BP-Amoco said it will plonk down pounds 16 billion for ARCO petroleum.

The celebrations in Chenega and London are strangely interwoven. Understanding BP’s strategy for this mega-deal, and its human consequences, requires knowing the tangled history of two corporations, BP-Amoco, one of the world’s largest, and Chenega Native Corporation, one of the smallest. By purchasing ARCO, BP will own 72 per cent of the Alaska Pipeline, up from 49 per cent, and with it a lock hold on America’s largest oil and gas reserves.

The gas is the hidden prize – 25 trillion cubic feet under the tundra. Because the gas cannot be transported, ARCO and BP book its value as zero.

But BP has a plan. Liquefy the gas, pipe it and ship it out by tanker. The only flaw with the plan is that it’s illegal. In the Seventies, environmentalists blocked the Alaska pipeline project in court. But Congress, by a single vote, over-rode the judges after BP and its junior partners, ARCO and Exxon, made several solemn commitments to protect the environment. One promise was that their oil pipeline would not be followed by a gas line. Enter the Chugach natives who, as a key political group, can block or bless a new pipeline.

The Evanoffs oppose new drilling and new threats to their island home. In Nanwalek Village, chief Vincent Kvasnikoff told me: ‘Sometimes I wake up at night and get sick thinking about it. I mean, it’s been 10 years since the spill and the state still says clam beds are off limits. What if a spill happens again? What do they expect us to eat then? Gravel?’

But that is not native Charles Totemoff’s concern. Totemoff is President of the Chenega Native Corporation which owns the village lands and the surrounding wilderness. Totemoff is not partial to traditional cuisine. ‘Seal meat? Ever smell that shit? Give me a Big Mac any day.’

Chenega Corporation was the brilliant creation of British Petroleum and partners. Throughout the Lower 48 states, Indians control ‘reservations’ where they maintain sovereign powers. After the Prudhoe Bay oil strike in 1969, the oil consortium could not take a chance on native authorities controlling their rights of way.

To induce the natives to give up sovereignty over their lands, oil company agents offered an odd gift: incorporation. By turning their tribes into corporations, the oil companies explained, natives could become shareholders and dividends from contracts with the oil companies could sustain the villages.

To the poor Chugach, especially the refugees from Chenega, the stock plan was an offer they could not refuse. Once incorporated, the Chugach sold the oil companies Valdez for $1 – then waited for their shares to provide a return.

Before long, most shares slipped from the hands of the villagers – bequeathed, transferred or sold at a fraction of their current value. Today, of Chenega’s 69 shareholders, only seven live in the island village. Most Chugach are now tenants on land owed by distant shareholders.

‘They set it up for us to fail,’ says a bitter Gail Evanoff, ‘They put our land in a form they could take away.’

The taking isn’t over. Chenega Corporation recently sold 90 per cent of the villages’ territory. The purchaser – a trust fund established by Exxon and a BP-controlled consortium called Alyeska.

The buy out is ostensibly to ‘preserve’ the land. But no one in the industry is fooled. Tiny Chenega is now home to a huge helicopter staging area, a cargo jet airport, unused, with a half-mile long airport runway and high-tech floating dock. While these are designated for emergency oil-spill clean-up, an oil industry lawyer told me bluntly: ‘This is an oil services centre.’

This month, the state will auction four million acres for oil drilling near Nanwalek. Chenega could not be far behind.

But what traditions are left to protect? Since the spill, fishing is stone dead. Chenega is down to two commercial boat licences.

Survival on dead waters a hundred miles from a grocery store now means working on the BP-Alyeska payroll. So food, no longer free to catch, can be bought and flown in weekly.

But oil company jobs are erratic and seasonal, leaving 70 per cent of Chugach villagers on various forms of public assistance.

The corporations have fared better. I remember the corporation’s pre-spill headquarters, a wooden bungalow near the village docks. Today, corporate chief Totemoff operates from Chenega Towers, a concrete and glass office block in Anchorage. On his wall hangs a huge map of Chenega, colour-coded into segments dividing timber logging sectors from hotel sites.

The land sale to the Exxon-Alyeska trust and a contract with the BP unit has brought corporate assets up to nearly $1 million per shareholder.

The oil consortium’s brilliance in re-making the tribes in their own corporate image ensures that, while traditionalists like the Evanoffs can be expected to challenge the gas scheme, BP can count on the native corporations putting shareholder dividends first.

Not just natives have been corporatised. Alaska, says its former Governor Walter Hickel, is ‘the owner state’. Rather than levy taxes, Alaska pays an annual dividend to each resident. Hickel, who drafted the terms of Alaska’s statehood, wants Alaskans to see themselves not as citizens but as stockholders in a resource-rich enterprise.

Hickel takes his own advice to heart. He was US Secretary of the Interior when ARCO’s chairman R O Andersen promised to forego a gas pipeline. A few years later, Hickel and Andersen formed Yukon-Pacific Corporation to build the gas line.

On the day Chenega Corporation sold his families’ traditional fishing grounds at Jackpot Bay, Evanoff told me: ‘You can’t sell land. You can’t own it. All we can do is use it, take care of it and pass it on.’

Not according to BP. This week, one Alaska legislator protested that BP was trying ‘to turn Alaska into their colony’. He’s wrong. BP would never turn the state into a restless colony so long as it can operate Alaska as a well-run subsidiary in which it owns the majority of shares.

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Gregory Palast’s other investigative reports can be found at www.GregPalast.com where you can also subscribe to Palast’s column.

Gregory Palast’s column “Inside Corporate America” appears fortnightly in the
Observer’s Business section. Nominated Business Writer of the Year (UK Press
Association – 2000), Investigative Story of the Year (Industrial. Society – 1999), Financial Times David Thomas Prize (1998).