By Rachel Premack of FreightWaves
As more drilling and mining projects are approved in Alaska, local trucking fleets are planning to hire drivers around the United States to haul equipment, chemicals and other loads — particularly on its fearsome Dalton Highway, a remote, 414-mile road that connects Fairbanks to oil fields near the Arctic Ocean.
The developments, particularly ConocoPhillips Alaska’s Willow project, have been controversial as they may mar some of Earth’s most remote land. However, for the residents of the United States’ third-least-populated state, the new investments could bring an economic boom that many locals say the state needs.
The construction of the Trans-Alaska Pipeline System in the 1970s and oil boom of the 1980s transformed Alaska. The pipeline brought in some 70,000 workers and often their families. Many of them stayed; Alaska’s population grew three times as fast as the rest of the country in the 1970s and 1980s. As of 2013, more than half of Alaska’s housing stock was built in those decades.
Josh Norum, the president of Fairbanks-based Sourdough Express, said the impending explosion in mining and drilling could rival those frothy years.
“We’re calling it our second pipeline,” Norum said. “(The Trans-Alaska Pipeline) was a huge boom. … We’re comparing that opportunity with this next phase.”
6-figure salaries for Alaskan truck drivers — but the job isn’t for everyone
In response, Alaskan trucking companies are searching for truck drivers to haul equipment — and they’re paying them massive salaries.
Drivers who can tackle the so-called haul road, which is packed with ice in the winter and prone to dust and mud the other three seasons, are in particular demand.
Norum said Sourdough Express drivers on the haul road earn $95,000 to $120,000, in addition to health care, retirement and paid time off benefits. Compensation has increased by 15% over the past two years.
Sourdough Express currently employs 85 company drivers in addition to contractors, Norum said, adding that over the next few years the company will add 50 to 100 new drivers.
Gage Schutte, vice president of freight operations for Alaska West Express, also said the company is looking to add 50 to 100 new drivers to its fleet. According to a federal database, the company currently has 121 drivers.
Alaska West Express increased driver compensation by 11% this year. Each round trip between Fairbanks and Prudhoe Bay on the haul road pays around $1,500, Schutte said. Drivers can expect to make 100 to 115 trips to Prudhoe a year. That means Alaska West Express drivers can earn around $150,000 to $170,000 a year, in addition to benefits.
That might be enticing for truck drivers who are struggling with slumping freight volumes and looking for a well-paid gig. Thousands of trucking authorities have already shut down this year as gigs available for drivers dry up. According to federal data, tractor-trailer drivers earn a median annual wage of around $48,000.
However, these aren’t easy jobs. The best conditions on the haul road are in the winter, when temperatures in the negative 20s give the ice-packed highway its best traction. Fall and spring make the road slushy, while summertime means the haul road is dusty or slick with calcium that’s used to make it less dusty.
Robb Christenson, the director of sales and pricing at Sourdough Express, was a truck driver around his native Alaska for nearly three decades, including some 50 runs on the haul road. He said those loads weren’t easy, but hauling chemicals and heavy equipment near the Arctic Circle was certainly memorable.
“The equipment that you haul you’ve never seen before in your life,” Christenson said. “Being a part of that and doing that, it means something special as well.”
Safety is the most important feature for these trucking executives. Those at Alaska West and Sourdough said they prefer to hire Alaskan residents. However, there’s such a demand for truck drivers now that they’ll likely have to recruit from the lower 48.
Schutte said few truck drivers who apply to these haul road driving positions already have haul road experience. Some are able to catch on quicker — for example, those with log trucking experience in the Pacific Northwest.
Jeff Russell, who is the superintendent of maintenance of operations in the Alaska Department of Transportation’s Dalton district, which includes the haul road, can concur that running on this road isn’t for everyone. Drivers stuck in a snowdrift might not be able to get rescued for a day or more. And they’ll need to know how to fix their own trucks — tow trucks aren’t exactly heading up to Prudhoe on a whim.
“Trying to find personnel that’s willing to take on that challenge is unique,” Russell said, “not just for those who need to maintain the road but for the trucking community who needs to have people that are willing to drive in those conditions. They’re not a dime a dozen. I can tell you that.”
Alaska’s longtime dependence on energy production
Alaska has a complex history with energy exploration and production. The state has long been highly dependent on diesel fuel for heating, transportation and power generation. Fuel is expensive to import.
Oil production drove Alaska’s economic growth in the 20th century. The 1977 completion of the Trans-Alaska Pipeline, which has a carrying capacity of 2.1 million barrels per day (bpd), unlocked more oil production but also depleted Alaska’s oil reserves. Production on Alaska’s North Slope peaked in 1988 at just over 2 million bpd and has fallen more than 75% since then.
Alaska’s oil production has been slowly declining for the past 10 years. Before that, there were two more punctuated periods of sharper decline, from 1988 to 1998 when crude oil production was cut in half from 2 million bpd to 1 million bpd, and another decline from 2004 to about 2011.
Today, the question is whether Alaskan oil production is poised for a rebound that would see it retake the 500,000 bpd mark — approximately 25% of the state’s 1988 peak.
Alaska’s oil production, when multiplied by the price of oil, helps determine the payout amounts for the Alaska Permanent Fund, the annual oil and gas dividend that every person who’s lived in Alaska for longer than 12 months is eligible to receive. That payout has bounced between $1,000 and $2,000 annually, but could see a resurgence if Alaska pumps more barrels in a rich price environment.
According to the U.S. Energy Information Administration, Alaska North Slope crude fetched $76.62 per barrel in January, a price that was down from recent peaks but still very high compared to the 1980s to 2000s.
A local boon — with international controversy
The $8 billion ConocoPhillips Willow project, approved by the Biden administration in mid-March, represents the largest investment in Alaska energy infrastructure in decades and is projected to produce as much as 200,000 bpd over the next 30 years. ConocoPhillips did not respond to a FreightWaves request for comment.
Oil production on the North Slope could grow by 40%, and ConocoPhillips officials have said that the Willow project’s wells could be used to develop newly discovered fields farther west.
Another project on the North Slope, a joint venture by Australian firm Oil Search and Spain’s Repsol, will invest $2.6 billion to develop the Pikka project, forecast to produce 120,000 bpd by 2026.
While that kind of production growth would have a significant positive impact on the Alaska Permanent Fund payouts to everyday Alaskans, a renaissance of Alaska’s oil and gas industry would immediately spike demand for construction, oilfield services and transportation jobs in the remote, frigid North Slope, likely raising wages significantly.
Other projects may contribute to that boom as well. A proposed gold mine in southwest Alaska would take three to four years to construct and operate for about 27 years. It would employ hundreds of workers each year.
Alaskan lawmakers, the oil industry, labor unions, trades, Alaska Native groups and some North Slope residents have all rallied behind the Willow project, as The New York Times reported.
Climate activists, however, have slammed it as a “carbon bomb.” Burning all of the oil the Willow project would produce would equal 9.2 million metric tons of carbon pollution annually, or 2 million additional cars. Meanwhile, some Alaska Natives say the proposed gold mine could endanger their access to fish and game resources.
Tyler Durden
Sat, 05/06/2023 – 21:30
