An emerging new economic opportunity
Alaska’s unique geographic position on the globe may once again prove to be an advantage.
For decades Alaska’s vast store of natural resources, combined with its strategic location on the Pacific Rim, has resulted in significant export opportunities, primarily to major Asian markets, that now amount to some $5 billion annually. Likewise, situated as it is nearly equidistance between Asia, Europe, and the United States, Alaska has become a key player in the international air cargo industry with dozens of airlines making use of the Ted Stevens Anchorage International Airport as a stop to refuel, change crews, and pick-up or transfer cargo. The airport is among the top five in the world for cargo throughput.
Now, it is the state’s location in the Arctic that portends an emerging new economic opportunity.
More so than any other American state, Alaska is best positioned to take a leading role and prosper from economic activity that will flow from commercial development in the Arctic region. And it’s not just the blessing of geography that presents Alaska with this opportunity. Alaska is home to a wide range of companies with world class capabilities in conducting business and carrying out projects in the Far North. In addition to the business experience and expertise present in the state, Alaska is also home to a number of important Arctic policy agencies and organizations, as well as scientific research centers and cultural institutions.
One further advantage for Alaska is the state’s Native peoples who have lived in the Arctic for thousands of years. They possess traditional knowledge of the lands, waters, and wildlife, passed down through the generations. When joined with modern technologies and methodologies, this local expertise can help to ensure the success of projects.
Companies operating in Alaska, whether they are local, national, or multi-national, have demonstrated their abilities to do business in a very challenging part of the world. They’ve learned to deal with extreme weather conditions, isolated job sites, extended supply chains, and a host of other conditions that require high levels of technical expertise and management. They’ve accomplished this under what are arguably some of the most rigorous environmental standards.
Particularly in natural resource development, such as oil, gas, and mining, companies operating in Alaska have the credentials to seek out and win business in other parts of the world, including other areas of the Arctic, and are doing so. At the same time, there are opportunities for American and foreign companies to come to Alaska and establish partnerships and joint ventures with Alaska companies for projects both in Alaska and elsewhere.
Beyond expertise in resource development related industries, Alaska is also attracting other types of businesses that are focused on the Arctic. For example, Anchorage is home to Pt Capital, the first Arctic focused private equity firm. The company, founded in 2013, announced in the fall of 2015 that they had raised more than $125 million for their first Arctic fund. Last year, they reported their first major investment with the buy-out of an Icelandic telecommunications company. The firm plans to put money to work in Arctic markets including Alaska, Iceland, Greenland, and Northern Canada.
Another Alaska company making itself known in the Arctic is Quintillion, an Anchorage-based, privately funded company developing an undersea fiber optic project. In the project’s first phase, he company will bring high-speed bandwidth to Alaska Arctic coastal communities. Phases two and three will ultimately see the cable extended to points in Europe and Asia.
Besides business enterprises focused on the Arctic, a number of government agencies and non-governmental organizations involved with Arctic policy are based in Alaska. These include the US Arctic Research Commission and the Institute of the North, both headquartered in Anchorage. There are scientific research centers in Alaska with an Arctic focus, including the International Arctic Research Center and the Cold Climate Housing Research Center. Both of these entities are located in Fairbanks. In the area of education, the University of Alaska Fairbanks is a member of the University of the Arctic, an international network of universities, colleges, and research institutes involved with education and research in the North.
To better understand the opportunities posed by development of the Arctic, and the role Alaska can play, for the past five years World Trade Center Anchorage has conducted Arctic Ambitions, an annual international conference and trade show focused on trade, commerce, and investment in the Arctic. In a nutshell, the event concerns itself with “the business of the Arctic.”
The event highlights business opportunities associated with commercial development in the Arctic, including natural resource extraction (oil, gas, and mining), engineering, design, construction, environmental services, mapping, charting, energy, emergency response, tourism, telecommunications, maritime shipping, and others.
From these gatherings of business executives and government officials, a set of questions has emerged that serve to put into focus some of the fundamental issues related to commercial development in the region:
- Which projects need to be developed?
- What are the priorities? In other words, which projects come first?
- What do these projects cost and who do they serve?
- Who pays? Government? Private sector? Both?
- What are the economic triggers to justify project development?
- When? What is the timeline?
The answers to these questions, of course, are a work in progress and don’t always flow in a straight line. But, with time, the answers will come and Alaska, as America’s Arctic state, can play a key role. The opportunity for the state is simply too big to ignore. In a recent report by Lloyd’s of London, they estimated the investment needed in the Arctic in the next ten years to be in the range of $100 billion in such infrastructure projects as ports, pipelines, roads, and power generation.
With its strategic geographic location and considerable inventory of Arctic-related assets, Alaska is poised to serve as the commercial gateway to the American Arctic. And, as the world increasingly looks north for opportunities and solutions, Alaska is uniquely situated and prepared to play a leading role.
Greg Wolf has been the Executive Director of the World Trade Center in Anchorage since 2002. Prior to joining the Center, he served as the State of Alaska’s Director of International Trade and Market Development and was the Vice President of Overseas Projects for the Anchorage Economic Development Corporation.
This article first appeared in the February 2017 print edition of Alaska Business Monthly.