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Benefits and risks Oil and gas development could reinvigorate Alaska’s Bristol Bay region Alan Bailey Petroleum News
It’s been 20 years since the last oil and gas lease sale in the U.S. Minerals Management Service North Aleutian planning area in the southeastern Bering Sea on the north side of the Alaska Peninsula. And the prospect of another MMS lease sale in the area, following the January 2007 lifting of a federal moratorium on oil and gas leasing in the Bristol Bay region, has triggered a contentious debate on the merits and pitfalls of oil and gas development in the area.
The North Aleutian Basin Energy-Fisheries Workshop held in Anchorage March 18 to19 provided an opportunity for a wide variety of people to hear about and discuss many of the issues relating to oil and gas development in the region. Organized under the auspices of the University of Alaska Fairbanks Alaska Sea Grant College Program, the workshop sought to identify future impacts of oil and gas industry activities on commercial and subsistence fishing, and the associated research needed in advance of the proposed lease sale.
Several organizations including Shell Oil, the University of Alaska and MMS funded the workshop.
MMS has estimated that there may be 8.6 trillion cubic feet of technically recoverable natural gas and 753 million barrels of technically recoverable oil and condensate in the North Aleutian Basin.
Early stage But John Goll, director of the MMS Alaska region, told workshop participants that the process for determining whether a North Aleutian Basin lease sale would take place was at an early stage and that there is no guarantee that a sale will occur.
“What we are starting here is really a long process … looking at all of the issues, and decisions on whether the sale will be held or not will not be made for about two years or more,” Goll said.
Goll said that the preparation of an environmental impact statement would be part of the process leading to the sale decision. He also said that the state governor would have to agree to the sale taking place.
“The Outer Continental Shelf Lands Act really gives a lot of deference to the governor of the state. … Basically we have to do what the governor tells us to do, unless there is a real reason for national security or other interests not to,” Goll said.
And if there is a lease sale, subsequent plans of exploration or development by leaseholders would be subject to environmental assessments and state coastal management plan consistency determinations, he said.
“Activity will not automatically happen,” he said. “… There are repeats of reviewing activity before any oil (or gas) comes out of the ground.”
MMS hopes to come out with a call for information and notice of intent for the lease sale EIS within the next two or three weeks, Goll said. Public scoping could occur in the spring and summer.
“The draft EIS we would expect to come out in early 2010 … with a final EIS … in early 2011, with an expectation of a sale in the fall of 2011,” Goll said.
Potential scenarios Gregg Nady, Shell’s Alaska exploration team leader, talked about potential development scenarios in the North Aleutian basin, based on an engineering study that Shell had conducted in the 1980s. Nady emphasized that he was presenting the results of the Shell study in the interests of sharing information about what could happen — any decision on oil and gas development in the basin remains a long way off.
“I do certainly believe that understanding something about what a development might look like … helps to inform the decision,” Nady said. “The more people know about what this might look like, the better prepared people are.”
If Shell acquired any offshore leases in the basin, the company could potentially drill exploration wells between 2012 and 2014, Nady said.
“It’s a fairly short window of activity to find out if there’s any oil and gas there,” he said.
Shell used Cook Inlet and the North Sea as analogues for development ideas in the southeastern Bering Sea, Nady said. And, with the North Aleutian basin thought to be gas prone, Nady described a scenario in which perhaps three to six offshore steel or concrete platforms a few miles offshore in the Bering Sea would connect by pipeline to a liquefied natural gas plant on the south side of the Alaska Peninsula near Port Moller.
Well bores would pass through platform legs to protect the wells from any sea ice. The use of modern seismic data analysis, measurement-while-drilling techniques, state-of-the-art well planning and modern blowout preventers would all serve to ensure that there isn’t a well blowout, Nady said.
“There has not been a significant well blowout for an exploration well in the history of the federal OCS in the United States,” he said.
In response to a question about some onshore oil and gas leases that Shell purchased in the State of Alaska’s 2005 Alaska Peninsula areawide lease sale, Nady said that those leases lie in a shallower section of the North Aleutian basin.
“We felt like if there was going to be an OCS lease sale it would be good to get a position early,” Nady said. “ … If we got something significant to work we could add on smaller opportunities later.”
Fishing industry If oil and gas activities do start in the southeastern Bering Sea those activities will share the outer continental shelf with a very large fishing industry that has been operating in the region for many years.
“The single largest fishery in the world exists in the eastern Bering Sea, and that is the eastern Bering Sea pollock fishery. There isn’t a fishery larger in volume and in value,” said Brent Paine, director of United Catcher Boats, an organization that represents trawl boat owners in the Bering Sea, the Gulf of Alaska and on the U.S. West Coast. That fishery is sustainable and renewable, and it’s growing, he said.
“The price for ground fish products in the next decade is probably going to double or more than double,” Paine said “The eastern Bering Sea fishery alone to the fishermen is (currently) worth about $200 million.”
Adding in the wholesale price results in upwards of $700 million to $800 million coming out of the Bering Sea annually, he said.
“Domestic crab fisheries in the Bering Sea and Bristol Bay areas began in the 1950s,” Bob Murphy, fisheries management biologist for the Alaska Department of Fish and Game, told the workshop. “Harvest and effort have fluctuated annually but have been relatively stable in recent years. … Bering Sea crab fisheries provide important revenues for the cities of Unalaska, St. Paul, King Cove, Akutan, St. George and Kodiak.”
Both Bristol Bay and the northern Alaska Peninsula are the sites of major salmon fisheries. In the northern Aleutian area by itself the sockeye salmon catch came in at about 3.4 million fish in 2007, Murphy said. However, the number of salmon fishing permits in the region has declined in the past decade because of falling salmon prices, he said.
There is also a longline cod fishery in the Bering Sea.
And, in addition to the fishing grounds, the southeast Bering Sea includes critical habitat for the northern right whale, a sea mammal that has been included on the endangered species list.
Overlapping areas Several of the Bering Sea fisheries overlap with the section of the North Aleutian basin that is most prospective for oil and gas. Those overlaps include major components of both the pollock and crab fisheries. Salmon fisheries occur along the coastline neighboring the oil and gas basin.
The pollock trawl fishery, the cod fishery and the flatfish trawl fishery all have “hot spots” close to the area where there is the highest potential for a natural gas find, said Jane DiCosimo, senior fisheries analyst for the North Pacific Fishery Management Council.
And those overlaps raise concerns about potential impacts of oil industry activities on fishing activities or fish habitats — drilling rigs and subsea pipelines could impede fishing activities, for example.
“I think the effect of oil and gas development on the essential fish habitat within the North Aleutian basin is one of the key issues for us,” Paine said.
There are also major concerns about the potential for an oil spill.
“What is the biological effect on pollock stocks, the crab stocks, the cod stocks, the flatfish stock if a tanker does have a disaster in the area?” Paine asked. “Would Shell Oil be willing to put a contingency fund … to guarantee the fishing fleet the value that it’s foregone because of an ecological disaster?”
Several people talked about the potential for seismic survey activities to disturb fish stock. Jerry Payne, a research scientist with the Newfoundland Department of Fisheries and Oceans, reviewed research that has been done in this topic. There is some evidence that seismic sound may affect the nervous systems of crustaceans and fish, but no indication of increased mortality, he said.
It would be premature at the current state of knowledge to set reference acceptable sound levels for shellfish and fish — more research is needed, he said.
Can co-exist Arnie Thomson, executive director of the Alaska Crab Coalition, said that thanks to modern technology the oil industry can co-exist with the fishing industry.
“Times change and technology advances,” Thomson said. “… The Alaska Crab Coalition is aware of the 40-year history of co-existence between fisheries and gas and oil production in the Gulf of Mexico, Cook Inlet, eastern Canada and Norway.”
However, environmental protections have to be a major priority.
“We’re aware that this is a pretty high-risk business in terms of our industry,” Thomson said.
The Alaska Crab Coalition would like to see industry and federal government commitment to a scientific monitoring program for impacts to the marine environment, commitments to environmental protections and commitments to compensation for impacts, he said.
Dale Schwartzmiller, vice president of Alaska production for Peter Pan Seafoods, also expressed guarded support for oil and gas development.
“Recent history in Alaska and other regions of the world has shown that energy development and fisheries can co-exist,” Schwartzmiller said. “While we are optimistic that outer continental shelf development can be a positive step to reduce dependence on foreign oil and gas resources and be a benefit to the local economy, we share the concerns of many that such development can only be done if mitigation measures are in place after a transparent review and approval process.”
Eric Olson, a commercial salmon fisherman from Dillingham and chairman of the North Pacific Fisheries Management Council, expressed concern. Salmon from many fisheries on the west coast of Alaska pass through the North Aleutian area, he said.
“The renewable fisheries resource that occurs north of this proposed development is of significant value not only to Bristol Bay but to the State of Alaska as a whole,” Olson said. “The potential impact on all of these fisheries throughout the western Alaska system needs to be fully analyzed.”
Olson questioned how to put a value on a fishery that could be affected by a large-scale oil spill in the region.
“I think if you ask the people who live in the region and participate in the fisheries, the answer you will get will be similar to that Mastercard commercial — ‘priceless,’” Olson said. “… Do we want to risk an effect on long-term renewable resources for what may be in the big scheme of things a short term development? … I don’t have the answer.”
Bubba Cook, senior fisheries officer with the World Wildlife Fund, expressed outright opposition to any oil and gas development in the Bering Sea.
Oil and gas developers often claim that risks can be managed and mitigated, Cook said.
“We’ve heard these arguments before every spill and toxic cleanup that’s occurred,” Cook said. “… Sufficient data gaps (for concern) exist with regard to fisheries and their relationship to oil development.”
Kelly Harrell, Alaska coordinator for the Alaska Marine Conservation Council, expressed similar sentiments.
“Our organization’s position is that environmental challenge of offshore drilling in this tremendously important area cannot be met,” Harrell said. “… The risks are simply too great to accept.”
Subsistence fishing The north Aleutian and Bristol Bay region supports a vibrant subsistence economy and culture that substantially depends on fishing.
“Subsistence is a viable sector of local economies,” James Fall of the Alaska Department of Fish and Game, Division of Subsistence, told the workshop. “… Subsistence activities are highly valued and people in these communities intend to maintain their subsistence uses as long as they live and as long as their dependents live.”
Norman Anderson, a commercial fisherman from Naknek, talked about the importance of the subsistence culture in his community.
“It’s not just the activity. It is the means of sharing that is very valuable,” Anderson said. “I don’t see how we can put a price on that — that’s nothing that can be replaced.”
Anderson described how his parents and village elders had instilled in him a respect for the land and for keeping resources safe.
“We must all do everything we can to save this big village we call Earth,” Anderson said.
Oil and gas development would bring increased noise and the spilling of contaminants into the sea, Anderson said. And the region is subject to storms similar in intensity to the Gulf of Mexico, he said.
“The only difference is that they name their weather … and we just wonder whether PenAir is going to make it in with the mail,” he quipped.
Thomas Tilden, tribal chief of the Curyung Tribal Council in Dillingham, also stressed the critical importance of subsistence to his community. Tilden said that his grandmother had once taught him that to be rich is to be able to eat and to feed yourself.
“Corporations are driven by profits and dividends and re-elections,” Tilden said.
Municipal governments are driven by taxing corporations and business, while subsistence users are driven by food, he said.
“Who is at greater risk? Who is going to suffer the most? Who can recover? These are some of the questions that need to be asked,” Tilden said. “… It’s about culture. It is our lifestyle. It is about who we are.”
Economic benefits But oil and gas development could bring substantial economic benefits to the Alaska Peninsula and Bristol Bay areas, where a multiyear decline in salmon fishing combined with soaring fuel costs have caused hardship and a drop in the population.
Justine Gundersen, a resident of the village of Nelson Lagoon on the north side of the Alaska Peninsula and a member of the Aleutians East Borough Assembly, spoke about the opportunities that the oil industry presents, as well as the community concerns. Nelson Lagoon lies close to the area of the proposed lease sale.
“We all are concerned about an oil spill,” Gundersen said. “Not only would that devastate the commercial fishery, it would devastate our subsistence lifestyle.”
But local people are no longer able to live on salmon fishing at current fish prices and with heating fuel that costs more than $4 per gallon. On the other hand people want to remain in their communities and want to see a future for their children, she said. The oil and gas industry could bring the means to sustain the communities.
“In the ‘80s we were against oil development,” Gundersen said. “… Things change.”
The communities have held discussions about oil and gas, and the regional boroughs have set stipulations for the oil industry, she said.
“People don’t want to leave. People want to develop,” Gundersen said. “… We do support this development. … There’s always a risk, but you can’t stand still.”
The regional boroughs have moved to support oil and gas development, albeit with the stipulations that Gundersen referred to.
Stanley Mack, mayor of the Aleutians East Borough, said that his borough had gleaned lessons learned from many people from various communities and organizations that have experienced oil and gas development.
“The last trip I made to Norway was the greatest eye-opener I ever had in my life, to find out how these folks can still exist with oil development in their area,” Mack said. The Norwegian communities had told the oil companies what the locals need if oil development were to proceed, he said. The companies wanted the oil and the communities got what they wanted.
“That’s where I’m coming from today,” Mack said. “… We’re trying to train our youngsters … so that they can take part in what happens. … We’re pro-development but we’re always protective of our culture, our lifestyle. … We’ll protect them at all costs.”
Other regions Gordon Slade, executive director of One Ocean, Canada, talked about experience of oil and gas development offshore Newfoundland. One Ocean was formed in 2002 to promote communication between the Newfoundland fishing and oil industries.
“Newfoundland’s heart and soul is in the fishing industry,” Slade said.
But there was a major collapse in the cod fishery in 1992, he said. The first oil from the offshore oil industry came from the Hibernia field in 1997.
“In Newfoundland and Labrador the fishing industry is not opposed to development of oil and gas,” he said. “… We can live together providing the oil and gas industry acts in a responsible manner and takes all the necessary precautions to protect the marine environment.”
In a videoconference with Norway, where a thriving offshore oil and gas industry has co-existed with the fishing industry for many years, Per Eidsvik, an advisor with Nordland County in central Norway, told the workshop about current offshore exploration interest in the Nordland VII area, in the environmentally sensitive Lofoten region.
Although oil and gas development could bring economic benefit to the region, it will be many years before those benefits could be realized, Eidsvik said. And a decision has yet to be made on whether to allow oil and gas development to proceed.
In answer to a question about discharges from oil and gas platforms, Eidsvik said that after “quite a number of years” Norway has reached a point of no discharge to sea, especially of produced water.
“That’s very important for us,” Eidsvik said. “The next goal is to get the emissions of carbon to zero.”
Dr. James Parker, an environmental advisor with Shell International Exploration and Production, spoke about interactions between the fishing and oil industries in the North Sea.
Each oil company operating in the North Sea has to appoint a fisheries liaison officer to liaise with the government and the fishing organizations, Parker said. There is also an offshore fisheries-oil consultative group that brings together representatives of the oil and fishing industries.
Oil and gas licenses can include special conditions for areas with sensitive fishing zones and operators are required to consult with fishermen about proposed offshore construction.
“We’ve got some pretty good information now on fishery sensitivities around the coast and there are requirements to notify the government before certain survey operations, for instance seismic surveys, are undertaken,” Parker said.
The United Kingdom has a formal fund, administered by the fishing organizations, to compensate fishermen if they pick up any oil industry debris in their nets, he said.
New subsea wellheads incorporate features to prevent damage to fishing gear, Parker said. A GPS based system also alerts fishermen to the proximity of any subsea oil and gas equipment. And there is a 500-meter exclusion zone around each oil and gas installation.
Many discharges into the sea are regulated under international agreements and all discharges have to be permitted, Parker said. Continuous monitoring of fish around oil and gas installations tests for contamination.
Industry is also investigating issues relating to noise.
“We have a large, joint-industry project at the moment looking at the effects of operational noise from our industry on marine organisms,” Parker said.
And on the United Kingdom continental shelf all operators have to contribute to a fund that ensures that the industry can cover any liabilities that arise from pollution from the offshore oil industry, he said.
Cook Inlet John Williams, mayor of the Kenai Peninsula Borough, talked about interactions between the oil and fishing industries in Cook Inlet and on the Kenai Peninsula.
“On the Kenai Peninsula we’ve got subsistence fishing. We’ve got personal use fishing. We’ve got sport fishing. We’ve got commercial fishing both onshore and offshore,” Williams said. “… I don’t believe that oil has ever had a lasting detrimental effect … on the fishing industry.”
On the other hand, the oil industry has brought economic prosperity to the region — the resident community on the peninsula has increased from 10,000 to about 53,000 people since 1968, Williams said. And that population enjoys facilities such as schools and major hospitals.
“Really when you look at the Kenai Peninsula, as it is today, without the oil industry and the tax base it’s very, very doubtful that the population base would be there, the educational base for our 43 schools and Kenai River campus of the University of Alaska — none of that would probably exist,” Williams said.
Bob Shavelson, executive director of Cook Inlet Keeper, agreed that the oil and gas industry can bring economic benefits but cautioned against government agencies giving way to oil industry pressure. Cook Inlet Keeper has joined with fishermen and tribal groups to sue the U.S. Environmental Protection Agency over the permitting of oil industry waste disposal in the Cook Inlet, he said.
Any perception that “smudges the fish brand” is bad for the fishing industry, Shavelson said.
Gary Fandrei, executive director of the Cook Inlet Aquaculture Association, said that issues relating to the interactions of the energy and commercial fishing industries in Cook Inlet mainly revolved around communication lapses — unanswered questions about new oil industry activities, for example. On the other hand, there have been opportunities for inter-industry cooperation, in the construction of a temporary fish ladder near Mount Redoubt, for example.
“I think that a lot of these things can be taken care of by direct communications,” Fandrei said.
The need for communications between all of the North Aleutian stakeholders seemed to be a theme that emerged from the workshop. John Devens, executive director of the Prince William Sound Regional Citizens’ Advisory Council, urged the early formation of some form of organization to represent local community interests.
“You need a citizen’s group to oversee what’s going on,” Devens said.
People in Newfoundland and Labrador did not have an early opportunity for a dialogue like this, said Slade in a general discussion session at the end of the workshop.
“We’ve had oil and gas in Newfoundland and Labrador for 10 years,” Slade said. “The fishing industry and oil and gas industry are working well together … through One Ocean. They have good dialogue with the regulators … but every day you have to be on top of things … and the fisheries and the communities have to be aware of what’s happening. And so this information exchange is critical.”
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