|
Yukon Flats land assessment drags on Rising price of oil complicates land appraisals; new USGS data indicates some Doyon land more prospective than previously thought Alan Bailey Petroleum News
Appraising the land for a proposed land swap between Doyon Ltd. and the U.S. Fish and Wildlife Service in the Yukon Flats of Interior Alaska is taking quite a long time, primarily because of the effect of rising oil prices on land values, Robert Jess, the manager of the Yukon Flats National Wildlife Refuge, told Petroleum News July 21.
“We’re still waiting for the land appraisals,” Jess said.
The land appraisals are required for an environmental impact statement for the land swap and are being prepared by an independent government agency.
Preparation of the EIS is progressing to plan, Jess said. Fish and Wildlife published a draft EIS in January and the public review period for that draft closed in May. Since then Fish and Wildlife has been revising the draft document in the light of public comments and waiting for the land appraisal results.
However, although Fish and Wildlife has been hoping to complete the plan by September, EIS completion may not now happen until later in the year, Jess said.
And James Mery, Doyon’s senior vice president, lands and natural resources, told Petroleum News July 21 that information about the Yukon Flats basin published by the U.S. Geological Survey has indicated that some Doyon land earmarked for the land swap is more prospective for oil and gas than the Native corporation had originally thought. USGS data published since a 2005 land swap agreement in principle between Doyon and Fish and Wildlife have identified Yukon Flats sub-basins and have refined basin depth profiles, Mery said.
“Some of the lands that were scheduled to go into the trade were subsequently determined by USGS to be prospective,” Mery said.
That determination may impact the selection of land for the swap, he said.
8.6 million acres The Yukon Flats consists of an approximately 15,000-square-mile lowland area around the Yukon River between the trans-Alaska oil pipeline and the Canadian border. The 8.6 million-acre Yukon Flats Wildlife Refuge, administered by the U.S. Fish and Wildlife Service, lies within the lowlands. Doyon and some Native village corporations own a patchwork of surface and subsurface land amounting to about 2 million acres inside the refuge perimeter boundary — the Native corporations selected this land under the terms of the Alaska Native Claims Settlement Act before the wildlife refuge came into existence.
A sedimentary basin with petroleum potential, the Yukon Flats basin, lies under the flats. And motivated by the potential for oil and gas development in the region, Doyon has been trying to engineer the land swap with Fish and Wildlife, to consolidate its land holdings in the deepest part of the basin.
The 2005 agreement in principle for the land swap involved the shuffling of a jigsaw puzzle of land tracts. That agreement gained support from some communities in the Yukon Flats, but vehement opposition from others. The controversy triggered development of the EIS for the swap.
Revenues from oil or gas production on Doyon land would result in dividends to the corporation’s Native stockholders, many of whom live in the Yukon Flats region. And 70 percent of the money would flow to other Native regional corporations, under the natural resource revenue sharing provisions of the Alaska Native Claims Settlement Act.
Dividend income and an influx of oil and gas related jobs could revive the fortunes of the Yukon Flats communities — the villages of Birch Creek, Beaver, Stevens Village and Fort Yukon, for example, are close to some of the deeper sections of the basin. In common with rural communities elsewhere in Alaska, Yukon Flats villages are suffering from the impact of escalating fuel prices.
But, with concerns about the potential impacts of oil development on the environment and the subsistence way of life in the region, there has also been vociferous opposition to the land swap proposal.
Controversial Under federal regulations, Fish and Wildlife has to exchange refuge land of equivalent value to the Native land that the federal government obtains for the refuge. So, the government land appraisal is critical in determining exactly how much land would be exchanged — the federal government uses a prescribed formula to assign a dollar value to the land, based on factors such as the land’s wildlife and other resources.
Some residents of the Yukon Flats have expressed concern that under the terms of federal land valuation rules the Native corporations would relinquish a larger area of surface land than they would gain.
And the agreement in principle between Doyon and Fish and Wildlife spelled out how the two landowners envisaged the land swap working.
Doyon would acquire about 110,000 acres of refuge lands over the deepest part of the basin. The corporation would also receive 97,000 acres of oil and gas rights next to some of these lands — this subsurface acreage would only be accessible by directional drilling from Doyon land. The refuge would acquire a minimum of 150,000 acres of Doyon full-fee land. And Doyon would also re-allocate about 56,000 acres of remaining entitlement within the refuge to locations outside the refuge.
Also Doyon would pay Fish and Wildlife a portion of any oil and gas revenues from land obtained in the swap. Fish and Wildlife would subsequently have the right to use that money to purchase up to an additional 120,000 acres of Doyon land.
Rising oil price But, because a primary purpose of the land swap is oil and gas development, the escalating price of oil has complicated the land appraisal, Jess said. In principle, a higher oil price could increase the dollar value of the refuge land, thus increasing the area of Doyon land needed for the exchange. However, at this stage Fish and Wildlife does not know what impact the oil price situation will have, Jess said.
Although the high price of oil might translate into an increase in the acreage of Doyon land that could be transferred to the refuge, that does not imply an unlimited commitment to the amount of land that Doyon would transfer, Mery said.
“We’re not going into this at any price or cost,” Mery said.
Mery said that in the agreement in principle Doyon had agreed to swap not less than 150,000 acres. And no more than 270,000 acres of Doyon land would be available between the two proposed phases of the land swap, he said.
Mery has also commented in the past that under the terms of the Alaska Native Claims Settlement Act Doyon had made an exceptionally large land selection in the Yukon Flats, with future oil and gas development in mind.
“Those are 330,000 acres of surface that the villages own that could have gone someplace else,” Mery said.
And Doyon plans to move ahead with oil and gas development on its own land, regardless of whether the land swap goes ahead. The increasing price of oil has substantially reduced the minimum field size required for viable development and the economics of developing oil on Doyon acreage has improved, Mery said.
| 