|
Borough gets Deadhorse acreage from state Municipal entitlement would include almost half of Deadhorse Lease Tracts, home to the North Slope’s service and supply industry Kristen Nelson Petroleum News Editor-in-Chief
The State of Alaska is proposing to cede the North Slope Borough almost half of the surface acreage at Deadhorse on the North Slope as part of the borough’s municipal entitlement of some 90,000 acres.
Bob Loeffler, director of the Alaska Department of Natural Resources’ Division of Mining, Land and Water, told the Alaska Support Industry Alliance Oct. 13 that most municipalities in the state have received all or most of their state land entitlement but the North Slope Borough has received only 364 acres.
The state owes the borough a lot of land, “and they’re selected the Deadhorse lease tracts which are, unfortunately or fortunately, essentially the only revenue-producing selectable acreage in the borough.”
The borough asked for 987 acres at Deadhorse. The division has made a preliminary finding and decision proposing to transfer some 450 acres to the borough and retain 538 acres, citing important state interests in the leases.
The lands, called the Deadhorse Lease Tracts, are a half a mile northeast of the Deadhorse Airport and house industrial and support facilities and Prudhoe Bay field drill site 12.
Under the preliminary finding the state would retain drill site 12 and associated tracts, contaminated tracts, some vacant tracts for use in remediation, tracts along the Sag River across from drill site 12, tracts in the lake bed and Nana Reservoir and portions of developed and undeveloped tracts so it retains approximately one-half of the tracts. Subdivision created in 1976 The division said in its preliminary finding that the state created the subdivision referred to as the Deadhorse Lease Tracts as a support area for North Slope oil development and trans-Alaska oil pipeline activities. The state leased the tracts and many have been developed with gravel pads.
The borough made selections in the Prudhoe Bay area in the 1970s but they were rejected by the department. The borough appealed administratively and ultimately to the Alaska Supreme Court, which in 1978 upheld the department’s decision. Following that decision the Alaska Legislature restricted the borough’s ability to select lands at Prudhoe Bay. The borough’s original selection rights expired, but the Legislature revived them in 1987, with language “specifically tailored to prevent the borough from selecting lands at Prudhoe Bay, at least in a manner that would interfere with the state’s management of the oil field.”
The borough could select from “vast amounts of inaccessible land located many miles south of the developed area of Prudhoe Bay,” the division said, but that “land has no near-term development potential” unless gas is found and developed in the North Slope Foothills, which might result in the same split-estate issues the state faced at Prudhoe Bay in the 1970s.
The division said the borough has already selected most of the suitable acreage available along the Dalton Highway. Split-estate an issue One reason the Alaska Supreme Court upheld the department’s 1974 decision rejecting a borough application for lands over the Prudhoe Bay field was because the state held the subsurface rights and “state ownership (of the surface) would eliminate split-surface estate conflicts between the surface owner and the mineral estate owner who desires to develop the oil field. It would also allow the state to ‘ensure a coherent and sensible placement of facilities necessary for the efficient operation of the oil field,’” the division said.
But Prudhoe has been developed since the 1970s, the geology of the unit is better understood and the underlying concern in the 1970s, that state lands shouldn’t be alienated before it was known what lands would be needed to support oil development, “no longer remains pertinent,” the division said.
Support facilities “crucial to the maintenance and development” of North Slope oil fields are located on the Deadhorse Lease Tracts, however, and it is important “that these tracts remain available for oil field support services,” the division said. The demand for developable land is expected to grow if a natural gas pipeline is constructed and because of the importance of these lands the division said it is important that it retains control over some of the Deadhorse Lease Tracts, so it can ensure they remain available for oil field support purposes. State ownership of some of the tracts will also give the state “some influence over the price and conditions of their availability” through influence on the leasing market.
The division said it expects the borough to continue administering the tracts for oil field support because that is “the highest economic use of most of these tracts, it is essentially the only practical use.”
Companies with leases on the tracts proposed to go to the North Slope Borough include: Airport Equipment Rentals, Alaska Explosives, Alaska Interstate Construction, Baker Oil Tools, B.J. Services, ConocoPhillips Alaska, Crowley Marine Services, Exxon, Halliburton Energy Services, K & K Recycling, Lynden Transport, M-I, Nabors Alaska Drilling, Peak Oilfield Service, Schlumberger Technology, Tuboscope Vetco International and VECO.
| 