Congress considering NPR-A legislation

Rep. Hastings proposes bill to streamline permitting and require federal government to prepare road and pipeline rights of way

Eric Lidji

For Petroleum News

The National Petroleum Reserve-Alaska is getting a lot of attention these days.

President Obama recently announced plans to hold annual lease sales in the 23 million acre swath of northwest Alaska and now a Congressional leader is proposing legislation designed to convert those lease sales into actual production of oil and natural gas.

House Natural Resources Committee Chairman Doc Hastings, R-Wash., recently introduced the National Petroleum Reserve Alaska Access Act to “unwind the tangled web of government regulations that prevent us from creating jobs and harnessing our own American energy resources in Alaska,” he said in a statement. “President Obama supports issuing leases in the NPR-A, which is a positive step; but permits needed to turn leases into real energy remain stalled in bureaucratic inaction. What good is issuing leases and producing oil and natural gas if they can’t be delivered to the American people?”

In addition to setting out some guidelines for how those lease sales would proceed, the legislation focuses on streamlining the permitting process and preparing for the road and pipeline network that would be required if ongoing production begins in the NPR-A.

The legislation would give the U.S. Department of the Interior six months to craft regulations for NPR-A permitting on a quicker timetable, such as acknowledging permit applications within five days and issuing permits within 60 days (although the only recourse for taking longer is a letter explaining the reason for the delay). The bill also sets a 60-day timeline for issuing permits for transportation infrastructure on leases that already have a federal drilling permit and a six-month timeline on other federal leases.

The legislation would require the Interior Department to ease the way for future development by preparing a plan within nine months that pre-approves rights of way so that every tract in the NPR-A is within 25 miles of pipeline and road rights of way.

It would also require the U.S. Geological Survey, in consultation with the State of Alaska and the American Association of Petroleum Geologists, to complete a new assessment of the technically recoverable oil and gas resources in the NPR-A within two years.

The USGS most recently studied the NPR-A in 2010, dropping its estimates for both the technically recoverable oil and natural gas based on a decade of industry exploration.

The House Natural Resources Committee scheduled a hearing on the legislation — including planned testimony from Alaska Department of Natural Resources Deputy Commissioner Joe Balash — on June 16, after Petroleum News went to print.

Hastings announced details of his legislation during a daylong tour of energy sites across northern Alaska — including stops at the trans-Alaska oil pipeline, in NPR-A and in the Native village of Kaktovik — with Gov. Sean Parnell and Rep. Don Young.

Stymied again and again

President Warren G. Harding formed the 23 million acre reserve in 1923 as Naval Petroleum Reserve No. 4, an undeveloped stockpile of fossil fuel for military use.

The USGS and the U.S. Navy drilled dozens of wildcats across the region in the 1940s and 1950s, uncovering promising finds like the Umiat oil field and the Wolf Camp prospect, but ultimately decided the economics of developing those plays didn’t pan out.

The government began holding regular lease sales in NPR-A starting in the late 1990s and over the following decade five companies drilled a total of 29 exploration wells.

But all five of those companies have since cooled on NPR-A.

Following two NPR-A wells in 2001, BP stopped its traditional exploration efforts in Alaska to focus on producing more oil from its existing units across the North Slope.

After drilling some of the most remote wildcats in recent Alaska history, Talisman subsidiary FEX relinquished its NPR-A acreage after unsuccessfully trying to market it. The French company Total, FEX’s partner on some of those wells, also scaled back in Alaska.

Anadarko Petroleum drilled the Altamura No. 1 in 2002, its first operated well in Alaska, but didn’t proceed to development. The company drilled at Gubik, southeast of NPR-A, in 2009 as part of a multiyear search for natural gas, but hasn’t followed up in the years since.

ConocoPhillips, responsible for 20 of those 29 exploration wells, remains actively interested in developing the leases it holds in the NPR-A with Anadarko, located just beyond the Colville River, but cannot get a key federal permit required to move ahead.