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Vol. 13, No. 29 Week of July 20, 2008
Providing coverage of Alaska and northern Canada's oil and gas industry

BLM sets fall NPR-A lease sale; 10-year deferral for Teshekpuk

On July 16 the U.S. Department of the Interior’s Bureau of Land Management announced the record of decision on the National Petroleum Reserve-Alaska northeast supplemental final plan, released in mid-May. BLM will proceed with an oil and gas lease sale in northeast NPR-A.

“The rapid increase in energy costs facing our nation is driven by a worldwide imbalance in energy supply and demand,” Secretary of the Interior Dirk Kempthorne said. “Developing the NPR-A in an environmentally sound manner will contribute to our domestic oil and natural gas supplies. Together with proposed new production from other offshore and onshore areas, these increased supplies will help to stabilize energy costs.”

BLM anticipates holding the sale in the fall.

“This action sets the stage for a major lease sale this fall. This is welcome news at a time when Americans are paying record prices at the pump,” said C. Stephen Allred, Assistant Secretary for Land and Minerals.

BLM has not yet determined an exact sale date, said BLM Alaska State Director Tom Lonnie.

“We don’t have a specific date yet, but we’re anticipating it would be mid-October,” Lonnie said. “There is a chance we could hold a sale September, depending on how quickly we can put it together, but it will be in September or October.”

The sale will likely include areas within northwest NPR-A that are not already under lease.

“Our intention in the sale is to also offer tracts in northwest NPR-A,” Lonnie said.

Both northwest and northeast NPR-A are particularly prospective for oil and gas — according to the supplemental final plan the mean estimate for conventionally recoverable oil in the northeast area is more than 5 billion barrels, with the estimate for conventionally recoverable natural gas coming in at 16 trillion cubic feet.

“It’s also important to understand that NPR-A is extremely important for future gas resources,” said BLM Deputy Director Henri Bisson, “It’s probably going to be more important from a gas standpoint than for oil.”

Lawsuit

Environmental groups brought suit against a 2006 northeast NPR-A lease sale which included a highly prospective but environmentally sensitive area north of Teshekpuk Lake. As a result of the suit, there was a court injunction on the sale and BLM only offered tracts in the northwest, returning unopened the bids it received for the northeast.

The development of the new supplemental final plan followed a court decision that BLM’s 2005 Northeast NPR-A amended integrated activity plan/environmental impact statement failed to adequately address cumulative impacts.

The supplemental final plan defers leasing for 10 years in the 430,000-acre area north and east of Teshekpuk Lake. In addition, BLM will not offer leasing in the 219,000 acres of the lake itself, and its islands.

The entire northeast area of NPR-A amounts to 4.6 million acres, Lonnie said.

“We’ve worked closely with our concerned citizens in Alaska to reach a decision that we thought was very balanced and to try to meet the needs of the country by making these resources available for potential development,” Bisson said. “… I think we have made the right decision in terms of deferring leasing for 10 years in the area north of the Teshekpuk Lake. There are many concerns about potential impacts on wildlife, particularly on caribou and on wild fowl.”

The deferral will provide an opportunity to see how developments unfold elsewhere in NPR-A before making a final decision about leasing in the Teshekpuk Lake area, he said.

Resource value

The deferred area lies near the crest of a geologic feature known as the Barrow Arch that is associated with major North Slope oil fields such as Prudhoe Bay and Endicott.

However, in May Jim Ducker, BLM environmental program analyst and the agency’s senior project lead on the plan, said the deferred lands have a great deal of wildlife resource value — they are an important waterfowl habitat for geese and the Teshekpuk Lake caribou herd calves there. These resources are also important for the subsistence way of life, he said.

The plan acknowledges the oil and gas value of the deferred area, he said, and commented that there is no particular hurry to lease those lands. The nearest infrastructure is 40 to 70 miles away, and even if BLM made the lands available immediately it seems very unlikely they would be developed immediately, he said.

Ducker said there are hundreds of thousands of acres to the east under lease or available for leasing, and while there has been exploration and some discoveries, development hasn’t occurred, although ConocoPhillips is pursuing permits for development.

Performance based mitigation

The supplemental final plan also includes performance-based mitigation measures, in which industry has to meet specific requirements for environmental protection. For example, there would likely be a requirement to allow caribou access under pipelines, but developers would have to work with local stakeholders such as the North Slope Borough to determine the height specifications that would satisfy that requirement.

“We had implemented those (performance based measures) in the northwest (NPR-A) EIS several years ago and this brings northeast in line with the northwest document,” Lonnie said.

And the final plan that BLM has now signed off on has taken into account comments received on the version of the plan issued in May, including refinements to some of the required environmental mitigation measures.

In commenting on the record of decision, Allred also emphasized the challenges of oil and gas development in the remote NPR-A region.

“The decision requires state-of-the-art technology and methods to develop oil and gas while protecting other important values,” Allred said. “… The companies that will undertake these activities after we conduct the sale must accept the challenges to develop these resources that are tremendous, that bring uncertainty and represent funding challenges in these frontier areas.”

—Alan Bailey



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