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Vol. 16, No. 16 Week of April 17, 2011
Providing coverage of Alaska and northern Canada's oil and gas industry

Beluga habitat out

NMFS designates 3,016 square miles of CI but excludes Port of Anchorage

Alan Bailey

Petroleum News

Following four public hearings and the submission of more than 135,000 individual comments on the National Marine Fisheries Service’s December 2009 proposal to designate 3,016 square miles of Alaska’s Cook Inlet as critical habitat for the Inlet’s iconic beluga whales, NMFS on April 8 issued a final rule for the critical habitat designation. Essentially, the agency has upheld the total area of its original proposed designation while excluding the Port of Anchorage and an artillery range that includes the lower reaches of the Eagle River in Joint Base Elmendorf-Richardson.

“The agency considered all public comments in developing the final rule and provided responses to all significant issues raised by respondents,” NMFS, an agency within the National Oceanic and Atmospheric Administration, said in an April 8 news release.

NMFS said that it has excluded the Port of Anchorage from the designation because of the port’s importance to national security.

“The Department of Defense has designated the Port of Anchorage as one of 19 strategic ports, which forms the basis for our exclusion,” NMFS said in its final rule document. “NMFS conferred with the Alaska Command after the request from the Port of Anchorage for exclusion and the Alaska Command confirmed that the Port of Anchorage is a strategic port that could be excluded from critical habitat designation.”

NMFS said it has not applied a similar exclusion to Port Mackenzie, located just a few miles from Anchorage, because Port Mackenzie does not have any security significance.

The exclusion of the artillery shooting range from the critical habitat area results from the existence of a Department of Defense natural resource management plan that applies to the range and provides benefits to beluga whales, including restrictions on access to whale habitat, NMFS said.

Storm of protest

The NMFS announcement raised a storm of protest from those who see the critical habitat designation as a threat to commercial activity in the Cook Inlet region.

“The decision is unjustified by science or economics,” said Sen. Mark Begich, D-Alaska. “The designation could stall or shut down projects from the Mat-Su to Anchorage to the Kenai Peninsula. NOAA is still trying to tell Alaskans this designation will only have a small ripple effect on the Southcentral economy. Unfortunately, it could be a bore tide.”

“Today’s announcement is another example of the federal government unnecessarily locking up Alaska land from development,” said Alaska Gov. Sean Parnell. “The state filed comments on the beluga whale regarding the endangered species designation, the critical habitat designation and we filed suit to challenge the designation of belugas as endangered. Now that we have a final decision on critical habitat, we will review the decision and continue to fight these federal actions that destroy jobs and opportunities for economic development.”

Environmental organizations have a different perspective.

“The designation of critical habitat for the Cook Inlet beluga whale gives this highly imperiled whale a real chance of recovery,” said Rebecca Noblin, Alaska director for the Center for Biological Diversity, in response to the NMFS April 8 announcement. “The fisheries service has thrown Cook Inlet belugas a much-needed lifeline.”

About 300 animals

The population of Cook Inlet beluga whales, recognized by NMFS as a distinct beluga whale subspecies, has declined to some 300 animals in recent years. Annual aerial surveys by NMFS over the upper Cook Inlet showed a major beluga whale population decline in the 1990s, with most people attributing that decline to subsistence hunting. However, NMFS said that the annual population data gathered since 1999, when hunting came to an almost complete halt, show a continuing, albeit slower, drop in the population. Others have challenged the NMFS position, saying that data since an especially low whale count in 2005 indicate that the population is starting to show signs of recovery.

In 2008, using a population model that indicated a 26 percent probability of extinction of the whales within 100 years, NMFS listed the Cook Inlet beluga whale as endangered. And under the terms of the Endangered Species Act the agency had to identify the whales’ critical habitat, including a specification of the features of that habitat that the whales depend on. The review of an application for any federal permit for an activity that might impact beluga whales will require a consultation with NMFS on how to protect the whales from harm, with one aspect of that consultation involving an assessment of whether the proposed activity may have an adverse impact on the critical habitat features.

The beluga whale habitat features that NMFS has identified as requiring protection within the 3,016-square-mile critical habitat area consist of intertidal and subtidal waters with depths of less than 30 feet and within five miles of anadromous fish streams; low levels of in-water noise; primary prey fish species, including four species of Pacific salmon; waters free of toxins and other harmful pollutants; and unrestricted passage for the whales between different critical habitat areas.

The agency has identified two major critical habitat areas: area 1 consisting of the extreme northern part of the inlet, Knik Arm and Turnagain Arm, and containing prime whale foraging areas adjacent river mouths, with the highest observed concentrations of beluga whales during the spring and summer; and area 2, extending south from area 1 and encompassing areas thought to be important to the whales for fall feeding and winter habitat.

Economic impacts

Although the terms of the Endangered Species Act did not require NMFS to consider the economic ramifications of listing the beluga whales, the act does require an economic evaluation of the critical habitat designation, with the potential for excluding areas of potential critical habitat from designation if the economic downside of designation outweighs the upside of habitat protection.

But NMFS tends to consider critical habitat designations as having minor economic impacts beyond the overall impact of ESA listings. And, so, in the case of the Cook Inlet beluga whales the agency has assessed the total economic impact of the critical habitat designation as the cost of additional agency consultations associated with the designation, a cost that the agency has estimated at somewhere between $157,000 and $571,000 over a 10-year period.

In addition, the agency has declined to assess any potential cost for future impacts on Cook Inlet projects, on the grounds that changes to projects resulting from the habitat designation are at present unknown and speculative. For example, in comments on the original proposed critical habitat designation, ConocoPhillips and Chugach Electric Association, two companies with businesses heavily dependent on Cook Inlet natural gas development, expressed concern about the potential costs of project modifications and delays resulting both from the Endangered Species Act process and from potential litigation related to the critical habitat designation.

“As consultations are already required … the additional consultation standard of destruction or adverse modification of critical habitat is not anticipated to result in significant, additional project delays,” NMFS responded. “With respect to project modifications, there presently is no detailed empirical information (e.g. engineering, materials and structural design; project scheduling, temporal sequencing of construction and duration; associated costs and financing) pertaining to future projects or any project modifications that might be proposed for areas within or immediately adjacent to Cook Inlet beluga whale critical habitat, making quantitative estimation of directly attributable economic costs purely speculative. In other words, since the precise nature of any future project modification is unknown, we cannot speculate whether such a potential modification ultimately increases or decreases project costs and by how much.”

Unwilling to speculate

In 2009 Lewis Queirolo, senior economist for the NOAA Alaska region, told Petroleum News that his agency was unwilling to generate speculative cost estimates for critical habitat impacts and that, besides, previous experience in administering the Endangered Species Act had shown that critical habitat designations rarely require substantial project modifications, delays to projects or the prevention of activities.

And those on the environmental side of the Endangered Species Act debate have tended to dismiss current hostility in Alaska to ESA listings as unwarranted hysteria.

But many in the Alaska development community remain unconvinced about the likelihood that impacts on industrial activities will be benign, and Alaska lawmakers have picked up on what they see as a significant threat to Alaska’s economic well being.

“I understand the beluga habitat needs protection, but I have serious concerns with NOAA’s figures to justify it,” said Sen. Murkowski, R-Alaska on April 8. “The costs involved are 100 times higher than they’re estimating. Beyond their bad math, I remain extremely concerned the critical habitat designation will lead to something all too common to Alaska: more delays in permitting, construction and protracted litigation.”

An independent economic analysis prepared for the Resource Development Council for Alaska estimated the cost of the habitat designation as lying between $39 million and $400 million per year, depending on what economic scenario is used, Murkowski said.

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Escopeta, Buccaneer respond on belugas

Petroleum News asked Danny Davis, president of Escopeta Oil, the company with a jack-up rig en route to Cook Inlet for exploration drilling this summer, for his response to the beluga whale Endangered Species Act listing and critical habitat designation.

Davis said Escopeta does everything it can to work with conservationists and others to make everything happen in a positive way.

“We’re going to have whale watchers. We’re going to have sound buoys. We’re going to do everything in the world we can to work along with the agencies to protect every beluga whale we run across. We love them, we believe in them and we want to protect them and do everything to see them flourish,” Davis said.

Davis also commented that to the best of his knowledge no beluga whale had been ever been injured by an oil industry operation during the 60-year history of the Cook Inlet oil industry.

Buccaneer Energy Ltd., the Australian company that is partnering with the Alaska Industrial Development and Export Authority to also bring a jack-up drilling rig to Cook Inlet issued a statement on April 11 downplaying the likely impact on the company’s operations of the National Marine Fisheries Service’s Cook Inlet beluga whale critical habitat designation.

The company said that people had anticipated the critical habitat designation since the listing of the beluga whales in 2008.

“Buccaneer planned its Cook Inlet exploration activities in anticipation of the critical habitat designation and does not anticipate delays in its planned exploration drilling program in the Cook Inlet,” wrote company director Dean Gallegos in Buccaneer’s statement.

Gallegos said that drilling is not precluded from the critical habitat region and that Buccaneer is taking several steps to minimize impacts on marine mammals, including beluga whales. Those steps include the implementation of safety zones around project activities, to ensure appropriate noise reductions when marine mammals approach the industrial operations, he wrote.

—Alan Bailey