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Vol. 12, No. 34 Week of August 26, 2007
Providing coverage of Alaska and northern Canada's oil and gas industry

NPR-A in limbo

Draft EIS for Northeast NPR-A out, earliest lease sale after 2008 election

Kay Cashman

Petroleum News

The federal government’s plan to open the National Petroleum Reserve-Alaska to oil and gas development has officially been derailed for at least two years, starting with a September 2006 court order that caused the U.S. Bureau of Land Management to halt all NPR-A lease sales and ending — maybe — at the very end of 2008, the earliest BLM will be ready to hold another lease sale. Not October or November 2008, but the “very end of the year,” a BLM official recently told Petroleum News.

In other words, the next lease sale will be held after the next presidential election. That’s where the “maybe” comes in because the next administration might not be as eager as George Bush to encourage domestic oil and gas production.

The lease sale delay was confirmed on Aug. 20 with the release of BLM’s draft plan for the Northeast section of NPR-A, which is out for public comment from Aug. 24 to Oct. 23, and which carries the more cumbersome name, “draft supplemental integrated activity plan/environmental impact statement.” BLM often shortens the last six words to IAP/EIS.

But the story surrounding the possible derailing of the feds’ plan for oil and gas leasing in NPR-A started much earlier, in the late 1980s and early 1990s when anti-development groups fought to keep the 1002 area of the Arctic National Wildlife Refuge closed to oil and gas development. One of their arguments was that the much larger 23 million acre National Petroleum Reserve-Alaska, on the other side of the North Slope, was already set aside for oil and gas drilling. After all, it was a ITALICS START HERE petroleum END OF ITALICS reserve.

But in 1997, when President Bill Clinton announced the opening of the 4.6 million acre Northeast corner of the petroleum reserve to oil and gas leasing, the same anti-development groups lobbied against it. They lost that war but won a battle to keep more than 600,000 acres of the most oil-rich acreage in NPR-A off the leasing table. BLM’s 1998 final plan (IAP/EIS) for the Northeast planning area did not include the 389,000 acres north and east of Teshekpuk Lake and 211,000 acres under the lake.

Teshekpuk is the largest freshwater body on Alaska’s North Slope and a habitat for caribou, migrating birds and other wildlife necessary to the subsistence lifestyle of the Inupiat Eskimos, who depend on wild game for much of their diet. Despite the fact that modern industry activity in the central North Slope had not negatively impacted wild game numbers, anti-development forces fought to keep the 600,000 acres from being leased.

The first Northeast oil and gas lease sale was in 1999, followed by another in 2002, after which the Northwest corner — i.e. planning area — was opened to leasing, with sales held in 2004 and 2006.

Pushing domestic production

Meanwhile, in 2001, President George W. Bush created the National Energy Policy Development Group, which was tasked with developing “a national energy policy designed to help the private sector, and, as necessary and appropriate, state and local governments, and promote dependable, affordable, and environmentally sound production and distribution of energy for the future.”

In May 2001, the group released the National Energy Policy report, which formed the basis of the President’s National Energy Policy that directed the Secretary of the Interior to “consider additional environmentally responsible oil and gas development, based on sound science and the best available technology, through further lease sales” in NPR-A, specifically noting the unleased oil-rich portions of the northeast corner.

With its marching orders from the Bush administration in hand, BLM set about amending the 1998 plan for Northeast NPR-A, which it released in late 2005 and issued a record of decision for in early 2006.

Anti-development forces filed legal action in March 2006, but BLM plowed forward, planning a Northeast and Northwest NPR-A lease sale for Sept. 27, 2006, that included leases on 373,000 acres north and east of Teshekpuk Lake that had not been offered previously. But the sale excluded acreage under the lake and along the Colville River.

Just before the sale U.S. District Court Judge James Singleton issued a ruling setting aside Interior’s 2006 record of decision, saying that the 2005 amended plan for Northeast NPR-A failed to adequately address the cumulative impacts of oil and gas activities in the 600,000 acres of protected wetlands north, east and under Teshekpuk Lake.

In response to the judge’s decision, in late 2006 BLM set about reworking its 2005 plan.

Halts South NPR-A planning

The agency also canceled scheduled lease sales for all of NPR-A and stopped its planning work for the southern area of the oil reserve.

“We came to this decision after listening to comments from local communities during our public outreach effort,” Interior Assistant Secretary for Land and Minerals Management Stephen Allred said May 14. At public meetings last year the agency said local residents expressed concern over potential impacts to subsistence resources, especially the western Arctic caribou herd, whose primary calving area is within the 9.2 million acre South NPR-A.

“Our decision to stop this effort underscores Secretary Kempthorne’s commitment to sound planning decisions and environmental protection,” Allred said. “The BLM weighed the practicality of energy development and determined it is not appropriate at this time in the South NPR-A.”

BLM resource assessments indicate the South NPR-A planning area contains limited oil reserves, estimated to be just 2.1 percent of the undiscovered oil in NPR-A. Although the area contains an estimated 27 percent of NPR-A’s undiscovered natural gas reserves, there is no transportation system to move the gas to market.

The South NPR-A land use plan isn’t likely to be taken up again in the foreseeable future, BLM Alaska District spokeswoman Sharon Wilson told Petroleum News May 15.

Another factor in the decision to stop work, Wilson said, was the agency’s desire to channel planning efforts to the supplemental IAP/EIS for the Northeast planning area.

Borough signs on as cooperating agency

In early 2007, the North Slope Borough signed a memorandum of understanding with BLM that gave it the formal status of a cooperating agency for reworking the 2005 amended plan, BLM said Aug. 20.

“The North Slope Borough has contributed valuable information, particularly on public health issues,” said Tom Lonnie, BLM state director for Alaska. “Their scientists have reviewed and submitted comments that have been used throughout the document.”

In its 2007 draft plan for the Northeast planning area, BLM said its “purpose and need” had not changed from the amended 2005 plan, referring to the President’s National Energy Policy that directed the Secretary of the Interior to address “the Nation’s need for production of more oil and gas through additional leasing in the Northeast NPR-A.”

Alaska crude output expected to drop to 270,000 bpd in 2030

In chapter 4 of the 2007 draft plan BLM noted that the U.S. Department of Energy estimated “the contribution of North Slope crude to domestically produced oil supplies would decline from 18 percent in 2004 to 14 percent in 2020; again, this decline could be mitigated, but not offset, by opening up the Northeast NPR-A to oil and gas exploration.” DOE currently estimates that Alaska’s oil production “will decline from 860,000 barrels a day to 270,000 barrels a day in 2030. … Depending upon how much additional oil is produced from NPR-A and other future North Slope oil development, these projected production declines may be slowed, or perhaps at some point even reversed,” BLM said.

Additional mitigation measures identified in 2007 draft

The range of alternatives in the 2007 draft was “almost entirely unchanged” from those presented in the 2005 version, BLM said, referring to the four proposed alternatives for resource development in Northeast NPR-A that ranged from doing nothing to opening the entire area to oil and gas exploration and development. (See chart adjacent to this story.)

Although many of the types of cumulative impacts are the same in the two plans, the analysis of the increased activity in the Northeast in the 2007 draft expanded and “substantially revised” BLM’s “consideration of additional measures that would minimize impacts,” the agency said.

BLM said it also “considered results from scientific studies completed since 2005.”

The 2007 draft plan also addresses the cumulative impact of increased activity in the Northeast planning area when combined with increased activity in the Northwest planning area, which was something the U.S. District Court said BLM failed to fully address.

The 2007 draft takes into account issues ranging from climate change and potential of Endangered Species Act protections for polar bears to the increasing price of oil. It also, BLM said, presents potential new mitigation measures to address potential adverse impacts to public health — measures that are “in addition to the protective measures incorporated in the alternatives themselves as lease stipulations and required operating procedures.”

The additional measures are included in separate description and analysis sections in chapters 3 and 4 of the draft supplement “rather than being presented within the context of other topics, such as subsistence or sociocultural systems, as has been done previously,” the agency said.

Anti-development groups call 2007 changes ‘cosmetic’

The additional information and analysis in the 2007 version will allow the agency to complete a plan that provides for sound management of Northeast NPR-A, BLM said.

Anti-development groups disagreed, dubbing BLM’s changes “cosmetic.”

In an Aug. 20 Associated Press report Myke Bybee, a public lands lobbyist for the Sierra Club, was quoted as saying, “The BLM has just slapped a new coat of paint on an old plan.” He indicated anti-development forces would wait for the plan to go through the bureaucratic process before moving forward in court.

“Whether there is more litigation would be determined by how the end result looks. It’s far too early to know,” Bybee said.

BLM does not offer preferred alternative in 2007 plan

Another difference between the 2005 and 2007 plans is that the latest version for Northeast NPR-A does not indicate which alternative of the four BLM prefers. The agency clearly supported a drilling alternative in 2005.

“We paint a picture of how things are right now and come to no conclusions,” Wilson told Petroleum News Aug. 22. “We’re looking for input from the public first.”

Wilson said the original plan that came out in 1998 did not include a preferred alternative.

Lease sales every 2 or 3 years

If the Interior Secretary’s record of decision on the final plan for Northeast NPR-A involves a leasing program, BLM said the first sale could occur at the end of 2008, with “subsequent lease sales approximately every 2 to 3 years thereafter.”

Each sale “might offer only a portion of the lands identified in the ROD as available, making possible a phased approach to leasing and development,” it said.

Legal jurisdiction of North Slope Borough an issue in plan

The nearly 1,500 page 2007 draft plan is worth a close read. In addition to pointing to possible benefits of climate change in chapter 4, BLM cautiously addresses the lingering question of the authority of the North Slope Borough on federal lands within NPR-A in chapter 1.

The North Slope Borough requires permits for certain activities within the Northeast planning area. The borough “believes that it has concurrent jurisdiction within the NPR-A derived from the jurisdiction transferred to the state under the Alaska Statehood Act and the borough’s status as a home rule municipality,” BLM said.

But “it is BLM’s policy to consider the NSB’s land management regulations to the extent practical in any decision within NPR-A. Although BLM acknowledges the NSB’s local land use plan, it is BLM’s position that the borough’s plans cannot prohibit activities on federal lands,” the Interior agency said.



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NPR-A regs expected in December 2008

The U.S. Bureau of Land Management expects to release its revised NPR-A oil and gas leasing and unitization regulations in December 2008, BLM Alaska District spokeswoman Sharon Wilson told Petroleum News Aug.23.

The public comment period on the proposed regulations for the National Petroleum Reserve-Alaska ended July 23, but due to the lengthy internal review process that follows, BLM “does not expect to have it completed until December 2008,” Wilson said. The review, she said, is being “conducted by BLM staff , all levels of management, solicitors (the DOI lawyers), and undoubtedly the Secretary’s staff, before it will be final.”

The revised rules for oil and gas leasing and unitization will bring NPR-A into compliance with the 2005 Energy Policy Act, clarify some lease-related issues, and bring some regulations more into line with leasing and unitization procedures in other regions and jurisdictions, the agency said.

Editor’s note: The most recent story about the proposed new regulations was published in the Aug. 5 issue of Petroleum News (http://www.petroleumnews.com/pnads/741917352.shtml).