Faced with continuing precipitous declines in oil production both from Alaska’s North Slope and from Cook Inlet, Alaska’s Division of Oil and Gas is pursuing various avenues to encourage new oil exploration and development, William Barron, division director, told the Anchorage Chamber of Commerce Make it Monday Forum on Aug. 22.
Permitting restructure
The division is actively looking to restructure the permitting of oil and gas projects, Barron said. And one possibility is the authorization of the permits for multiple activities within a company’s unit plan of development, as part of plan authorization.
“If we can do that, then people will have an assurance of their ability to go forward rather than always permitting the same task over and over,” he said.
Typically, a plan of operation involves several projects and covers a period of three to five years. The division has to approve the overall plan, but individual projects within the plan separately require a series of individual permits. Barron told Petroleum News in an Aug. 21 email that the division has not yet taken its thoughts on “plan permitting” beyond the conceptual stage, and that the complete scope of the concept and the specifics of what, if any, statutory or regulatory changes might be involved have yet to be worked out. The idea would be to look out further in time than has tended to be the custom, to secure as many permits as possible, based on the plan of operations, he said.
The division is also working on the creation of a statewide information clearing house for permit information and other critical information associated with oil and gas activities and with geothermal work, Barron told the Chamber of Commerce audience.
“The idea here is to try to have a little bit more transparency and a bit more openness across the board for anybody who’s trying to do work, to understand what’s been done,” he said.
Barron also said that the division is looking at the possibility of introducing bonding for restoration at the end of the useful life of oil and gas facilities, asking questions about what the abandonment liabilities might be and what the state and landowners might want left at a site after facility decommissioning.
Unconventional oil & gas
The division’s resource evaluation group is in the process of building on its knowledge of unconventional oil and gas, while the division’s commercial group is, among other things, working on issues relating to shale oil, Barron said.
The units section is updating division regulations to promote oil and gas development while protecting state interest, he said.
“You can lease land all day long but if you don’t do exploration and if you don’t bring it to production the only thing the state gains is basically the bonus (bid) and the rental from the lease,” Barron said.
One issue that this section is addressing is the encouragement of exploration and development during the regular term of a lease, to reduce the tendency for a business to apply for unit formation at the end of a lease term, to allow exploration to take place after the lease would have otherwise expired, he said.
—Alan Bailey
