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Vol. 14, No. 43 Week of October 25, 2009
Providing coverage of Alaska and northern Canada's oil and gas industry

Massive OCS feedback

NOAA, Natives oppose much of 2010-’15 leasing plan; drillers, lawmakers endorse

Wesley Loy

For Petroleum News

A key scientific agency is advising the Obama administration against oil and gas leasing in large portions of the nation’s Outer Continental Shelf.

The National Oceanic and Atmospheric Administration recommends that Alaska’s North Aleutian basin, which takes in rich Bristol Bay commercial fishing and subsistence gathering grounds, be crossed off the government’s proposed 2010-15 leasing schedule.

And NOAA also says no leasing should occur in Alaska’s remote Chukchi Sea pending further research into oil spill risk and Arctic cleanup capabilities.

NOAA’s position was amid an extraordinary outpouring of public feedback the U.S. Minerals Management Service received by the Sept. 21 extended deadline to comment on the new offshore leasing plan, which would revise the current 2007-12 plan.

MMS, an Interior Department agency that regulates offshore oil and gas activity, said it received more than 450,000 comments on the plan, which the Bush administration released in its final days in office.

Many of the comments came from four regional meetings Interior Secretary Ken Salazar held in Alaska, California, Louisiana and New Jersey.

“I look forward to reviewing MMS’s analysis of the public comments,” Salazar said in a Sept. 22 press release. “The offshore energy program we are developing must address our nation’s energy security challenges, deliver a fair return to the taxpayers who own the resources, and account for the views of local communities, states, and tribal nations.”

The 2010-15 offshore leasing plan proposes 31 lease sales in the Gulf of Mexico; in south and mid-Atlantic waters; in areas off southern and northern California; and in Alaska’s Beaufort and Chukchi seas as well as Bristol Bay and Cook Inlet.

NOAA’s view

NOAA is an agency within the Commerce Department with broad regulatory and scientific responsibilities. These include managing the nation’s commercial fisheries and protecting marine species listed as threatened or endangered.

Jane Lubchenco, a marine ecologist and environmental scientist who was teaching at Oregon State University when the Obama administration chose her to lead NOAA, signed the agency’s comments to MMS.

NOAA questions many aspects of the draft offshore leasing plan, including the ability to deal with oil spills in the Arctic.

The plan “does not focus on the challenges of spill response in Arctic waters, including the challenges of recovering oil from solid, broken and shorefast ice,” NOAA commented.

“The challenges posed by Arctic conditions are greatly understated,” NOAA continued. “Recovery rates of spilled oil in optimum situations (calm weather, in a harbor, rapid response) rarely exceed 20 percent, and response to spills in ice in remote areas is substantially more challenging. On-scene response efforts may take days to weeks to implement, and are rarely effective.”

Before more Arctic leasing occurs, NOAA said more research is needed on oil spill risk, on preparing for and responding to spills, and on “human dimension impacts on Alaska Native cultures” from oil and gas exploration and accidents.

NOAA also said it strongly endorses lease deferral for Chukchi blocks within 25 miles of the coast, and suggests seismic airguns might drive marine mammals from their habitat.

As for the Beaufort Sea, NOAA said it’s warming and experiencing more open water, prompting recent adoption of a federal policy banning commercial fisheries until more information is available. “A similar precautionary approach for oil and gas activities should be considered,” NOAA said.

With respect to the North Aleutian basin, NOAA noted Bristol Bay supports “nationally significant commercial fisheries, and extensive subsistence use by Alaska Natives.” It added that northern fur seals in the region are “extremely sensitive to spilled oil,” and seismic noise has potential to cause the endangered North Pacific right whale to abandon its feeding habitat.

NOAA said MMS failed to note the full impact an oil spill could have on Bristol Bay’s fishing industry. “International markets for Alaskan seafood, for example, could be substantially impaired even by a small spill,” NOAA commented.

“As a result of all of these factors, NOAA recommends that the Presidential withdrawal be extended for the North Aleutian Basin in order to protect these valuable fisheries,” the agency wrote.

NOAA also said MMS can no longer truthfully say no “substantial environmental impacts” have been observed for many years as a result of offshore oil production and transport. NOAA cited the latest data on spills related to hurricanes Katrina and Rita, saying some damaged rigs and pipelines “continue to have episodic releases, and repairs have not been fully completed.”

MMS figures show more than 600,000 gallons were spilled from federal offshore oil platforms and associated pipelines in hurricane-related incidents, NOAA wrote.

Elsewhere around the U.S. coast, NOAA recommended the leasing plan exclude Atlantic and Gulf of Mexico areas with environmentally sensitive seamounts, submarine canyons and coral. The agency also urged removal of entrances to Long Island Sound, Chesapeake Bay and Delaware Bay to protect sea turtle habitat.

Indigenous resistance

The North Slope Borough, which represents mostly Inupiat Eskimo villagers living along the Beaufort and Chukchi coasts, seemed to soften its general stance against offshore drilling, citing the new administration and hope for a break from “the flawed policies of the past.”

Borough Mayor Edward Itta, in comments to MMS, noted the borough previously had asked MMS to simply cancel the new leasing plan, which the borough saw as “an expedited rush to OCS development.”

Now the borough sees a compromise.

“We are willing to work with the federal and state governments to allow development of OCS resources, provided that drilling and infrastructure development occurs at onshore locations to the maximum extent practicable,” the borough said, citing as a model BP’s extended-reach drilling project to tap the Liberty field in the Beaufort Sea.

But no further lease sales should be held for the Chukchi Sea, where the ecology is changing rapidly and where extended-reach drilling “would clearly not be an option,” the borough said.

Itta also touched on the subject of money, saying local governments in Alaska deserve a share of federal OCS oil and gas revenue.

The borough maintained its skepticism about industry’s ability to prevent spills, or clean them up in the icy Arctic.

“The Borough understands that the probability of a major oil spill is extremely small. The evolution of offshore exploration and production technology has been paralleled by evolution in spill-prevention technology. Spills do continue to occur, however,” the borough wrote, citing an Aug. 21 blowout and oil spill from a platform in the Timor Sea off northwestern Australia.

The Alaska Eskimo Whaling Commission, a nonprofit organization representing subsistence whaling captains in Barrow and other North Slope villages, said withdrawing the Chukchi and Beaufort seas from future leasing is “the only responsible decision.” It said the Interior Department has provided “highly suspect” information about the risk of a catastrophic oil spill in the Arctic, and said the department’s offshore leasing program under the Bush administration was “fundamentally broken.”

“The new Administration must step in and assert new and responsible leadership to fix this situation,” the whaling commission commented. It asked for “a comprehensive management plan” to protect North Slope and subsistence animals.

“Industrialization in the Arctic, particularly offshore activities, threaten to cause a myriad of interrelated impacts to the physical and mental health of the Inupiat people,” the commission said.

ConocoPhillips, Shell weigh in

Two oil companies with vast Beaufort and Chukchi acreage under lease expressed general support for the proposed 2010-15 leasing plan.

ConocoPhillips, which spent $506 million in last year’s Chukchi Sea Lease Sale 193, noted MMS considers the Chukchi one of the most promising areas for offshore oil and gas exploration, second only to the Gulf of Mexico.

“We are taking a measured and responsible approach to prepare for our initial exploration well in the Chukchi Sea, which is now planned for summer of 2012,” wrote David Brown, Alaska land manager for ConocoPhillips. “We are committed to explore the Chukchi Sea responsibly with respect for the environment and in a manner that also respects the subsistence way of life of the residents of Alaska’s North Slope.”

Chukchi production will be important for tempering the nation’s reliance on imported oil, for extending the life of the trans-Alaska oil pipeline, and for supporting a proposed natural gas pipeline, Brown added.

Shell, which spent $2.1 billion in Lease Sale 193, noted it’s the nation’s largest OCS leaseholder and the second largest offshore oil and gas producer.

While some say the leasing plan presents a difficult choice between economic and environmental impacts, “History and experience teach otherwise,” wrote David Lawrence, Shell’s exploration and commercial executive vice president in Houston.

The National Academy of Sciences has found that less than 1 percent of the oil in North American seas comes from OCS production and transportation, Lawrence noted.

“Such analysis strongly indicates that failure to develop OCS resources may present an even greater risk of global environmental degradation as a result of increased worldwide dependence on production from less environmentally safe alternatives,” he wrote.

Shell cited a recent University of Alaska study that found OCS development could produce $5.8 billion in direct revenue to the state, with most of this going to local governments as property taxes on onshore petroleum facilities.

Shell supports legislation Alaska’s senators, Democrat Mark Begich and Republican Lisa Murkowski, have introduced to share federal OCS oil and gas revenue with Alaska and other coastal states and Native corporations, Lawrence wrote.

The company also urged MMS to “expeditiously … confirm the continued validity” of its Chukchi leases in light of an April federal appeals court decision partially vacating the 2007-12 leasing program pending further environmental analysis. Shell also said other court challenges and snags in getting federal air pollution permits have cost the company three Arctic drilling seasons and hundreds of millions of dollars.

Further drilling delays likely will “chill industry interest in any future Arctic OCS lease sales,” Lawrence wrote.

Mixed legislative, fishing views

Among others submitting comments, a bipartisan group of Alaska state senators — Senate President Gary Stevens, Kevin Meyer, Con Bunde, Linda Menard, Dennis Egan and Bill Wielechowski — signed a joint letter expressing “strong support” for the new five-year leasing plan.

“Environmentally safe and responsible offshore oil and gas production has been going on for decades in Alaska,” the letter said. “It can, and is being done, without harming the culture, traditions and lifestyle of Alaska’s native population. Whale harvests and subsistence activities can take place while offshore exploration and development is conducted safely.”

Two leading commercial fishing groups raised many concerns about the two proposed lease sales in the North Aleutian basin — Sale 214 in 2011 and Sale 239 in 2014.

Juneau-based United Fishermen of Alaska stopped short of calling for the basin to be excluded from the leasing schedule, but it requested such measures as “zero discharges from drilling installations” and a limit of one round of new seismic activity “with information to be shared by all leaseholders.”

The Alaska Independent Fishermen’s Marketing Association, a Seattle-based group of Bristol Bay salmon gillnetters, urged MMS to scrap the North Aleutian basin sales, calling oil and gas development “a grave threat” to the fishing industry.

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