Public hearings were underway the week of Aug. 15 on a lower Cook Inlet Outer Continental Shelf lease sale - OCS Sale 244 - but whether the sale will actually be held on schedule in June, 2017, seems uncertain.
U.S. Bureau of Ocean Energy Management Director Abigail Hopper said planning continues for the sale because industry nominations, or requests for acreage to be leased, had been received by her agency.
Hopper spoke in an interview in Anchorage April 12 following a week-long visit in Alaska.
BOEM officials would not say how many nominations came from companies for Sale 244 acreage because that information is confidential but they did say that the recommendations came in before crude oil prices took their plunge in late 2015.
Given that, it’s possible that what happened in three previous Cook Inlet OCS sales, a no-show by industry in one sale and two sales being cancelled, may be repeated.
Industry was also a no-show in the state’s most recent Cook Inlet areawide sale, that clearly blamed on oil prices. The acreage being offered by BOEM in 2017, if the sale is held, is just south of Kalgin Island and the southern boundary of state-owned submerged land in north Cook Inlet.
BOEM would offer 1.09 million acres on 224 OCS tracts for bid in Sale 244, if it is held.
Arctic sales cancelled
U.S. Interior Secretary Sally Jewell also cancelled two Arctic OCS sales in the current five-year plan, one for the Chukchi Sea and one for the Beaufort Sea, due to lack of industry interest.
Nominations of acreage for those sales came in before Shell announced the news of its unsuccessful Chukchi Sea exploration well, and there were no requests for new acreage in the Chukchi Sea and only one company making a request in the Beaufort Sea, BOEM officials said.
As for Cook Inlet, OCS Sale 244 is the final sale in the U.S. Department of the Interior’s current five-year leasing schedule. Hopper said the BOEM will release its sale recommendations for the next five year schedule, for 2017 to 2022 sometime this fall.
Hopper would not say what recommendations she will make to Interior Secretary Sally Jewell on including Arctic OCS sales.
Hopper also met with Gov. Bill Walker and the state’s two U.S. senators, Lisa Murkowski and Dan Sullivan, along with industry and Arctic community leaders.
Her visit included a visit to two North Slope offshore oil fields, Hilcorp Energy’s Northstar field and the Nikaitchuq field operated by Eni Oil and Gas. Both fields produce from artificial gravel islands in state-controlled nearshore waters but some of the Northstar production comes from federal acreage just to the north. It is the only OCS production in Alaska.
Murkowski urges sales
Murkowski, who chairs the Senate Energy and Environment Committee, pressed Hopper to recommend holding sales in the Chukchi and Beaufort seas to Jewell, but the BOEM director made no commitments.
Hopper said the federal OCS Lands Act spells out criteria for decisions on whether to hold a sale including the position taken by the state’s governor, resource potential and environmental concerns and the alternative uses of the OCS. “There is no particular priority as to how the criteria are applied,” she said.
She heard support for the Arctic sales from Walker and Sullivan as well as Murkowski, and also leaders from Arctic communities.
BOEM has prepared a Draft Environmental Impact Statement for the Lower Cook Inlet sale and public hearings in Anchorage, Kenai and Homer.
The April 15 hearing in Anchorage was lightly attended and had a mix of support and opposition to the sale from those present.
Support, opposition
Carl Portman, speaking in support of OCS Sale 244 for the Resource Development Council, an Anchorage-based development advocacy group, said the lease sale would open new opportunities for economic development and diversification along the southern reaches of the Kenai Peninsula.
“Federal waters in Cook Inlet offer significant potential for new natural gas reserves to meet future demand (in the region.) Approximately 85 percent of the electricity generated in Southcentral Alaska depends on natural gas and 60 percent of Alaskans depend on gas as a source of heat or electricity in their homes and businesses,” Portman said.
Speaking against the sale, Laura Comer, representing the Alaska Sierra Club, said that the lease sale offering was out of sync with the Obama administration’s policy to combat global climate change and the Paris accord to limit global warming.
“The agency’s (BOEM) refusal to consider or disclose global impacts from consuming the oil and gas extracted under its proposal (OCS Sale 244) is morally and legally unjustifiable. … When the price of oil is low the answer is not to meet low demand with increased supply. Oil companies already have enough currently identified fossil fuel reserves to last for decades,” Comer said in her statement at the April 15 hearing.
