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BOEM publishes comments on Chukchi sale State and industry question the use of targeted lease offerings; environmental organizations object to any oil and gas leasing Alan Bailey Petroleum News
On Dec. 3, following a delay resulting from the federal government shutdown, the Bureau of Ocean Energy Management, or BOEM, closed the period during which the agency accepted public comments on lease sale 237, the Chukchi Sea oil and gas lease sale scheduled for 2016 under the agency’s 2012-17 five-year outer continental shelf lease sale program. The agency has published on the regulations.gov website the comments it has received.
Unlike in its last Chukchi Sea sale, held in 2008, in 2016 BOEM proposes to only offer for lease tracts of land that are of particular interest to oil companies in areas not excluded by environmental constraints, rather than conducting an areawide sale that would apply to a broad expanse of the Chukchi Sea region. Consequently, in addition to requesting general information from the public about the Chukchi Sea, as an aid to determining which areas within the region to include in or exclude from the sale, the agency used the comment period to request oil companies to nominate areas that they would like to see offered for leasing.
Petroleum geologists view the Chukchi Sea has likely to hold major undiscovered oil and gas resources.
Unhappy about targeted approach But oil companies are clearly less than happy about the prospect of only being offered targeted land tracts. In a letter to BOEM, the Alaska Oil and Gas Association, or AOGA, an Alaska oil industry trade association, told the agency that, while oil leasing in the Chukchi Sea is of “paramount importance” in “establishing access to nationally and internationally significant hydrocarbon regions,” there is no justification to move from areawide to targeted leasing in the Arctic.
Given that BOEM requires geological, geophysical and economic information in support of industry land tract nominations, the agency is in effect “asking industry to endure the temporal and economic burden of compiling data without any guarantee that those efforts will correspond to an opportunity to engage in leasing,” AOGA said. In other words, in the absence of a knowledge of which areas BOEM might exclude from the sale, an oil company might expend considerable time and money investigating land that is not ultimately offered for leasing.
Moreover, BOEM itself possesses most of the existing geological and geophysical data pertaining to the Chukchi Sea, thus making a land nomination process conducted by the agency more efficient for all parties than a process involving individual nominations by individual companies, AOGA argued.
The State of Alaska, while supporting the principle of holding the lease sale, also took aim at the targeted land tract approach. The new approach would prematurely limit the process for public involvement by placing selected areas of the Chukchi off limits without the first carrying out “the appropriate level of analysis and scientific justification to inform decision making,” the state said in its comments to BOEM. Saying that, by law, BOEM must allow access to outer continental shelf resources, the state also expressed concern about the potential impact on current Chukchi Sea leaseholders if tracts adjacent or nearby lease blocks are withheld from future lease sales.
North Slope Borough The North Slope Borough, in its comments to BOEM, said that in recent years the borough has come to support oil and gas leasing in Arctic waters, provided there are strong assurances that industrial operations will be conducted safely, with adequate agency oversight for the protection of the marine environment and the subsistence resources of the Arctic communities. With that in mind, the borough recommended some areas that it thinks should be deferred from leasing. The borough also recommended that BOEM should evaluate some new data about Chukchi Sea surface currents.
The Alaska Eskimo Whaling Commission requested the completion of a map of offshore subsistence resources before any leasing decisions are made. The commission also recommended a series of lease stipulations for the protection of subsistence hunting.
Predictably, several environmental organizations expressed their opposition to holding any Chukchi Sea lease sale.
The World Wildlife Fund, for example, submitted a petition signed by 25,642 supporters, saying that the Arctic is threatened by climate change. In addition, “the technology for containing oil spills in icy waters does not exist, and the extreme conditions in the Arctic make offshore oil development here much too risky,” the petition said, arguing that the problems experienced by Shell during its 2012 Arctic drilling program demonstrated those risks.
One group of organizations that included the National Audubon Society, Oceana and the Pew Charitable Trusts requested that the lease sale not be held but recommended some areas of the Chukchi Sea that should be excluded from leasing should the lease sale take place.
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