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THE EXPLORERS 2006 - Usibelli’s CBM project blocked Denali Borough Assembly passes ordinance banning gas exploration on 40 percent of proposed
license area, kills coalbed methane project Sarah Hurst For Petroleum News
No mining company in Alaska is more an integral part of its community than Usibelli is in Healy. The family-owned company has been mining coal near this small town south of Fairbanks since 1943, when Emil Usibelli began operations with a used bulldozer and a used logging truck. Usibelli continuously reclaims the land it has mined and donates to numerous local causes, including the expansion of the museum at the University of Alaska Fairbanks, which recently named part of its fine arts gallery in honor of Rose Berry, Emil Usibelli’s wife.
But the mining company’s good record hasn’t helped it much in its efforts to explore for coalbed methane in Interior Alaska.
Usibelli filed an application for gas-only exploration in April 2004 with Alaska’s Department of Natural Resources.
In August 2005, DNR’s Division of Oil and Gas published a preliminary best interest finding. Mark Myers, who was director of the division at the time (and is now director of the U.S. Geological Survey) found that “the potential benefits of the Healy Basin Exploration License, as conditioned, outweigh the possible adverse impacts, and that the exploration license will best serve the interests of the State of Alaska.”
Process has ground to halt The state should have issued a final best interest finding by the end of 2005, following a public comment period, but the process has ground to a halt.
A nonprofit organization called Denali Citizens Council has been fighting Usibelli’s proposal, inspired by the success of a similar campaign against coalbed methane development in Southcentral Alaska’s Matanuska-Susitna Borough. DCC struck a major blow against Usibelli in mid-September 2006, when the Denali Borough Assembly passed an ordinance that bans any gas exploration or development activity on about 40 percent of the proposed license area.
“I think this is a very classic case of a small group of people who are not going to be persuaded, that has managed to gain the ear of enough assembly members,” said Usibelli’s vice president for business development, Steve Denton. “Very little of the area they’ve closed off has potential for coalbed methane exploration, because that’s probably going to be in the deeper part of the basin. It’s a totally unexplored basin and our chances of success are pretty low. It’s going to be small fields, whatever it is,” he added.
Usibelli asks state to put exploration license on hold The company has asked the state to put the license application on hold until the local issues can be resolved.
The 208,630-acre area that Usibelli would like to explore is on state land and some of it is adjacent to Denali National Park. DCC argues that there are concerns about the possible contamination of drinking water and surface water, potentially explosive buildups of gas in homes and businesses, noise from industrial machinery and insufficient reclamation bonding.
“On the positive side, some surface landowners have received benefits from coalbed methane by way of payments for infrastructure siting, construction of roads or driveways where they needed them, irrigation water, and severance tax revenues to help pay for local services,” DCC says on its Web site.
Had been negotiating with borough The licensing fee that the state would receive for the project is $1 per acre, Myers pointed out in the preliminary best interest finding.
“The potential for additional revenue from rentals, royalties and taxes is unpredictable because no one knows what reserves may be found in the area,” he said.
Usibelli would have to describe efforts to minimize impacts on local communities in its plan of operations and submit a copy of the plan of operations to all surface owners whose property is located within half a mile of work activities.
Impacts on water and air quality would be regulated by existing legislation.
Before the ordinance was passed, Usibelli had been negotiating with the Denali Borough Assembly for a year to try and find a solution to the impasse.
“We will continue to try and work through the assembly,” Denton said. “The state hasn’t shown any strength in dealing with these contentious local issues.”
Advice for new governor Denton’s advice to the new governor of Alaska?
“I would say that they need to vigorously defend the state’s rights as a subsurface owner of resources. These local governments condemning state resources has gotten really out of hand.”
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