State works to keep Alaska sales in Interior’s 2017-22 OCS plan

The state is working to ensure that Alaska is included in the U.S. Department of the Interior’s 2017-22 outer continental shelf lease sale program.

In an Oct. 6 letter to Secretary of the Interior Sally Jewell, Gov. Bill Walker formally nominated the Beaufort Sea, Chukchi Sea and Cook Inlet for inclusion in the five-year program.

He said the nomination was “necessary to ensure the three proposed lease sales” remain in the five-year program. The governor also said that once lease sales are scheduled in the Arctic OCS, the state “will nominate specific tracts.”

The governor said in a Sept. 30 press release that he and Lt. Gov. Byron Mallott and Alaska Department of Natural Resources Commissioner Andy Mack met with members of the Obama administration to request that Alaska remain in the five-year OCS lease sale plan.

The administration is also working with communities along the coast. In an Oct. 7 press release Walker said he and Mallott met with North Slope Borough Mayor Harry Brower and Arctic Slope Regional Corp. President and CEO Rex Rock “to discuss appropriate safeguards and benefits from development in the Arctic.” Walker also said the Department of Natural Resources and the North Slope Borough continue to work on a memorandum of understanding to collaborate on Arctic resource development.

Walker said in his letter to Jewell that if Interior accepts the nominations, the state “will use the federal leasing process to facilitate private sector investment and participation in the lease plans.”

Walker referenced provisions of the federal Outer Continental Shelf Lands Act in his letter to Jewell, noting that the act specifies that the OCS “should be made available for expeditious and orderly development, subject to environmental safeguards” and that states and affected local governments “are entitled to an opportunity to participate, to the extent consistent with the national interest, in the policy and planning decisions made by the Federal Government, relating to exploration for, and development and production of, minerals of the outer Continental Shelf.”

DNR Commissioner Mack told Petroleum News that “OCSLA is a pro-state, pro-local community federal law that leans heavily on the states adjacent to the areas being considered for leasing.”

If the state and the communities adjacent to the proposed leasing areas - in Alaska’s case the Kenai Peninsula and North Slope boroughs - “are in concert and working together and they’re making recommendations it’s our view that the federal government is required to listen to them and their opinion.”

Mack said the state is working closely with local communities, “in particular in the case of the Arctic, we’re working with folks up on the North Slope.” The state will work with communities “to make sure that leasing and planning for activity in the OCS is done very carefully, thoughtfully,” he said.

Tools that have been used historically, such as conflict avoidance agreements, “would be very helpful in constructing these lease sales,” Mack said.

Mack said the process for OCS lease sales is a one-way street, and if an area is pulled out of the five-year plan “it cannot be put back in” and the area would then be on the shelf until there’s another five-year plan.

The process includes a draft program with planning areas, he said.

The Beaufort and Chukchi seas and Cook Inlet are included in the planning areas.

The state is nominating areas for leasing “and we’re going to promote leasing and we’re going to facilitate leasing in these areas ... and by that we mean going out and selling” the OCS opportunity in Alaska, he said.

The state has traditionally worked to promote interest in state lease sales.

Mack said the state thinks OCS development “can be done in a way which makes sense for the communities but also makes a lot of sense for the state of Alaska and ... we will go out and we will talk about these opportunities with companies and we will promote Alaska’s resource base.”

As to what role the state might play, Mack said with sufficient industry interest the state “would like this to be a partnership where we are promoting both activity and interest while we do what we’re also obligated to do which is to make sure we do this with high standards and we do it safely.”

In his letter to Jewel the governor cited federal regulations and said: “To the extent it is necessary to protect the State’s interest and promote its policies, the State of Alaska intends to participate in lease sales in the Arctic OCS Region as a qualified lessee.”

Asked about possible state participation as a lessee, Mack told Petroleum News is an email: “The State’s strong preference is a conventional approach where we facilitate participation by companies in federal leases sales. But the State also wants to keep its long term options open. The State has an abiding interest in a long term strategy toward safe OCS development.”

- KRISTEN NELSON