Federal agencies in Alaska gear up to meet U.S. energy needs

BLM gets money from Washington for Northwestern NPR-A pre-sale work; MMS moves forward with OCS lease program; Toohey says state regulatory policies critical to federal leasing programs’ success

Kay Cashman

PNA Publisher

Following the Sept. 11 tragedy, a shift occurred in how Americans viewed their increasing reliance on oil and gas imports from foreign countries.

Polls assessing national opinion about oil and gas in the Arctic National Wildlife Refuge, for example, showed growing public support for drilling.

Concern that long-time ally Saudi Arabia, supplier of approximately 16 percent of the United States’ crude oil, was politically volatile lent weight to the Bush administration’s position that national security was tied to producing more oil and gas in this country and being less dependent on energy imports.

5 to 20 years to production

Lots, Cam Toohey told PNA. Toohey is special assistant to the Secretary of the Interior for Alaska.

“We are working to gain access to lands that, for the most part, have been closed to oil and gas — or recently opened. … We’re working exceedingly hard to open the coastal plain of ANWR (see update on page 3), which would have the most significant impact on domestic oil production if allowed to proceed,” he said. “If our estimates are correct, the amount of oil from ANWR will be about the same as the amount we have imported from Saudi Arabia over the last 30 year years.”

“We’re not just concentrating on the North Slope or Cook Inlet. And we’re not just looking at conventional oil and gas plays, we’re looking at all power sources, such as coalbed methane,” he said.

Most of the federal government’s oil and gas leasing programs, Toohey said, are expected to “bear fruit in the next 5 to 20 years. But a tremendous amount of our activity is dependent on a state regulatory system that is efficient and predictable. …

“Our leasing programs will only be as successful as the state regulators allow,” he said.

“On top of the leasing programs, we’re trying to adequately process and quickly issue the TAPS reauthorization to assure continued and future production of oil and gas from the North Slope,” Toohey said.

Northwest NPR-A planning moves forward

On Oct. 17, BLM secured its $2 million in funding, Toohey said, to launch the planning effort that is necessary to hold the first Northwest NPR-A oil and gas lease sale in 2004.

“Before we can offer any leases in the Northwest area we have to go through the EIS process, which is a two year process,” BLM public affairs officer Ed Bovy told PNA.

“It’s a carbon copy of the effort we undertook for the Northeast area. We still have access to the same talent, so a lot of the same people will be involved. We will also be able to use some of the same data our team gathered for the Northeast environmental impact statement, so we’re not starting from scratch.”

The EIS, Bovy said, is expected to be completed by the end of the 2003.

“Depending on the results of the EIS, we could potentially hold a sale in the early summer of 2004,” he said.

The $2 million in funding was approved in a Senate conference committee. From there it goes to the president where it is expected to be signed without a hitch.

“It’s the earliest we have had a budget approved in several years,” Bovy said. “Oct. 1 is the start of our fiscal year but we generally don’t get our programs funded until later in the calendar year. … It’s great to get it now.”

MMS proposes eight Alaska OCS sales

The first Alaska outer continental shelf production is expected to begin shortly when BP Exploration (Alaska) Inc. begins pumping oil from the Northstar field. Northstar lies in federal and state leases in the Beaufort Sea.

Most of MMS’s active oil and gas leases are in the Gulf of Mexico, the agency’s Alaska region director John Goll told PNA in a recent interview.

MMS is proposing to hold 12 oil and gas lease sales in the Gulf of Mexico and eight offshore Alaska from mid-2002 to mid-2007.

The Alaska sales are in the Beaufort Sea, Norton Basin, Cook Inlet/Shelikof Strait and the Chukchi Sea/Hope basin. (See related story on page 8 and chart with this story.)

“Alaska has tremendous potential but that potential is largely in areas that would take more time to develop because there is no infrastructure in most of our areas,” Goll said.

The Chukchi Sea, where Shell Western Exploration & Production Inc. (see related page 1 story on Shell) was the last company to drill an exploration well in 1990, is an area that “companies would like to look at, but realistically with the projects the companies have going onshore, we’re not going to see things happen overnight in the Chukchi,” he said. “I don’t foresee a great rush (on leases). … We’re offering options to companies. If someone is interested, the option will be there.”

Goll also sees parts of Norton Sound and the Chukchi Sea as good sources for gas. It might be a resource, he said, that could be developed for local use but development would depend on economics.

“What might be possible is some kind of scenario for local use combined with LNG export to Japan,” he said.

Two proposed MMS Cook Inlet lease sales in 2004 and 2006 could “help open the door to future gas reserves for the Kenai Peninsula, Anchorage and the Mat Valley,” he said.

Goll's thoughts mirrored Toohey’s regarding the need for reasonable state regulatory policies for OCS development: “Any federal project — be it onshore or offshore — that affects the coastal zone of the state of Alaska would have to go through some sort of coastal zone process with the state.”

That process, he said, would be something oil and gas companies would look at before they proceeded with development.

Editor’s note: In the first part of this series, PNA’s writer Derek Brower wrote about what the United Kingdom was doing to fast-track oil and gas development in the interest of national security. Next week, PNA will look at what the state of Alaska is doing to stimulate oil and exploration and production to meet domestic energy needs.