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Alaska to lease Bristol Bay lands; one year-plus to first oil and gas sale
Steve Sutherlin, Petroleum News associate editor
The state of Alaska has added state and Native owned lands on the Alaska Peninsula near Bristol Bay to its five-year oil and gas leasing program.
The lands were added at the request of the Bristol Bay Native Corp. and other local groups, Gov. Frank Murkowski said in a July 1 statement.
Onshore annual areawide lease sales will be held as soon as feasible.
The state and Bristol Bay Native Corp. will develop a leasing plan through a memorandum of understanding, which will include a plan for leasing-related access, and general improvement of transportation in the region.
“The revision of the state's leasing program is in response to BBNC and local residents who want the state to facilitate oil and gas exploration on shore in order to help improve the local economy and alleviate escalating energy costs,” Murkowski said. “I believe that outside the North Slope and Cook Inlet, the Bristol Bay region offers one of the state's best opportunities in terms of commercial quantities of oil and gas potential.”
A state lease sale in the Bristol Bay region is at least two years away, according to Bill Van Dyke, Alaska Division of oil and gas petroleum manager.
The state will have to meet notice requirements, prepare best interest findings, and complete a coastal management review, Van Dyke told Petroleum News July 2.
Beyond the paperwork side of the process, the division wants to make sure the industry has a handle on the potential of the area before the sale.
“We want to give the industry some lead time to revisit the area,” Van Dyke said. “It was 30 years ago that there was any activity there, and most of those folks are long gone from the industry.”
Van Dyke said the industry would likely need in excess of 12 months to develop prospects and select parcels.
The division is unsure whether the sale will include the state’s offshore acreage, which extends three miles into the bay, he said. If offshore acreage were offered, it would be with the stipulation that all drilling be done from shore.
Van Dyke said the state will work with the Bristol Bay Native Corp. to incorporate the corporation’s inholdings. Economic Opportunity Murkowski said opening areas of Alaska to exploration and development of oil and gas resources would provide job and economic opportunities in a region and at the same time help the state address its current fiscal challenge, adding that exploration tax incentives approved by the Legislature earlier this year would boost industry interest.
“Planning a new series of onshore lease sales in the Bristol Bay region will help us accomplish both goals,” he said. “We have seen many technological advances in the past 20 years that address the environmental concerns once associated with this region,” he said.
In the past, most residents of the fishing-dependent region were opposed to oil and gas development because they saw oil drilling as incompatible with fishing. That view has changed as the local economy has suffered with the fishing industry in recent years.
“There is widespread to almost unanimous support for on shore, and mixed support for offshore drilling,” Paul Roehl, vice president of land and development for Bristol Bay Native Corp., told Petroleum News in June.
Murkowski said production of natural gas in the region would benefit local communities by substantially reducing heating and energy costs. Energy development in Bristol Bay would actually enhance the competitiveness of local commercial fishermen, Murkowski said, by lowering the cost of cold storage.
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