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Vol. 14, No. 24 Week of June 14, 2009
Providing coverage of Alaska and northern Canada's oil and gas industry

Local doubts on bay

Aleutians East Borough prods MMS on North Aleutian Basin lease planning

By Wesley Loy

For Petroleum News

The U.S. Minerals Management Service for years has counted on a remote local government, the Aleutians East Borough, as a key supporter of the offshore oil and gas lease sale proposed for the North Aleutian basin in 2011.

Lately, however, the borough’s relationship with MMS has become strained, raising the possibility that a friend might turn against the controversial Lease Sale 214.

The evidence is a flurry of letters the borough sent to MMS officials in March questioning the agency’s approach on preparations for the sale, including the drafting of an environmental impact statement.

The letters complain of poor scheduling, inadequate baseline research to document the sale area’s commercially important fish and crab resources, lack of information on the different sale alternatives MMS is planning, and lack of federal funding to cover travel and other costs so borough residents can participate meaningfully in the planning process.

The borough also is pressing MMS to require lease terms for protecting fisheries, fishermen and the environment, and for ensuring jobs for local residents. MMS, however, is pushing back on some of these demands.

The tenor of the letters suggests the borough is prepared to pull its support for the lease sale, which is highly controversial because it would occur in the outer waters of Bristol Bay, an area known for its extraordinary abundance of salmon and other fish as well as king crab and marine mammals.

“AEB has reserved the right to withdraw support for oil and gas leasing in the North Aleutian Basin during the Environmental Impact Statement Process and Lease Sale Process if our concerns have not been addressed,” says a March 4 letter from borough Administrator Sharon Boyette to an MMS official. “As a heads up, MMS’s lack of response on our proposed mitigation measures, and delay or unwillingness to commit to lease sale stipulation language is beginning to cause us concern.”

Borough support vital

In a March 10 reply letter, MMS Alaska Regional Director John Goll acknowledged the agency badly needs the borough’s backing.

“We realize the importance of local support for this lease sale and fully believe that the State of Alaska’s support is contingent on local support for which the AEB has assumed a lead role,” Goll’s letter says. “In essence, without the support of AEB the proposed lease sale may never be realized.”

In interviews in early June, both Boyette and MMS officials in Anchorage said they believe relations are improving since the exchange of letters.

But much work remains in the run-up to Lease Sale 214, assuming the Obama administration decides to proceed with it.

“It’s a process, and it’s going to be a bumpy one, I think,” Boyette told Petroleum News on June 10. She said the MMS “has a really good team of people,” and she’s hopeful that issues between the borough and the agency can be worked out.

Bold endorsement

The Aleutians East Borough encompasses the western end of the rugged Alaska Peninsula, as well as numerous islands. Its roughly 3,000 residents live mainly in the villages of Sand Point, King Cove, Akutan, Cold Bay, False Pass and Nelson Lagoon. Commercial fishing is the borough’s mainstay industry.

The borough is the closest local government to the offshore zone considered most prospective for exploratory drilling.

In October 2005, the Aleutians East Borough Assembly voted unanimously in support of allowing oil and gas leasing in Bristol Bay, so long as fish are protected, exploration is conducted in an environmentally safe manner and oil and gas companies provide jobs and business opportunity for local residents.

The borough sees major potential for increased tax revenue and local employment for a region where commercial salmon fishing struggled beginning in the late 1990s in part because of competition from foreign fish farmers.

The borough’s qualified support for offshore leasing stands in contrast to the opposition voiced by other local governments and Native organizations around Bristol Bay.

Also opposed are many environmental groups who helped successfully campaign for the federal government to buy back leases sold for $95 million in Lease Sale 92 in 1988.

Cooperating agency

Just over a year ago, the borough and the MMS signed a memorandum of agreement under which the borough acts as a “cooperating agency” to ensure local interests are considered as the MMS prepares the EIS for Lease Sale 214.

But the borough’s letters to the MMS suggest the borough feels — or felt — somewhat slighted in the partnership.

The letters seem designed to push the agency to not only require the safeguards the borough wants for its fishing interests, but also to ensure an environmental review that can withstand a possible legal challenge from leasing opponents.

Among the borough’s complaints:

*Lack of an agreed schedule for collaborating on the EIS for the 2011 lease sale. The problem is compounded, the borough notes, because the borough mayor and many other residents are busy fishing in June and July, making it impossible for them to participate in the planning.

• Poor progress on dozens of fishery, air, oceanographic, oil spill and other studies the borough believes are necessary. One borough letter complains the MMS offered a 21-year-old study of seismic noise impacts on Dungeness crab larvae, when what is really needed is a study of potential seismic impacts on Bristol Bay’s valuable king and Tanner crab.

• Lack of clarity on what alternatives the MMS is considering for Lease Sale 214. In a March 2 letter, the borough said it had seen only an outline of six alternatives under consideration, including one specifying, “Defer all oil prone lease blocks.” The borough asked where those blocks are located, and complained that MMS had failed to provide maps of the proposed lease sale area with overlays of fishery and critical habitat areas.

• No apparent MMS plans to study Balboa Bay, on the south side of the Alaska Peninsula near Sand Point. The bay is where Shell — the oil company hoping to explore the gas-prone North Aleutian Basin and produce from several offshore platforms — has said it might place a liquefied natural gas plant and tanker port.

“If the plan is to build an LNG plant in this bay, we need good data here,” a March 5 borough letter says. “We are already starting to hear local concern and resistance to development in Balboa Bay, and we need to be in a position to show that there is high quality baseline data and knowledge of this bay and demonstrate that a system is in place to protect fish and shellfish resources.”

• Uncertainly over what MMS will require of explorers as lease stipulations. The borough is seeking such requirements as compensation for fishermen in the event of a spill or other harm, jobs for local residents and something approaching zero discharge of drilling fluids and wastes.

“The AEB doesn’t have a clear idea of what MMS plans to do with our recommendations,” says a March 4 borough letter. “One of our most important concerns is fisheries protection and fishermen’s compensation. We set up a meeting with MMS for March 4, 2009. We arranged to have our staff and an AEB fisherman flown in, along with consultant support. MMS canceled this meeting with short notice.”

MMS reassurances

In its March 10 reply to Boyette, the borough administrator, Goll wrote that “we do not have the authority to implement” all the borough’s preferred mitigation measures.

He promised to set up meetings to talk about environmental studies, leasing alternatives, maps and other borough concerns.

“We want to gain your support to improve communication as we move forward with this project together,” the letter says. “In the future, please let us know of any and all expectations before expressing any disappointment for lack of action on our part.”

Boyette, in the June 10 interview with Petroleum News, said the borough has been having regular meetings with MMS. She said the draft EIS probably will be released in about a year.

At that time, borough leaders will sit down and list which protection measures made the cut and which didn’t, Boyette said. And then the borough assembly will decide again whether to support offshore leasing or, as one borough villager said in 2005, “get off the train.”

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