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Vol. 20, No. 2 Week of January 11, 2015
Providing coverage of Alaska and Northwest Canada's mineral industry

Mining News: Pebble critics laud oil-gas drilling ban

Mine development proponents say petroleum exploration moratorium should have little relevance to future of copper-gold-molybdenum project

Rose Ragsdale

For Mining News

On the face of it, President Barack Obama’s decision to place a ban on offshore oil and gas drilling in Alaska’s Bristol Bay Region appears to have handed opponents of the Pebble Project another weapon in their ongoing fight to block development of the enormous copper-gold-molybdenum deposit.

But Pebble supporters say a moratorium on petroleum exploration in Bristol Bay has little or no relationship to the merits of the mine project.

Oil and gas drilling in Bristol Bay has long been a contentious issue, dating back to the 1980s when industry interest in the area increased.

But little drilling occurred before the 1989 Exxon Valdez oil spill in Prince William Sound prompted Congress to bar drilling in Bristol Bay and buy back leases that had already been issued at an ultimate cost of more than $100 million.

President Bill Clinton issued a moratorium on Bristol Bay drilling in 1998. Congress lifted its ban in 2003, but Clinton’s order was only overturned by President George W. Bush in 2007, when plans were made to hold a lease sale in 2011.

In 2010, Obama canceled the 2011 lease sale and put a seven-year moratorium on oil and gas activity in Bristol Bay.

In recent years, Republicans have tried multiple times to require a Bristol Bay lease sale but failed to pass such legislation.

Obama moved Dec. 16 to permanently bar oil and gas drilling in the North Aleutian Basin, including Bristol Bay off the coast of southwestern Alaska.

The area is “too precious for us to be putting out to the highest bidder,” Obama said in a video message announcing his decision.

In a memo to the Interior Department, the president extended protections for an area estimated to provide 40 percent of U.S. wild-caught seafood.

Interior Secretary Sally Jewell said Obama’s action caps decades of work from the community to protect the region’s economic and cultural heritage.

“With its pristine waters, rich fisheries and strong tourist economy, Bristol Bay is a treasure that should be off limits for oil and gas development,” Jewell added in a statement.

In reacting to Obama’s action, U.S. Sen. Lisa Murkowski, R-Alaska, noted the current lack of petroleum industry interest in the North Aleutian Basin and said she had no objection to the move at this time.

Murkowski, who took over as chairman of the Senate Energy Committee when the U.S. Senate re-convened Jan. 6, questioned the timing of the President’s action and expressed her continued frustration with the administration’s priorities.

“It is incredibly frustrating that this administration looks at Alaska – with oil production at a fraction of the level it could be at, and with low oil prices about to force steep across-the-board budget cuts – and decides that conservation is our most pressing need,” she said in a statement. “… What we need are decisions to open lands and waters in Alaska, not the familiar and frustrating pattern of shutting everything down.”

The decision to withdraw the area from all future oil and gas leasing eliminates the sunset date to a withdrawal that President Obama issued in 2010 and was set to expire in 2017. The Interior department previously dropped the North Aleutian Basin from its 2012-2017 leasing plan, so Obama’s announcement largely represents the continuation of an existing policy. The prohibition will remain in place until lifted by the Obama administration or a future administration.

Next up: Pebble

The Pebble deposit, which is located in a broad valley about 20 miles north of Lake Iliamna, is one of the greatest stores of mineral wealth ever discovered. Its current resource estimate includes 5.94 billion metric tons in measured and indicated resources containing 55 billion pounds copper, 67 million ounces gold and 3.3 billion lbs. molybdenum; and 4.84 billion metric tons in inferred resources containing 26 billion lbs. copper, 40 million oz gold and 2.3 billion lbs. molybdenum. Quantities of silver, palladium and rhenium also occur in the deposit.

While the president’s action drew widespread praise from environmental groups, media outlets and others who lauded Obama for his leadership in protecting a place so important to Alaskans, it also sparked new calls for similar protections for inland waterways near the huge Pebble copper-gold-molybdenum deposit.

“Today, President Obama permanently protected the offshore areas of Bristol Bay from oil & gas drilling and exploration,” said Nell Williams, deputy director of Trout Unlimited - Alaska Program in a statement. “Now the need for protecting the region’s headwater streams from the Pebble Mine is clearer than ever.

“Headwater streams are where Bristol Bay’s salmon spawn, and are critical to the health of the resource and sustainable industry in Bristol Bay. The Clean Water Act section 404(c) is the next logical step to ensure that Bristol Bay continues to thrive for many years to come,” Williams added.

“The executive order not only protects the region from drilling, but draws national attention to the effort of opposition to the Pebble Mine proposal,” wrote The Good Men Project on its website. “In November, nearly two-thirds of Alaskans voted in favor of ballot measure 4, giving the state Legislature power to approve or reject the Pebble Mine proposal. State and federal agencies have to approve the proposal as well, after the Legislature would have to conclude that the project would not harm the region’s fishing industry. The mine would be one of the largest of its kind in the world, creating 10.8 billion tons of waste rock, requiring dams to store the waste liquid from the mining operation,” according to a Dec. 17 post.

Setback for EPA

The U.S. Environmental Protection Agency has taken steps in recent years to block development of the Pebble deposit using its authority under Clean Water Act section 404(c).

Pebble Limited Partnership, the proposed mine’s developer, recently won a preliminary injunction in federal court against the EPA, and the judge directed the agency to suspend all actions against the project until the legal issues raised by the developer can be heard in front of his court.

As for the ban on oil and gas drilling in Bristol Bay, Pebble spokesman Mike Heatwole said, “It is our view that the action on oil and gas leasing in Bristol Bay does not have implications for us. Our claims are on State of Alaska land.”

Moreover, “we have said all along that our mine plan, when we release one and initiate the permitting process, must co-exist with the fishery. As you’ve heard us state on many occasions, this is why we have undertaken an extensive environmental studies program over the past 10 years to help us design a responsible plan for Pebble,” said Heatwole, who also noted that the project has spent more than $150 million on those studies.

“I found the President’s announcement baffling because there’s been no activity there and little or no interest in the region from the oil and gas industry for some time,” said Deantha Crockett, executive director of the Alaska Miners Association.

Crockett, who also called Obama’s move “interesting”, said she can’t help wondering if the action might be a prelude to something else. And while the EPA has repeatedly said its recent actions to block Pebble’s development as a hardrock mine is not directed at any other mining projects, she, likewise, can’t help but wonder about that agency’s motives.

“I have no idea if the ban on oil and gas drilling in Bristol Bay is a sign of things to come or not. But any such action by the federal government is always a concern,” Crockett said. “In a logical world, it wouldn’t have anything to do with mining, but this is not necessarily a logical world.”

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