A decision filed Jan. 10 at the U.S. District Court for Alaska eliminated a ban on surface activity that has hampered exploration efforts in the Northwest National Petroleum Reserve-Alaska.
The court ruled against the Northern Alaska Environmental Center and other plaintiffs in a 2004 lawsuit challenging Secretary of the Interior Gale Norton’s decision to open Northwest NPR-A to oil and gas leasing.
The 22-page decision concludes that Interior’s actions were “not arbitrary and capricious” as alleged by the environmental center because the cumulative impact analysis by Interior “considered a reasonable range of alternatives and gave sufficient consideration to reasonably foreseeable alternatives.”
Further the court found that the department’s biological opinion, which was also criticized by the environmental center, “reasonably discussed the entire agency action as contemplated by the ROD (Record of Decision) and accurately and sufficiently accounted for the distribution of eiders.”
The environmental center claimed the biological opinion ignored the uneven distribution of Stellar’s eiders and spectacled eiders, and that it arbitrarily violated the Endangered Species Act and the Administrative Procedure Act. It also argued that Interior acted arbitrarily and in violation of the National Environmental Policy Act and the Administrative Procedure Act by authorizing leasing without considering reasonable alternatives and without doing a site-specific analysis of each of the areas affected by its proposed action.
The court denied the environmental center’s request for a declaratory judgment against the Integrated Activity Plan and Environmental Impact Statement, as well as its request for a declaratory judgment against the biological opinion.
The environmental center had argued that the documents failed to consider a middle ground alternative because the alternatives either effectively opened the entire reserve to leasing or closed parts of the reserve likely to contain oil and gas to leasing.
The court found otherwise.
“On balance, the Court is not convinced that the BLM failed to analyze alternatives that weigh the risks to the environment within the NWPA (Northwest Planning Area) against the benefit of development of high petroleum potential lands,” Judge James Singleton wrote in his decision, adding that the environmental impact statement satisfies the “touchstone” of a National Environmental Policy Act inquiry, which “fosters informed decision making and informed public participation.”
Clouded access
Singleton’s decision lifts the restriction he put on leases won by companies in last year’s Bureau of Land Management Northwest NPR-A oil and gas lease sale. Singleton allowed the June sale to continue on schedule, but restricted activity on the leases until the lawsuit was settled.
Singleton ruled that the Department of the Interior must notify prospective lessees of the pending litigation, because rights under such leases are contingent on resolution of the litigation, “and that no right to drill or build roads on any lease will be permitted until the termination of this litigation.”
“Surface occupancy of leases will not be allowed until the litigation is settled, so BLM will not be allowed to accept applications for permits to drill, geological permits to conduct seismic activities, right of way permits, etc.,” the judge said.
BLM proceeded with the sale and pledged to undertake reasonable effort to lift the surface activity ban. Henri Bisson, BLM Alaska state director said after bids were opened June 2 at the sale, that the agency would now “do what we have to do to defend the sale, and see where we go from there.”
BLM spokeswoman Jody Weil told Petroleum News Jan. 11 that the court order will clean up the clouds that have hindered access to the leases.
“The judge put a restriction on any seismic or surface-disturbing activities after the lawsuit was filed. That has been lifted,” she said. “The companies can now proceed” with exploration of the leases.
Exploration begins
Judge Singleton’s decision ends a waiting period of uncertainty for the successful bidders in the June 2004 BLM Northwest NPR-A oil and gas lease sale.
ConocoPhillips Alaska bid $1,860,500 for eight tracts by itself, $2,871,540 in partnership with Pioneer Natural Resources and $3,847,150 in partnership with Anadarko Petroleum and Pioneer for a total of $8,579,190.
Calgary-based Petro-Canada, bidding by itself, had $13,614,835 in high bids, 25 percent of the high bids at the sale. The company said resolution of the lawsuit would allow it to move forward on its plans for the area.
“We will initiate evaluation of lease holdings in the NPR-A,” Susan Braungart, Petro-Canada spokesperson told Petroleum News Jan. 12.
Braungart told Petroleum News in July that the “oil prime” NPR-A acreage would give the company an additional base for operations in Alaska and possibly something to work on “while we await news on a gas pipeline.”
Prior to its successful bids in the June NPR-A sale, Petro-Canada Alaska holdings consisted of speculative gas-prone acreage it began picking up three years ago in the foothills of the Brooks Range. The company said it wanted to get its foot in the door in case a North Slope gas line was built.
Petro-Canada’s NPR-A holdings are particularly intriguing in that they represent a potential interest on the part of the company to become more active within Alaska.
“We’re interested in Alaska because we continue to see the area as highly prospective for both gas and oil,” Braungart said.
Anadarko took two tracts bidding by itself for $155,356 and paid out another $2,308,290 as a 30 percent partner with ConocoPhillips and Pioneer, for a total of $2,463,646.
Anadarko Alaska spokesman Mark Hanley said the Jan. 10 ruling was an impetus for the company to get started on its exploration process in the area.
“It’s good news,” he said. “Until we knew we could go forward with exploration of our leases, things were a little on hold.”
The actual time frame of work will be determined by ConocoPhillips, operator of the leases in which Anadarko has an interest in the affected area, Hanley said, adding that he did not expect an immediate jolt in activity in NPR-A as a result of the ruling.
“We had nothing planned to drill in the area this winter anyway,” he said.
He said activity could accelerate for the 2005-2006 season as a result of the judge’s action. Talisman Energy’s U.S. subsidiary Fortuna Energy, bidding by itself, had $26,480,300 in high bids, 49 percent of the high bids at the sale. Fortuna told Petroleum News in 2004 it sees Alaska as a bright prospect in its group of international assets and expects to drill a well in NPR-A in the winter of 2005-2006.
David Mann, manager of investor relations and corporate communications for Talisman, told Petroleum News in July he was not sure if the well would be on the acreage it shares with Total, the new NPR-A acreage it acquired in June on the eastern edge of the northwest NPR-A planning area, or elsewhere.
Pioneer, bidding in partnership with ConocoPhillips and Anadarko, and in another bidding group with ConocoPhillips, had $2,769,520 in high bids.
The plaintiffs in the suit were the Northern Alaska Environmental Center, National Audubon Society, the Wilderness Society, Natural Resources Defense Council, Sierra Club, Alaska Wilderness League and Center for Biological Diversity.
