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Arctic Oil, Gas Lease Sales Gets Tentative Go Ahead

By | November 8, 2011

The Obama Administration is giving a tentative green-light to oil and gas lease sales in the arctic as part of its new five year plan.  It’s calling for one lease sale in both the Beaufort and Chukchi Seas, and also one farther south in Cook Inlet near Anchorage.  But the plan is
drawing criticism from Republicans who want more development, and environmentalists who say it’s too much.

The Interior Department’s proposed five-year oil and gas leasing plan calls for Arctic sales – but not right away.  And Secretary Ken Salazar says the timing’s important.  The Beaufort Sea sale is scheduled for 2015 and the Chukchi would be a year later.  Salazar says that gives a buffer of time to figure some more things out… like how to clean up oil spills in icy waters, and if there is an accident, how to stage a major clean-up in a remote part of the world with no deep ports or coastal fleets.

“They are scheduled under our program late in the program to allow time for further study and infrastructure development and addressing other issues important for the unique conditions we face in this frontier area.  In frontier areas like the arctic we know we must proceed cautiously, safely, and based on the best science available as government and science work to develop infrastructure,” Salazar said.

The director of the Interior Department’s Bureau of Ocean Energy Management Tommy Beaudreau detailed the plans for a lease sale in Alaska’s Cook Inlet.  He says he grew up in Anchorage looking at development platforms out on the Inlet, but those are in state waters, and Beaudreau says this would allow exploration in federal waters.

“The Cook Inlet by our estimate includes a lot of natural gas plays, historically there hasn’t been much interest in pursuing those plays in Alaska as opposed to other areas of the country.  But that interest may be changing, it may be growing.  One operator in particular, Apache, has recently expressed interest,” Beaudreau said.

Senator Lisa Murkowski, the top Republican on the Energy Committee, calls the proposed Alaska leases a “positive sign” but says the proof will come in the permitting process.  GOP Congressman Don Young says it’s a step in the right direction but complains that the White House isn’t being as aggressive as the Bush Administration was.  Other Republicans were more critical, chiding the Interior Department for not creating enough oil and gas industry jobs.

But environmental groups are voicing their own criticism of the White House.

Lois Epstein, an engineer and the Arctic Program Director for The Wilderness Society, calls the decision “a mixed bag,” and used the word “disappointed” to describe her reaction.  Epstein and other environmentalists doubt there will be significant enough improvements in knowledge about Arctic drilling in the window before 2015.

“The infrastructure is still not going to be there.  There’s not going to be adequate science in a few years.  There’s not going to be tested and proven spill response equipment.  So our view is that it’s a bit of a rosy picture they’re painting about what the situation’s going to be in 2015 and more likely than not they’re not going to be any more ready to be drilling then than they are now,” Epstein said.

This week’s announcement is focused on the new five year lease plan, but it doesn’t go back and change or erase leases already sold.  That means oil company Shell could still go ahead with its plans for exploration in arctic waters this summer if it gets final approval. Interior Deputy Secretary David Hayes explains.

“What we are processing now are leases that were sold five years ago under the prior administration, 4-5 years ago.  Companies purchased those leases, and we have made clear that we believe there’s an obligation to diligently proceed and evaluate requests to develop those leases since they have been purchased by those companies,” Hayes said.

Environmentalist Lois Epstein says it doesn’t make sense to move cautiously on the next round of lease sales while letting Shell go forward.
“There’s a contradiction there.  Because they’re saying they’re going to go forward with exploratory drilling, which can be riskier even than production, and they say they don’t have enough information to for sure hold those lease sales in the next few years?,” Epstein said.

Shell Alaska spokesman Curtis Smith says a lot may ride on how things go for his company when it’s allowed to proceed.

“Reading between the lines, I think it’s fair to say our success, Shell’s success in the arctic will in some way be a referendum on those future lease sales.  Not just in terms of them being available for bidding, but also the price they might demand,” Smith said.

The Interior Department’s David Hayes says the proposed five year plan is not etched in stone, so what is learned – or not learned – and how things go if Shell moves forward, could influence what happens next.

“There is potential flexibility for either delaying or increasing the lease sales in the arctic, dpending on what information is developed in the meantime,” Hayes said.

Officials will hold nine hearings in Alaska next month to take comments on the proposal, in communities like Anchorage and Fairbanks – and those on the front lines like Wainwright, Kaktovik, and Barrow.

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