State calls a truce in Prudhoe Bay dispute

Alaska Natural Resources Commissioner Andy Mack at a press conference in Anchorage on June 28, 2016. (Photo by Graelyn Brashear, Alaska Public Media - Anchorage)
Alaska Natural Resources Commissioner Andy Mack at a press conference in Anchorage on June 28, 2016. (Photo by Graelyn Brashear, Alaska Public Media – Anchorage)

Gov. Bill Walker’s administration has called a truce in its dispute with the big three North  Slope oil producers over plans for Prudhoe Bay.

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The Department of Natural Resources has approved the field’s latest development plan, ending a stand-off that raised fears the Walker administration was threatening companies’ leases at the site — potentially disrupting production at the state’s largest oil field.

The dispute goes back to January, when the Walker administration requested detailed information about how BP, which operates Prudhoe Bay, plans to market the field’s massive natural gas reserves. It was the first time the state has made such a request; Prudhoe doesn’t currently ship gas, only oil.

But the state wants assurances that BP and Prudhoe’s other owners, ExxonMobil and ConocoPhillips, are preparing to make the gas available to a potential North Slope pipeline project.

“The state’s position is that we’re at a point where we need to prepare for major gas sales,” said new DNR Commissioner Andy Mack. Mack spoke by phone from Seoul, South Korea, where he was traveling with the governor and other state officials in an effort to promote Alaska’s gas line project.

BP refused the Walker administration’s request, arguing the information the state wants either doesn’t exist or would be illegal to release under anti-trust laws. In June, the state declared the Prudhoe Bay plan incomplete, and gave BP two months to try again.

That decision raised concerns the state might be considering action against the companies’ leases if they didn’t cooperate.

But the state reversed course. On September 20th, Mack sent a letter approving the companies’ plan (as first reported by the Alaska Journal of Commerce). In an interview, Mack said the state didn’t get all of the information it requested, but the administration has been encouraged by the companies’ public statements in support of a state-led gas line project.

“There’s always a request and then there’s a response, and in many cases it’s not a perfect match, and I think that’s the case here,” he said. “But we felt comfortable at the end of this process that it was the right thing to do for the state of Alaska to approve the plan through 2017.”

The approval letter included the caveat that the state expects more detailed information next year.

State Sen. Cathy Giessel, R-Anchorage, chairs the state Senate’s Natural Resources committee. She said the letter seems to leave the issue open.

“I think there is definitely a tone of ongoing threat to the leases on the North Slope, based on Commissioner Mack’s letter,” Giessel said. “That’s a concern to me.”

Meanwhile, the head of the state Division of Oil and Gas, Corri Feige, announced plans to resign the same day Mack’s letter was sent. Feige has been the face of the Walker administration in the dispute for the past few months.

Mack said her decision had nothing to do with the Prudhoe Bay plan. A spokesperson for the Division said Feige was not available to comment.