ENERGY

Alaska Pushes Drilling Plan for Offshore, Area Near ANWR

This undated photo shows the Arctic National Wildlife Refuge in Alaska.
National Journal
Coral Davenport
June 30, 2011, 10:20 a.m.

This story is a cor­rec­ted ver­sion. An earli­er ver­sion in­cor­rectly stated the state of Alaska would al­low drilling in the most en­vir­on­ment­ally sens­it­ive areas.

The Alaska gov­ernor’s of­fice, which has long griped that the Obama ad­min­is­tra­tion has blocked oil drilling in the Arc­tic Ocean and Arc­tic Na­tion­al Wild­life Refuge, is ag­gress­ively push­ing a plan to drill off a pristine strip of state-owned coast thread­ing between the fed­er­ally pro­tec­ted lands and wa­ters.

Alaska Gov. Sean Par­nell, a Re­pub­lic­an, an­nounced the plan on Thursday by tele­con­fer­ence at a Wash­ing­ton press con­fer­ence held in con­junc­tion with the U.S. Cham­ber of Com­merce. It would al­low the state to start al­low­ing drilling in the Beaufort Sea, up to three miles off the fed­er­ally pro­tec­ted re­gions of AN­WR and the Na­tion­al Pet­ro­leum Re­serve-Alaska, by­passing the need for fed­er­al per­mis­sion. It also ap­pears cal­cu­lated to ramp up polit­ic­al pres­sure on the ad­min­is­tra­tion to al­low new drilling on the con­tested fed­er­al lands and wa­ters.

Par­nell said he in­tends to use this move to en­cour­age oth­er coastal states to ex­pand drilling.

“We’re set­ting an ex­ample for what oth­er states can do. Much of Alaska’s prom­ising lands are un­der fed­er­al con­trol. We need Amer­ica’s help to spur pro­duc­tion.” 

“This is break­ing new ground,” said a seni­or of­fi­cial at a ma­jor U.S. oil com­pany, who asked not to be iden­ti­fied since all ma­jor oil com­pan­ies were not made aware of the de­cision be­fore it was an­nounced. “In the past, noth­ing any­where near AN­WR was even talked about. This would present an op­por­tun­ity that’s nev­er been avail­able be­fore. The in­dustry will wel­come this as a pos­it­ive de­vel­op­ment.” 

It’s long been a source of ire to the oil in­dustry””and re­lief to en­vir­on­ment­al­ists””that the fed­er­al gov­ern­ment has fi­nal say on wheth­er com­pan­ies can drill in the fed­er­al wa­ters of the Arc­tic Ocean, the 19 mil­lion acres of AN­WR, and the 24 mil­lion acres of the Na­tion­al Pet­ro­leum Re­serve, which are be­lieved to hold more than 10 bil­lion bar­rels of un­dis­covered oil. But those areas are also home to sens­it­ive and unique eco­sys­tems that could be dev­ast­ated by a dis­aster like last sum­mer’s Gulf of Mex­ico oil spill. Since the fed­er­al gov­ern­ment cre­ated AN­WR in 1960 and the NPR in 1923, it has fought at­tempts to open up the wild­life refuge and res­isted ef­forts to is­sue per­mits to drill in the re­serve. The ad­min­is­tra­tion has is­sued per­mits to Shell Oil to be­gin drilling the first ex­plor­at­ory wells in the Beaufort and Chuk­chi seas, but it delayed those plans after the Gulf spill, cit­ing the need for more re­search in­to im­pacts of an Arc­tic spill.

All of this has ag­grav­ated of­fi­cials in Alaska, which de­rives most of its rev­en­ue from oil roy­al­ties.      

“The first couple of years of the Obama ad­min­is­tra­tion have felt like an on­slaught,” Alaska De­part­ment of Re­sources Com­mis­sion­er Daniel Sul­li­van told Na­tion­al Journ­al in an in­ter­view.

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So state of­fi­cials say they found a way to take ac­tion. While the state has no con­trol over drilling in AN­WR, it does own the three miles of Arc­tic Ocean just off the coast””after those three miles, the fed­er­al gov­ern­ment owns the wa­ters. Of­fi­cials say it stands to reas­on that that three-mile rib­bon likely cuts through the vast oil de­pos­its be­lieved to lie be­neath AN­WR and the Arc­tic Ocean. Alaskan of­fi­cials and oil com­pan­ies hope that by drilling in that strip, they can tap in­to up to a dozen gi­ant oil pools that would oth­er­wise be off-lim­its. And if they do hit sig­ni­fic­ant re­serves there, that could pres­sure the fed­er­al gov­ern­ment to open ad­ja­cent areas. An­oth­er op­tion Alaskan of­fi­cials are hop­ing for is pas­sage of a bill sponsored by Sen. Lisa Murkowski, R-Alaska, the rank­ing mem­ber of the Sen­ate En­ergy and Nat­ur­al Re­sources Com­mit­tee, which would al­low drillers in state-owned wa­ters to use ho­ri­zont­al drills to si­phon oil from un­der­neath the ad­ja­cent pro­tec­ted areas. 

Sul­li­van said he ex­pects Alaska’s Oc­to­ber sale of on­shore and off­shore drilling leases to be the largest such sale this year. Over­all, it will open up 14.7 mil­lion acres to drilling, an area equal to Mas­sachu­setts, Con­necti­c­ut and Ver­mont com­bined.  

He ad­ded that he is con­fid­ent that com­pan­ies that find oil in the state wa­ters between the fed­er­al prop­er­ties will be able to with­stand any leg­al chal­lenges.   

“We’ve looked hard at the leg­al is­sues sur­round­ing such plays, and we are con­fid­ent that if a com­pany drilled down straight down with­in that play, and drained that re­serve, they will be with­in their leg­al rights.  Large oil and gas fields don’t re­spect state and fed­er­al bound­ar­ies. But if a com­pany drilling on state land hit that well they would be with­in their leg­al right to drain that well.”

The push­back from the en­vir­on­ment­al com­munity should be fierce. Over a year after the deadly Gulf oil spill high­lighted the dangers of off­shore drilling, Con­gress has yet to pass le­gis­la­tion re­quir­ing new off­shore-drilling safety meas­ures, and en­vir­on­ment­al ad­voc­ates, led by the Pew En­vir­on­ment Group, have pressed Pres­id­ent Obama not to al­low any new drilling in Arc­tic wa­ters, where, green groups say, ex­treme weath­er con­di­tions and a sens­it­ive eco­sys­tem could make the im­pacts of a spill even more dev­ast­at­ing. 

Elean­or Huffines, man­ager of Pew’s U.S. Arc­tic Pro­gram, said that the group does not have a prob­lem with the cur­rent drilling in Alaska’s state-owned wa­ters, which takes place near the on-land Prud­hoe Bay drilling op­er­a­tions. 

“To date the state-wa­ter off­shore-drilling fa­cil­it­ies have been done in a way that min­im­izes harm to the en­vir­on­ment,” she said. “But for each plan, loc­a­tion is im­port­ant. To date it’s been done safely, but that’s not to say you could do that off AN­WR. You have to con­nect to the coast, which means build­ing in­fra­struc­ture. How could you do that in AN­WR? The risks to sens­it­ive spe­cies would be high­er. It would be much more dif­fi­cult to do safely.”

Sul­li­van said that the state will not al­low drilling in the most en­vir­on­ment­ally sens­it­ive areas, where whale mi­gra­tion and whale calv­ing areas are.

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