Alaska Pushes Drilling Plan for Offshore, Area Near ANWR

This undated photo shows the Arctic National Wildlife Refuge in Alaska.
National Journal
Add to Briefcase
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.

From Na­tion­al Journ­al: Col­bert Leaves FEC Tri­umphant Sen­ate Stayc­a­tion: Here, But Not Clear What to Do VIDEO: Gates Leg­acy Still Hangs in the Bal­ance On The Trail: Chan­ging Face of the GOP PIC­TURES: Obama Shows Off His Team Spir­it

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.


Welcome to National Journal!

You are currently accessing National Journal from IP access. Please login to access this feature. If you have any questions, please contact your Dedicated Advisor.