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Oil and Gas
Anchorage Daily News, April 1, 2010

Obama drilling policy excludes Bristol Bay
By Elizabeth Bluemink

President Obama announced Wednesday he supports development of some oil and gas leases in Arctic waters off Alaska's coast but won't allow drilling in federal waters near Bristol Bay.

The decision could clear a path to a promising frontier for oil and gas companies in Alaska, where production from aging oil fields has been falling for over two decades. In the last few years, oil companies have spent billions for rights to drill in the Chukchi and Beaufort seas, which may hold some of the biggest oil and gas deposits in the country, federal scientists say.

Obama announced support for drilling on existing leases there. But the president said he would cancel planned Chukchi and Beaufort lease sales so that environmental and oil-spill risks could be studied further.

His decision to ban drilling near Bristol Bay, amid the state's richest fishing grounds, was a solid win for fishermen and environmentalists that campaigned against leasing there.

In general, Obama offered something to oil companies, environmental groups, Native interests and Alaska political leaders but didn't give any group everything it wanted.

"He threaded the eye of the needle on this," said Jim Ayers, the Pacific director for Oceana, one of several environmental groups suing to block drilling in the Beaufort and Chukchi seas.

The Alaska offshore leasing plan is part of a larger national leasing plan the Obama administration published Wednesday.

The plan would let Shell, a Dutch oil giant, drill several exploration wells in the Beaufort and Chukchi seas this summer, if the company can get federal permits it still needs and withstand legal challenges from environmental groups and several North Slope villages.

Ayers, other environmentalists and some North Slope village leaders are unhappy about any drilling in Arctic waters: They worry about the difficulty of cleaning up oil spills in broken ice and possible harm to marine mammals from increased offshore industrial activity.

Curtis Smith, an Alaska spokesman for Shell, said the president's decision "acknowledges that responsible oil and gas exploration can take place in the Arctic."

He called the Chukchi and Beaufort seas "areas that could be home to some of the most prolific, undiscovered hydrocarbon basins in the U.S."

MIXED REACTION

The reaction in Alaska to Obama's decision was mixed.

While applauding the president for protecting Bristol Bay, some environmental groups also blasted Obama for allowing Arctic drilling.

The Center for Biological Diversity, a group suing to stop drilling there, called that decision "a disaster for wildlife and climate."

North Slope Borough Mayor Edward Itta said he is relieved by Obama's plan to cancel planned lease sales while scientists gather more information. Itta said the decision, overall, was a balanced one.

But Point Hope Native village president Caroline Cannon said Chukchi drilling would threaten the way of life in her community. The oil industry should not "have greater rights than we do," she said.

Gov. Sean Parnell and U.S. Rep. Don Young criticized Obama's decision. Parnell said it creates uncertainty about the future of oil and gas leasing in Alaska's outer continental shelf. Young called it a "ploy" to restrict development, noting that it prevents leasing in areas that had previously been approved by the Bush administration.

But Alaska's two senators, Republican Lisa Murkowski and Democrat Mark Begich, issued a press release together welcoming the decision to proceed with drilling.

"I appreciate the department's decision to allow valid existing rights to explore Alaska's huge offshore oil and gas reserves to go ahead," Murkowski said.

Begich said, "Although I want to see more details, it appears President Obama has struck a careful balance between environmentally responsible development in Alaska's outer continental shelf and conducting additional science to ensure the (shelf's) other resources, such as marine mammals, are protected."

TOO SPECIAL TO DRILL

Obama said his plan on offshore leasing nationwide is "part of a broader strategy that will move us from an economy that runs on fossil fuels and foreign oil to one that relies more on home-grown fuels and clean energy."

U.S. Interior Secretary Ken Salazar said that the Bristol Bay region is one place that is "simply too special to drill." Salazar cited the bay's world-class sockeye salmon runs and abundant wildlife. "It is a national treasure that we must protect," he said.

The area that had been proposed for leasing is not strictly located in Bristol Bay but is situated to the southwest in waters along the Alaska Peninsula called the North Aleutian Basin. Bristol Bay's commercial and subsistence fisheries rely on salmon that spend much of their life cycle in the basin.

Shell had hoped to explore the basin and is disappointed with the decision to close the area, said Smith, the company spokesman.

Also disappointed by the drilling ban there was Stanley Mack, Aleutians East Borough mayor, who remains upset about Salazar's visit to Dillingham last year to gather public input about drilling, rather than the peninsula towns.

"It would have been very beneficial for the secretary to hear from the residents closest to the lease sale. They are almost all in favor of responsible gas and oil development," Mack said.

But Dillingham-based tribal chief Tommy Tilden said he was overjoyed when he heard the Obama announcement on the radio Wednesday.

"It's been a long hard fight," Tilden said. "This is our breadbasket out there. ... It has all of the food we depend on."

WHAT'S NEXT

The Obama administration decision Wednesday involves two five-year oil and gas leasing plans.

The first one, running from 2007 to 2012, was approved by then-President George W. Bush but was withdrawn for revisions after environmental groups and villages sued to block it. A federal appeals court must be approve the new 2007-12 plan.

The second plan is for leasing between 2012 and 2017.

The public can comment for 30 days on both leasing plans.

© Copyright 2010, The Anchorage Daily News

Photo © Paul S. Hamilton