Alaskan lawmakers blast Interior's new reserve management plan

An Obama administration plan to provide special management protections across roughly 13 million acres of a federal petroleum reserve in northwest Alaska would block oil and gas development and could hinder construction of a pipeline to transport offshore crude oil to market, the state's congressional delegation warned.

While the Interior Department plan announced yesterday would allow oil and gas leasing on roughly half of the 22.5-million-acre National Petroleum Reserve, known as NPR-A, it would expand "special management areas" by roughly two-thirds, including a waterfowl-rich -- and oil-rich -- area known as Teshekpuk Lake.

The plan also maintains protection at Kasegaluk Lagoon near Wainwright, where many assume a pipeline would come ashore if commercial oil is discovered in the neighboring Chukchi Sea, said Sen. Mark Begich (D-Alaska).

"The new preferred alternative still seems to close off several options for building a pipeline across the NPR-A," Begich said yesterday in a statement. "What additional conditions are going to have to be met and how feasible is it to get a pipeline in there?" he added. "The same is true if the pipeline has to cross over a new protected area to the west of Alpine."

His comments reflect a general unease among oil industry boosters over how the special areas would be managed -- questions that may not be answered until the agency's final environmental impact statement comes out later this year.

Interior Secretary Ken Salazar yesterday said the agency's preferred alternative, known as B-2, would provide access to the "vast majority" of oil in the reserve and would not rule out the potential for a future pipeline. The proposal, which reduces available leasing from 13 million acres to 11.8 million acres, would allow access to 72 percent of projected oil resources in the NPR-A, about 549 million barrels, the agency said.

The plan would also significantly expand special management areas at Teshekpuk and the Utukok River Uplands, home to the North Slope's largest caribou herd, and create a new area at Peard Bay that serves as habitat for seals, polar bears and other marine mammals, according to a chart comparing alternatives.

But the plan does not recommend that Congress designate any of a dozen wild and scenic rivers that were included in the draft alternative B on which the agency's new proposal is based.

"This plan also strikes an important balance by recognizing the need to protect America's treasures in the Arctic, from the raptors of the Colville River and the polar bears of the Beaufort Sea coast, to Teshekpuk Lake, Peard Bay and some of the largest caribou herds on Earth," Salazar said during a conference call yesterday from Anchorage.

'The most restrictive management plan possible'

The plan drew widespread praise from environmental groups whose members argue that although the Naval Petroleum Reserves Production Act of 1976 requires oil and gas leasing in the reserve, it also requires Interior to consider "activities related to the protection of environmental, fish and wildlife, and historical or scenic values."

But Sen. Lisa Murkowski (R-Alaska) called the new proposal the "the most restrictive management plan possible" for a reserve that was expressly established in 1923 as an emergency oil supply for the Navy.

"The environmentally sensitive Teshekpuk Lake area was already under a 10-year deferral for additional study, but this alternative goes vastly beyond that, putting half of the petroleum reserve off limits," she said in a statement. "This decision denies U.S. taxpayers both revenue and jobs at a time when our nation faces record debt and chronic unemployment."

Murkowski said the decision threatens both exploration in NPR-A as well as development of existing offshore leases in the Chukchi. Royal Dutch Shell PLC has invested billions of dollars in its Arctic exploration program and plans to begin drilling in the Chukchi and Beaufort seas this summer, pending federal approval (see related story).

The company during the past few years has studied potential corridors from the Chukchi to the Trans-Alaska Pipeline System, which carries crude from the North Slope to the Port of Valdez. The ongoing studies focus on hydrology, critical habitat, subsistence, infrastructure, soil, permafrost and water sources, among other considerations, a company spokeswoman said.

"If [Interior] puts the pipeline so far south that it just drives the cost out of the ballpark, well, then you know, it's game over," Robert Dillon, a spokesman for Murkowski, said earlier this month. "We think option B would do that."

Rep. Don Young (R-Alaska) said the plan unveiled yesterday would "add uncertainty and delay development projects at a time when the U.S. badly needs both the energy and the jobs."

Kara Moriarty, executive director of the Alaska Oil and Gas Association, said none of the group's members holds leases within the reserve, a reflection of low interest as a result of the most prospective areas already being off limits.

"Each of the proposed alternatives has significant restrictions in the form of special areas, wild and scenic rivers, stipulations, required operating procedures, and best management practices that could greatly impact if not prohibit the ability to permit and construct a pipeline across NPR-A to" the Trans-Alaska Pipeline System, she said in comments to the agency in May.

Oil and gas development has been slow in the reserve due in part to its sheer size, unique climate and past regulatory delays. In addition, the U.S. Geological Survey in fall 2010 significantly downgraded its estimate of oil and gas in the reserve from 10.6 billion barrels to fewer than 1 billion barrels (Greenwire, Oct. 27, 2010).

While numerous wells have been drilled, ConocoPhillips Alaska could become the first to build a commercially producing oil well in the reserve after receiving approval in December 2011 from the Army Corps of Engineers (E&ENews PM, Dec. 19, 2011).

Conservation groups applaud the plan

Conservation groups yesterday said Interior's plan allows ample opportunities for future oil and gas development.

"This proposal would make millions of acres available for oil and gas leasing, while preserving irreplaceable habitat for the western Arctic caribou herd in the Utukok Uplands and other wildlife areas," said Ken Rait, director of the Pew Environment Group's Western Lands Initiative.

Dale Hall, CEO of Ducks Unlimited and a former director of the Fish and Wildlife Service, said protections in Teshekpuk Lake -- where oil companies have sought to drill -- provide "irreplaceable" habitats for breeding waterfowl and molting geese.

"The importance of the Teshekpuk Lake Special Area, and the peninsula and lakes just above it, cannot be overstated," he said, adding the area is also important for caribou, grizzlies, other wildlife species and public uses, including hunting and other outdoor recreation.