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Agency seeks Arctic offshore lease suggestions

Posted: September 27, 2013 - 12:04am

ANCHORAGE — The Interior Department has put out a call for expressions of interest by the petroleum industry for expanded drilling in the Arctic Ocean.

The Bureau of Ocean Energy Management announced Thursday it has issued a 45-day call for petroleum drillers to comment on additional tracts that could be sold in the Chukchi Sea off Alaska’s northwest coast.

The call is an early step toward a potential targeted lease sale in 2016.

“Any future leasing in the Chukchi Sea must be focused on areas that can be developed safely and responsible while also protecting sensitive habitats and places that are important to Alaska Native hunters and fishermen,” bureau director Tommy Beaudreau said in the announcement.

The last Chukchi lease sale was in 2008 during the waning days of the Bush administration. The leading bidder was a subsidiary of Royal Dutch Shell PLC, which paid $2.1 billion for Chukchi leases. The company says it has spent upward of $5 billion on Arctic offshore development.

Drilling is bitterly opposed by environmental groups who contend oil companies have not demonstrated they can drill safely in one of the world’s coldest and most remote regions or deal with an oil spill in waters subject to ice in various stages all year round.

Lawsuits and permit requirements held up Arctic offshore drilling until 2012 and Shell was not allowed to dig into petroleum-bearing deposits last year because a key piece of spill response equipment was damaged in testing.

Shell succeeded in drilling top holes in both the Chukchi and Beaufort seas but suffered mishaps culminating in its Beaufort drilling vessel, the Kulluk, running aground in December near Kodiak as it tried to cross the Gulf of Alaska under tow. Both the Kulluk and the vessel that drilled in the Chukchi, the Noble Discoverer, are undergoing repairs and did not drill in 2013.

Susan Murray, deputy vice president of the environmental group Oceana, said additional Chukchi leasing is premature and unnecessary.

“Oil companies are not ready to explore on leases they already control — which are also still under legal challenge,” she said. “Rather than pushing forward to open new areas, BOEM should focus on fixing the problems that have been made apparent by the controversies and near-disasters that have resulted from its previous decisions.”

The U.S. Geological Survey estimates Arctic offshore reserves at 26 billion barrels of recoverable oil and 130 trillion cubic feet of natural gas.

Alaska elected officials strongly support offshore development as a major source of oil for the trans-Alaska pipeline.

BOEM said it wants to gauge interest in additional leasing by requesting the industry to identify specific blocks that appear promising.

A decision on a lease sale will be made after evaluating industry interest, an analysis of scientific data and a review of potential environmental and subsistence hunting conflicts, the agency said.

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