Interior Department nears offshore drilling decision

Agency to announce results of analysis ordered by court

Posted: Wednesday, March 31, 2010

ANCHORAGE - The Interior Department is ready to announce its analysis and review of defects in a program covering lease sales off much of Alaska's coastline, including arctic waters, according to a legal filing Tuesday.

Just one lease sale has been conducted under the 2007-2012 five-year Outer Continental Shelf lease program - the February 2008 Chukchi Sea sale that earned the federal government $2.7 billion. Additional sales were scheduled for the Chukchi and three other Alaska areas.

A federal appeals court ruled nearly a year ago that the Bush-era Interior Department did not properly study the environmental impact of expanding oil and gas drilling off the Alaska coast before authorizing its five-year program.

Attorney Peter Van Tuyn, representing the Native Village of Point Hope and two environmental groups, said Tuesday that judges concluded the Bush administration environmental review was "irrational." The department equated the sensitivity of water far offshore with coastal areas, he said.

That was a significant error regarding Arctic waters, where the environment and wildlife are driven by the ice edge that moves north and south with the seasons, Van Tuyn said.

Sea ice is a key element in the Beaufort Sea on Alaska's north coast, the Chukchi Sea on the state's northwest coast, and the Bering Sea, including Bristol Bay, home to the world's largest sockeye salmon fishery.

All three seas are on the migratory paths of endangered whales. The Beaufort and Chukchi seas are home to Alaska's two polar bear populations. Indigenous communities rely on marine life for subsistence hunting and fishing, and some fear industrial activity - from ship traffic to noise to spills - will permanently alter their homes.

The appeals court ordered the Interior Department to analyze the areas to determine environmental risks and potential damage before moving ahead with the five-year leasing program. The status report Tuesday said the department was ready to announce the results of its analysis and review, and would communicate them "very soon."

Elected officials in Alaska, which takes in about 90 percent of its general fund revenue from the oil industry, continue to push for lease sales that will lead to exploration and extraction.

Gov. Sean Parnell has aggressively challenged endangered species listings that could delay drilling.

U.S. Sen. Mark Begich, D-Alaska, wrote Interior Secretary Ken Salazar on Monday reminding him that drilling would create thousands of jobs and increase domestic energy production.

"I strongly urge you to ensure the balance you strike in Alaska continues a strong leasing program in the Chukchi and Beaufort Seas," Begich wrote.

He also noted that successful development of offshore oil and gas reserves is key to keeping the trans-Alaska pipeline carrying oil and important for a proposed multibillion natural gas pipeline to the Lower 48 states.

Michael LeVine, an attorney for the marine conservation group Oceana, said the Bush administration rushed forward with lease proposals without considering the effects of industrial activity. Federal regulators lack baseline data in the Arctic Ocean to even know if industrialization would cause changes.

"We know that Americans want energy and they want a healthy environment," he said. "There's a way to do it right."

Salazar could remove areas from the lease program, such as Bristol Bay, which is scheduled for a 2011 sale. He could negate the 2008 Chukchi sale, where Shell Gulf of Mexico Inc. paid $2.1 billion for leases and hopes to drill exploration wells this year. Salazar in December announced that the Minerals Management Service had conditionally approved Shell's exploratory drilling plan, despite the cloud hanging over the sale.

A decision by Salazar will be preliminary. It will open a 30-day comment period for the public to weigh in.

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