BLM plans another lease sale in Petroleum Reserve

Government estimates the land could yield billions of barrels of oil

Posted: Thursday, July 17, 2008

ANCHORAGE - For the fifth time in a decade, the federal government will allow oil companies to bid for oil and gas leases in the sprawling National Petroleum Reserve-Alaska, officials announced Wednesday.

No oil or gas production has resulted from previous lease sales, however, officials with the Bureau of Land Management touted the upcoming sale, the fifth since 1999, as an opportunity to offset high fuel costs.

"This is welcome news at a time when Americans are paying record prices at the pump," said C. Stephen Allred, the Department of Interior's assistant secretary for land and minerals.

The government estimates that the roughly 3 million acres it plans to put up for bid this fall could yield several billion barrels of oil and a significant amount of natural gas.

However, oil companies face the difficult hurdle of getting the fuels to market. The Colville River separates reserve lands from the massive Prudhoe Bay oil field and its satellites to the east. The lack of roads, pipelines and other infrastructure in the reserve makes production risky.

Late last year, ConocoPhillips, Anadarko Petroleum Corp. and Pioneer Natural Resources returned 300,000 acres in the reserve to the federal government, saying the land did not contain enough oil and gas to justify the high costs of extraction and transportation in the remote Arctic environment.

Still, those same companies and others continue to pay for the rights to extract fossil fuels from more than 3 million acres, secured in previous NPR-A lease sales.

ConocoPhillips and Anadarko Petroleum did not immediately return messages left Wednesday afternoon.

Oil companies have paid $5 to $950 an acre for leasing rights, plus annual rental fees of $3 to $5 per acre, to the state and federal governments, according to Bureau of Land Management records. The state of Alaska and the federal government split those fees evenly, according to Sharon Wilson, a spokeswoman for the BLM in Alaska.

In a small victory for conservation groups, the agency decided early this year not to open land near Teshekpuk Lake, an important caribou and waterfowl habitat, for this round of leasing. In 2006, a federal judge halted lease sales near the lake, saying that that the government's environmental studies on the lake had been inadequate.

"I'm glad that the Department of Interior is continuing to recognize the significance of Teshekpuk Lake as an important wildlife habitat," said Eleanor Huffines, Alaska regional director for The Wilderness Society. "However, the government is still misleading the public into thinking that drilling will solve our problems at the pump."

Huffines said that companies should focus on producing oil and gas from the petroleum reserve instead of pushing for more exploration in the Beaufort and Chukchi seas, Bristol Bay and the Arctic National Wildlife Refuge.

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