Report OKs environmental conditions for lease sale

Posted: Thursday, July 29, 2004

ANCHORAGE - A new report by the federal government says there are no new environmental concerns preventing a Beaufort Sea oil and gas lease sale from taking place next spring.

The proposed sale, tentatively scheduled for March 30, covers nearly 9.8 million acres off Alaska's northern coast from the Canadian border to Point Barrow.

The federal Minerals Management Service has released an environmental assessment of the area that would be affected by the sale, determining there would be "no new significant impacts" besides those previously assessed.

MMS completed a comprehensive environmental impact statement of drilling in the Beaufort Sea two years ago, when it developed a plan to offer three lease sales over five years there.

The report released this week was conducted to determine whether another evaluation was necessary because of new or changed information on the region's birds, bowhead whales and subsistence hunters.

"Our view was that nothing had changed to make any new significant issues," said John Goll, MMS Alaska regional director.

The assessment will be open to public comment for 30 days. A proposed notice of sale is scheduled to go out in October and a final notice of sale 30 days before the lease sale date.

MMS must also get the recommendation of Gov. Frank Murkowski, said MMS spokeswoman Robin Cacy.

Inupiat Eskimos hunt bowhead whales during their spring and fall migrations through the Beaufort and Chukchi seas. The Alaska Eskimo Whaling Commission earlier this year decried Murkowski's plan to sell oil leases in state waters off the Arctic National Wildlife Refuge.

Maggie Ahmaogak, executive director of the commission, was traveling on Tuesday and could not be reached for comment.

The Minerals Management Service has had eight federal sales in the Beaufort Sea planning area since 1979. The most recent was last September, when three companies bid more than $10 million for leases on 181,000 acres.

Next year's proposed sale covers the same territory. MMS proposes six alternatives to the plan, removing from the sale various areas used by subsistence whale hunters.

MMS again plans to offer incentives to oil companies in next year's sale. One is a royalty reduction, where the first 30 million or 45 million barrels of oil from a leased tract can be produced tax free if the price of oil remains below a ceiling yet to be set.

Goll said the incentives, used in last year's sale and elsewhere, are needed to attract companies.

"With economic changes and such over the last decade, overall in Alaska things seemed to be in a downgrade. Now they're picking up again," Goll said.

MMS estimates 340 million to 570 million barrels of oil can be taken from the Beaufort Sea, with the price of oil between $18 and $30 per barrel. The price of Alaska North Slope crude on Tuesday was $40.54.

MMS predicts most Beaufort Sea leasing and drilling will happen off Prudhoe Bay, nearest the infrastructure already developed by North Slope producers.

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