Cook Inlet oil and gas leases win federal agency's approval

If proposal receives final OK, lease offerings are expected to generate hundreds of jobs

Posted: Friday, November 14, 2003

HOMER - A federal agency recommends that the biggest oil and gas lease offering in Cook Inlet in two decades should go ahead next year, as long as tracts along the lower tip of the Kenai Peninsula and Barren Islands are deleted for environmental reasons.

If the federal lease sale gets final approval, it is expected to be held in mid-May.

Robin Cacy, a spokeswoman for the federal Minerals Management Service, said a formal proposal for the sale in lower Cook Inlet will be announced later this month. A final decision will be made by Interior Secretary Gale Norton.

People at hearings earlier this year in Homer and the villages of Port Graham and Nanwalek opposed the sale. But it was supported in Kenai and backed by the Kenai Peninsula Borough.

An environmental study released last week said the deletion of recommended tracts, along the eastern Inlet from Kachemak Bay south, should help protect Native subsistence and reduce potential impacts to threatened species, such as beluga whales and Steller sea lions.

It also would reduce visual impacts by moving development farther offshore, the study said.

While the southern end of the sale area has received closer environmental scrutiny, the northern end has gotten more industry attention.

The study estimates that going ahead will bring $2.8 million a year in borough property taxes for 15 years, along with $2 million a year to the state and several hundred "direct, indirect and induced" jobs.

Opponents said that they feared spills and that the appearance of oil or natural gas platforms that might disrupt tourism. They said they feared that federal and state moves to reduce environmental regulations would increase the risks of drilling.

Bob Shavelson, director of the Homer-based group Cook Inlet Keeper, dismissed the environmental concessions as window dressing.

"The throwaway tracts were intentionally put in there so they could be pulled out and the government would appear to be responsive," he said.

About 2.2 million acres is recommended for next year's Sale 191.

The lower Inlet, stretching from Katmai National Park to Ninilchik, was first offered for lease in 1977 and 1981, with 13 exploration wells drilled. The wells were all plugged and abandoned, and the leases have expired.

In 1997, the Clinton administration scaled back federal lease Sale 149 to offer just the northernmost tracts, in the middle Inlet. The move was pushed by then-Gov. Tony Knowles.

That offering of just less than half a million acres resulted in the sale of only four tracts. But they were key: The four now belong to Forest Oil and are part of the Cosmopolitan unit being explored for oil by Conoco Phillips, which is using slant drilling from an onshore platform at Stariski.

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