The government will sell oil and gas drilling leases in Alaska’s National Petroleum Reserve by the end of this year, Interior Secretary Ken Salazar announced today.
The move builds on President Barack Obama’s May 14 announcement that the Interior Department would begin conducting annual lease sales for tracts inside the 23-million-acre reserve on Alaska’s North Slope.
Salazar’s announcement came at the end of a nearly two-hour House Natural Resources subcommittee hearing on Republican legislation that would mandate annual lease sales in the reserve and speed up federal permitting of roads, pipelines and other infrastructure needed to support oil and gas development in the region.
Salazar said the commitment to annual lease sales is “part of President Obama’s comprehensive energy strategy” and one of several “concrete steps to continue to expand responsible and safe domestic oil production.”
But Rep. Doc Hastings, R-Wash., said the administration wasn’t going far enough.
“Producing oil and natural gas in the NPR-A is pointless if there’s no way to get it out of there,” said Hastings, the bill sponsor. “The real problem is the federal government’s blocking and delaying of permits for necessary roads, bridges and pipelines needed to transport the energy out of the (reserve).”
To prepare for the 2011 lease sale, the Interior Department will solicit expressions of interest by oil and gas companies who may have their eyes on tracts in the reserve, said Mike Pool, deputy director of the Bureau of Land Management.
“This affords industry (the chance) to express to BLM certain parcels or tracts that they would like to see offered for the lease sale come December,” Pool told the House panel. The Bureau of Land Management still may put additional tracts on the auction block, he stressed.
Hastings’ bill would go further by also:
- requiring government agencies to issue infrastructure permits tied to oil and gas development in the reserve no more than 60 days after essential drilling permits are issued by the Interior Department.
- forcing the Interior Department to prepare a right-of-way plan that details how existing and future leases would be within 25 miles of an approved road or pipeline.
- mandating an updated assessment of the oil and natural gas resources in the reserve, because current estimates have been criticized as too low.
The U.S. Geological Survey estimated last year that there are roughly 900 million barrels of oil in the NPR-A, which was established as a petroleum reserve in 1923 and first opened for drilling in 1998. Earlier calculations were much higher, with estimates of 2.7 billion barrels of oil and 114.36 trillion cubic feet of natural gas in the reserve.
Given the designation as an oil and gas reserve — and not a specially protected wilderness area or other landmark — extracting energy from the region should be straightforward, said Sen. Lisa Murkowski, R-Alaska.
“If we can’t be producing from the National Petroleum Reserve, where in the world can we get it from?” Murkowski said. “I would suggest . . . that we’ve got a permitting problem. We don’t have a leasing problem.”
“The leases are out there,” Murkowski added. But “without some assurance of basic use and enjoyment of the property, purchasing a lease would be very risky business.”
Although 1.6 million acres — spanning 191 tracts — are now leased in the reserve, relatively little drilling has gone on there. Companies have increasingly given up their leases to drill, with 64 leases relinquished in fiscal 2010 and 60 already handed back to the government this year.
Murkowski and other Republicans highlighted the long-running bid by ConocoPhillips to build a bridge and pipeline over the Colville River Delta to access its drill site in the reserve. For some GOP lawmakers and industry allies, the company’s six-year quest has become a symbol of environmental regulation run amok.
Federal agencies have squared off on the project, with the Environmental Protection Agency generally opposing ConocoPhillips’ plan in favor of a road-less approach combining flights with an underwater pipeline.
Murkowski said she was “cautiously optimistic” the project would be resolved, following negotiations with administration officials. But, she said, “if every time a leaseholder wants to produce from the NPR-A they’ve got to come to Congress and essentially have a congressional hearing, we’re not going to be in a better position next go around.”
Alaskan officials and oil industry leaders today warned that the viability of the 800-mile-long Trans Alaska pipeline is in jeopardy without robust production from the reserve. Low volumes of oil traveling in the pipeline has already slowed the speed of that crude, and officials warn that if the volume shrinks much further, it could stop flowing altogether.
That could hurt Western consumers and refineries who depend on oil from Alaska, said Charles Drevna, head of the National Petrochemical and Refiners Association.
Drevna said that if Western states had been starved of Alaskan crude in 2010, they would have imported more than 73 percent of their oil.
“Our nation needs to ensure that there are minimal constraints to critical energy arteries — roads, bridges and pipelines — that move reliable and secure American energy sources to manufacturers that produce useful American products,” Drevna said. “Unfortunately, too often multiple government agencies create years of bureaucratic delays in approving a permit for a road, a bridge or other needed infrastructure.”
Democrats and administration officials took a dim view of Hastings’ bill.
Rep. Rush Holt, D-N.J., said it would be wasteful to force the government to map “out a spiderweb of roads and pipelines before we even know where future oil and gas production may take place.”
The BLM’s Pool also took issue with bill’s road-mapping requirement, which he said would force the government to “pre-approve rights-of-way on millions of acres of lands that industry may never seek to develop.”
Pool also warned that the legislation’s requirement for annual lease sales in areas of the reserve most likely to produce commercial quantities of oil and natural gas could conflict with decisions the agency has already reached about the best spots to sell. “These decisions balance protection of wildlife, habitat and subsistence values with oil and gas exploration,” Pool said.