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Obama Hits Hard on Alaska, Arctic E&P Prospects

Interior Secretary Sally Jewell and her chief of staff told U.S. Sen. Lisa Murkowski (R-AK) that the Obama administration will announce Tuesday it will withdraw any deferred areas for lease in the Beaufort and Chukchi seas from Interior's next five-year offshore leasing plan, and will also ban drilling in the Hanna Shoal area, according to a spokesman for the Senate Energy and Natural Resources Committee.

Meanwhile, in a move that infuriated Alaska's independent governor and its all-Republican contingent in Congress, the Obama administration said it will recommend designating core areas and the coastal plain of the Arctic National Wildlife Refuge (ANWR) as wilderness.

Robert Dillon told NGI that Jewell and Murkowski had a conversation about the administration's plans on Friday evening and that earlier in the day Jewell's chief of staff met with the senator in her office.

"We were informed that there were three things they were going to do this week," Dillon said Monday. "ANWR was first. The second was they were going to release the five-year plan tomorrow and the areas that are currently deferred in the Chukchi and Beaufort seas under the current five-year plan would, in the next five-year plan, be withdrawn just like the president recently did in Bristol Bay [see Daily GPIDec. 17, 2014].

"In addition to the deferral areas, they would also add the Hanna Shoal to that," Dillon said. "It won't affect leased areas [or] current leases, but it will restrict leasing going forward to certain areas."

Katie Marquette, spokesman for Gov. Bill Walker, said information about leasing in the Beaufort and Chukchi seas “was shared by the Interior Department to Alaska’s congressional delegation” and referred additional questions to Dillon.

On Sunday, Interior unveiled a conservation plan that includes a recommendation by its U.S. Fish and Wildlife Service to designate 12.28 million acres as wilderness, and to include the Atigun, Hulahula, Kongakut and Marsh Fork Canning rivers into the National Wild and Scenic Rivers Program.

If approved by Congress, the wilderness designation would be the largest in Interior's history and would designate nearly all of ANWR's total 19.8 million acres as wilderness. Currently, more than 7 million acres of ANWR are managed as wilderness.

But if initial reaction to the wilderness proposal is any indication, the prospects of it being enacted by a Republican-controlled Congress appear dim. It may have also bruised the administration's relationship with Murkowski, the new chairman of the Senate Energy and Natural Resources Committee.

"What's coming is a stunning attack on our sovereignty and our ability to develop a strong economy that allows us, our children and our grandchildren to thrive," Murkowski said in a joint statement with Walker, Sen. Dan Sullivan (R-AK) and Rep. Don Young (R-AK). That statement said Obama and Jewell were "declaring war on Alaska's future."

"It's clear this administration does not care about us, and sees us as nothing but a territory," Murkowski added. "The promises made to us at statehood, and since then, mean absolutely nothing to them. I cannot understand why this administration is willing to negotiate with Iran, but not Alaska. But we will not be run over like this. We will fight back with every resource at our disposal...

"These decisions simply cannot be allowed to stand. I have tried to work with this administration -- even though they've made it extremely difficult every step of the way -- but those days are officially over. We are left with no choice but to hit back as hard as we can."

Sullivan said Alaskans would defeat the administration's "lawless attempt to designate ANWR as a wilderness, as well as their ultimate goal of making Alaska one big national park... It is just one more example of President Obama thumbing his nose at the citizens of a sovereign state, and will put Alaska and America's energy security in serious jeopardy."

Young added "simply put, this wholesale land grab, this widespread attack on our people and our way of life, is disgusting."

Walker said the Obama administration's proposal came at a particularly bad time -- when the state was withdrawing more than $10 million from its savings every day due to the collapse in world crude oil prices and declining production. Consequently, he said he would pursue increased drilling on state-owned land.

"Having just given to Alaskans the State of the State and State of the Budget addresses, it's clear that our fiscal challenges in both the short- and long-term would benefit significantly from increased oil production," Walker said. "This action by the federal government is a major setback toward reaching that goal. Therefore, I will consider accelerating the options available to us to increase oil exploration and production on state-owned lands.

"This further underscores the need for Alaska to become a participant in the infrastructure development for the benefit of all North Slope participants and the residents of Alaska."

Royal Dutch Shell plc is the largest leaseholder in the Chukchi and Beaufort seas, investing nearly $6 billion in Alaska's offshore, but with little to show for it so far (see Daily GPIAug. 29, 2014). Shell dropped its drilling plans in both seas last year while ConocoPhillips, another large leaseholder, put its plans to explore the Chukchi on hold in 2013 (see Daily GPIMay 20, 2014April 11, 2013)

Last year the U.S. House of Representatives passed a bill calling for the Obama administration to move forward on offshore lease sales, including in areas of the National Petroleum Reserve in Alaska (NPR-A). That followed plans by Interior in 2013 to lease nearly 12 million acres, more than half of the NPR-A, which would allowed pipelines to be built to transport offshore Chukchi and Beaufort seas production (see Daily GPIJune 27, 2014Feb. 25, 2013).

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