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BLM to Hold 'Major' Lease Sale on Alaska NPR

With energy prices at historical -- and in some cases record highs -- relief could be on the way in a few years as the Bureau of Land Management (BLM) announced last week that it will make land available for oil and natural gas leasing in the resource-rich northeast and northwest portions of the National Petroleum Reserve in Alaska (NPR-A).

In a Record of Decision (ROD) issued last Wednesday, the BLM said it has plans to have the "major" lease sale in October. Some of the companies rumored to have expressed interest include ConocoPhillips, Anadarko, Renaissance Alaska, PetroCanada and Pioneer Natural Resources, according to the government agency.

The lands made available for leasing under plans for the NPR-A northeast and northwest sale could result in the development of as much as 8.4 billion bbls of oil and more than 50 Tcf of natural gas. The oil would be transported to market on existing infrastructure just east of the NPR-A boundary that connects to the TransAlaska Pipeline System, while gas could be shipped to North American markets through gas pipelines currently in the planning stages (see NGI, July 14a).

"Our current estimate for the entire NPR-A, which is 23 million acres, is approximately 70 Tcf," said BLM-Alaska Director Tom Lonnie. "About 26% of that is identified to be in the south NPR-A, which we haven't talked about at all, but approximately 74% would be in the northwest and northeast that we are talking about right now."

Lonnie noted that following the lease sale, production could begin anywhere from two to 10 years down the road. "We anticipate that the [development] movement is going to be east to west...Based on ConocoPhillips' projections, we are anticipating that there would be production within NPR-A sometime between 2010 and 2012."

According to the ROD, the BLM defers leasing for 10 years on land currently unavailable for leasing north and east of Teshekpuk Lake.

"This action sets the stage for a major lease sale this fall. This is welcome news at a time when Americans are paying record prices at the pump," said C. Stephen Allred, assistant secretary for Land and Minerals, in signing the ROD.

With crude and natural gas futures prices recently trading near $150/bbl and well north of $13/MMBtu respectively, lawmakers have been looking far and wide for ways to increase production domestically in the Lower 48 and in Alaska. As part of a broader bill, House Democrats recently said they would call on the Bush administration to mandate annual lease sales in the NPR-A (see NGI, July 14b).

"The rapid increase in energy costs facing our nation is driven by a worldwide imbalance in energy supply and demand," Secretary of the Interior Dirk Kempthorne said. "Developing the NPR-A in an environmentally sound manner will contribute to our domestic oil and natural gas supplies. Together with new production from other offshore and onshore areas, these increased supplies will help stabilize energy costs."

The plan includes protections for the polar bear, including requirements to consider impacts on areas used by polar bears for denning. Additionally, with the listing of the polar bear as "threatened" under the Endangered Species Act, the agency will continue to work closely with the U.S. Fish and Wildlife Service on future oil and gas activities (see NGI, May 19).

"This decision provides for the protection of high-value wildlife, including waterfowl and caribou, and meets the subsistence needs of North Slope residents while making lands with oil and gas potential available for leasing," said Lonnie.

The ROD for the northeast NPR-A Final Supplemental Plan can be viewed at www.blm.gov/ak.

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