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Administration's Alaska Leasing Proposal Blasted

Sen. Lisa Murkowski of Alaska, the ranking Republican on the Senate Energy and Natural Resources Committee, has attacked the Obama administration's proposed plan to manage oil and natural gas development in the National Petroleum Reserve in Alaska (NPR-A), saying that its proposal would unilaterally ban exploration in half of the 23 million-acre reserve.

The administration's plan, which the Interior Department released earlier this month, proposed a modified version of an alternative (Alternative B), which would have made only 48% of the reserve (11 million acres) available for leasing. It designated extensive areas around Lake Teshepuk as being unavailable for leasing. The other three alternatives for leasing were far less restrictive, offering leasing on 57%, 76% or 100% of the NPR-A.

"The environmentally sensitive Teshepuk Lake area was already under a 10-year deferral for additional study, but this alternative goes vastly beyond that, putting half of the petroleum reserve off limits...This decision endangers not only further exploration of the NPR-A, but also development of existing offshore leases in the Chukchi Sea," Murkowski said.

The draft NPR-A Integrity Activity Plans and Environmental Impact Statement (IAP/EIS), which was released in March, identified four alternatives for management of the reserve, including Alternative B. The final IAP/EIS, which is to be unveiled later this year, will offer a modified version of Alternative B (B-2) as the preferred alternative, the department said. It did not say how the alternative would be modified.

Sen. Mark Begich (D-AK) also expressed concern about Interior's choice, saying the "new preferred alternative still seems to close off several options for building a pipeline across the NPR-A." But Interior contends the preferred alternative would allow for the possibility of pipelines and related infrastructure to be built in the NPR-A to accommodate future offshore oil and gas production in the Beaufort and Chukchi seas.

Interior Secretary Ken Salazar proposed the NPR-A plan after meeting with North Slope leaders and reviewing hundreds of thousands of comments.

"To harness the oil and gas potential of the NPR-A, we need a plan that will help industry bring energy safely to market from this remote location...This proposal would allow us to continue to expand our leasing in the NPR-A ...and builds on our efforts to help companies develop the infrastructure that's needed to bring supplies online," Salazar said.

"As the first integrated activity plan for the entire NPR-A, this will provide a roadmap to help facilitate the transition from leasing and cautious exploration to production and smart development," said Mike Pool, acting director of Interior's Bureau of Land Management (BLM).

The agency estimated that the nearly 11.8 million acres that would be available for leasing under the preferred alternative are estimated to hold 549 million bbl of discovered and undiscovered economically recoverable oil and approximately 8.7 Tcf of discovered and undiscovered economically recoverable natural gas.

In December, BLM offered three million acres for sale in the NPR-A that generated bids totaling more than $3.6 million (see NGI, Dec. 12, 2011). It has scheduled a second NPR-A sale to be held in November (see NGI, May 21). BLM Alaska said it plans to offer 630 tracts on about 7.1 million acres in the upcoming lease lease, which would be more than double what the agency offered producers in 2011. The tracts to be auctioned would be within the Northeast and Northwest Planning Areas of the NPR-A.

To date, only exploratory drilling has occurred within the NPR-A, although last year permits were issued to ConocoPhillips to allow for future production of oil and gas resources within the NPR-A.

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