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Planning Underway for Beaufort Sea Lease Sale in 2017

Federal regulators are calling for information and nominations from industry and stakeholders for the final Outer Continental Shelf (OCS) sale scheduled for 2017, Lease Sale 242, which would encompass part of the controversial Beaufort Sea Planning Area offshore Alaska.

The 45-day call for information, which launches Tuesday with a notice in the Federal Register, is designed to gather information about specific areas within the Beaufort Sea that have the "most promising oil and gas resource potential," and to increase understanding about environmentally sensitive habitats and important social and cultural uses -- including vital Alaska Native subsistence activities -- that exist within the area, the Department of Interior bureau said.

"There is significant oil and gas potential in the Beaufort Sea, but this part of the Arctic Ocean is also a unique and sensitive environment that is critically important to the subsistence needs of Alaska Native communities on the North Slope," said Bureau of Ocean Energy Management (BOEM) Acting Director Walter Cruickshank. "Any consideration of future leasing must be done in a way that identifies not only the areas that have resource potential, but also those areas that must be protected for wildlife and traditional uses.”

Issuing the call is an early step in the BOEM's "targeted" approach to leasing offshore Alaska, established in Interior's final 2012-2017 Outer Continental Shelf Oil & Gas Leasing Program (see Daily GPIJune 29, 2012). The sale would exclude two subsistence whaling areas near Barrow and Kaktovik from leasing.

According to Interior, targeted leasing is designed to move away from area-wide sales in favor of a "more geographically distinct proposal having high resource potential, clear indications of industry interest and reflecting appropriate environmental protection and the interests of other users of the OCS."

The call for information does not indicate any decision about what areas of the Beaufort could be offered for leases in the future, which is why it is asking for advice.

Consistent with the targeted leasing approach BOEM wants the oil and gas industry to identify specific blocks in the Beaufort Sea Program Area that appear promising for exploration and development.

"The call requests that industry rank its interest in particular areas according to five levels of priority, ranging from 'critical interest' to 'no interest.' If a nomination falls outside the area BOEM has determined to have a high hydrocarbon potential, the nominating company will be required to provide detailed information about the basis for its level of interest in the nominated area, including a summary of the relevant geologic, geophysical and economic information."

Interested parties are asked to comment not only on areas that have potential resources but those areas that might be considered for exclusion because of "conflicting values, uses or environmental concerns." Those submitting information also are asked to be as specific as possible in their comments, which may include information about geological conditions, such as bottom hazards; archaeological sites on the seabed or near shore; multiple uses of the area, including navigation and subsistence; and other socioeconomic, biological or environmental information.

"BOEM will make decisions about potential areas for leasing after evaluating industry interest in the resource potential of specific areas and continuing its analysis of scientific information and traditional knowledge regarding environmental issues and potential conflicts with uses such as subsistence activities," officials said. "Any future lease sale in the Beaufort Sea Planning Area would also undergo thorough environmental reviews and consultations under the National Environmental Policy Act and other laws."

Alaska Democrat Sen. Mark Begich said the announcement is "another important step to developing the massive oil and gas resources of the Arctic Ocean and keeping oil flowing through the Trans-Alaska Pipeline for decades to come. Residents of the North Slope have balanced responsible oil development and subsistence hunting for decades...I am confident we can do so again in the Beaufort Sea and encourage industry and whaling groups to come to the table so we can make good decisions going forward."

The call for information drew criticism from conservation groups, which want the Obama administration to halt all oil and gas development in the Arctic. Proposed drilling in the Beaufort, like the neighboring Chukchi Sea, has faced litigation for two years (see Daily GPIDec. 18, 2012).

"The Beaufort Sea, just 12 miles off the coast of the Arctic National Wildlife Refuge, is an important ecological and subsistence area," Alaska Wilderness League Executive Director Cindy Shogan said. "The Beaufort and Chukchi seas are central to life in coastal communities, provide important habitat for countless species of wildlife and play a vital role in regulating the world's climate."

Whether an Arctic drilling program will draw many explorers is a question, with ongoing criticism by federal regulators and the opposition. BOEM already is in the preliminary stages to schedule offshore lease sales, including Alaska, from 2017-2022 (see Daily GPIJune 13).

Shogan pointed to Royal Dutch Shell plc's problems during its inaugural drilling season in the Beaufort and Chukchi seas in the summer of 2012 (see Daily GPIMarch 18, 2013). Mishaps that arose for Shell and its contractors are evidence of future exploration problems, she said.

"The harshness and uncertainty of the Arctic climate, coupled with the lack of scientific information about our fragile Arctic Ocean, make the Arctic Ocean no place to drill. Shell's failures and the on-the-ground reality of the Arctic should give the Obama administration ample reason to take any future leasing off the table."

Although it has spent billions over the past few years for the Alaska exploration program, Shell dropped its drilling plans for this year and now is scrutinizing its offshore program that to date has not resulted in any production (see Daily GPIMay 20). ConocoPhillips, another big leaseholder in the region, scuttled its long-planned program to drill this year in the Chukchi (see Daily GPIApril 11, 2013).

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