While the Alaska National Wildlife Refuge (ANWR) remains closed to oil and gas drilling, there’s nothing standing in the way of the state offering the area offshore ANWR to producers, according to Alaska Gov. Frank Murkowski. The governor said on Wednesday that he plans to offer 350,000 acres of state land offshore ANWR and 670,000 acres off the coast of the National Petroleum Reserve in Alaska in an October lease sale.
With the national energy bill making uncertain progress in Congress and with OPEC lowering its production targets as promised, Murkowski said the state can “no longer allow others to hold hostage the time at which Alaska will move its resources to market to benefit the nation.” He said his plan allows the state to “exercise its sovereign authority” for offshore development, “just as Texas and Louisiana are doing today.”
“I have directed my commissioner of natural resources, Tom Irwin, to open an immediate dialogue with the residents of the North Slope. While the U.S. House and Senate remain grid-locked over opening ANWR for oil development, I am not burdened with that process,” Murkowski noted. “Residents of Alaska and the North Slope are unified in their support for the opening of ANWR. Initial contacts with officials of the North Slope have been made. It would be my intention to include the state offshore ANWR tracts in our October 2004 Beaufort Sea Area Wide lease sale.”
The governor noted estimates that the area to be leased could produce up to 1.6 million bbl/d of oil. While there is no guarantee that amount is recoverable, the governor said, directional drilling from state leases offshore could help delineate onshore deposits, could identify deposits that collectively might justify investment in onshore pipelines, and could even discover more oil than is ever found onshore.
“There are about 425 miles of coastline between Barrow and the Canadian border. That’s just under two million acres in all. Some of the areas, those located off state land near Prudhoe Bay, are already leased and producing oil. These include the Northstar, Point McIntyre and Endicott fields,” he noted.
Rep. Richard Pombo (R-CA) lauded Murkowski’s leasing plan. “The only way we are going to increase our energy independence is by putting Americans to work and helping ourselves,” Pombo said. He also noted that the governor’s plan was announced shortly after OPEC ratified a prior pledge to reduce its cumulative oil production target by a million barrels per day, which will further increase U.S. gasoline prices beyond the record highs of recent weeks.
“The United States has the best workforce, the most advanced technology and the toughest environmental standards in the world,” said Pombo. “That combination of assets must be put in motion to make us more self-reliant. Unfortunately a few senators have not yet found the will to make this happen and our nation and its citizens are suffering as a result.”
Murkowski also announced Wednesday that he expects another large company to come forward, possibly as soon as this week, with a gas pipeline proposal under the state’s Stranded Gas Development Act. A group led by MidAmerican Energy Holdings withdrew an application last week for a 4.5 Bcf/d pipeline project. The group said the state failed to agree to terms that would have allowed it to move forward on an accelerated schedule with an exclusive five-year development period (see Daily GPI, March 26). Murkowski noted that it would have been unfair to the other applications under the Stranded Gas Development Act to cease negotiations with them by granting an exclusive right to MidAmerican. However, he sent a letter to David Sokol, president of MidAmerican Energy Holdings, suggesting a way the state could proceed to accommodate MidAmerican’s request for a five-year exclusive right to develop a pipeline from the North Slope. The letter may have crossed in the mail with a press release from MidAmerican stating the company was withdrawing its application with the state under the Stranded Gas Development Act.
Separate gas pipeline applications also have been made by the major North Slope producers and the Alaska Port Authority. TransCanada PipeLines already has permits to build the pipeline. In addition, an application is expected from the Alaska Natural Gas Development Authority.
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