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New Alaska Oil Leases Being Offered
Published on Thursday, August 17, 2006 by the Associated Press
New Alaska Oil Leases Being Offered
by H. Josef Hebert
 

The Interior Department is set to open a vast area of environmentally sensitive wetlands in Alaska to new oil drilling, even as opponents point to corroding pipelines to the east at Prudhoe Bay as a reason to keep the area off-limits.

The tens of thousands of acres in and around Lake Teshekpuk on Alaska's North Slope are part of the oil-rich Barrow Arch that also includes the Prudhoe Bay fields that have kept oil flowing for decades.

The lease sale, opposed by environmentalists and some members of Congress, comes as federal regulators and a House committee investigate inspection and maintenance programs of BP-Alaska where widespread pipeline corrosion forced the partial shutdown of Prudhoe Bay oil production Aug. 6.

BP-Alaska is a subsidiary of London-based BP PLC.

Government geologists believe at least 2 billion barrels of oil and huge amounts of natural gas lie beneath the coastal lagoons, river deltas and sedge grass meadows — an area also where caribou give birth to their calves and thousands of geese migrate each summer to molt.

Within days, the Interior Department will open tracts in the lake area for leasing, with the winning bids to be announced in late September.

The lake and its surrounding wetlands are within the federal National Petroleum Reserve-Alaska (NPRA), a vast area of 22 million acres set aside in 1923 by the federal government for its oil and gas resources.

Unlike the Arctic National Wildlife Refuge farther to the east, the NPRA is acknowledged by all sides to be an area for energy development. But environmentalists argue that parts of it — especially the region around Lake Teshekpuk — should be excluded from the lease sales.

They contend that the risks to the environment were reinforced by the recent disclosure of shoddy maintenance, inadequate inspections and corroded pipes that led to the partial shutdown of North Slope oil production. BP Alaska has said it is replacing two thirds of its 22-mile Prudhoe Bay feeder pipeline system because of corrosion.

The company has acknowledged it was wrong to rely on ultrasonic tests to monitor the pipes and not internal tests using so-called smart pig technology, while also allowing a buildup of sludge in the pipes.

But the oil industry says it spends tens of millions of dollars for environmental protection on the North Slope and using modern technology can explore and develop oil fields in sensitive areas without a risk to wildlife and the environment.

"Oil is inherently a dirty business and there are some places where it should not be OK to go," countered Aurah Landau of the Alaska Coalition, an environmental advocacy group. She contends BP's pipeline corrosion and inspection and maintenance lapses are not an aberration and that there are frequent oil spills on the North Slope.

Recently, 19 senators and 66 House members separately urged Interior Secretary Dirk Kempthorne to reconsider offering leases in the Lake Teshekpuk area.

"Industry already has access to 87 percent of the Northeast area of the Reserve and providing them access to the remainder jeopardizes caribou and waterfowl populations and subsistence resources in one of the most important wetland complexes in the Arctic," the House letter says.

Interior's Bureau of Land Management said that in its upcoming lease offering it will limit the surface areas within the nearly 500,000 acres to protect geese molting and caribou calving areas. The restrictions apply to roads and drilling pads, but not to elevated 30-inch pipelines.

It is just such pipes that are the focus of BP Alaska's Prudhoe Bay problems, including a spill of 270,000 gallons of oil last March and another spill discovered recently, resulting in the shutdown of pipes BP's Prudhoe Bay production.

Edward Bovy, a spokesman for BLM-Alaska, said the agency's restrictions on surface activity are aimed to protect the environment, but that pipeline safety and integrity "are separate issues" and do not affect leasing decisions.

The Transportation Department's Pipeline and Hazardous Materials Safety Administration will regulate any pipelines extended into the NPRA lease areas. As a result of the BP pipe corrosion problems, the agency said it plans to strengthen federal requirements and standards for operating such pipelines in the coming months.

Copyright © 2006 The Associated Press.

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