by Robert Campbell

ANCHORAGE, Alaska - Modern technology and surging oil prices have suddenly made the prospect of drilling in the remote, icy Chukchi Sea irresistible to the world's oil giants -- and that is worrying the Inupiat people who have lived at the sea's edge for centuries.

With drilling opportunities dwindling elsewhere, oil companies earlier this month bid an astonishing $2.66 billion for drilling rights in the Chukchi, a stretch of water off Alaska's northwest coast that is frozen half the year and is a major polar bear habitat.

The Inupiat, relatives of the Inuit who inhabit other parts of the Arctic, fear oil spills or drilling activity will disrupt the endangered bowhead whales and other marine animals that they have hunted for generations.

"We want to continue to survive. Our lives are tied to subsistence. So is our culture and our religion with all the animals," said Jack Schaefer, president of the Inupiat village of Point Hope, a settlement on the Chukchi that is one of the oldest continuously inhabited places in North America.

"We don't have anything to replace that with. The high unemployment rate here will continue even if there is offshore oil and gas development since there will only be a few jobs that will be available."

Shell and ConocoPhillips, the two biggest bidders in the U.S. government's sale of drilling rights in the Chukchi, insist they will take the concerns of local communities into account as they search for the 12 billion barrels of oil the government believes lie under the sea floor.

But native leaders and environmentalists say the oil companies and the U.S. government's Minerals Management Service (MMS) have not done enough research to see if drilling in the Chukchi will be safe, especially in light of climate change, which is already transforming the Arctic environment and putting stress on delicate ecosystems.

"The MMS's environmental impact statement did not take into account what we have learned in the last year -- we are not going to see as much sea ice (in the Chukchi) and this is going to have really big ramifications for a number of species like the polar bear and walrus," said Chris Krenz, a researcher with Oceana, a marine environment advocacy group.

The Chukchi sale comes as the U.S. government is pushing to move more acreage in other parts of the Arctic like the Beaufort Sea into the hands of oil companies.

"It's too much, it's too soon and it's just going too fast," said Edward Itta, the Inupiat mayor of the sprawling North Slope Borough, a north Alaskan area the size of Britain.

ICE AND OIL

Native groups and environmentalists most fear a serious oil spill in the Chukchi. The MMS itself estimated in the environmental impact statement authorizing the lease sale there was a 40 percent chance of a spill of at least 1,000 barrels or more over the life of any single oil development project in the Chukchi.

"If oil spills under ice in the middle of January there is absolutely nothing they can do about it," said Rick Steiner, an oil spill expert at the University of Alaska, Anchorage.

"There's a large stretch of time when they would be producing oil and have no way of cleaning up a spill."

A legal challenge to the validity of the MMS's environmental impact statement is under way, and a similar suit temporarily halted Shell's plans to drill in the Beaufort Sea last summer.

Drilling opponents are pessimistic about their chances of putting a stop to the rush into the Arctic.

"Maybe there can be something worked out, but at this time it really doesn't look that way," said Schaefer.

"They don't really seem to care, and as this is a democracy they'll tend to deal with those that are the majority."

Additional reporting by Yereth Rosen in Anchorage, editing by Matthew Lewis
© 2008 Reuters