NPR-A leasing a model of responsibility

On May 16, a task force established by the administration of US President George W. Bush issued a report on national energy policy, complete with extensive recommendations designed to help bring together business, government, local communities, and citizens to promote dependable, affordable, and environmentally sound energy for the future. Among the many recommendations, the report recommends additional oil and gas development in Alaska.¹

When people talk about oil drilling in Alaska, the Arctic, or even new domestic drilling generally, one thing comes to mind: the Arctic National Wildlife Refuge. Ever since then-Texas Gov. George W. Bush, during the 2000 presidential campaign, raised the issue of opening the refuge for drilling, arguments for and against drilling and arguments for and against protecting the refuge habitat have inundated the public. Newspapers, magazines, congressional debates, the White House, and especially television coverage have made ANWR a term familiar to a great many Americans.

ANWR is a 19 million-acre parcel of protected federal lands covering the eastern part of the North Slope of Alaska, of which drilling advocates want to explore the 1.5 million-acre coastal plain. Just by listening to the press coverage, one might think this area of interest encompassed the whole North Slope. In fact, ANWR only covers about a third of the North Slope.

Directly to the west of the refuge sits Prudhoe Bay and related fields that oil companies have explored and developed for decades. Prudhoe Bay itself is the largest oil field in North America and the 18th largest field in the world. Prudhoe Bay and related fields are on private land and have thus far produced more than 13 billion bbl of oil.

West of Prudhoe Bay is another parcel of federal land, the National Petroleum Reserve-Alaska, or NPR-A. Unlike ANWR, most Americans have not heard about the NPR-A-not from newspapers, not from television, not from the Congress, and not from the new administration. The 23 million-acre NPR-A covers the western part of the North Slope of Alaska, and it is, in fact, open to oil and gas development. The US conducted a lease sale in 1999, offering nearly 3.9 million acres within NPR-A to industry. Since the lease sale, industry has drilled a number of exploratory wells on those NPR-A leases.

With all the talk about a US energy crisis, NPR-A would be a natural Exhibit A for discussion. In addition to the successful lease sale, Phillips Alaska Inc. and Anadarko Petroleum Corp. recently announced the first discoveries in NPR-A since the 1999 lease sale (OGJ Online, May 21, 2001). Of six wells and a sidetrack drilled there, Phillips and Anadarko disclosed that five of the wells and the sidetrack encountered oil or gas and condensate, and Phillips indicated the likelihood of commerciality. Phillips was reported estimating the discoveries' combined potential reserves as comparable to that of nearby Alpine field, also owned by Phillips and Anadarko and said to be among the largest onshore oil discoveries in the US in a decade (see map).²

Furthermore, the new National Energy Policy report recommends additional oil and gas leasing within NPR-A, the administration has allocated $5 million in the current budget to pursue additional lease sales, the Bureau of Land Management has announced that there will be another NPR-A lease sale in June 2002, and there are another 19 million acres or so of lands within NPR-A that have not been ex- plored-more than 10 times the acreage in ANWR that drilling advocates seek to open.

NPR-A is, as its name expressly states, a petroleum reserve, not a wildlife refuge. (But then, what's in a name?) Whether one supports leasing or preserving ANWR, that 23 million acres to the west is certainly worth a public discussion.

Background

NPR-A is about the size of Indiana and lies between the crest of the Brooks Range and the Arctic Ocean.

In 1923, President Harding designated the land as the Naval Petroleum Reserve No. 4, reserving the oil and gas resources. Pet-4 as it was known, was renamed the National Petroleum Reserve-Alaska in 1976, with the passage of the Naval Petroleum Reserves Production Act. Management of the lands was transferred from the Secretary of the Navy to the Secretary of the Interior, who was authorized to pursue petroleum exploration but not to begin development and production.

NPR-A was closed to all forms of appropriation under the public land laws, including the mining and mineral leasing laws. The 1976 act further provided that the Interior secretary assume all responsibilities for "any activities related to the protection of environmental, fish and wildlife, and historical or scenic values" and required that the Interior secretary "promulgate such rules and regulations as he deems necessary and appropriate for the protection of such values within the Reserve."³ Pursuant to this law, regulations to protect the surface resources of NPR-A were promulgated by BLM, the agency within the Department of the Interior responsible for NPR-A.

The 1981 Interior and Related Agencies Appropriations Act opened the NPR-A lands to oil and gas leasing and development but continued the withdrawals from other activities under the public land laws and continued the protections for the surface resources.⁴

From 1982 to 1984, DOI held four NPR-A lease sales. The first three sales led to the issuance of leases on 1,347,583 acres within NPR-A. Several factors hindered the first NPR-A leasing program, including:

• A lawsuit claiming that the subsistence provisions of the Alaska National Interest Lands Conservation Act had not been followed (a claim that ultimately failed).
• The fact that there were no provisions within the Naval Petroleum Reserves Production Act to allow unitization and suspension of leases.
• An interest in leasing ANWR that diverted interest from the petroleum reserve.

The result was that the fourth lease sale in mid-1984 produced no bids. The 10-year leases issued in the early 1980s expired without development.

Clinton-Babbitt initiative

In the mid-1990s, President Bill Clinton and his secretary of the Interior, Bruce Babbitt, began considering further management actions for the area.

This was prompted by numerous factors, including inquiries by Alaska's governor and congressional delegation, renewed interest in development from industry, interest by the environmental community in protecting the surface resources, and an interest by the native communities in both development and protection of resources in the area. The majority of the interest was centered on the northeast section of NPR-A, the portion closest to existing oil and gas development that also contains sensitive wildlife habitat.

In January 1997, conscious of the statutory requirements to protect the surface resources as well as develop the oil and gas, the president directed the secretary to initiate a planning process for the 4.6 million-acre northeast corner of NPR-A. The secretary assigned the project to BLM, directing that the planning process include an environmental impact statement to determine whether there were lands in the area suitable for oil and gas leasing, as well as whether further protections would be appropriate for wildlife and other resources in the area.⁵

On Feb. 12, 1997, BLM announced its intent to prepare a land-management plan and environmental impact statement for the area.⁶ The 18-month process was a model of inclusion, bringing together diverse interests to provide input to the agency on its plan. In addition to being a full public process, it was also a cooperative process with local, state, and federal agencies.

The core team was made up of both BLM and Minerals Management Service employees, in addition to representatives from the state and the North Slope Borough (the "county" government). Peer review was provided by the US Geological Survey, US Fish and Wildlife Service, and agencies from the state.

The Interior secretary also appointed a policy group, consisting of three of his top advisors, to represent him, ensure that the planning team in Alaska had all the resources needed to accomplish the project, and guide the career staff on policy decisions. The policy group consisted of the special assistant to the secretary for Alaska, the deputy assistant secretary for policy, and the deputy director of BLM. As the line manager responsible for the team in Alaska, the BLM Alaska state director also sat as an ex officio member of the group.

In order to consider all management alternatives in the comprehensive plan, BLM requested input from the public related to mineral resource development, including oil and gas leasing; wildlife protection; subsistence resources and activities and possible impacts on subsistence from various management alternatives; access; recreation and visual resources; threatened and endangered species; and historic, cultural, soil, water, and vegetation resources.⁷

"Inclusion." "Public participation." "Science." "Cooperation." "Collaboration." These were the buzzwords for the NPR-A process.

And the process itself was extensive, as BLM:

• Held five scoping meetings in which it asked the public to comment on the process that the agency was about to undertake.
• Conducted 10 public hearings on a draft proposal for the area.
• Printed and mailed a bimonthly newsletter throughout the process that was sent to anyone expressing any interest.
• Established an internet web site for the project, which contained all information and documents produced and allowed the public to submit comments electronically, in addition to the traditional methods.
• Hosted a 3-day science symposium in which experts from industry, academia, state and federal agencies, and the native community shared their knowledge about the resources in the area and the latest technology and advances in oil and gas development in the Arctic.
• Led a waterfowl and caribou stipulation workshop, gathering information from all involved on the best ways to protect the biological resources within the area and ways to develop the subsurface resources while protecting those surface resources.
• Held a subsistence stipulation workshop to ensure that subsistence issues were addressed.

BLM received over 7,000 written comments on its draft document, including substantial comments from the North Slope Borough, the state of Alaska, scientific experts on the waterfowl and other wildlife in the area, experts on the historical and archaeological resources in the area, oil and gas industry representatives, US Fish and Wildlife Service, US Department of Energy, and members of the general public both in Alaska and nationwide. All written and oral comments and concerns were fully considered in preparing a final proposal.

The final plan and environmental impact statement was released on Aug. 6, 1998. It made about 87% of the 4.6 million acres studied available for oil and gas leasing. The plan barred leasing and development in sensitive waterfowl and caribou habitat at Teshekpuk Lake and protected additional caribou habitat with special lease stipulations.

Continuing with the buzzwords for the process, the plan established a subsistence advisory panel and an interagency, interdisciplinary research and monitoring team. Under the plan, no surface occupancy is permitted on the three rivers that provide raptor habitat or on Teshekpuk Lake and other areas important for fish and subsistence use.⁸

Over the next few months, the secretary of the Interior signed a final Record of Decision on the plan, and the BLM-MMS team proceeded to plan the first lease sale for NPR-A in nearly 15 years. The first lease sale was held on May 5, 1999. About 3.9 million acres were offered for lease. Six companies submitted 174 bids on 867,721 acres (see map, OGJ, May 17, 1999, p. 33).

The 133 high bids totaled over $104.6 million, proceeds that were shared equally between the federal government and the state. Leaseholders sought and received permits to drill from the bureau. Exploratory wells have been drilled, discoveries have been made, and industry experts expect that additional wells and full development will follow.

Bush-Norton opportunity

President Bush has made the nation's energy policy a focus of his administration, naming Vice-Pres. Dick Cheney to head the National Energy Policy Development Group and to develop a national energy policy designed to help the private sector and government promote dependable, affordable, and environmentally sound production and distribution of energy for the future.⁹

From the beginning, President Bush, Vice-Pres. Cheney, and Interior Sec. Gale Norton have all stated that oil and gas exploration within ANWR would be pursued as part of the national policy, and in fact, it is a recommendation of the report. This commitment and recommendation has become a rallying call for the environmental movement in this country and even worldwide. These groups view ANWR as one of the world's great wonders, referring to ANWR's coastal plain, the very area the administration seeks to open for production, as "America's Serengeti."¹⁰

The president and vice-president and their representatives have discussed several proposals that could be included in a national energy policy. These include more exploration on federal lands, increased refining capacity, increased pipeline transportation, relicensing of hydro projects, solar and renewable energy, clean coal research, and a heating oil reserve.¹¹ All of these recommendations are set out in the National Energy Policy report.¹² However, the battle over ANWR has eclipsed all other aspects of the debate on the president's energy agenda. When it comes to what the average American knows about the Bush team's energy plans, it is only ANWR.

With all this noise, one might think that ANWR was about to be opened up tomorrow. Instead, it is not so imminent. Only Congress may authorize oil and gas activity within ANWR. Although polls show that the vast majority of Alaskans support exploration for oil and gas within the ANWR coastal plain, the polls also show that the majority of Americans oppose it.

Furthermore, a majority of US senators oppose it, as well, with most of the Republicans on record supporting drilling in ANWR and most of the Democrats on record opposing drilling. In the 2000 elections, eight pro-drilling Republicans left the Senate, replaced by at least six senators on record opposed to drilling. Therefore, based on conventional wisdom, the rest of the president's energy agenda is being eclipsed by a proposal that will not come to pass during the 107th Congress.

One domestic area that holds a lot of promise for oil and gas exploration is NPR-A. Now that exploration has occurred since the 1999 lease sale, another lease sale would likely be well-received on the same area. In addition, the federal agency staffs need resources from the administration and the Congress to respond to additional requests from industry on the existing leases. There is also planning that needs to be conducted in the NPR-A.

The Babbitt plan required that a plan be produced for the Colville River. Finally, there is an additional 19 million or so acres that have not received a comprehensive planning and environmental review by BLM. Such review could lead to additional oil and gas leasing and development.

There has been, and will continue to be, leasing for oil and gas in the Arctic. The area on Alaska's North Slope has proven to be a critical part of the nation's energy supply for decades. Will drilling in new areas be controversial? Drilling in a national petroleum reserve, being leased after a fully inclusive and cooperative public process, has survived what little controversy it engendered. But drilling in a national wildlife refuge that is like the Holy Grail to the environmental movement is certainly controversial. New oil and gas development on Alaska's North Slope provides a great opportunity for the new administration. Hopefully, the controversy to the east in ANWR will not hinder development to the west in NPR-A.

Acknowledgment

The author thanks Gene Terland, the BLM Alaska project manager, and Bill Burton, a partner at Jones, Day, Reavis & Pogue, for their input and assistance with this article.

References

1. National Energy Policy, Report of the National Energy Policy Development Group, viii, Appendix One (May 2001).
2. Anchorage Daily News, "Phillips finds NPR-A Oil," May 24, 2001.
3. 42 USC. SS 6503(b).
4. 42 USC. SSSS 6504(b), 6508.
5. "Clinton Administration to Initiate Comprehensive Planning Within Northeastern Area of Alaska Petroleum Reserve," US Department of the Interior News Release, Jan. 14, 1997.
6. "Process for NPR-A Planning is Launched: Secretary Babbitt Plans Firsthand Look this Summer," US Department of the Interior News Release, Feb. 12, 1997.
7. 62 Fed. Reg. 6797 (1997).
8. "Babbitt Presents Biologically Based NPR-A Plan that Balances Protection for Wildlife Habitat with Oil and Gas Development," US Department of the Interior News Release, Aug. 6, 1998.
9. "A Blueprint for New Beginnings. Create a Comprehensive Energy Policy," White House News Release, May 15, 2001.
10. "Protect America's Arctic National Wildlife Refuge," Alaska Wilderness League brochure.
11. Ari Fleischer, White House Press Briefing, Mar. 19, 2001.
12. National Energy Policy at Appendix One.

The author

Kim Harb, an attorney at Jones, Day, Reavis & Pogue, was the Bureau of Land Management headquarters project manager for the National Petroleum Reserve-Alaska project.