By the OGJ Editors
WASHINGTON, DC, Apr. 11 --The US Department of Interior's Bureau of Land Management Apr. 11 published a final rule clarifying drilling related activities that occur in the National Petroleum Reserve-Alaska (NPR-A).
"This final rule, which implements recent changes in a law that governs oil and gas activities in the NPR-A, complements existing oil and gas leasing procedures in NPR-A," said BLM Director Kathleen Clarke.
Under the rule, companies operating in the NPR-A will be able to 'unitize' their oil and gas leases. Unitization maximizes production while minimizing the environmental impact of development, BLM said.
Shared benefits
Under a unit agreement, or "unitzation" several lessees in a given area may share in the risks and costs -- as well as the potential benefits -- of oil and gas exploration and development by grouping their leases into one block and delegating the operating responsibilities to one operator, BLM said. Grouping is also seen as more environmentally-friendly because it allows two or more leases to produce using fewer wells, reducing the size of the drilling area.
Lease suspensions
BLM also said it will allow lease suspensions to give companies more lead time to plan drilling and extraction on Alaska's sensitive North Slope environment. The rule sets the primary lease term for 10 years. The suspensions will allow leases to be extended beyond their authorized terms by "stopping the clock" under circumstances that are beyond the control of the operator, BLM said.
BLM said it may also suspend a lease term after discovery of producible oil or gas to allow time for the construction of a transportation system from the new well to a gathering or storage system or some other facility.
Subsurface storage agreements will assist production in the NPR-A by allowing operators, for a fee, to store oil or gas in existing geological structures rather than in above-ground tanks while waiting for distribution.
"Severe climate or other factors often make it difficult to construct distribution and storage systems for the oil and gas, and little environmental risk is posed by this type of storage," BLM said.
The final rule also allows for waiver, suspension, or reduction of rental or royalty for
NPR-A leases; this rule also makes clear that existing suspension and royalty
reduction regulations do not apply to the NPR-A.
BLM's sister agency, the US Geological Survey, is expected to release updated reserve projections this spring on NPR-A which are expected to be much higher than previous estimates because of better seismic data collection and drilling methods.
Earlier estimates by USGS showed the northeast portion of the 23-million acre area likely held between 1.8 to 4.7 billion recoverable barrels (OGJ Online, Mar. 28, 2002).
