WATCHING WASHINGTON ANWR LEASING TERMS

With Patrick Crow Ironically, when the Senate energy committee voted 11-8 May 23 to allow leasing of the Arctic National Wildlife Refuge Coastal Plain, senators didn't debate leasing terms. They debated whether the U.S. needs the oil ANWR may contain or should protect the plain in perpetuity. And they talked about how to spend potential oil revenues.

June 17, 1991

3 min read

Ironically, when the Senate energy committee voted 11-8 May 23 to allow leasing of the Arctic National Wildlife Refuge Coastal Plain, senators didn't debate leasing terms.

They debated whether the U.S. needs the oil ANWR may contain or should protect the plain in perpetuity. And they talked about how to spend potential oil revenues.

But no one objected to leasing terms and conditions, which are similar to those in a similar 1989 bill that fell victim to the Exxon Valdez oil spill. The only major change is that this time the federal government would split the revenues 50-50 with Alaska rather than give the state 90% as before.

INTERIOR'S ROLE

The latest measure requires the Interior Department to issue leasing regulations within 9 months of the bill's enactment after consulting with Alaska, Canada, Environmental Protection Agency, and Corps of Engineers.

After final regulations are issued, oil companies could nominate tracts for the first sale, and anyone could comment on those choices. Interior is obliged to exclude any environmentally sensitive tracts from the sales.

The first lease sale would be held within 18 months of the date the leasing rules are issued. A second sale would follow within 3 years. Later sales could be no more frequent than every 2 years.

All sales would be via cash bonus bids. Tracts would carry at least oneeighth royalties. No sale could offer more than 300,000 acres.

After each sale, the Justice Department and Federal Trade Commission would review the bids for antitrust implications.

High bidders then would file exploration and production plans, including minute details on all facilities planned for each site, operation schedules, reclamation plans, and contingency plans for accidents. Separate plans would be drafted to minimize and mitigate environmental damages at each location.

After public comment, Interior could approve the plans and collect bonds from the companies covering all operations.

The bill stresses that exploration and production must have "no significant adverse effect on fish and wildlife, their habitat, and the environment." Interior can suspend a lease any time it perceives a threat to any of those. Companies must use the best commercially available technology in all operations.

Exploration, except for surface geological studies, would be limited to Nov.1-May 1 when snow cover protects the surface.

Companies that violate any regulation would be subject to a $10,000/day civil penalty, and their officials could face possible criminal penalties.

The bill sets aside $5 million/year for environmental monitoring and enforcement. And it levies a 50/bbl fee on ANWR production to build a $50 million reclamation fund.

Those terms are the toughest the oil industry has faced in the U.S.

ENVIRONMENTALISTS REBUFFED

A Senate energy committee's report brushed aside environmentalists' arguments against drilling ANWR.

It said, "Oil from Prudhoe Bay now constitutes a fourth of our domestic supply but will soon begin an inevitable and irreversible decline. We simply must find out what lies in geologically similar underground formations in the ANWR right next to Prudhoe Bay field.

"It is difficult to see how we can be willing to send troops to fight in the Persian Gulf but not be willing to explore our most promising prospect for domestic oil."