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Petroleum News: Governor blesses Bristol Bay sale

Murkowski cites local support for oil and gas development, North Aleutian basin could hold up to 23 trillion cubic feet of natural gas

Wesley Loy

Anchorage Daily News

Alaska Gov. Frank Murkowski came off the fence April 12 and endorsed the idea of oil and gas leasing in the federal waters of salmon-rich Bristol Bay.

In a letter to the U.S. Minerals Management Service, Murkowski said he based his position on local support around the bay for leasing in what is known as the North Aleutian basin.

The governor last October had stopped short of backing a lease sale, saying he needed to hear more from the region’s people.

The idea of drilling for oil and gas in Bristol Bay long has been controversial because of concern that an oil spill could hurt the world’s largest annual migration of sockeye salmon, which sustains the state’s most valuable commercial salmon fishery. The region also is rich in king crab, bottom fish and sea mammals important to subsistence hunters.

Mounting protest led the federal government to buy back leases that drew more than $95 million from oil companies in a 1988 sale.

More recently, however, the value of Bristol Bay salmon has plunged because of competition from foreign, farm-raised salmon, and some bay leaders now look to oil and gas development as a way to sustain the local economy.

Murkowski cited the support of the Aleutians East Borough, the local government closest to offshore waters most prospective for oil and gas discoveries, as one reason why he could support offshore leasing.

Not the broader bay

However, the governor asked the Minerals Management Service, which regulates offshore drilling, to offer for lease only the area that was offered in 1988, and not the broader bay.

“This area is located a good distance away from the Bristol Bay fisheries, which are the subject of much of the local concern,” the governor wrote.

MMS is crafting its national leasing plan for 2007-2012 and sought comments from the governor and the public. Murkowski also blessed continued leasing in the Beaufort and Chukchi seas and in Cook Inlet.

Bristol Bay is among several U.S. offshore zones currently barred to drillers by presidential decree.

Local governments, tribal organizations and fishing industry players generally have supported recent state efforts to lease land around the bay to drillers, but they’re divided on leasing in the federal waters beyond three miles offshore.

Dorothy Childers, an activist with the Alaska Marine Conservation Council, said her group is disappointed the governor supported leasing without waiting until the Minerals Management Service completes an environmental impact study.

Federal officials have noted that inclusion of an area such as Bristol Bay in the leasing plan does not necessarily mean a lease sale will occur.

“We’re a long way from having a lease sale in Bristol Bay,” Childers said. “Bristol Bay is clearly one of the crown jewels of the U.S. coast, not just in Alaska but for the whole country.”

Federal geologists believe the North Aleutian Basin could be rich in hydrocarbons, particularly natural gas — up to 23 trillion cubic feet. One company, Dutch oil giant Shell, has expressed strong interest in drilling in the bay.

Seattle-based Peter Pan Seafoods Inc., which operates a major salmon cannery at Dillingham, said in comments to the Minerals Management Service that energy development could help diversify the region’s economy.

“Recent history in other areas has shown that energy development and fisheries can successfully coexist,” wrote Clyde Sterling, Peter Pan’s executive vice president for Alaska operations.

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