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3/21/2018 Member News
Feds, Alaska Try to Push Pace on Alaska Refuge Oil Exploration (Subscription Required)

Feds, Alaska Try to Push Pace on Alaska Refuge Oil Exploration

Posted March 13, 2018, 6:59 AM

  • Notice coming soon on oil leasing plans for Arctic National Wildlife Refuge
  • Alaska administration proposes to help finance seismic survey

Interior Department officials and Alaska Gov. Bill Walker are looking to accelerate work to prepare for oil leasing in the Arctic National Wildlife Refuge, the focus of a fight for more than 30 years over whether any oil production should ever take place on the land.

Interior Deputy Secretary David Bernhardt and Joseph Balash, Interior assistant secretary for land and minerals management, met March 8 and 9 with agency regional staff and business representatives in Anchorage, Alaska. Bernhardt said there that a notice on the next phase of regulatory plans for ANWR will be published in the Federal Register within weeks.

The meetings came not long after the state administration proposed $10 million to help finance a seismic survey to find oil and gas fields in ANWR. A new seismic survey would use far better technology than the last survey, completed 33 years ago, and the data from it could encourage more companies to bid for oil leases, Andrew Mack, commissioner of the Alaska Department of Natural Resources, said.

The state hopes to complete a survey next winter, Mack said.

“I think they absolutely could complete a program during three months of winter,” Nikki Martin, president of the International Association of Geophysical Contractors, said.

A survey is expected to cost more than $10 million, and the state is seeking corporate partners. A survey in ANWR could easily cost $20 million, possibly $30 million, Martin said.

‘Data is Critical’

The first step for some companies looking to lease in ANWR will be to apply for permits to conduct seismic surveys.

“Data before you actually drill your wells is critical,” Mack told Bloomberg Environment. There is a “voracious appetite” for data on the North Slope of Alaska, he added.

CGG SA, Schlumberger Ltd., Geokinetics Inc., and SAExploration Holdings Inc. are some of the geophysical service companies that may conduct surveys, which are usually financed by oil companies.

Seismic companies have been through three lean years—bad enough that Paris-based CGG, one of the biggest, filed in 2017 for a bankruptcy turnaround in the U.S. and France. CGG has acquired substantial operations over the years, including Fairweather Geophysical, which has done much work on the Alaska North Slope.

Equipment stored at Deadhorse, Alaska, at the northern end of the Trans-Alaska Pipeline System, would have to be mobilized eastward in a winter exploration season on frozen permafrost when vehicles will not churn up the ground. Typically that is a three-month to four-month window.

The higher costs of exploration in the Arctic, where conditions are tougher and environmental regulations are more restrictive, increase the importance of surveys.

Environmental advocates oppose ANWR leasing and will be participants in public procedures involving environmental reviews and land planning for leasing, said Nicole Whittington-Evans, Alaska regional director for the Wilderness Society.

“We will lay out the blueprint of items that need to be addressed administratively,” she said.

Shared Seismic Surveys

Seismic surveys, creating vibrations that are reflected from subsurface geologic layers, can identify potential locations of oil and gas fields, although drilling is necessary to confirm the existence and amounts of hydrocarbons.

Mack said the state has helped fund seismic work on state Arctic land in the past, starting in 2006. This time around, the data would be available for companies to look at—but not remove—in the state’s Geological Materials Center, a fairly new facility.

But, there is no assurance the state Legislature will authorize $10 million, Mack said. The state has had a more than $2 billion shortfall in each of the last few years. 

Companies Wary of Sharing

Oil companies may not be willing to go along with a seismic survey involving the state, because that would allow competitors to look at the data for a fee, and companies prefer to keep such data proprietary.

“It’s a very competitive, confidential portion of our business,” said Kara Moriarty, president of the Alaska Oil and Gas Association.

The oil companies don’t like to talk about what their exploration plans are. They haven’t divulged what seismic survey plans they may be contemplating on their own or taken a position on the governor’s proposal, Moriarty said.

Companies also worry about fiscal certainty, Martin said.

Companies still don’t know what the complications will be as Interior’s Bureau of Land Management works on the leasing plan and an environmental impact statement.

BLM will have to consult with the U.S. Fish and Wildlife Service to fulfill obligations under the National Environmental Policy Act, the Endangered Species Act, and possibly—because of polar bears—the Marine Mammal Protection Act, Martin said.

To contact the reporter on this story: Alan Kovski in Washington at akovski@bloombergenvironment.com

To contact the editor responsible for this story: Rachael Daigle at rdaigle@bloombergenvironment.com

https://bnanews.bna.com/environment-and-energy/feds-alaska-try-to-push-pace-on-alaska-refuge-oil-exploration?context=article-related