Alaska Chukchi Sea oil lease offer draws fire

A polar bear sow and two cubs are seen on the Beaufort Sea coast in this undated handout photo. The Minerals Management Service said Wednesday it will offer oil and gas exploration rights next month to 29.7 million acres in the remote Chukchi Sea off northwestern Alaska.

By Yereth Rosen

ANCHORAGE, Alaska (Reuters) - The Minerals Management Service said Wednesday it will offer oil and gas exploration rights next month to 29.7 million acres in the remote Chukchi Sea off northwestern Alaska.

The decision to hold the February 6 lease sale, the first in the Chukchi since 1991, comes days before the Fish and Wildlife Service will decide whether to list the polar bear as threatened and has drawn fire from environmentalists seeking to limit oil development in the area.

"We believe our decision is a good balance, and will allow companies to explore this intriguing frontier area while still protecting the resources important to the coastal residents," MMS Director Randall Luthi said in a statement.

The Chukchi Sea separates northwestern Alaska from northeastern Siberia. The U.S. portion of the remote, ice-choked sea is believed to hold 15 billion barrels of recoverable oil and 76 trillion cubic feet of recoverable natural gas, according to the Interior Department.

In the past, companies seeking to drill Alaska's offshore regions have concentrated on areas as close to shore as possible, minimizing distances from infrastructure and potential costs.

It is unclear whether companies will want to venture into such distant waters, said MMS spokeswoman Robin Cacy. "We won't really know until we have the sale."

Environmentalists say the Chukchi area, already hard-hit by rapid warming, should not be opened to more oil and gas development.

"We've seen all of these studies and reports coming out concerning significant impacts to marine mammals from global warming," said Betsey Beardsley of the Alaska Wilderness League. "If you couple that with increased oil and gas development, there's no telling what impact that would have to marine life."

Senator John Kerry criticized the lease sale plan and said the MMS should wait at least three years to investigate potential impacts to polar bears, being considered for Endangered Species Act protections because of habitat loss.

"It's the height of irresponsibility and short-sightedness for the Bush Administration to schedule lease sales in the Chukchi Sea, which represents critical habitat for polar bears, whales, walrus and threatened wildlife," he said.

A decision on listing the polar bear is due next week.

Alaska Wilderness League's Beardley predicted several companies will bid on Chukchi leases, including Shell, which is active in offshore Alaska, Exxon Mobil and Norway's Statoil.

A spokesman for Shell said the company acquired data from seismic surveys conducted in the Chukchi over the summer, Shell spokesman Curtis Smith said.

"Evaluation of that data is ongoing to determine if the Chukchi is a good fit for Shell," he said.

(Reporting by Yereth Rosen; Editing by David Gregorio)