Oil Report

Bush administration bars drilling in Arctic wetland

ANCHORAGE, Alaska (Reuters) - The Bush administration on Friday proposed keeping potentially oil-rich wetlands in Arctic Alaska off-limits to drilling because of their ecological sensitivity, a reversal of its earlier plan.

The Bureau of Land Management proposed a 10-year leasing moratorium for 430,000 acres of wetlands north and east of vast Teshekpuk Lake in the National Petroleum Reserve-Alaska. Environmentalists and local groups hailed the decision.

“This plan provides a balanced approach to energy development and wildlife protection, and forms a solid basis for the Bureau of Land Management to proceed with an oil and gas lease sale later this year,” Interior Secretary Dirk Kempthorne said in a statement.

The area, the North Slope’s biggest freshwater lake, is considered potentially rich in oil and gas as well as a critical habitat for migrating birds and caribou. Two years ago, the administration was poised to sell leases to energy companies seeking to drill.

But a lawsuit by environmentalists and native groups forced the agency to revisit the plan in late 2006.

Extensive public comment, input from the local government and practical considerations contributed to the policy change, said Jim Ducker, an environmental program analyst for the BLM.

Ducker noted that the area is 40 to 70 miles away from any oil-field infrastructure.

“Our thinking is, it’s pretty darn unlikely that we’re going to have any development there” in the near future, he said.

Ducker said the BLM hopes the new plan will result in a lease sale this fall, to encompass essentially the same area offered for lease by the Clinton administration in 1999.

Geologists estimate the area holds 2.8 billion barrels of oil, he said, with 800 million barrels in the deferral area.

Environmentalists were pleased with the BLM’s new plan.

“It is a win,” said Stan Senner, executive director of Audubon Alaska, one of the groups campaigning for preservation. “I think they’ve responded to public interest in seeing that the area’s protected, and it gives people who care about the place time to work on a permanent solution.”

The BLM statement noted that North Slope Borough Mayor Edward Itta said “The lease sale can proceed while one of the region’s most sensitive wildlife habitats will be protected. It’s a win-win.”

The borough, which opposed oil development in the area because it is important to Inupiat Eskimo hunters, was enlisted to help prepare the new plan after a federal judge voided the previous leasing plan.

The 23 million acre National Petroleum Reserve-Alaska, on the central North Slope, was created in 1923 as a potential source of energy for the military.

Despite sporadic exploration drilling since the 1940s, almost all the successful oil development that ensued on the North Slope occurred on state land east of the reserve.

Industry interest in the petroleum reserve resurfaced in the 1990s, after Arco Alaska Inc. discovered the Alpine oil field on state land bordering the federal unit. Alpine is now operated by Arco successor ConocoPhillips.

While there has never been any commercial oil production in the petroleum reserve, ConocoPhillips and partner Anadarko plan to develop Alpine satellite fields on the federal land there.

Editing by David Gregorio