Alaska Governor Sean Parnell this week announced in Washington, DC plans to hold auctions in October to lease 15 million acres of state land for oil and gas exploration. The lease tracts include areas within state waters in the Beaufort Sea off the coast of the Arctic National Wildlife Refuge and onshore areas that are adjacent to ANWR.
In a written statement, Governor Parnell and Natural Resources Commissioner Dan Sullivan did not try to conceal that part of the plan is to drain oil reserves under ANWR that have been locked up by Congress since 1980 and under the National Petroleum Reserve. “By drilling on state land and waters adjacent to NPR-A and ANWR, developers may end up drawing untapped oil that lies beneath these federal lands.”
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The Governor and Commissioner stated that so long as drilling is done “vertically” from State land into a reservoir that may flow across under federal land that draining the reservoir would be legally defensible. The point of contact with any play MUST be under State land . They specifically stated directional drilling under federal land was probably not legally defensible. This is specifically why legislation has been introduced by Senator Murkowski of Alaska toward directional drilling into ANWR from State land. To allow this situation to happen. That bill has not moved since introduced. Nor did it move last Congress in a previous iteration.
The current price of oil ($90/bbl) is a nearly hypnotic draw to those who want to cash in on the Beaufort Sea oil basin. ANWR basin appears to hold enough oil to supply World needs for about a month (1998 USGS survey). This even though is is not certain that that estimate will hold up in light of the USGS’s 2004 massive reduction in estimate to the NPR-A. Current drilling practice does not ensure clean slant drilling operations, BP’s excursion in the Gulf of Mexico was a clear example of can happen. What kind of regulation is there to assure that operation is vertical drilling — self reporting? When oil demand has forced crude prices up by a another factor of 2, the arguments may be more powerful. A second doubling might almost force the drilling. But right now any loosening of regulations would not show sufficient net return on investment to justify the costs (monetary and non-monetary)
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