US Eyes Drilling on
Alaska Coast

Boston Globe
Posted April 24, 2003

By Richard Simon

WASHINGTON - Blocked by stiff congressional opposition to opening the Arctic National Wildlife Refuge to oil drilling, the Bush administration is moving on its own to promote energy exploration in icy waters off the Alaskan coast.

Government officials are inviting oil companies to bid later this year on the rights to drill in the Beaufort Sea off the northern coast of Alaska, an area unaffected by a moratorium on new offshore exploration in much of the rest of the United States.

High costs have caused wariness among oil companies about drilling in the sea. As an industry lobbyist noted: ''A lot of really expensive dry holes have been drilled'' in the Beaufort Sea.

In response, the administration proposes to offer millions of dollars worth of incentives to encourage bids on leases expected to cover nearly 10 million acres, stretching from the Canadian border to the Alaskan city of Barrow.

The Alaskan coast may be one of the best hopes left to President Bush to achieve his goal of developing more domestic energy production.

In response to objections from his brother, Governor Jeb Bush of Florida, he reduced drilling opportunities in the Gulf of Mexico and agreed to spend $235 million to cancel unused oil and gas leases elsewhere off the state's coast and in the Everglades.

More recently, the White House dropped a legal fight with California over old offshore oil leases, virtually ending the chance of new drilling off the state's coast. Last month, the Senate rejected Bush's bid to allow drilling in the Arctic National Wildlife Refuge in Alaska's northeast corner.

Faced with diminishing choices, the administration is looking elsewhere in Alaska - especially in areas, such as the Beaufort Sea, where drilling would not require congressional approval.

''If you look around, the lower 48 is pretty drilled up,'' said Larry Cooke, a geologist in Alaska for the federal Minerals Management Service. ''If you're looking for big things, Alaska is about the only place left.''

Walter Cruickshank, the service's deputy director in Washington, added: ''Alaska ... can provide significant supplies if the resources that we believe are there ... turn out to be there and be economical to produce.''

The big unknown is how much enthusiasm oil companies will show for the offshore leases when they come up for sale this September.

Federal officials say the offshore area proposed for leasing could yield 460 million barrels of economically recoverable oil. The United States uses about 7 billion barrels of oil a year.

Unlike drilling in the Arctic refuge, the administration can move forward with the lease sale unless blocked by Congress, something considered unlikely since Alaska's congressional representatives have generally supported more drilling in their state.

The area proposed for drilling comes within 3 miles of the Arctic refuge.

Lisa Speer, a senior policy analyst with the Natural Resources Defense Council, said the group is concerned that the debate over the Arctic refuge has obscured the administration's efforts to promote the offshore drilling.

''The Arctic refuge is taking the spotlight,'' she said. ''But throughout the Arctic, there is this effort to hand things over to the oil industry. ''

Administration officials say no final decision has been made on the final boundaries of the proposed drilling area. Although the lease sale is currently proposed for 10 million acres, Interior Secretary Gale Norton can alter the size before the leases are offered.

As an inducement to oil companies, the administration has proposed allowing companies to produce up to 45 million barrels of oil free of royalties paid to the government.

Boston Globe

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