RDC’s 24th Annual Conference Presentations
Henri Bisson, Alaska Director, U.S. Bureau of Land Management
Let’s be thankful for Alaska’s mineral/energy potential
Next week is Thanksgiving!
I suspect that most Americans associate Thanksgiving with our agricultural abundance.
Thanksgiving means food, right?
Well perhaps that’s true, but if you think about it a little longer, it isn’t much of a stretch to tie Thanksgiving in with energy.
It took energy in the form of petroleum products to grow that food—whether it was a turkey, potatoes or pumpkin--, then process it, package it, refrigerate it, and get it to market. I also suspect most people will get in a car or truck to go to the store to load up on their groceries.
And when they get their food home, they won’t cook it on a wood stove. (Well, this is Alaska, so maybe some of you will head out to your cabin for thanksgiving!) But no, I think most people have electric or gas stoves in their houses.
It sounds so obvious when I say it. But let’s be candid here.
People just aren’t aware of how much they depend on the products many of you reliably supply day after day.
Energy and power are taken for granted--unless there is a big blackout.
There’s a big disconnect that needs to be connected. So, next week, remind someone outside your immediate family that we should be thankful for more than our food. Here, in Alaska, we are blessed with an abundance of energy resources. Give thanks for our energy resources too!
I’ve been asked to comment on energy and resource development from BLM’s perspective. First, I’ll discuss some promising aspects that are “over the horizon” a number of years away. Then I’ll talk about what could happen in the next few years, and finally give you an update on what’s happening right now!
OVER THE HORIZON
The National Petroleum Reserve-Alaska gets attention for its oil, but many people have no idea that it also has the largest coal reserves in North America. The coal-bearing beds follow the Colville River drainage for some 150 miles and are estimated to exceed 2.7 trillion tons of coal with less than 500 feet of overburden. Two factors push any coal development over the horizon. First, the National Petroleum Reserve currently is not open for coal leasing and second, the lack of infrastructure would make coal very difficult to bring to market at a competitive price. But it is there waiting for the economics to become more favorable. One way the economics for coal could improve is through coal gasification; if coal were to be processed and sent as a gas instead of a solid. It’s feasible, perhaps some day it will be economically viable
The lack of existing infrastructure affects other minerals known to exist in the National Petroleum Reserve. The mineralized belt of rocks that makes Red Dog a world class lead-zinc mine continues into the Petroleum Reserve, just 40 miles away. A well known, large, lead-zinc-silver occurrence at Drenchwater Creek shows promise. Exploratory drilling is necessary to better determine the extent of the mineralization.
The National Petroleum Reserve also has large barite deposits and I’m told that at least two companies have examined the possibilities of mining should the area be opened to mineral entry. Domestic barite supplies are declining and the United States is importing it from China. This is something to think about when we start our planning effort for the southern third of the National Petroleum Reserve and the Colville River, next summer. Barite, for those of you who don’t know, is used as an additive in drilling mud.
Another resource on the North Slope is commonly referred to as “heavy oil.” Heavy oil occurs across a huge area. You may have seen photos of natural oil seeps, some of which are in the Petroleum Reserve. Fortunately, the deposits (which could exceed 25 billion barrels) also overlap a large area around Prudhoe Bay in the West Sak, Milne and Orion fields, where infrastructure is in place. Heavy oil has some limiting factors —it’s cold, slow moving, viscous and sells at a discount to lighter oil. Industry has yet to devise the cost-cutting strategies needed to make this resource competitive and government has yet to provide some economic incentives to spur development. Since this oil occurs at shallow depths, there are some promising lines of inquiry open. For example, BLM, USGS, University of Alaska-Fairbanks and the state currently have a joint science proposal pending with BLM’s National Science Center in Denver. The project would study the potential for low impact drilling techniques for heavy oil; these could be employed year round in a tundra environment. I am very hopeful we will secure funding for the project to be initiated this year.
Research in the realm of gas hydrates is promising and should continue. The estimates are huge--an estimated 590 trillion CF in place in hydrate form on the Arctic North Slope, 100 TCF of which are within the existing Prudhoe Bay infrastructure. There is great potential and BLM wants to be involved. We are pursuing gas hydrate research in a variety of ways. We have assistance agreements with USGS and DGGS that will tie in with UAF; this will enable us to undertake a 3 to 5 year research project that will further identify locations and quantities across the North Slope. Another project, currently underway, is looking at a potential correlation between the orientation of pingos on the North Slope and escaping natural gas. We are mapping these using high-resolution photos.
This technology is still a ways off and considered unproven. Even if the technical aspects are solved, the lack of a natural gas pipeline will direct any production into a reinjection scenario until such time as the gas pipeline becomes a reality.
NEAR TERM
So, while we are waiting for that gas pipeline to be built, let’s turn to something that appears to be a bit more likely to happen soon, coal-bed methane. Or, what is now being referred to as coalbed natural gas.
The resource estimates for Alaska are staggering… perhaps up to 5.5 trillion short tons of coal could hold 1,000 TCF of coalbed natural gas in place.
There are several applications for this resource. Perhaps the most exciting is bringing a low cost energy alternative to remote villages. Studies have identified at least 35 villages that could benefit. These villages are currently depending on oil for space heating and power generation. The transport and storage of oil has environmental and economic costs that contribute significantly to the cost of living in these areas. BLM has met with a number of villages that are interested in this technology.
Along with other partners, we completed a test project using a conventional drilling rig this spring to see if there was coal at depth at Chignik on the Alaska Peninsula. The findings were not satisfactory, but other exploratory drilling projects are scheduled for Wainwright and Fort Yukon.
BLM expects to spend about $150,000 a year for the next 3 years on interagency coalbed natural gas research in Alaska. This summer we will be working with USGS to re-enter a North Slope climate drill hole to determine whether the gas present is suitable for development.
We are also partnering with Evergreen Resources on a drilling project in the Mat-Su Valley to model production holes—we want to see how much gas and water is produced to tie in with the findings from the North Slope.
We will also be looking at the gas potential from Federal minerals in the Mat-Su Valley and elsewhere during our Ring of Fire planning effort—that runs from the Aleutians, up through the upper end of Cook Inlet and down through Southeast.
Developing energy resources in rural areas can do a lot more than lower residential heating bills. We know of a number of large mineral deposits “off the power grid” that would benefit as well, such as the Donnlin Creek project near Aniak, where an estimated 17 million ounces of gold could be mined in a 30-year time period IF a suitable low cost energy source could be developed. Bringing prospects such as this into full production would increase the tax base for the state and provide a significant number of new jobs in areas plagued with chronic high unemployment.
RIGHT NOW
Now let’s get to current events.
Next Friday, we are releasing the final EIS for BLM’s plans for 8.8 million acres in the Northwest part of the National Petroleum Reserve. Time precludes a full discussion of the plan so I’ll just give you a few highlights….
In January we released a draft EIS with 4 alternatives. The EIS was controversial and we received more than 96,000 comments, most through a fax/email campaign organized by various environmental groups. But we also received a number of well thought-out, carefully researched comments from the local Audubon Society, the North Slope Communities, the State of Alaska and others. We used this information to develop our final plan.
So, what is our proposed management plan? First, we chose to keep all 8.8 million acres of BLM-administered lands and the federal subsurface lands open to leasing.
However, recognizing that there are a number of sensitive areas that need some special protection for water quality, vegetation, wetlands, fish and wildlife habitat, subsistence uses and scenic/recreational values, we took steps to protect sensitive resources.
For example, leasing would be deferred for 10 years on about 1.5 million acres near Wainwright. The deferral area will serve as a control area that can be scientifically compared to nearby areas to measure any changes brought about by oil and gas exploration and development.
We are proposing no surface occupancy stipulations for permanent facilities for 1.6 million acres along coastal areas, deep-water lakes and key rivers.
Other stipulations and required operating procedures establish restrictions and guidance that apply to waste prevention and spills, water use, winter overland moves and seismic activity, exploratory drilling, aircraft use and subsistence consultation.
We also identified special study areas for Pacific black brandt and caribou. Areawide studies would be conducted on habitat for Spectacled and Steller’s eiders and yellow-billed loons.
Finally we have also developed some special stipulations within the Colville River Special Area to minimize loss of raptor foraging habitat.
We anticipate holding a lease sale for selected tracts in the Northwest portion of the National Petroleum Reserve next June. Because the straight-line boundaries of the lease tracts do not correspond precisely to the irregular boundary of the Ikpikpuk River, some of the leases extend into the Northeast Planning Area; this acreage will also be included in the sale.
As some of you recall when I spoke with you a year ago, I asked whether you thought it would be worthwhile to take another look at the possibility of opening up some additional, promising acreage to leasing in the Northeast portion of the National Petroleum Reserve. This acreage surrounds Teshekpuk Lake and overlies the Barrow Arch, one of the most promising geologic structures. We believe there could be as much as 2 billion barrels of oil present in a 800,000 acre area either closed to leasing or subject to no surface occupancy restrictions for both exploration and development.
We are now taking that second look. Efforts are underway to consider amending the existing plan for the Northeast portion of the National Petroleum Reserve by the end of 2004. You can expect to see a lease sale of re-offered Northeast parcels and possibly new Northeast acreage in June 2005.
We also have one other EIS underway for the proposed Alpine satellites project. This project is examining five proposed ConnocoPhilips satellite production sites. The Draft EIS is on schedule for release in January. We are very excited about this project, as it will lead to the first commercial oil production from the National Petroleum Reserve in about 5 years.
So, there you have it. BLM-administered public lands in Alaska are playing an important role in America’s existing energy mix. And as we have seen, there are other new, valuable, exciting, emerging energy resources in place that can continue to make a contribution to our heating, power, transportation and yes, agricultural needs far into the future.
And, while you’re enjoying your turkey dinner next Thursday, remember the coal, oil and natural gas that make it all possible.
Happy Thanksgiving.
