The U.S. Minerals Management Service’s February 6 lease sale in the Chukchi Sea attracted a record 667 bids and nearly $2.7 billion in winning bids, making it the most successful sale in Alaska to date. This was the third lease sale to occur in the Chukchi, with the closest tract 54 miles from land.
“We are very pleased with the sale’s historic results,” said MMS Director Randall Luthi, in remarks delivered before the Resource Development Council’s Anchorage breakfast forum the morning after the record event. “Oil and gas resources present in the Chukchi Sea are vital to our nation’s and Alaska’s economy.”
Luthi noted the lease sale comes at a critical time when the nation’s demand for energy is increasing. “We can either close the gap with domestic production, or increase our reliance on foreign sources,” Luthi said. “This sale represents an opportunity to lessen the gap.”
Over the past 30 years, MMS has funded nearly $300 million for environmental studies in Alaska waters and since 2000, the agency has conducted 30 to 40 studies each year offshore Alaska.
“We are committed to ensuring that all environmental concerns have been addressed while we move forward to supply energy to our nation,”Luthi said.
Companies submitted bids totaling almost $3.4 billion, with high bids of more than $2.6 billion. The highest bid received for the sale was $105,304,581 submitted by Shell. Other companies participating in the sale included ConocoPhillips, Repsol E&P USA, Inc., Statoil Hydro, Eni Petroleum, Iona Energy and North American Civil Recovery.
“We know that the Chukchi Sea is very important to the people who live along its coast and use its resources,” Luthi said. “MMS will continue working closely with the State of Alaska, local communities, whalers and industry to help minimize any impacts of industry activity on subsistence hunting. In fact, leases issued from the sale will include stipulations for protection of biological resources, including marine mammals and migratory and other protected birds, and methods to minimize interference with subsistence hunting and other subsistence harvesting activities.”
The sale was not without controversy as environmentalists filed suit in federal court earlier this month to stop it. They argue that oil and gas exploration and development should not occur in polar bear habitat.
In a sign of things to come if the polar bear is listed under the Endangered Species Act (ESA), opponents protested the lease sale and turned out in force at a recent U.S. House Committee hearing on global warming, which called on the Interior Department to halt the sale. The hearing drew a standingroomonly crowd with some spectators dressed up in fuzzy polar bear costumes holding signs reading, “Oil greed destroying the world,” and “Don’t drill in my home.”
Rep. Edward Markey (D-MA) filed legislation in an unsuccessful attempt to force the agency to hold off on the sale.
The agency estimates the Chukchi Sea holds 15 billion barrels of oil and as much as 77 trillion cubic feet of natural gas. The Beaufort Sea and the National Petroleum ReserveAlaska could hold up to another 125 trillion cubic feet of gas, but environmentalists are likely to push for critical habitat designations in the most highlyprospective areas should an ESA listing of polar bears occur.
RDC is concerned that a listing of polar bears and its subsequent third-party lawsuits would jeopardize a gas line from the North Slope to the Lower48. New natural gas discoveries beyond the Slope’s 35 trillion cubic feet of known reserves are vital to the gas line’s economic viability. Known reserves are not enough to make the project economic.
The polar bears are well managed by international and domestic agreements, laws and regulations, making them one of the most protected species in the world. Their worldwide population has doubled in 40 years, and in Alaska the population is healthy in size and distribution.
