Parnell’s challenge

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Alaska governor rolls out exploration proposal for ANWR coastal plain

Wesley Loy

For Petroleum News

Alaska Gov. Sean Parnell is proposing the state and federal governments partner on an oil and gas exploration campaign on the coastal plain of the Arctic National Wildlife Refuge.

To help pay for it, Parnell says he’ll ask state legislators to chip in $50 million.

The goal, says the governor, is to better define the oil and gas potential of the coastal plain, long believed to be one of North America’s best chances for an elephant discovery.

Parnell pitched the exploration proposal to Sally Jewell, the Obama administration’s new interior secretary, in a May 18 letter.

The proposal could be a political masterstroke — or just another tilt at the windmill.

Alaska’s elected officials have tried all sorts of strategies over the years to open ANWR to drilling. A big oil find could shower the state with billions of dollars in new revenue.

But only Congress can authorize oil exploration, and for decades the votes have either fallen short or run into a presidential veto. Meantime, ANWR protection has become one of the top causes for national environmental groups.

In fact, drilling proponents at the moment are fearful protectionists might win wilderness designation for the coastal plain, which would have the effect of shutting out oil explorers permanently.

Parnell’s exploration proposal, laid out in a highly detailed 187-page document, drew rapid and mixed reaction.

“This is a great move by the governor,” said state Rep. Eric Feige, R-Chickaloon, who co-chairs the House Resources Committee. “We must have a definitive idea of what resources are available in ANWR.”

“Having modern, 3-D seismic information in hand can help inform the debate,” said U.S. Sen. Mark Begich, D-Alaska.

The Wilderness Society’s Alaska regional director, Nicole Whittington-Evans, said the proposal “defies the will of the American people.”

A snubbed alternative

The U.S. Fish and Wildlife Service, landlord for the refuge, released a draft of the plan in August 2011. It featured six alternatives, ranging from no changes to recommending huge new chunks of ANWR, including the coastal plain, for wilderness designation.

Alaska political leaders questioned why the agency was even considering new wilderness designations. And Parnell and others were perturbed that no oil and gas alternative was included in the draft.

The Fish and Wildlife Service is expected to release its final management plan any time now. That step had been on hold as the Interior Department transitioned to new leadership under Jewell.

Parnell’s exploration proposal essentially stands as a seventh alternative for ANWR management.

Sullivan touted the exploration proposal at a press event May 20 at the U.S. Chamber of Commerce in Washington, D.C.

He had support at the event from Charlotte Brower, mayor of the North Slope Borough, and Rex Rock, chief executive of Arctic Slope Regional Corp.

The exploration proposal is a seven-year program to acquire high-quality, 3-D seismic data from across the coastal plain, followed by drilling on the best identified prospects.

The environmental impact would be negligible, Sullivan said, because all the work would be done exclusively in winter when the fragile tundra is safely frozen, when ice roads and pads could be built to support equipment, and when the area is relatively devoid of wildlife such as caribou.

Sullivan called it “a modest proposal” to learn what everyone should want to know: the true oil and gas potential of the coastal plain, and its potential for helping the nation and Alaska.

Updating old data

Only one exploratory well, the Chevron KIC No. 1, has been drilled within the 1002 area. Results of that well remain secret.

The government’s most recent petroleum assessment for the 1002 area was prepared in 1998 by the U.S. Geological Survey. The study estimated between 4.3 billion and 11.8 billion barrels of technically recoverable oil could be within the 1002 area.

That’s a great deal of oil. But the Parnell administration evidently believes that a seismic survey using advanced 3-D technology, followed by the drilling of several wells, could very well prove up a much more tantalizing resource base.

If only access to the area can be won.

“The debate over the opening of the 1002 Area has been ongoing for decades, and we are using data just as old,” the open-ANWR lobby group Arctic Power said in a statement endorsing the Parnell proposal. “If we want to have a fully formed discussion over the merits of oil and gas exploration in potentially one of the largest reserves of conventional North American oil and gas, then we need to use the most modern of technology to provide us all with the best possible data.”

Alaska Congressman Don Young, who in 2008 turned back Parnell’s challenge in the Republican primary, and dubbed him “Capt. Zero,” thanked the governor for his “continued leadership” on the ANWR issue.

Young said Parnell’s proposal offers “yet another chance for the Obama Administration to commit to develop oil and gas on federal land.”

Seismic and drilling details

The proposal has three phases: seismic surveys, planning and permitting, and exploratory drilling.

The seismic survey phase would cover three years, acquiring up to 3,305 square miles of 3-D data. It would focus first on the western coastal plain, particularly the Undeformed area.

“This area should have the highest priority for investigation because of assumptions of reservoir quality, likely oil charge characteristics, and proximity to existing infrastructure to the west,” the proposal says.

Seismic work would progress to areas farther south and west, including the Marsh Creek area, the Hulahula area, the Jago area, and the Sabbath area.

The Hulahula area, in the central coastal plain, contains a subsurface structural depression called the Hulahula Low.

“This area preserves some of the youngest and best potential reservoir sandstones on the coastal plain, and is interpreted to be a key ‘kitchen,’ or area where oil and gas has been generated from source rocks,” the proposal says.

To help fund the seismic program, Parnell said in his letter to Interior Secretary Jewell that he’d request up to $50 million from state legislators during their 2014 session. Parnell recommended the USGS conduct the 3-D seismic program in conjunction with the Alaska Division of Geological and Geophysical Surveys.

“We would of course need a positive indication that the federal government would want to partner with the State of Alaska on such a seismic program before submitting a budget request to our Legislature at the end of the year,” Parnell wrote.

Sullivan said the survey data would be available publicly.

Following the seismic survey phase, Parnell’s exploration proposal would move into the planning and permitting phase, and then into the exploratory drilling phase.

The proposal calls for drilling up to 16 wells on 14 key prospects with four rigs working over four winter seasons.

A map shows hypothetical drilling locations.

“The State’s proposal is a way forward,” the document concludes. “At the end of the exploration program, Congress, the State, industry, and the public will all know what oil and gas resources are available under the 1002 Area. This will allow Congress to make an informed decision regarding an area that has been under debate since the 1980s.”

Petroleum News asked the Fish and Wildlife Service for comment.

“We really have no position on Gov. Parnell’s proposal,” agency spokeswoman Cathy Rezabeck said.