US: July 18, 2008


ANCHORAGE - The US Bureau of Land Management said on Wednesday it will hold an oil lease sale this autumn for acreage in the National Petroleum Reserve of Alaska that the government says could hold 8.4 billion barrels of recoverable crude.


The move comes amid a push in Washington to boost domestic oil drilling to help wean the United States off its dependence on foreign shipments.

"We believe that the area within the NPR-A and the area opened by this decision can provide more than 8 billion barrels of oil to help us share our future supplies with the citizens of the United States," Assistant Interior Secretary Steve Allred told reporters at a news conference.

"We believe that the opening and the sale, which will occur in October, will tend to reduce pressure on prices ... and encourage us to increase supply of oil and natural gas from resources we have here at home."

The sale, authorized in a formal record of decision signed Wednesday, will include some 2.6 million acres in the northeast section of the NPR-A and an unknown amount in the northwest section, the BLM said during a news conference.

The lease sale will be the fifth in the past decade offered in the Indiana-sized NPRA and will make available land that had been offered in the previous lease sales, which date back to 1999.

Those lease sales have yielded a total of about US$236 million in high bids from various companies. Roughly 3 million acres are currently under lease within the petroleum reserve, according to the BLM.

Tom Lonnie, the BLM's Alaska state director, said Anadarko Petroleum Corp and another company, Renaissance Alaska, have actively inquired about the planned fall lease sale, and he expects participation from other companies that are active in the reserve, such as ConocoPhillips, Pioneer Natural Resources, Petro-Canada and Talisman Energy unit FEX L.P.

"We have several different companies that hold leases and have expressed some interest in potentially being involved in a sale," Lonnie said at the news conference.

Henri Bisson, deputy director of the BLM, said the timing of the sale -- as members of Congress are clamoring for more federal territory to be opened to oil and gas development -- is coincidental.

"The timing is exactly the path we've been on for the past year and a half," he said, noting that the management plan has long been in the works and was released in May.

The 23 million-acre petroleum reserve was established in 1923 by President Warren Harding as a source of energy for the nation's military sources. Despite sporadic exploration that dates back to the 1940s, there has been no commercial oil production from the reserve yet. Development proceeded instead mostly on state land to the east of the reserve, starting with the Prudhoe Bay discovery in 1968.

The series of lease sales that started in 1999, however, have yielded some commercial discoveries which are slated to come on line soon. The first, ConocoPhillips' and Anadarko's Mooses Tooth unit near the eastern border of the reserve, is expected to start production by 2012, Lonnie said.

Not included in the upcoming lease sale will be wetlands north and east of Teshekpuk Lake, an environmentally sensitive area of about 430,000 acres that is important to migrating birds, caribou and other Arctic wildlife. Any oil and gas leasing there is deferred for 10 years, under the management plan released by the BLM in May.

That deferral pleased environmentalists and Inupiat Eskimo residents of the North Slope, for whom the area is an important source of wild food.

Stan Senner, executive director of Audubon Alaska, said Wednesday the BLM's plan strikes a good balance between energy development and wildlife protection.

"We understand that there will be additional oil and gas activities in NPR-A," he said. "Audubon's goal is to strike a balance between energy development and wildlife protection in the Arctic." (Reporting by Yereth Rosen)


Story by Yereth Rosen


REUTERS NEWS SERVICE