By Wesley Loy

13-09-04 State officials plan to issue to a start-up Dillingham company a license to explore for oil and gas in more than 329,113 acres at the head of Bristol Bay.
The founders of the company, called Bristol Shores, are a handful of Dillingham elders who want to help the bay's ailing salmon economy and to contribute to local, state and maybe even global needs for natural gas, said George Shade, one of the founders.
The state exploration license means "we're definitely moving forward," Shade said.

To win the license, Bristol Shores promised to conduct $ 3.2 mm in exploratory work in a period of seven years. The license covers a huge block mostly east of Dillingham but also the upper Nushagak Bay beginning south of Ekuk.
Normally, companies acquire oil and gas exploration rights by submitting a winning bid in periodic state lease sales. The sales typically happen on the North Slope or around Cook Inlet, the two regions of Alaska where interest is highest and where discoveries have been the biggest.

To encourage exploration in less prospective regions, the state has a licensing program to attract companies that might otherwise be deterred by having to pay a large bid amount up front for exclusive rights to land. In the past two years, Gov. Frank Murkowski as well as local leaders in Bristol Bay have revived interest in oil and gas exploration in that region, best known for the world's largest annual run of sockeye salmon. Competition from foreign salmon farmers has sapped much of the profit from the salmon business in recent years, prompting interest in other types of industry.
Shade said a group of Dillingham elders including his father, Harvey Shade, Dillingham businessman Ernest Sifsof and others formed Bristol Shores. All are, or were, commercial salmon fishermen in Bristol Bay, he said.

The company also has a "very prominent" Alaska investor, whom George Shade said he was not yet at liberty to name. The company hopes to soon begin seismic surveys and exploratory drilling for natural gas. The gas could be used in Dillingham or other Bristol Bay villages or, depending on the size of any finds, it could be piped east to tie in with the existing Cook Inlet network or even exported to Asia, Shade said.
Officials with the state Department of Natural Resources said they intend to issue the exploration license to Bristol Shores if no one appeals the decision by Sept. 27. The company will be required to pay a licensing fee of $ 1 per acre.

The license carries several conditions for protecting the environment and the fishery. No offshore drilling will be allowed, although drillers can explore under Nushagak Bay waters by using directional drilling from the shore.
To protect commercial fishermen, no permanent oil and gas facilities will be allowed within half a mile of two important salmon rivers, the Nushagak and Wood. Also, explorers may be restricted on when and where they can use seismic explosives, which could harm baby salmon or eggs.

Little is known about the geology under the lowlands to be licensed to Bristol Shores, as no exploratory drilling has been done there, state officials say.
The state says commercial oil finds are unlikely but the area might contain as much as 1 tcm of natural gas. By comparison, drillers since the 1950s have discovered about 8.5 tcf of recoverable gas in the Cook Inlet basin, which supplies homes and commercial customers in the Anchorage area.