Oil leases sold in north-east corner of the National Petroleum Reserve

May 06, 1999 02:00 AM

Despite protests and a lawsuit by environmentalists, the government sold commercial oil drilling leases in a vast wilderness reserve set aside by President Warren G. Harding in 1923.
Bids totalling about $ 105 mm were accepted for 134 tracts in the north-east corner of the National Petroleum Reserve-Alaska, which was established on 23 mm acres to ensure that the Navy would always have enough fuel.
Atlantic Richfield Co. and a partner, Anadarko Petroleum Corp., were the most prolific bidders in the first sale of drilling leases in 15 years on the land 75 miles west of Prudhoe Bay. Arco and Anadarko won exploration and production rights to 93 tracts.
Lease sales in the 1980s were a flop, with only one dry well drilled, in part because exploration techniques were relatively primitive and the means to get oil to market underdeveloped.
Now, high-tech seismic exploration using powerful computers to locate underground reserves has companies interested again, and branches of the trans-Alaska oil pipeline now are closer to the area.

Still, The Sierra Club, one of the environmental groups that fought to block the lease sale, contends the Interior Department didn't put permanent protections in place to keep oil activities away from wildlife.
"We've seen temporary protections fall by the wayside before," said Sara Callaghan, a Sierra Club spokeswoman. "In less than 30 years of North Slope development we have hundreds of miles of roads, pipelines and toxic waste sites."

The land that attracted the highest bids, up to $ 3.6 mm for some parcels, is adjacent to Arco's 365 mm barrel Alpine field, discovered in 1994.
It was the 1996 announcement of Alpine's discovery that prompted Gov. Tony Knowles and the industry to begin lobbying the Interior Department for another shot at finding oil in the reserve.
Last summer, Interior Secretary Bruce Babbitt agreed, opening the reserve's north-east corner to leasing. The decision sparked a lawsuit and protests from environmentalists who argued the reserve's wetlands are important waterfowl breeding grounds that can't withstand oil exploration.
BP Amoco joined Chevron Corp. and Phillips Petroleum on some of its 25 winning bids and with Phillips alone on others.
The state and the federal government will split the money from the lease sales.
The winning bidders now head to the field for exploratory drilling they hope will confirm their suspicions about the potential for oil. It likely will take at least five years before any commercial production begin, Meyers said.

Source: AP via Newspage
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