Obama Closes 50 Percent of the Naval Petroleum Reserve in Alaska

In 1923, President Warren Harding established the 23 million acre Naval Petroleum Reserve-Alaska (NPR-A) for the U.S. Navy at a time when it was converting its coal-fired ships to run on petroleum. In 1976, this Indiana-sized area was turned over to the Department of Interior and in 1980, the Bureau of Land Management was given authority to manage oil leasing on the lands. In December 2011, the Obama Administration provided 3 million acres for lease and intends to provide a total of 11.8 million acres in the NPR-A to future leasing.  But, the administration’s plan only allows about half of the NPR-A to be available to new oil development. The Department of Interior plan takes the coastal regions, such as Kasegaluk Lagoon and Peard Bay, off the market for future leasing, claiming leasing might harm local wildlife.[i]  According to the U.S. Geological Survey’s estimates, the entire reserve holds about 900 million barrels of oil, but only 549 million barrels are to be offered for lease.[ii] Thus, the plan not only decreases access to prospective areas, but also closes off lands with highly prospective oil potential in the name of wildlife conservation, despite decades of experience in which there are increased numbers of wildlife in Alaska where oil and gas development has already occurred.

To read IER’s Fact Sheet on the NPR-A, click here.

The Obama Administration Path to NPR-A Leasing

The Obama Administration first announced that it would open the NPR-A to drilling in May, 2011 due to concerns over high gasoline prices and the belief that the President’s policies were restricting domestic  development of oil and natural gas resources.[iii] However, a month after making this announcement, the President opposed the “National Petroleum Reserve Alaska Access Act” that would expedite leasing and infrastructure permitting in the Alaskan reserve. The issue the bill would have addressed is that leasing areas to oil exploration does not in itself provide the necessary access to get the resources to market. There are no roads nor pipelines through NPR-A and permits to cross the bordering Colville River to link to pipelines to Prudhoe Bay and the Trans Alaska Pipeline have been blocked. The legislation was prompted when a permit to develop a bridge and pipeline system to transport newly discovered oil out of NPRA was denied in 2010, even though an Environmental Impact Statement prepared in 2004 determined that it was the preferred method for such transport.  As Congressman Doc Hastings said, “Producing oil and natural gas in the NPR-A is pointless if there’s no way to get it out of there. The real problem is the federal government’s blocking and delaying of permits for necessary roads, bridges and pipelines needed to transport the energy out of the NPR-A.”[iv]

In December 2011, the Obama Administration had its first lease sale, leasing tracts on 3 million acres of the NPR-A where exploration could occur. Seventeen bids were accepted, covering 140,000 acres, but totaling just over $3.6 million, a measure of reduced interest attributable to uncertainties surrounding permitting in the area. In March of this year, 4 proposals were provided for comment by the Department of Interior. The Department accepted and modified one of the proposals, allowing a total of 11.8 million acres to be available for lease, while putting off limits to future oil and gas development “special areas” around Teshekpuk Lake, in coastal bays and lagoons, and in the southwestern part of the Reserve.  The plan they chose offered the least opportunity for oil and gas development in the Naval Petroleum Reserve. The plan also purports to allow for a pipeline that would connect with existing lines to bring the oil to market.[v]

However, the plan has been roundly criticized by the Alaska’s Governor and other officials, including the bipartisan Congressional Delegation and the Regional Organization representing the interests of the Inupiat Eskimo people of the North Slope of Alaska who lie in and around the NPR-A.  They universally denounced the plan for offering so little energy potential for lease and for introducing new roadblocks to potential infrastructure for transport ion within and through NPR-A. If, for example, a world class oil discovery is made in the Chukchi Sea as many believe may turn out to be the case, a pipeline through NPR-A would be required to access the Trans Alaskan Pipeline System.  Additional hurdles included in the Obama/Salazar plan for the area could complicate construction of such necessary infrastructure.

The next lease sale is scheduled for November 7, 2012, and will cover 400 tracts in about 4.5 million acres of the NPR-A.[vi]  This will be the first sale since the introduction of the restrictive plan proposed by the Administration.

The true irony in this plan is that the Clinton Administration had opened the NPR-A to new leasing under extensive review and without placing a large amount of land off limits. At the time that the Clinton Administration offered leases for sale, oil prices were at rock bottom and only mild interest was shown. Before any lease sale offers occurred, the Bureau of Land Management held an extensive process of public comment and consultation, resulting in a decision to allow significant oil and gas exploration and development, while postponing leasing in the most sensitive areas near a body of water called Teshekpuk Lake–important for migratory wildlife– and rejecting the kind of sweeping ban that the Obama administration has now decided to impose.[vii]

In announcing this new plan, Interior Secretary Salazar stated, “This plan also strikes an important balance by recognizing the need to protect America’s treasures in the Arctic, from the raptors of the Colville River and the polar bears of the Beaufort Sea coast, to Teshekpuk Lake, Peard Bay, and some of the largest caribou herds on Earth.”[viii] However, the Administration claims toward the conservation of caribou and other wildlife as reasons for taking land off the leasing schedule are unsupported by facts and history.  The Western Arctic Herd, which migrates through NPR-A, actually calves in its center, not around the coast or newly restricted areas.  And, the Central Arctic Herd located to the east at Prudhoe Bay has increased from 5,000 to 66,000 animals since oil production began, and they calf directly in the middle of the oil field.  Caribou, waterfowl, and fish are reported to roam freely and migrating animals are unaffected.[ix]  It is clear that with the proper precautions, wildlife populations can thrive at the same time energy important for our nation’s economic growth and national security are developed.

Conclusion

Placing half of the NPR-A off limits to future oil and gas development is a continuation of the president’s energy policies that continue to impede domestic energy exploration and production. The administration has already put 85 percent of offshore acreage off limits through its 2012-2017 OCS leasing plan, placed Federal lands in the west off limits, imposed and proposed more regulation on energy production, and called for more taxation of the domestic oil and natural gas industry.

According to Senator Lisa Murkowski, the NPR-A area “is not a wildlife refuge.” The purpose of the region is to produce more petroleum for the nation’s energy supply, just as it has been since its establishment ninety years ago as a Petroleum Reserve. She commented “This decision denies U.S. taxpayers both revenue and jobs at a time when our nation faces record debt and chronic unemployment.” As high unemployment lingers and as energy prices continue to be high, Americans have expressed support for the expansion of U.S. oil and natural gas resources. According to a recent survey issued by the American Petroleum Institute, “71 percent of voters approve more access to these resources, 90 percent believe new development could generate more U.S. jobs, and 87 percent believe it would significantly reduce energy costs for consumers.”[x]  As seen above, Alaskans and even the people who live in the NPR-A area in Alaska support more access.  So, why isn’t this administration listening?