The Fish and Wildlife Service says no deal after years of study and negotiations -- not to mention 100,000 public comments as environmental groups nationwide and some nearby villagers protested potential drilling in the Yukon Flats National Wildlife Refuge.
But there's a twist. The Fairbanks-based Native corporation that pitched the swap, Doyon Ltd., may be happy to see it die.
"We've expected it for a while, and we've been having growing concerns that perhaps it wasn't in the best interest of the organization," said Jim Mery, Doyon vice president for lands and natural resources.
A key criticism of the proposed swap concerned whether it was a fair deal for the federal government. To get the promising oil and gas land, Doyon was to surrender land it owned elsewhere in the wildlife refuge and give the government a cut of the petroleum income.
The price of oil has climbed since the land-swap negotiations began roughly six years ago. That threw appraisals the deal was based on out of balance. But it also potentially makes it more profitable for Doyon to develop the land it already owned without the swap, according to the company. Even as the swap deal progressed in recent years, new data released by the U.S. Geological Survey showed that the land Doyon was about to trade away held promising oil and gas prospects of its own, Mery said.
The company now hopes to explore and possibly develop that land within the wildlife refuge borders, beginning with land near the villages of Birch Creek and Stevens Village.
Significant oil and gas development in the Yukon Flats has the potential to create jobs and provide cheaper, reliable fuel sources for heating homes and making electricity in Interior Alaska the way Cook Inlet development transformed the Anchorage region. It also could provide a major source of revenue in coming decades for Doyon, the regional Native corporation for the Interior.
The USGS estimates the refuge could hold 300 million barrels of recoverable oil and gas liquids, plus 5.5 trillion cubic feet of natural gas. By comparison, the Cook Inlet region has produced 1.3 billion barrels of oil and just under 8 trillion cubic feet of gas total since 1958.
VILLAGES SPLIT
The Yukon Flats Wildlife Refuge lies north of Fairbanks, east of the trans-Alaska oil pipeline and directly south of Arctic National Wildlife Refuge. At more than 8 million acres, it is the third-largest wildlife refuge in the nation, encompassing an area about half the size of Indiana. Doyon owns hundreds of thousands of acres within the refuge borders, and can build roads or pipelines through the refuge to access that land under federal law, Mery said.
The proposed land trade would have given Doyon oil and gas extraction rights on 207,000 acres, with ownership of the surface land on a little more than half of that.
In return, the feds were supposed to get at least 150,000 acres of fish and wildlife habitat that Doyon owned within the refuge. Doyon would also have given up rights to 56,000 acres of Yukon Flats land selected under the 1971 Alaska Native Claims Settlement Act and instead agreed to select land somewhere else. The majority of that land, about 40,000 acres, sits in the Beaver prospect the corporation now hopes to develop.
Fish and Wildlife would also have had the right to some Doyon oil and gas revenue.
This month, the Fish and Wildlife Service announced a preliminary decision to not move ahead with the trade. The final word isn't expected until early next year but Doyon's Mery said he can't imagine any scenario where the swap would still happen.
Some Yukon Flats village organizations, like the Dinyee Corp. in Stevens Village, supported the proposed trade. Modern oil and gas exploration can co-exist with traditional land use, general manager Howard Taylor said from Fairbanks.
Others said the deal was made without consulting village leaders and warned it could harm hunting and fishing in the cash-strapped region.
Mike Peter is first chief of the tribal government for Fort Yukon, a village of roughly 600 people where the Porcupine River meets the Yukon.
"We still live a subsistence way of life out here and we would like to keep it the way it is," he said. "We'd like (our children) to have what we had when we grew up. Clean water, clean air, clean land," he said.
SEA OF OPPOSITION
Doyon has talked about trying to trade for land in the refuge -- for oil and gas exploration -- since the mid-1990s, Mery said.
After negotiating for two years, the proposed deal between Fish and Wildlife Service and Doyon was unveiled in 2004. The Native corporation wanted to control as much oil and gas development as possible within the Yukon Flats and presented the swap as a way to create jobs and revenue.
The Fish and Wildlife Service officials labeled the Doyon lands they would obtain as high-value habitat, while environmental groups argued against the deal, saying the resulting oil and gas development would lead to roads or pipelines through the refuge.
In a statement announcing its decision this month, the Fish and Wildlife Service said the proposal drew a sea of public comments -- with the "vast majority" opposing the swap.
"Going into this effort, we did not anticipate the level of opposition that we heard from some of the most affected communities within the Yukon Flats," said Robb Jess, Yukon Flats National Wildlife Refuge manager, in the written statement.
ATTRACTING OIL COMPANIES
That debate -- development vs. conservation within the refuge boundaries -- could begin all over again.
Doyon is looking for partners to fund exploration, including more seismic studies at Birch Creek and Stevens Village. If the results are good enough, the company hopes to drill.
"We've actually been thinking about moving ahead with, in effect, trying to interest people in exploration for about the last couple of years," Mery said.
Now that the land swap is dead, companies might be more willing to make the leap.
Dacho Alexander, former first chief of Fort Yukon tribal government and a critic of the original land swap, is skeptical.
"I don't know if big oil companies would be willing to take the risk, when there's already proven reserves around the world that are a lot less difficult."
Read The Village, the ADN's blog about rural Alaska, at adn.com/thevillage. Twitter updates: twitter.com/adnvillage. Call Kyle Hopkins at 257-4334.
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