The license gives Usibelli the right to explore for conventional and unconventional natural gas supplies across 208,630 acres just east of Denali National Park and Preserve, a stretch of land that traverses the Parks Highway. Usibelli operates a coal strip mine in that area and the region is thought to have high potential for coal bed methane.
The license does not allow Usibelli to explore for oil. If Usibelli unexpectedly discovers oil during exploration, it would be required to shut down activities and contact the state.
The Department of Natural Resources issued its final finding on the matter late last month, nearly five years after issuing its preliminary finding, a delay caused by local opposition to coal bed methane development in the region. Whether additional concerns remain will come to light in the coming weeks. Those who commented on the preliminary finding have until July 19 to ask the state to reconsider its decision to issue the exploration license.
If no one protests, the license would become effective on July 28.
The license requires Usibelli to conduct $500,000 worth of work over 10 years.
During the licensing phase, Usibelli can conduct geological and geophysical studies and perform environmental assessments over the area, and drill exploratory wells. If the company decides to pursue the resources further, it would need to convert the license to normal exploration leases and follow the traditional development process from there.
Usibelli wants to find enough gas to power its mine but the company has kept the door open to supplying Railbelt utilities if it finds a large enough gas field.
Although there is currently no commercial production of coal bed methane in Alaska, companies are showing increasing interest in the natural gas potential of the state's huge coal reserves, believed to be as high as 5.5 trillion tons, or half the national total.
ENVIRONMENTAL COMMENTS
The comments addressed in the final finding include concerns about water and air quality, protecting wildlife and limiting noise pollution, issues at play with resource development in any part of the state. But they also include issues somewhat unique to Healy.
On the environmental issues, the state believes the coal bed methane leasing guidelines in Alaska "are more protective of environmental and surface owner interests" than those in Colorado and Wyoming, states with a history of coal bed methane development.
For water quality, the state noted that both the Department of Environmental Conservation and the U.S. Environmental Protection Agency mandate certain standards, and that the Alaska Oil and Gas Conservation Commission requires unconventional gas operators to gather baseline information about water wells in the development area and prohibits unconventional gas wells that touch aquifers used for drinking water.
NEIGHBORHOOD WORRIES
The concerns unique to Healy include how exploration might affect neighboring Denali, a premier tourism spot and home to animals whose habitats extend outside the park.
Alaska Natural Resources Commissioner Tom Irwin noted the license area is entirely on state land and the National Park Service doesn't have authority there.
However, he said the state could impose seasonal restrictions to protect moose and caribou calving and wintering areas.
A second issue is how exploration work could affect Parks Highway communities, particularly Healy. While oil and gas development is widespread in Alaska, the size of the state and locations of deposits have kept much past activity away from residential areas.
While more than 1,000 people live in Healy and other highway communities, Irwin noted, "local interests are not overriding or prioritized above all other interests."
Those interests include state revenue. Some questioned why the state would proceed with the license when the projected state revenue from coal bed methane would likely be insignificant compared to current revenue from oil and gas. Irwin noted that in addition to revenue, the project promised a "significant source of clean-burning natural gas," close to existing infrastructure, that might one day offset declines from Cook Inlet.
With activity potentially taking place near homes, some worry about falling property values. Studies have shown that having coal bed methane nearby can lop 20 percent or more off the sale price of a house. The state, though, pointed to studies showing that when the development occurs more than 550 feet away, the impact is "modest."
In the early 2000s, a Colorado company met with strong opposition when it attempted to develop coal bed methane in populated areas of the Mat-Su Borough. With concern over water pollution, industrial activity near neighborhoods and political manipulation in the Legislature and among regulators, the effort eventually fizzled.
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