State wants Legislature to approve $10 million to jump-start ANWR exploration

The Walker administration wants the Legislature to approve a $10 million budget request that would allow Alaska to partner with other entities on a seismic shoot to enhance the search for oil in the Arctic National Wildlife Refuge.

The state's investment would pay for itself by attracting companies to bid on leases in the refuge, said Natural Resources Commissioner Andy Mack, speaking to the Senate Finance Committee on Monday.

In December, the Republican-controlled Congress and President Donald Trump  agreed to open the coastal plain of the 19-million-acre refuge to drilling, after decades of unsuccessful attempts by Congress to allow drilling there.

The legislation, authored by Sen. Lisa Murkowski, calls for the federal government to auction off land in two lease sales within seven years. The first must be held within four years.

The Congressional Budget Office estimated the lease sales would bring in $2 billion that the U.S. and Alaska would split.

The state believes new seismic information will lead to more lease income, said Mack.

A seismic shoot – using seismic waves to reveal underground formations that might hold oil – would require a permit from the federal government, Mack said.

"We want to make sure we have as many qualified bidders as possible and increase the value of that lease sale," Mack said.

A seismic shoot is expected to cost more than $10 million, so the state will seek partners that could include oil companies, the North Slope Borough, or others, said Pat Pitney, director of the Office of Management and Budget, speaking to the committee on Monday.

Pitney said the money is an investment in the state's future.

Alaska has previously sought permission to conduct seismic work in the refuge. In 2015, U.S. Anchorage District Judge Sharon Gleason rejected an ANWR exploration plan submitted by the previous administration under Gov. Sean Parnell.

Gleason sided with the Interior Department at the time. The agency had said its authority to approve seismic exploration ended in 1987.

[Federal judge rejects Parnell-era push to open ANWR]

But that was before Congress approved drilling in the refuge. Also, Trump and his Interior Department have signaled strong support for exploration there. Trump has called the refuge "one of the largest oil reserves in the world."

It's uncertain how much oil might exist in the refuge. The lone exploration well there was drilled in the mid-1980s on privately owned Alaska Native land. Companies have kept the results a closely guarded secret.

[Mystery surrounds only well drilled in ANWR]

What's publicly known about the refuge's oil potential is based on a two-dimensional seismic study done in 1984 and 1985.

The U.S. Geological Survey has estimated about 10 billion barrels of oil could be economically extracted from the coastal plain, an amount similar to the original production estimate at the giant Prudhoe Bay oil field west of ANWR.

State officials have argued that the 1980s seismic data is extremely dated. They say a modern seismic study would reveal far more detail.

Asked by a reporter how the state could legally obtain a permit for the seismic shoot, Pitney said state officials have been discussing the idea with the U.S. Interior Department. The federal government is one possible partner in the seismic shoot, she said.

The Washington Post reported in September that the Interior Department was looking to alter the 1980s regulations to allow such seismic work.

Brook Brisson, senior staff attorney at Trustees for Alaska, said Tuesday the conservation group will monitor any application for seismic activity to make sure the refuge is protected.

"We will absolutely evaluate any proposal the state or anyone puts forward for seismic," she said.

Sen. Lisa Murkowski told a reporter Monday any industrial work conducted in ANWR must be legally "airtight" to avoid lawsuits from conservation groups. One possibility now is doing a seismic study on the Native-owned lands within the coastal plain, she said.

The Arctic Slope Regional Corp. and the village corporation for Kaktovik own 92,000 acres of private land in the coastal plain.

"We will in this next year begin to see more announced activity," she said. "But keep in mind this is a very much a step-by-step (process)."

At Monday's hearing, Sen. Pete Micciche, R-Soldotna, warned that new seismic data could hurt the effort to boost lease income for Alaska. The data might reveal that some areas of the coastal plain aren't favorable for oil discoveries, reducing interest there.

Sen. Natasha von Imhof, R-Anchorage, suggested the state, with its limited resources, should wait and let others invest in seismic work.

Mack said the state has seen a connection between seismic studies conducted in the North Slope's Colville River region and the discovery of "tremendous prospects," he said.

"There seems to be a strong relationship," Mack said.

[ConocoPhillips plans largest exploration season in 15 years]

Sen. Click Bishop, R-Fairbanks, suggested the state might want to commit more money to study the refuge after it waited for 40 years for Congress to allow drilling there.

"I'm looking at $10 million — I'm wondering if that's enough, because I don't know if we'll ever get back in there again," he said.