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Alaska announces plan to permit oil exploration near site of state’s first well

JUNEAU — The Alaska Department of Natural Resources has announced a preliminary decision that would allow an Alaska firm to begin exploring for oil and gas beneath land and water east of the Copper River and west of Yakutat, along the shores of the Gulf of Alaska.

Alaskans have until Oct. 4 to comment on the state’s decision. If the decision is confirmed, the state could proceed with an exploration license.

If Cassandra Energy Co. of Nikiski proceeds as planned, it could mark a return to oilfield productivity for the birthplace of Alaska’s petroleum industry. In September 1902, the Alaska Development Co. discovered commercial quantities of oil at Katalla, a now-abandoned town southeast of Cordova. Between 1902 and 1931, 44 oil wells were drilled in the area, but the region’s refinery burned down in 1933 and was never rebuilt. Occasional attempts to revive the oil industry in the area have been unsuccessful.

The ghost town of Katalla once attracted huge investments for competing railroads, docks and a breakwater, seen here in 2007. (Charles Wohlforth) IMAGE IS OWNED BY WOHLFORTH. USE ONLY AFTER CONTACTING CHARLES - 907-242-2151, charleswohlforth@gmail.com

Cassandra Energy’s president, Bill Stevens, said when contacted by phone Monday that he was working and unavailable to talk immediately.

The draft license is for 10 years and requires Cassandra Energy to spend at least $1 million in the region. The license would be canceled if at least 25% of that work has not been done by the fourth year of the license. The draft license also includes an eight-page list of restrictions intended to protect the environment and historic sites.

Among the restrictions: No work within 500 feet of “all fish-bearing waterbodies” or within a half-mile of the area’s larger rivers. In addition, each proposed structure installed by Cassandra Energy must be approved by the state Division of Oil and Gas and reviewed on a case-by-case basis.

Additional permits would be needed before wells are drilled. A listing of the possible permits requires 15 pages in the state’s decision document.

According to information provided by the division, the state has three active exploration licenses outside the North Slope and Cook Inlet, with two applications pending, including Cassandra’s. (The other application is from the Alaska Natural Gas Corp. in the Susitna Valley.)

According to the division’s records, the Cassandra Energy license application has been in the works for more than four years: The homegrown independent oil company applied for an exploration license in April 2015. A year later, the division determined that state land in Southcentral, including along the Gulf of Alaska, can be licensed for oil and gas exploration. The state then proceeded to analyze Cassandra’s request for a specific plot near Katalla.

Following the 2015 application, the state received comments from fishermen and local residents concerned about potential environmental effects from drilling. In response, the state added additional environmental restrictions to the licensing proposal and pressed ahead.

“The director considered applicable laws and regulations and balanced the potential positive and negative effects given the mitigation measures and other regulatory protections and has preliminarily determined that issuing the Gulf of Alaska exploration license is in the state’s best interest,” according to the preliminary licensing report.

According to reporting by Petroleum News, Cassandra Energy has almost two decades of history in the region already. In 2001, it purchased the 465-acre Katalla oil field. At the same time, Cassandra worked with Chugach Alaska, the regional Native corporation, to pursue oil and gas drilling on corporation land nearby. After that agreement ended, Cassandra unsuccessfully attempted to find new investors.

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