It won't be long until we know if there's any oil in the Arctic National Wildlife Refuge. The Department of the Interior is on a fast track to get leasing underway, perhaps as early as July 2019, top Interior Department officials say. Who shows up to bid will tell us a lot.
Assistant Interior Secretary for Lands and Mines Joe Balash has been given marching orders by his boss, Interior Secretary Ryan Zinke, to get a streamlined Environmental Impact Statement done in 12 months. The clock started ticking on that in March, when the department issued its Notice of Intent to do the EIS. If the environmental review is done and Interior's Record of Decision comes in the first half of 2019, the sale itself could happen any time after that.
Realistically, it will probably be sometime later. Inevitably, lawsuits will be filed. Certain aspects of how the ANWR program is being done — the expedited EIS, for one — could heighten the legal vulnerabilities, too.
Meanwhile, explorers are trying to figure out what they know, and don't know, about ANWR's potential. One initiative already underway is a proposal for a large, two-winter season advanced 3-D seismic program across the 1.5 million acres to be conducted by SA Exploration, an Alaska geophysical company, with backing by two Alaska Native corporations, Arctic Slope Regional Corp. and Kaktovik Inupiat Corp. Kaktovik is the Native corporation for Kaktovik village, an Inupiat community on Barter Island, which is adjacent to ANWR. SA Exploration is itself majority-owned by another Native corporation, Kuukpik Corp., the village corporation for Nuiqsut, near the Colville River.
All of this illustrates the unusual role that Native corporations will play in ANWR's exploration and its possible development. ASRC and KIC actually own a big chunk of the most prospective oil lands on the refuge's coastal plain, a 91,000-acre inholding in the 1.5 million-acre coastal plain section that will be leased.
Assistant Secretary Balash says these are private lands and that ASRC and Kaktovik are free to do with them as they wish, including conducting their own exploration and drilling. In fact, they've already done that. In the early 1980s, the two Native corporations concluded a deal with Chevron and BP to drill the only exploration well drilled in ANWR in 1986, on their lands. The results of that well have been confidential for decades. The extent to which ASRC is still engaged with the two companies is unknown. With lease sales pending, no one is talking.
Who else might be interested in ANWR? We really won't know until the lease sale happens. A seismic operator like SA Exploration typically acts as a contractor working on behalf of customers for the data it acquires, usually oil and gas companies interested in acquiring leases. Sometimes seismic companies do the work on their own dime and sell the data later.
SA Exploration is likely lining up customers, but we won't know who they are.
ASRC and KIC are listed with SA Exploration on the seismic permit application, and it's likely they are customers, since the program will include their 91,000 acres. But it's possible, and this is speculation since so much is unknown, that ASRC may bankroll the $150 million or so needed for the survey. ASRC is financially strong and seems capable of doing this.
The three companies may decide to do the program themselves and then sell the data for the entire 1.6 million-acre coastal plain section, or they may keep it and bid for tracts themselves and do their own exploration. Native corporations, including ASRC, have previously bid in federal and state lease sales.
ASRC has oil and gas technical expertise, including building pipelines and oil production modules through its subsidiary, ASRC Energy Services. There's also potential alignment with industry partners, including Chevron and BP.
Admittedly, this is all hypothetical, but it's at least possible, and it's unique that local players and local indigenous people could be in on the ground flood of major resource play. In fact, it's a formidable combination that could dominate ANWR development if oil is discovered.
We have to also acknowledge, however, that if a juggernaut like this takes shape it could, perversely, discourage other companies from bidding. For companies outside the club, why bid if ASRC and its partners, possibly including Chevron and BP, have an inside track on geophysical and exploration well data and rights to a 91,000-acre enclave in the middle of the federal acreage being leased?
We do know, from years past, that the 1980s partnership between ASRC, Chevron and BP had a chilling effect on the appetite for ANWR by other companies. I've often been puzzled, for example, as to why ExxonMobil hasn't seemed to show much interest in the refuge.
ExxonMobil has a half-century of Alaska exploration experience and an established presence at the Point Thomson field on state lands right across the ANWR border. Possibly being an outsider, that is outside the ANWR club, may have something to do with it.
Is it good or bad that there could be inside players who could dominate ANWR? I don't know.
It's good that the insiders include local people and Alaska companies. It may be good if our goal is to have a diversified industry with many companies and opportunities for Alaska oil service contractors.
But as for the bigger questions — who is really interested and if there's really significant oil in ANWR — we'll have to wait. But not terribly long.
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