| "The development of Alaska over the past 30 years has been directly tied to the development of oil." | |
| Pat Galvin, Alaska Division of Governmental Coordination |
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Oil and gas development is big business in Alaska, generating nearly 80 percent of the state government's total unrestricted revenue through lease sales, royalties, and taxes. The Alaska coastal management program leads a multiagency review of all proposed coastal and offshore oil and gas developments, ensuring coordination among state resource agencies, local governments, and federal regulators.
One such review was for the development of the first subsea oil pipeline offshore the Alaskan Arctic Ocean. The estimated $449 million Northstar oil and gas project is currently being constructed by BP Exploration (Alaska) on a joint federal and state managed reservoir in the Beaufort Sea. According to the state coastal management program, recoverable reserves are estimated at 145 million barrels of oil over the 15-year life of the project. The development likely will create 300 jobs during peak construction, and provide 100 permanent positions. Revenues from the project are expected to provide $575 million to the state, $450 million to the federal government, and $60 million to the North Slope Borough, which is the local government in the area of development. Production is projected to begin in 2001.
"The development of Alaska over the past 30 years has been directly tied to the development of oil," says Pat Galvin, director of the Alaska Division of Governmental Coordination (DGC), which houses the coastal management program. "One of the reasons Alaska participated in the Coastal Zone Management Act was to have a role in federal outer continental shelf oil and gas activities, and as a way of managing oil and gas development."
The DGC's role is to coordinate state reviews of proposals for oil and gas exploration and development projects, and to coordinate reviews for federal oil and gas lease sales in the outer continental shelf and in the National Petroleum Reserve in the state, says Glenn Gray, project analyst for the DGC and one of two staff members who coordinate oil and gas reviews.
"We have an independent coastal program," Gray notes. "We're located in the governor's office instead of a resource agency. Although we are the ones responsible for managing the state's coastal management program, we actually have no enforcement capability. By not being a resource agency, we don't have a stake, other than that the coastal standards are being met. We are facilitators, mediators, and try to resolve conflicts any way we can."
The Northstar development consists of constructing a man-made gravel drilling and production island in 39 feet of water about 12 miles northwest of Prudhoe Bay. A subsea pipeline will bring the oil to land, and connect into the Trans-Alaska Oil Pipeline. Production facilities and pipelines will be located on state submerged lands. Up to six development wells could be directionally drilled from a surface location on state submerged lands into the federal outer continental shelf.
BP Exploration (Alaska) began the Northstar project exploration in the 1980s. Oil and gas development in Alaska begins with the company purchasing a state or federal lease that gives it exclusive rights to "explore whether or not there is oil in that particular area, and then have the opportunity to produce that oil." In the case of Northstar and other large projects, Gray says the companies "can work with the state for several years to try to resolve issues" before an application to develop a site for production undergoes official review.
The coastal program works with the local coastal district; staff from the state's departments of Fish and Game, Natural Resources, and Environmental Conservation; and the regional citizen's advisory council to "get a project description that is the best one with the least impacts. A lot of work goes on before the review even starts." During this "preapproval" process, Gray says the federal government sometimes conducts an Environmental Impact Statement, and the coastal program staff participates in this process as well. Gray notes that no federal permits can be issued until the "state finds consistency with the coastal program, or consistency has been presumed."
Once project proposals are officially submitted for approval, the review participants can take as little as 50 days to make a decision. But, Gray explains, a large or complicated project like the Northstar development can take months. "All reviews include deadlines, but we have the ability to stop the clock and extend the review process if an agency feels they need more information," or to provide an adequate public comment period.
Gray says Northstar was under state review for eight months, partly because the proposal was controversial. "It was up there. A lot of people were at the public hearings supporting it because of all the jobs it would create, and environmental groups were there opposing it because of a fundamental disagreement with developing offshore. We didn't get a lot of comments from citizens opposing the project that I recall." Environmental groups have since sued a number of federal and state agencies, including the coastal program, to try to stop the project. A court has not ruled on the case.
After considering public comments, the state then "looks at the effects of a project, and determines if it meets permitting requirements and statewide standards of the coastal management program and the local district standards, which are part of the coastal program. Each district has its own enforceable policies," Gray explains.
The prevention of oil spills is of primary concern to the reviewers. "The first issue on all our minds are potential oil spills," Gray says. "In my mind, the number one thing we are trying to do is prevent an oil spill from occurring, and if a spill does occur, that there would be adequate means to clean it up."
Other issues that are addressed include air and water quality, as well as the potential impact on area wildlife. "Subsistence whaling is still practiced by residents, as is the subsistence use of other marine mammals, fish, and waterfowl. Protecting caribou is of great concern to the native people."
The state approved the Northstar project with 146 "conditions that were placed on the consistency finding and on individual permits," Gray says. "BP will have to meet all those requirements before they can start pumping oil."
Gray says for Alaska oil and gas development, the consistency review process is "critical. I think the advantage of the coastal program [acting as the coordinating agency] is that it forces everyone to sit around the table to resolve issues. Otherwise each regulatory agency would resolve issues in isolation. I think it's really important for the different staff from the different agencies to see what the big issues are. Everyone sees the same public comments and the agency comments get sent around. Everyone gets to see the whole picture."
For more information about Alaska's oil and gas review process, contact Glenn Gray at (907) 465-8792 or e-mail glenn_gray@gov.state.ak.us.
