Federal agencies at odds over drilling plan for Alaska reserve

By Phil Taylor | 01/21/2015 01:05 PM EST

What’s the best way to drill for oil in a mostly untouched Alaskan tundra — home to migrating caribou, abundant waterfowl, and Native hunting and fishing grounds? It depends on which federal agency is asked. The Bureau of Land Management, the Army Corps of Engineers, U.S. EPA and the Fish and Wildlife Service are at odds over ConocoPhillips Co.’s bid to become the first oil producer in the 22.5-million-acre National Petroleum Reserve.

Correction appended.

Updated at 10:57 a.m. EST Jan. 29.

What’s the best way to drill for oil in a mostly untouched Alaskan tundra, home to migrating caribou, abundant waterfowl, and Native Alaskan hunting and fishing grounds?


It depends on which federal agency you ask.

The Bureau of Land Management, the Army Corps of Engineers, U.S. EPA and the Fish and Wildlife Service are split on how to approve ConocoPhillips Co.’s bid to become the first oil producer in the 22.5-million-acre National Petroleum Reserve (NPR-A) in northwest Alaska.

How they resolve those differences could point to how — and to what extent — the nation taps into a reserve believed to hold upward of a billion barrels of crude.

"The federal government is at odds with itself on this decision," said Lindsey Hajduk, Alaska program director for the Conservation Lands Foundation in Anchorage. "The public deserves a thorough, scientific analysis of the project with an outcome that best protects the Arctic’s fragile wetlands, wildlife and subsistence resources."

The issue came to a head Friday when the Army Corps issued a Clean Water Act permit to ConocoPhillips that allows an 8-mile gravel road and drill pad and the filling of 73 acres of waters and wetlands. In the corps’ view, that road configuration, known as alternative A, was the "least environmentally damaging, practicable alternative," a key litmus test under CWA (Greenwire, Jan. 20).

"This alternative meets the overall project purpose, is practicable in consideration of costs, logistics and existing technology, and would result in the smallest footprint impacts to aquatic resources," the corps said in its decision, noting that the shorter route would also affect drier wetlands.

But BLM came to a different conclusion in its final environmental impact statement on the project in October and picked alternative B, calling for a slightly longer road that swings south of Fish Creek, an important hunting ground for Native Alaskans in the nearby village of Nuiqsut.

That route would also eliminate a bridge and pipeline crossing over Crea Creek and the crossing of Barely Creek, improving life for fish, BLM said. While BLM acknowledged that the longer road would require more land disturbance and would be more difficult to build due to poorer soils, it said it wants to adhere to its 2013 comprehensive land-use plan for the reserve that established a 3-mile setback for Fish Creek.

The Fish and Wildlife Service largely took BLM’s view in comments to the Army Corps, arguing that alternative B would cause the fewest impacts to fish and aquatic habitat, water quality, and stream hydrology.

U.S. EPA said that BLM’s alternative D, a "roadless" drilling option that relies on ice roads, airlifted supplies and more facilities at the ConocoPhillips well site, could be the least environmentally damaging, practicable alternative (LEDPA), but that such a plan would have other potentially significant adverse environmental consequences that deserve consideration. The agency said it did not choose a LEDPA but could support either alternative A or B as the best alternative.

That the agencies would have different views is not surprising given their different statutory missions and institutional histories.

Now it’s up to BLM, which manages the Indiana-sized reserve, to decide how to proceed.

In the coming weeks, it is expected to issue a record of decision identifying a final alternative as well as a mitigation plan for ConocoPhillips to offset the project’s impacts.

"The BLM continues to coordinate with the Corps of Engineers to determine a federally unified, environmentally sound and economically feasible path forward," BLM spokeswoman Celia Boddington said today in a statement. "The BLM is also working with [ConocoPhillips] to establish a robust set of best management practices and mitigation measures that will address the foreseeable impacts of this project and benefit affected environments and parties, including subsistence users."

Environmental groups are lobbying BLM to stick to its guns and protect Fish Creek.

"Under Alternative A, the sensitive Fish Creek watershed would be needlessly damaged by the construction of multiple bridges and other infrastructure," said Nicole Whittington-Evans, Alaska director for the Wilderness Society. "Given that two of the four federal agencies involved in reviewing the GMT-1 proposal agree that Alternative B would cause the least harm to this watershed, BLM should hold firm on its approach."

In a Jan. 9 letter, the CEOs of the Wilderness Society, Conservation Lands Foundation, Natural Resources Defense Council, Alaska Wilderness League and Sierra Club said BLM must protect the creek to "uphold the integrity" of its 2013 integrated activity plan for the reserve.

But BLM faces pushback from ConocoPhillips, Alaska Gov. Bill Walker (I) and the local county government, all of which back the corps’ preferred alternative.

"We support the U.S. Army Corps of Engineers’ decision," said ConocoPhillips spokeswoman Amy Burnett. "The alternative they have selected … has the least environmental footprint and requires the least amount of gravel."

Burnett said BLM’s decision must "agree" with the Army Corps in order for the project to proceed.

In addition, the corps argued that its road alternative would have minor impacts to Crea and Barely creeks, use fewer culverts, and "better accommodate the natural hydrology of the area." The proposed road would get no closer than 2.5 miles to Fish Creek, it said.

According to a Dec. 16 letter from Alaska’s Department of Natural Resources, BLM told cooperating agencies it thought the environmental impacts from its preferred alternative and that of the corps were similar.

ConocoPhillips’ $890 million Greater Mooses Tooth project would drill up to 33 production wells and several injection wells, sending up to 30,000 barrels of oil per day to the Trans-Alaska Pipeline System by late 2017.

Mitigation steps

But in addition to the road route, there’s another major battle over which mitigation steps BLM will require of ConocoPhillips.

In exchange for its Clean Water Act permit from the corps, ConocoPhillips agreed to create a 342-acre conservation easement to preserve lands owned by the Native Alaskan Kuukpik Corp. between channels of the Fish Creek Delta as it empties into the Beaufort Sea.

But BLM’s mitigation package may demand much more.

The package, which would be spelled out in BLM’s record of decision, may include a new "compensatory mitigation fund." Money provided by ConocoPhillips could be used to create a landscape-level mitigation strategy, clean up NPR-A "legacy" wells that were abandoned by the Navy, construct a boat launch on the Ublutuoch River or monitor concerns related to air quality in the Nuiqsut area.

Other mitigation steps may include aircraft and traffic limits to minimize impacts on caribou and an agreement giving local Native communities access to the road.

Burnett, of ConocoPhillips, said the BLM mitigation measures must be "acceptable" in order for the project to move forward for consideration by the company’s senior management.

Industry, lawmakers decry ambiguity

All this uncertainty has raised the ire of the oil and gas industry, Walker and Sen. Lisa Murkowski (R-Alaska).

Walker in a Dec. 22 letter to Interior Secretary Sally Jewell said "it appears that rather than a clearly-defined regulatory path, a multi-layered bargaining regime has been put in front of the applicant, the purpose of which appears to be either to extract value from the project or to so negatively affect the economic outcome as to effectively stop project development."

Murkowski in a statement in October slammed BLM for issuing its final EIS on the project but deferring its record of decision and mitigation package to a later date.

"I am concerned about the critical project decisions that are being left for the record of decision, which could impact whether this project moves forward or not," Murkowski said then. "Federal leaseholders need to have a permitting process that is timely and predictable in order to invest the billions of dollars it takes to develop America’s energy resources."

Industry and green groups will be watching BLM’s decision closely, as it will likely set a template for future NPR-A development as industry moves westward into the untapped reserve.

Correction: An earlier version of this story identified Alaska Gov. Bill Walker as a Republican. Walker has campaigned as a Republican, but he ran for governor in 2014 as an independent.