Thursday, January 27, 2005

Alaskans warm to oil drilling

It is high time we start getting back into the oil exploration business domestically. This will buy us the time we need to develop reasonably priced alternative energy sources. - Sailor

Jan. 27, 2005, 7:35AM

Alaskans warm to oil drilling

As the salmon industry loses its luster, some who fought exploration now embrace it

Copyright 2005 Houston Chronicle

The people of Bristol Bay, Alaska, had little use for the energy exploration business back when a salmon was worth about the same as a barrel of oil.

In the late 1980s and early 1990s, when state officials and oil companies pushed for onshore and offshore drilling, many residents in the sparsely populated region fought back.

"A sockeye salmon was going for over $2 per pound, oil was $14 a barrel and the Exxon Valdez had just gone up on the rocks," said Tom Hawkins, chief operating officer of the Bristol Bay Native Corp. "People made a good living from fishing and asked themselves, 'Do we really want to take this risk?' "

By 1995, public pressure led the federal government to buy back the leases and impose a moratorium on exploration.

Ten years later, the tide has turned.

Salmon prices have plummeted, the result of international competition and cheap, farm-raised fish. Oil prices have skyrocketed, pushing $50 a barrel, and natural gas prices are near record highs.

In a place where brown bears outnumber people and active volcanoes loom over icy peaks, the energy industry suddenly doesn't look so bad to some of the struggling fishermen.

State officials are preparing to sell exploration leases on 5 million acres on the Alaska Peninsula in October, but this time community leaders from the region are getting behind the effort.

Officials representing local native groups and local government are in Houston this week to market their region during the North American Prospects Expo at the George R. Brown Convention Center.

More than 10,000 members of the oil and gas industry are expected to attend, where companies buy and sell energy prospects and market their services and products.

With few roads and no pipelines, oil and gas production on the Alaska Peninsula is by no means a sure thing. But that doesn't keep the locals from trying to find a way to diversify the economy.

On Wednesday, representatives from the local groups manned booths at the convention center next to Alaska state officials, handing out brochures, showing off seismic data maps and talking up the region's potential.

Bob Juettner, administrator for the Aleutians East Borough, pointed out this area could be reached using the many existing air strips or deep water ports on both the Pacific Ocean and Bering Sea sides of the peninsula.

"This region is a level playing field for independents who maybe don't want to fight it out with companies in the other parts of Alaska," Juettner said.

Oil companies haven't looked at the region in many years, but there's ample seismic data from the 1980s that companies can use to evaluate prospects for the October lease sale, said Don Brizzolara, a geologist with the State of Alaska's Department of Natural Resources. The greatest potential may be for natural gas.

"In the past companies were drilling for 'elephants,' looking for the next big oil find like Prudhoe Bay," Brizzolara said. "They would hit gas but ignore it and keep on going."

But natural gas is a more attractive commodity these days, meaning companies may be more willing to look at the area.

So far, teams from Shell and Petro-Canada have made visits to old drill sites along the peninsula, officials said.

Support for exploration in the Bristol Bay/Alaska Peninsula area stands in contrast to hotly contested efforts to open other parts of Alaska, particularly the Alaskan National Wildlife Refuge, or ANWR.

The state of Alaska controls much of the land on the Alaska Peninsula, while ANWR is a federally protected area. Environmental groups are gearing up for a fight over exploration there, which may come up on Capitol Hill again this spring, but there's been less organized opposition toward the Bristol Bay issue.

Dorothy Childers, executive director of the Alaska Marine Conservation Council, said it's a good sign the lease sale is limited to onshore drilling, but there are still people who are wary.

"There's a lot of talk flying around about Bristol Bay being open for business," Childers said, noting that there are plans for gold mining in the region, too. "People are waking up to the fact that there's a lot that we still need to be careful about."

Stanley Mack, mayor of the Aleutians East Borough and a fisherman who lives in the town of Sand Point, said improvements in oil exploration and production technology have helped ease concerns about drilling this time around.

"We feel like we'll be pretty well protected," Mack said as he manned a table at the conference Wednesday. "People have come to expect that the industry will be here eventually."

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