As fishing falls off, rural Alaska wants oil

Bristol Bay is rich in sea life - but a plunge in salmon prices resurrects plans for controversial oil drilling.

Southwestern Alaska's Bristol Bay, site of the world's biggest sockeye salmon runs, was long considered too valuable to risk to oil rigs. Like the California and Florida coasts, this part of Alaska has been under a national leasing moratorium to spare it from the threat of spilled crude.

But now, eight years after a federal move to buy back oil leases in the vast Bay, residents and state officials are doing what would have seemed unthinkable not long ago: inviting oil firms back.

The reversal reflects the fallen fortunes of Alaska's once-powerful salmon industry, and the economic challenges facing rural Alaska.

"The fishing industry is failing so badly.... We've got to do something else," said Nels Anderson, a former state lawmaker and native leader spearheading the push for energy development. "We just can't afford to live out here."

Despite Bristol Bay's salmon bounty, commercial fishers have been hit by the rise of cheap farmed salmon. Last year's Bristol Bay commercial salmon catch was worth only $29.8 million, less than a quarter the 20-year average. And there are few moneymaking alternatives for residents, largely Yupik Eskimos, Athabaskan Indians, and Aleuts. The economic problem affects other fishing-dependent areas of Alaska as well.

So, as local energy costs soar - fuel is so expensive that fishermen say they can't even afford to make ice to chill their salmon - the once-rejected oil and gas industry is being wooed as a potential paycheck savior.

The pro-drilling mood is a dramatic turnabout for Bristol Bay. Back when President Reagan's Interior Department first began planning oil and gas leasing in the region, the state of Alaska sued to block exploration. A sale went ahead in 1988, drawing $96 million in bids.

Eight years ago, the buyback of those leases by the Clinton Interior Department was a celebrated move in the region. But today, Alaska Gov. Frank Murkowski (R) is touting the region as Alaska's new energy frontier, saying its "prospects are as bright here as anywhere in the state relative to oil and gas."

At Mr. Murkowski's direction, the state Division of Oil and Gas is offering exploration licenses for state and native lands and coastal areas in the region, to allow companies to explore a frontier area for a nominal fee and an investment commitment. A conventional state lease sale is also planned near the end of 2005 - not seen in the region since 1984.

To further spur oil and gas development, Murkowski wants the state to build a new 182-mile gravel road through the sparsely populated Alaska Peninsula. He says the road's $285 million cost can be covered by lease revenues. But the revenue estimate is higher than the average Alaska oil lease-sale standard.

Onshore first, offshore later

For now, proposed development is limited to onshore drilling, including possible extended-reach drilling to target some offshore areas. But the governor and many Bristol Bay residents, including several native organizations, are pushing for full-scale offshore drilling. That is more controversial, because biologists say currents can sweep spilled oil around the entire bay, - an international crossroads for whales, birds, and other sea life.

Harvey Samuelson, a native leader heading the charge for local energy development, says those who are leery about offshore drilling have not been educated about modern energy technology. "We can go to the moon and back. We can do this," he said.

Samuelson has an ally in US Sen. Ted Stevens (R). Stevens, chairman of the Senate Appropriations Committee, has drafted a budget bill that effectively removes a congressional ban on oil leasing there.

How valuable to industry?

It is unclear whether the industry still sees Bristol Bay as attractive.

Judy Brady, executive director of the Alaska Oil and Gas Association, said the region has long been seen as rich in potential. "Some geologists that I know from past experience drool when you talk about Bristol Bay," she says.

But estimates from the US Minerals Management Service, the agency in charge of offshore drilling in federal waters, describe the area as rich more in gas than oil. The North Aleutian Basin, as the federal agency calls the offshore area there, could hold 230 million to 570 million barrels of recoverable oil, versus 7 trillion to 17 trillion cubic feet of natural gas, according to geologists' estimates from 1995.

Commercialization of natural gas in Alaska has long been hampered by remoteness from major markets.

President Bush might consider lifting the presidential moratorium on Bristol Bay, but only if Congress removes its leasing ban and there is clear support from Alaskans, including the affected native people, said Johnnie Burton, director of the Mineral Management Service, during a recent Anchorage visit. "It's not going to be initiated in Washington," she said. "It has to be initiated in Alaska."

Not everyone in the region favors energy development. Tom Tilden, a local native leader and former Dillingham mayor, confessed to "mixed feelings" at the recent meeting between Murkowski and native organizations. "That is our backyard.... There are some worries."

Environmentalists strongly oppose development. Onshore development, they say, could affect a collection of neighboring parks and wildlife refuges. A key concern is that aggressive roadbuilding could degrade salmon-spawning areas and other habitat.

As for offshore drilling, all the past concerns remain valid, said Dorothy Childers of the Alaska Marine Conservation Council. "We just don't think the oil industry is prepared any better now than they were 10 years ago to respond to an oil spill."

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