Alaskan oil battle may shift offshore

Environmentalists warn of oil exploration in Beaufort Sea

From the moment he came into office, President Bush had put drilling in the Arctic National Wildlife Refuge (ANWR) at the top of his agenda to increase domestic oil and gas production.

But now, having to concede defeat amid opposition from Democrats and moderate Republicans in Congress, the Bush administration is diverting its emphasis - and potentially the next symbolic environmental battleground - offshore.

As the Senate prepares to debate energy legislation as early as this week, Americans are likely to learn about another piece of Alaskan geography even more remote than ANWR. It's an icy stretch of ocean, comprising the northernmost extent of US waters, called the Beaufort Sea.

Geologists say huge pockets of oil and natural gas may exist beneath the bottom of the ocean floor and could be of interest to the president and the oil industry.

Depending on the outcome of what could be a fiery partisan exchange in the Senate, the Interior Department could open nearly 10 million acres of Arctic barrier islands and ocean to energy exploration by the middle of summer.

But the area, which extends from Barrow, Ala., in the west to the US-Canada border in the east, is valued by environmentalists. Here, endangered bowhead whales cruise the icy-blue depths, polar bears prowl in search of seals, and native Inupiats still practice maritime hunts.

The region also constitutes some of the world's most hostile conditions for drilling.

"There is enough oil and gas that if companies want to bid on it and explore, we will make it accessible," says John Goll, the regional director in Alaska for the federal Minerals Management Service, which administers off-shore drilling for the Interior Department. "But that still doesn't mean development will happen because exploration is expensive and there are no guarantees of success."

Estimates of commercially recoverable oil in the Beaufort Sea range from four to 12 billion barrels, and Mr. Goll adds that there is believed to be between 13 and 63 trillion cubic feet of natural gas - a commodity that would become more attractive if a proposed natural-gas pipeline from northern Alaska is built.

Relatively few exploration wells, perhaps 30, have been drilled recently in the Beaufort, and only one major development exists parallel to the several hundred miles of coastline. But congressional action could set the stage for a much larger infrastructure of drilling platforms, pipelines, ship traffic, and roads onshore.

"The level of intrusion itself is worrisome," says Pamela Miller of Arctic Connections, an organization based in Anchorage specializing in assessing the impacts of energy development on coastal areas. "If there's major development and a spill in the ocean, we're going to have a disaster because it would be next to impossible to contain."

A few months ago, Ms. Miller notes, the National Academy of Sciences warned that seismic exploration and offshore drilling would displace some whales and, in turn, force traditional Inupiat hunters to travel further afield. Any roads built in the area would also intrude on bear habitats.

Opening the Beaufort Sea to expanded exploration, however, is just part of a broader administration plan, which includes temporarily suspending mandatory federal royalty payments for companies that go looking for new deposits of oil and gas.

While taken as a whole, the 2003 version of energy legislation offers less than the $38 billion in subsidies to the oil, gas, coal, and nuclear industries offered two years ago, observers say it lays out a more ambitious strategy to ease regulatory restrictions on drilling.

One of the most controversial proposals calls for new efforts to identify and map commercial development potential along coastal regions that are currently off limits to drilling such as California, Florida, Oregon, Washington, and the Eastern seaboard.

"Why would you spend all that money and time assessing what is there unless you were planning to go and get it?" asks Peter Rafle, spokesman for The Wilderness Society.

For the Bush administration and the state of Alaska, oil from the Beaufort Sea and the National Petroleum Reserve west of ANWR have the potential for increasing production of North Slope crude which has tapered off from a peak of 2 million barrels a decade ago to 1 million barrels a day.

While Goll says the odds of stumbling upon another massive "elephant" reservoir of oil like the one at Prudhoe Bay are low, a handful of companies are aggressively seeking a big payday.

Technically, the administration doesn't need congressional action to authorize more intensive energy exploration in the Beaufort. However, it does need lawmaker approval for the package of financial incentives to spur more interest from the private sector.

In addition to suspension of royalties, the energy bill creates a revenue-sharing program which gives native Alaskan villages - some of which have been ambivalent or opposed to oil drilling - an inducement to go along with energy development.

If President Bush rolls back drilling moratoria, some of which were imposed by Ronald Reagan and his own father, it could prove politically perilous, Mr. Rafle says. A recent Gallop poll showed 55 percent of Americans are opposed to drilling in the Arctic wildlife refuge.

Many look upon the administration's energy plan as the first real test of the president's ability to leverage his postwar popularity to offset a domestic issue that might resonate badly at the polls.

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