April 8, 2008 / 6:57 PM / in 9 years

Government seeks comment on possible Bering Sea drilling

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<p>The Yukon Delta (C) and Bering Sea (L) is shown in this handout photo from NASA's Aqua satellite taken March 8, 2004.MODIS Rapid Responce Team/NASA-GSFC RCS</p>

ANCHORAGE, Alaska (Reuters) - The Interior Department's Minerals Management Service on Tuesday announced it is launching an environmental review of possible offshore oil and gas drilling in the salmon-rich area of Bristol Bay, where energy exploration was temporarily banned following the Exxon Valdez disaster in 1989.

After the Bush administration lifted the ban under the department's current five-year outer continental shelf leasing plan, which took effect last July, the government proposed a North Aleutian Basin lease sale in 2011.

Potential Lease Sale 214, as the MMS labels it, covers about 5.6 million acres in the southeastern Bering Sea and may hold 2.5 billion barrels of oil and 23.3 trillion cubic feet of natural gas.

The area is also home to the world's biggest sockeye salmon runs and a plethora of marine life, including some of the last known eastern Pacific right whales, a critically endangered species.

The MMS said in its announcement that it is seeking oil industry and public comment on the leasing proposal. The announcement "does not indicate a preliminary decision to lease in this area," the MMS said in its Federal Register notice, published Tuesday.

"With this step MMS begins a more formal information gathering process and continues our process of consulting with local villages, interest groups, including environmental groups, and industry," MMS Director Randall Luthi said in a news release.

The prospect of oil drilling in and around Bristol Bay has long been controversial in Alaska. A 1988 lease sale that drew $95.4 million in high bids was the subject of lawsuits and legislation that precluded any drilling. In 1995, the Clinton administration bought back the leases, refunding the oil companies and ending the legal disputes.

But as commercial fishing fortunes have faltered, some local governments in the Bristol Bay region and political leaders who once championed the lease buyback now embrace the proposed offshore oil development as a way to diversify the region's economy.

Shell, a company that has invested heavily in leases in Alaska's Chukchi and Beaufort seas, has also expressed keen interest in North Aleutian Basin drilling.

"Obviously, we'd be excited if that area came up for lease," Rick Fox, Shell's Alaska assets manager, said in a presentation last week to the Alaska World Affairs Council. "We would be interested in participating and would position ourselves to do so."

Shell spent nearly $1 million in 2005 to acquire leases on state territory nearby on the Alaska Peninsula. There are no plans to develop those leases without outer continental shelf activity as an anchor, said Gregg Nady, Shell's Alaska exploration team leader, said at a conference last month.

"Those were seen more as satellites potentially if the OCS does occur," he said at the conference, held in Anchorage. "Our view is the OCS is the best place to find the threshold potential that would be needed to justify development."

Environmentalists and several native and fishing organizations, meanwhile, continue to staunchly oppose offshore oil development.

"This is the worst manifestation of the Cheney energy policy. It would leave dead whales and oiled beaches and ruined fishing communities in its wake," Brendan Cummings, oceans program director for the Center for Biological Diversity, said Tuesday.

It is unclear if the next U.S. president would allow the MMS to conduct a lease sale in the designated area. The three main presidential candidates already oppose opening Alaska's Arctic National Wildlife Refuge to oil drilling.

Additional reporting by Tom Doggett in Washington; editing by Christian Wiessner

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