By Steven Mufson
Washington Post Staff Writer
Thursday, February 7, 2008
The Interior Department yesterday announced $2.6 billion in winning bids from companies seeking to drill for oil and gas in Alaska's Chukchi Sea despite protests from environmental groups and members of Congress that oil and gas exploration would endanger polar bears.
Companies made 667 bids for 448 tracts in the 29 million-acre area north of Point Barrow. The winning bids included a record-breaking $105.3 million offer by Shell Oil for one three-by-three-mile leasehold, almost twice as much as the previous high bid for a single offshore U.S. tract.
"This is a tremendous opportunity, and with that comes a tremendous responsibility to Alaska and the offshore area," said Annell Bay, vice president of exploration for Shell in the Americas.
Environmental groups said, however, that they doubted the area, home to about one-tenth of the world's polar bears, could be explored without high risks of a spill and damage to the habitat of the bears and other wildlife, such as walruses and bowhead whales.
Athan Manuel, an offshore-drilling expert for the Sierra Club, said that the oil companies would be drilling "in an Arctic ecosystem that is frozen much of the time and, when it's not frozen, is full of other hazards such as huge floating chunks of ice that could be hazards to rigs and pipelines."
Some lawmakers also criticized the Interior Department, whose Fish and Wildlife Service last month missed a court-ordered deadline for deciding whether to declare polar bears a threatened species while the department's Minerals Management Service went ahead with the lease sale.
"Signing on the dotted line with oil companies before creating clear lines of protection for the polar bear will only lead to litigation, oil company compensation and the potential decimation of the polar bear in Alaska," Rep. Edward J. Markey (D-Mass.), chairman of the House Select Committee on Energy Independence and Global Warming, said in a statement.
The Minerals Management Service said it had delayed the sale from an earlier leasing program to complete an environmental analysis. It said it had reduced the size of the lease area to make way for a corridor 25 to 50 miles from shore for migrating whales, other marine mammals and birds, and to leave open areas used by local communities to hunt.
Oil companies, which have been venturing farther from shore in search of big oil reservoirs, view the area as an unusually good prospect. The Minerals Management Service has said the area could hold as much as 15 billion barrels of oil and 75 trillion cubic feet of natural gas, though many such geological structures turn out to be dry.
Shell, which found some natural gas when it participated in five wells drilled there in the late 1980s, thought the blocs were some of the best undeveloped oil and gas prospects in the country, Bay said. Shell had spent the past four years analyzing its earlier results and more recent seismic data, she said.
Bay said that though drilling technology has improved since the 1980s, it was still challenging territory. She said that Shell's blocs were all 60 miles or more offshore and that the frigid water was about 150 deep.