Supreme Court says state erred on platform permit

Posted: Tuesday, May 07, 2002

ANCHORAGE (AP) -- Exploratory drilling at a new oil platform in Cook Inlet is in limbo in the wake of a ruling by the Alaska Supreme Court that the state made a mistake when it decided the Osprey Platform didn't need a project-specific discharge permit for drilling waste.

The high court's ruling Friday came two weeks after the same court granted a restraining order sought by Cook Inlet Keeper to stop the drilling of a fifth exploration well on Forest Oil Corp.'s Osprey, sitting above Cook Inlet near the western shore roughly across from Nikiski. The issue was whether the state was following the strict rules of the Alaska Coastal Management Act.

''We're doing additional work on the other four wells while we wait for the situation to be cleared,'' said Dave Keyte, chief financial officer for Denver-based Forest. ''We've got a lot of other work to do before we go into production.

''It's not the exactly perfect way to deal with the situation. But we've got a project that's a world-class oil field and one we intend to develop.'' Forest is spending about $130 million in Cook Inlet this year, more than half of the company's entire capital budget.

The unanimous Supreme Court said state regulators erred when they decided to allow discharge of drilling mud and rock cuttings from the platform under a general discharge permit issued by the federal government.

State regulators reasoned that the Environmental Protection Agency's general permit for Cook Inlet covered discharge of drilling wastes, and that general permit had been cleared as consistent with the coastal management law. So the state didn't do its own review.

The court decided that approach was wrong.

''We think that with the state of technology where it is, this project should be a model for future development -- that would include zero toxic discharges,'' said Bob Shavelson of Cook Inlet Keeper, a Homer-based environmental group. Drilling wastes contain heavy metals such as cadmium, mercury and lead that could harm the environment and the creatures in it, he said. ''We know the discharges are toxic, and they're relatively persistent.''

The high court ruled that the state has a duty to conduct a project-specific review.

''The state was comfortable going with a generalized statement of impacts,'' Shavelson said. ''It's common sense to want to know what the localized impacts will be from a specific project.''

How long it might take for the state to complete a new review of the Osprey exploration wasn't clear. The court ruling could have an impact on a permit for development, as opposed to exploration, that was issued just last week, said Pat Galvin, director of the Division of Governmental Coordination, which handles the permits.

''The issue of discharging that material (drilling muds) isn't an issue in development,'' Galvin said. Forest has agreed to reinject discharges from its production wells.

''Once they move to development, as long as they work off the permits they've gotten so far, it's zero discharge,'' he said. Forest plans to drill upwards of 20 wells during the development phase, he said.



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