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Amendment may allow state to waive review for Forest Oil Cook Inlet well

Senate tries to reverse court action

Posted: Monday, May 13, 2002

The Alaska Senate moved Friday to reverse the effects of a week-old Alaska Supreme Court ruling that had looked like a major setback for a Forest Oil Corp. project to sink a fifth well at its Osprey oil production platform in upper Cook Inlet.

On April 26, the High Court vacated the Division of Governmental Coordination's determination that the exploration well project was consistent with provisions of the Alaska Coastal Zone Management Act. The division had waived doing its own project-specific determination, relying on an existing general discharge permit from the federal government that had met the consistency requirements.

The court issued a restraining order in mid-April stopping further drilling. The final decision remanded the project back to the division for a new consistency determination, a process that could take weeks, if not months.

Friday, however, Sen. Gene Therriault, R-North Pole, introduced an amendment that would allow the state to waive a consistency review for any activity already authorized under a general or national permit considered consistent and waive review of any authorization or permit issued by the Alaska Oil and Gas Conservation Commission. The amendment was made retroactive to Aug. 1, 1998.

The oil drilling amendment was attached to Senate Bill 371, a measure exempting use of munitions by the U.S. Military in Alaska from environmental waste discharge rules.

In arguing for the amendment, Therriault said the recent court ruling meant companies would no longer be able to apply for all the individual general permits needed to put a project together and then run the whole package through the consistency review process.

"You're going to have to go through this process for every single one of what used to be general permits," he said. "And also go though the process on the whole project. And then (again) when you go to put pipe in the ground. A completely endless litany of this process over and over again."

Sen. Johnny Ellis, D-Anchorage, said piggybacking the amendment on the munitions exemption bill made it a whole new bill.

He said he hadn't even had time to digest the full impact of the Supreme Court ruling. He voted against the bill.

The amendment was adopted by a 16-to-2 vote and Senate Bill 371 itself passed 15-3. A reconsideration vote is expected today.

The Cook Inlet Keeper, a Homer-based environmental watchdog agency, filed the court case. Director Bob Shavelson said the Keeper had tried to resolve differences over the dumping of drilling muds and cuttings into Cook Inlet with Forest Oil's predecessor, Forcenergy Inc. (The companies merged in 2000).

"They chose not to address those issues," Shavelson said.

The company, he said, made a "bottom-line decision" to dump wastes from exploratory drilling operations on the fifth well into the inlet rather than go to the expense of injecting them into the ground. That technology, Shavelson added, is readily available. Indeed, the company agreed to inject the far less voluminous production wastes.

"We applauded that," Shavelson said in an interview early Friday before the Senate action. "But they decided it was cheaper to dump the (exploration) wastes into Cook Inlet."

Keeper appealed the division's consistency determination in October 1999. Litigation eventually reached the Alaska Supreme Court. The unfavorable ruling sent the company to the Legislature for "a fix," Shavelson said. He said the state had fallen down on the job.

The Osprey platform is between the Redoubt Bay Critical Habitat Area and the Trading Bay Fish and Game Refuge. The inlet, itself, is a fish-rich environment important to the state's fishing industry.

Over the years, the Keeper and other environmental groups often have questioned, and occasionally challenged, drilling operations in the inlet. Late Friday, Shavelson expressed disappointment in the Senate's action.

"This is sham democracy," he said in a press release. "The legislation was pushed through so quickly that the public didn't even see critical amendment language before it was voted on."

Becca Bernard, the Trustees for Alaska attorney who argued the case before the Alaska Supreme Court, disagreed with Therriault's view that the court's ruling would require companies to tread continually through the permitting process.

"The court held that the coastal review for a project in the coastal zone must look at the whole project. The court decision does not create multiple coastal reviews," she said.

Sen. John Torgerson, R-Kasilof, voted for the amendment saying use of general permits already determined consistent with the coastal zone act instead of doing another consistency determination had been standard practice for years.

"Someone found a loophole and sued over it," he said. "The Supreme Court agreed to it. The main reason was we don't have a law that covers it."

Torgerson said he expects the bill will pass in the House and be signed by Gov. Tony Knowles, rendering the court ruling moot. How long it will be before that actually happens, he couldn't say. Meanwhile, Forest Oil cannot drill at its fifth well.

If the law does not pass, it is conceivable the project could be hung up until next year when the Legislature could deal with the issue again, Torgerson said.

Following the court's ruling, Dave Keyte, chief financial officer for Forest Oil, said the company had work to do on the four other wells on the platform while it waited for the OK to move on the fifth.

"We've got a lot of work to do before we move into production," he said.

Shavelson said Alaska's coastal resources and future generations of Alaskans deserved better from the Legislature.

"The Alaska Senate is out of step with Alaskans' commitment to clean air, clean water and healthy coastal resources."

A spokesperson for Forest Oil Corp. could not be reached late Friday afternoon.

The Associated Press contributed to this story.



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