Murkowski announces oil accord with Bristol Bay Native Corp.

Posted: Sunday, July 13, 2003

JUNEAU (AP) State officials have reached an accord with the Bristol Bay Native Corporation over the prospects of opening the first lease sale in the region in more than a decade.

''We think the prospects are as bright here as anywhere in the state regarding oil and gas,'' said Gov. Frank Murkowski.

The State Department of Natural Resources has signed a memorandum of understanding with the Bristol Bay Native Corporation, which owns 3.1 million acres in the region on behalf of more than 7,000 shareholders.

The state hopes to open onshore lease sales for shallow natural gas by next year and follow that with oil and gas lease sales by the fall of 2005, Murkowski said.

The state hopes to hold shallow gas leases in the upper end of the bay by the fall of 2004, Murkowski said. Such a sale would help offset the high cost of energy in the local communities, he said.

Within the agreement, the two sides plan to work cooperatively to make the lease sales happen as soon as possible. They will also both work to persuade the federal government to lift a moratorium on offshore oil and gas exploration. That moratorium is expected to last until 2011.

The Alaska Division of Oil and Gas is considering opening up millions of acres around Bristol Bay to oil and gas exploration.

The deal announced on Friday provides a stark contrast to previous years when the general opposition to exploration in the wake of the 1989 Exxon Valdez spill.

Residents in the region heavily dependent on its salmon and other fisheries had been reluctant to support oil development after the spill impacted vast areas of Prince William Sound and shut down fishing there.

Now the fishing industry is struggling and Bristol Bay has weathered a series of fishing disasters. Residents strongly favor more natural resource development there as a way for new jobs to be brought to the area, said Tom Hawkins, senior vice president of the Native corporation.

Some people are still reluctant to support offshore exploration, but ''almost 100 percent'' are in favor of resuming exploration on land, Hawkins said.

Bristol Bay basin is thought to hold commercial quantities of oil and gas deposits on par with those in Cook Inlet. More than 20 exploration wells have been drilled there in past years and the results are encouraging, Murkowski said.

It's unclear how much the lease sales could fetch for the state or the Native corporation. Mark Myers, director of the state Oil and Gas Division could not be reached for comment. But he has said it holds the potential of hundreds of millions of barrels of oil, in addition to natural gas.

The last lease sale came in 1988 in which the North Aleutian Basin Sale 92 generated $96 million in bids for 23 leases on 122,000 acres of land.

But following the Exxon Valdez spill, the lease sale was canceled and the bid proceeds returned to the oil companies.

On Thursday, Murkowski outlined his future plans to construct a $285 million road from King Salmon to Chignik on the Alaska Peninsula. He said the road could be paid for from proceeds from the lease sale.

The five-year memorandum outlined on Friday calls for the two sides to coordinate the timing of their lease sales, share some information and work with tribal organizations, villages and borough and city governments.

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