By Margaret Bauman
Alaska Journal of Commerce

For residents of the Bristol Bay Borough, rising fuel prices are the bottom line behind a decision to consider - though not yet fully support - offshore drilling in the world's richest salmon fishery.

"We prefer onshore drilling, but we may be receptive to offshore drilling if we are guaranteed lower fuel costs for our area," Bristol Bay Borough Manager Fred Pike said April 12. "We want better than Anchorage prices."

Pike's comments came in the wake of Gov. Frank Murkowski's decision April 11 to endorse the proposed federal leasing programs in the Beaufort and Chukchi seas. The governor's comments were contained in a letter to the federal Minerals Management Service on the draft proposed program for Outer Continental Shelf oil and gas leasing for 2007-2012.

Pike said residents of Naknek, where borough offices are located, have been paying $3.88 a gallon since last fall for unleaded regular gasoline, "and it is 50 cents to 60 cents (a gallon) higher in Dillingham than it is here," he said.

Home heating fuel, which heats about 95 percent of homes in the region, runs $3.32 to $3.35 a gallon, he said. Fuel costs have probably increased almost three-fourths above what they were a year ago.

Borough residents are also cautious about offshore exploration because of environmental concerns, he said. In the wake of Hurricane Katrina off the coast of Louisiana, there were 19 oil platforms that were never seen again, he said.

Officials of the Bristol Bay Native Corp., whose shareholders include a number of fishermen, expressed equal caution.

Jason Metrokin, a spokesman for the corporation, said that BBNC has for years been in support of a study for potential for oil and gas in the Bristol Bay Basin.

"If it is going to require a lifting of the presidential moratorium on the Outer Continental Shelf, BBNC is in support of that, to know what the potential is in that area," he said. "Even if BBNC has not come out in favor of offshore exploration, we still need to know what's out there. Then we can make solid decisions based on that."

Cam Toohey, Alaska governmental and external affairs manager for the Shell Oil Co., said his company has been straightforward in talks with rural communities about benefits of offshore exploration, including jobs and contracting opportunities.

"Obviously local power in fuel (costs) is one of many benefits that could be generated, but the details on that one are many years off," he said." There are a lot of unknowns, but that is one of many things people will be looking for."

Toohey noted this is just the early stage of the MMS five-year program. "As we move forward, we will be able to flesh out all the opportunities for the region," he said.

Murkowski encouraged MMS and the oil and gas industry to continue to work with the North Slope Borough, whaling organizations and Native communities to ensure that activities are conducted in a manner compatible with subsistence whaling. Murkowski also endorsed the draft proposed plan's option 1 for the Cook Inlet planning area, which calls for two special interest sales in 2009 and 2011 in the program area.

The OCS North Aleutian Basin planning area is currently subject to a presidential withdrawal from leasing through June 2012. Murkowski said there was tremendous community support for the Alaska Peninsula lease sale the state held in October.

Murkowski also indicated that based on comments he has reviewed, there is widespread local support for opening leasing in the region, but that support is directed primarily to one specific planning area included in Lease Sale 92, held in 1985.

The governor noted that the Aleutians East Borough Assembly voted earlier in April to formally support oil and gas development in a small portion of the North Aleutian Basin, an area borough officials felt confident that environmentally responsible development could co-exist with fishing.

"Any lease sale activities in this area must be done with stakeholder consultation and must minimize conflicts with fishing activities and minimize negative impacts to our fish and wildlife resources," Murkowski said. "I believe we can protect those important resources and have a strong economy in the region. Oil and gas development can play an important role in that economy in the future."

Margaret Bauman can be reached at margie.bauman@alaskajournal.com.