Preliminary finding would allow oil exploration near Bering River

  • A small Nikiski company is close to securing rights to explore for oil and gas on state lands and waters near the Bering River. (Map/Courtesy/Alaska Department of Natural Resources)

A small Nikiski-based company is close to getting exclusive oil and gas exploration rights to a large swath of state land at the edge of the Gulf of Alaska.

Acting Division of Oil and Gas Director Jim Beckham signed a preliminary finding Aug. 2 that, if finalized, would give Cassandra Energy Corp. sole rights to exploring 65,773 acres at the mouth of the Bering River.

The area of mostly tidelands and near shore state waters is adjacent to the Copper River Delta State Critical Habitat Area to the west. Much of the surrounding area is Chugach National Forest land.

The Division of Oil and Gas issues broad exploration licenses to encourage companies to hunt for commercially viable hydrocarbons in areas outside of the state’s traditional North Slope and Cook Inlet basins.

The 256-page draft decision would give Cassandra Energy exploration rights to the acreage for 10 years and includes a $1 million work commitment, a contingency established by Beckham based on work proposed by the company, it states.

The division is soliciting public comments on the preliminary exploration license through Oct. 4.

Division of Oil and Gas officials said Cassandra Energy leaders have outlined a general work plan to them but declined to relay that information out of commercial concerns. The company has not submitted formal exploration or operational plans to the state.

The exploration license could eventually be transformed into more formal state oil and gas leases.

Cassandra Energy initially planned to explore the nearby onshore historic Katalla oil field near the Bering River in the early 2000s by drilling from Chugach Alaska Corp. holdings inside the Chugach National Forest. The plan sparked a lawsuit over the U.S. Forest Service’s evaluation of Cassandra’s proposal, according to news reports at the time.

Oil has been produced from areas near the exploration acreage in the past. According to the license finding, 44 wells were drilled in the Katalla field and surrounding areas in the early 1900s and approximately 154,000 barrels of oil were ultimately produced.

A small refinery built in 1911 supplied fuel to the Kennecott mine located about 150 miles to the north. The refinery burned in 1933 and was never rebuilt, according to the license.

The area is also known to have occurrences of coal.

Division officials expect the area’s bedrock — fractured and disrupted by many large earthquakes — could make oil and gas recovery difficult.

“Although there is no evidence of a viable conventional petroleum system, it is likely that the unconventional shale play still holds technically recoverable oil and gas resources,” the license states.

Representatives for Cassandra Energy could not be reached in time for this story.

The company first submitted an exploration license application for the area in April 2015.

While adjudication of exploration license applications requires multiple rounds of public comment and subsequent evaluation, the process usually doesn’t take more than four years, which is how long it has taken to reach the preliminary decision for Cassandra Energy’s application.

In this case, the Division of Oil and Gas was more deliberate in its evaluation of the proposal because of the ecological and economic importance of the nearby Copper River Delta, division officials said. The commercial fishery that occurs there each spring and summer is the first major salmon harvest in the state each year and in turn generates a very high per-pound value for the prized Copper River chinook and sockeye salmon taken.

This year, Copper River District fishermen harvested more than 1.2 million sockeye salmon and nearly 18,000 chinook. The Copper River also supports a large upriver personal use salmon fishery.

According to comments from the fishing group Cordova District Fishermen United summarized in the preliminary finding, Cordova ranks 14th among U.S. fishing ports in terms of landed value and volume, with much of that harvest coming from the Copper and Bering River areas.

Then-Cordova District Fishermen Executive Director Alexis Cooper wrote during a 2015 comment period on the application that the group opposes oil and gas exploration in the area until technological advances in the industry eliminate a substantial risk to renewable resources in the region.

Department of Natural Resources officials responded in written comments included in the preliminary finding that they understand the importance of the region’s commercial fisheries and therefore the license prohibits surface activity in the Copper River Delta State Critical Habitat Area, among other measures.

Other Cordova residents and area conservation and fishing groups opposed an oil and gas exploration license for the western Gulf of Alaska, repeatedly citing the need to protect the region’s fisheries and other marine life. Several noted that Prince William Sound is still recovering from the 1989 Exxon Valdez oil spill.

DNR officials responded, in part, that, “Spill response techniques and technology have improved since the time of the Exxon Valdez spill and other agencies including (the Alaska Department of Environmental Conservation) are responsible for review of spill prevention and response plans for any proposed activity associated with this exploration license.”

Requirements in the draft license for mitigating environmental impacts from oil and gas activity prohibit facilities within 500 feet of fish-bearing waters and limit development within a half-mile of several rivers in the area.

The license would also restrict offshore drilling to onshore directional drilling unless an environmentally preferable location is found. It also states that the Division of Oil and Gas would approve many development proposals would only after consulting with other resource agencies, such as Environmental Conservation and Fish and Game.

Elwood Brehmer can be reached at [email protected].

08/07/2019 - 9:40am