Feds increase oil and gas expectations for Cook Inlet leases

Interior Department officials have added to their expectations for oil and gas development in lower Cook Inlet based on new resource estimates for the area.

In the lower Cook Inlet federal oil and gas lease sale draft environmental impact statement, Interior contemplates the eventual construction of six offshore platforms and up to 81 oil and gas producing wells in the largely untapped region over 40 years. A version of the draft review published earlier this year considered development of up to four platforms and 48 production wells over 36 years.

The vast majority of existing industry development in the Cook Inlet basin is located in near-shore state waters and the state-controlled waters of the northern Inlet.

The changes stem from the Bureau of Ocean Energy Management’s updated October analysis of Alaska’s offshore oil and gas resources, according to BOEM Alaska spokesman John Callahan. From that analysis, BOEM increased its estimates for total oil production in the lower Cook Inlet area by 18% to 192 million barrels, and total gas production by about 4% to 301 billion cubic feet, or bcf, of natural gas over estimates made in 2016.

Callahan wrote via email that the projections represent the maximum potential development that could stem from the lease sale being considered.

BOEM officials initiated a 45-day public comment period Oct. 29 for the draft EIS of its proposal to offer up nearly 1.1 million acres of federal Cook Inlet waters to oil and gas companies in a lease sale tentatively scheduled for some time next year.

Environmental groups have long lobbied Interior leaders to stop proposing Cook Inlet lease sales, citing a lack of interest from industry and fears development activity could harm the Inlet’s endangered population of beluga whales and other marine life.

The updated EIS is the Biden administration’s attempt to comply with a June U.S. District Court order that barred the administration from “pausing” new oil and gas leasing on federal acreage, as President Joe Biden ordered in late January shortly after taking office. BOEM officials in early February subsequently recalled a draft lower Cook Inlet EIS published in the final days of the Trump presidency.

Interior’s appeal of the District Court ruling is pending.

Specifically, BOEM is largely proposing to make the northernmost portion of the broader federal Cook Inlet planning area available for lease; a rough triangle starting at about Ninilchik to the north and Seldovia and Augustine Island to the south.

According to the draft EIS, BOEM officials targeted areas closer to existing infrastructure and industry activity and avoided most of the area listed as critical habitat for Cook Inlet belugas and northern sea otters in selecting acreage to lease. Alternative plans call for removing 10 lease blocks of critically designated beluga habitat in the northern portion of the proposed lease area or restrictions on some exploration activities in winter, when the whales are most likely to be in the area.

Agency officials are also open to similar restrictions to mitigate impacts to northern sea otters and activity restrictions to coincide with the summer commercial drift gillnet salmon fishery that occurs in the northern portion of the proposed lease area each year.

Hilcorp Energy was the lone bidder in the last lower Cook Inlet lease sale held in 2017. The Houston-based independent, which is the dominant player in the broader Cook Inlet basin, selected 14 leases for just more than $3 million at the time. Those leases are just offshore from the Ninilchik and Cosmopolitan state units, and in the middle of the Inlet in front of Kachemak Bay.

Prior to 2017, the last federal sale of Inlet waters was in 2008. The state holds a lease sale for its acreage in the basin each year.

Once the state’s primary source of oil, the Cook Inlet basin is now mainly a source of natural gas for local utilities. Absent historic demand for LNG exports to Japan and gas for major industrial uses, new, large-scale Cook Inlet oil and gas projects have been rare in recent years.

The public comment period for the lower Cook Inlet lease sale draft EIS is open through Dec. 13.

Elwood Brehmer can be reached at [email protected].

11/04/2021 - 8:04am