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In Alaska, the Hunt for Oil, Gas Only Begins at Wildlife Refuge

Energy: High prices, pro-business government fuel the drive for drilling. Activists are gearing up.


CORDOVA, Alaska — As Congress prepares to square off over oil drilling in Alaska's Arctic National Wildlife Refuge, a small company has quietly applied to drill 680 miles to the south, on the Copper River Delta.

It is hard to imagine a plan more likely to set off alarm bells with environmentalists, for the 700,000-acre delta is the most important shorebird stopover on the Pacific Coast--and home of the best-tasting salmon in the world.

But ramped-up oil and gas production now is possible in regions all over the Alaskan frontier--from the Copper River Delta and offshore sites along the Cook Inlet in the south to the frozen Beaufort Sea in the north. Some of the areas that previously held little interest for oil producers now are prime for exploration for two key reasons: soaring fuel prices and the support of a new, more business-friendly Republican administration.

The Arctic refuge is simply the first flash point. A GOP-drafted federal energy package, following President Bush's lead, calls for drilling in the 1.5-million-acre coastal plain--a region so rich with wildlife that it is known as America's Serengeti.

"Alaska has seen that, with a Republican administration and a Republican House and a Republican Senate, all the constellations have aligned for them," said Allen Smith, Alaska regional director of the Wilderness Society. "They are preparing to have their day, and oil and gas are at the front of the line."

No wonder that in his state of the state address last month, Alaska Gov. Tony Knowles--a Democrat but also a former oilman and Bush's fraternity brother at Yale--proclaimed Alaska "on the verge of a new era." Anchorage Mayor George Wuerch is unabashedly upbeat. "The Clinton era is over," he said. "If you care about Alaska, our economic future is about to change."

Like the Bush administration, Knowles believes in economic development--and says it does not have to come at the expense of the environment.

The governor has already pledged to expedite permit reviews for the nation's single biggest energy development project in more than two decades: an $8-billion to $10-billion pipeline to carry natural gas from the North Slope down through Canada and the U.S. Midwest.

"Help is on the way," Knowles told a conference of Western governors Friday in Portland, Ore.--noting that the pipeline will provide access to 36 trillion cubic feet of new natural gas, the largest proven reserves in North America.

But the fact that the cheapest way to build the pipeline is to bury it under the ocean off the coast of the Arctic refuge could make it nearly as controversial as drilling in the refuge itself. Knowles has backed a route that could be $2 billion more expensive, running down the existing trans-Alaska pipeline and well clear of the refuge.

Babbitt Delayed Oil Lease Sale

Other controversies are possible in the waters off Alaska's shore as the federal Minerals Management Service in the coming months prepares its next five-year development program.

"Given this administration, I think it will be unlike anything we've ever seen," said Jenna App, a lawyer with Trustees for Alaska who has challenged offshore drilling in the Beaufort Sea. "We're potentially looking at Alaska pretty much on all sides being surrounded by [offshore] leasing."

Two days before leaving office, former Interior Secretary Bruce Babbitt deferred a pending lease sale on nearly 10 million acres that could have allowed drilling in the Beaufort Sea off the Arctic refuge and the National Petroleum Reserve.

Since 1979, the government has issued 688 leases in the Beaufort Sea--although the first actual production well, known as Northstar, only now is nearing operation. Federal officials said it is not clear whether the new administration will seek to lift Babbitt's deferral.

BP Exploration and Phillips Alaska--two of the biggest oil firms operating in the Arctic--admit they are setting their sights on the frozen Beaufort Sea, where there are substantial questions about the industry's ability to clean up oil spills in the shifting, broken ice of spring and fall. And Phillips is eyeing expansion in the Cook Inlet, where heavy opposition until now has restricted most offshore drilling to the more developed, less ecologically sensitive upper inlet.

In an interview, Knowles said it was doubtful that the oil industry would seek to expand drilling much beyond the existing infrastructure. "Basically, drilling and extraction in Alaska is such an expensive proposition--and the environmental concerns are so great--there really has been a concentration on the area where there is an existing infrastructure" on the North Slope, he said.

With that in mind, the big oil companies are not ruling out expanding their footprint in the National Petroleum Reserve.

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