Feds push ahead with draft plan for Cook Inlet oil and gas leasing

The U.S. Interior Department is moving forward with a plan to offer oil and gas leases in federal waters of Cook Inlet, an area that has drawn little industry interest in the past.

Interior's Bureau of Ocean Energy Management on Friday released a draft environmental impact statement for a lease sale tentatively scheduled to be held a year from now.

Cook Inlet Lease Sale 244, part of the bureau's five-year offshore leasing program, would be the sixth auction of oil and gas leases in federal waters of the Southcentral Alaska inlet. Other lease sales were held in 1977, 1981, 1982, 1997 and 2004, according to bureau records.

Except for the earliest sale, which resulted in 87 leases awarded, industry interest has been paltry. The most recent attempts to sell leases in federal waters of Cook Inlet flopped. Sales that were to have been held in 2011 and 2009 were canceled for lack of industry interest, and a sale in 2004 drew no bids, according to bureau records.

Although most of the oil and gas produced in the region originate on state leases, recent attempts to sell more leases in state territory of Cook Inlet have also drawn poor industry response. A state sale in 2015 drew only eight bids and a sale scheduled for earlier this year drew no bids.

Nonetheless, there is reason to proceed with lease sale planning in federal waters, though no decision has been made about holding the sale, the bureau's top official said.

"Cook Inlet has significant oil and gas potential, as well as sensitive marine and coastal resources that Alaska Native communities depend on for subsistence," Abigail Ross Hopper, the bureau's director, said in a statement. "We look forward to discussing this draft EIS with the public and representatives from Cook Inlet communities, and getting meaningful feedback."

The draft environmental impact statement considers six lease-sale alternatives, including a no-action alternative, and potential impacts to fishing, wildlife and other resources. The document proposes recommending the  alternative of offering 1.09 million acres for leasing.

A 45-day public comment period will start on July 22, and public meetings are scheduled in August in Anchorage, Homer and Kenai-Soldotna.

The Cook Inlet basin is Alaska's oldest oil-producing region, with operations dating back to the 1950s, though the vast majority of Alaska oil production has been on the North Slope in the Arctic. Boosters of statehood in the 1950s cited the discovery of oil on the Kenai Peninsula as evidence Alaska wouldn't be a pauper.

Government geologists believe that considerable oil and gas remain to be discovered in the Cook Inlet region.

An assessment published by the bueau in 2011 estimates that federal waters of Cook Inlet hold about 1 billion barrels of undiscovered oil and about 1.2 trillion cubic feet of undiscovered natural gas, according to mean calculations.

A 2011 resource assessment by the U.S. Geological Survey that included both onshore and offshore territory of the Cook Inlet basin concluded that about 600 million barrels of oil, 19 trillion cubic feet of natural gas and 46 million barrels of gas condensate were yet to be discovered, according to mean estimates. Those totals exclude federal offshore areas.