Arctic oil search moves to new turf, new controversies

One is a long-protected portion of Arctic Alaska where a vast freshwater lake is edged by marshes that draw migrating birds from as far as Mexico and Russia. The other is a national wildlife refuge straddling the Arctic Circle, a watery haven for moose, furry mammals, and waterfowl.

But underneath both lie what may be some of the largest untapped pools of onshore oil and natural gas in the US. As a result, the two sites represent one of the next crucial frontiers in the nation's expanding energy wars.

In many respects, the fight quietly emerging over the two areas - Teshekpuk Lake and the Yukon Flats National Wildlife Refuge - parallels the protracted battle over the Arctic National Wildlife Refuge (ANWR). It is energy versus the environment, with elements of caribou and molting birds and native American culture mixed in.

But the latest fight also has its own dimensions that hold important practical and symbolic implications for a nation struggling to find the right balance between conservation and hydrocarbons.

Though long eyed by development interests, the Teshekpuk and Yukon sites are attracting new attention from the Bush administration and energy companies as oil prices spike and new technology makes it more economical to drill in remote areas.

Teshekpuk, meaning "big enclosed coastal water," is Alaska's third-largest lake. It and its nearby wetlands draw huge flocks of birds each summer, there to shed their feathers and fatten up. Most notable are the Pacific black brant: Nearly 30 percent of the geese head to Teshekpuk for their annual molt.

"There is nowhere else in the circumpolar Arctic that attracts so many molting geese," says Stan Senner, executive director of Audubon Alaska.

Drilling opponents point to a reverence for the region that crosses political bounds: Even James Watt, President Reagan's famously pro-development Interior secretary, deemed it too sensitive to drill. In 1998, the Clinton administration opened most of the northeast corner of the National Petroleum Reserve, of which Teshekpuk is a part, to oil leasing. But it kept the lake itself off limits.

Now, however, concern about rising prices and dependence on foreign crude is forcing a new look at the area. "The country needs access to its oil and gas resources, and this area is a petroleum reserve," Henri Bisson, Alaska state director for the Bureau of Land Management (BLM), said in a speech announcing the Bush administration's plans to overturn Clinton-era rules that closed Teshekpuk Lake and its shores to oil leasing.

The BLM announced its plan for leasing the area in February, but a final decision has not been made. Objections from the natives on the North Slope and in southwestern Alaska - a nesting site for geese that molt at Teshekpuk - are prompting some changes, Mr. Bisson said.

The Barrow Arch, the rich geologic structure that has fed all of the producing oil fields on Alaska's North Slope, runs right under the Teshekpuk area. Of the 2 billion recoverable barrels believed to lie under the northeastern section of the National Petroleum Reserve, 1.4 billion are under Teshekpuk Lake and the lands around it, according to government estimates. Aside from ANWR's coastal plain, it may be the biggest source of oil on federal lands anywhere in the nation.

It is oil that should be drilled, industry says. "If you're going to be stymied doing responsible exploration and production activities in a petroleum reserve, that sends a pretty chilling message to the oil and gas industry in the United States," says Tadd Owens, executive director of the Resource Development Council for Alaska.

But to George Ahmaogak, mayor of the North Slope Borough (a county-like jurisdiction the size of Michigan), Teshekpuk Lake is more deserving of protection than the ANWR coastal plain. He, in fact, supports drilling in ANWR for its potential economic payoff to his fellow Inupiat. But he recognizes the irony of the names. "If you live in the Lower 48 and you compare those two names," he said in an Anchorage speech, "well, one of them is a 'wildlife refuge' and the other is a 'petroleum reserve.' Which one is going to get your environmental juices flowing?"

For decades, economics and practical considerations stalled development in the National Petroleum Reserve. The largest single unit of federal land, it was established by President Warren Harding as a source of energy for the nation's military.

But there has been no commercial oil or gas production yet. The government started exploration in 1944, but activities were only sporadic. The main drilling in Alaska was far to the east, at Prudhoe Bay.

Industry finally gained serious interest in the reserve in the mid-1990s, when Arco Alaska Inc. discovered the Alpine field bordering state land. Alpine, now the westernmost oil-producing field on the North Slope, pumps out more than 100,000 barrels a day and offers a pipeline connection for finds farther west.

Modern technology and lessons learned from the nearly 20 wells drilled in the state's northeastern corner in recent years justify the expansion of development, backers argue.

Environmentalists disagree. Though they accept some oil development in the reserve - "It's not an icon in the way that the Arctic Refuge is," Mr. Senner says - they believe Teshekpuk Lake should be shielded from drilling.

While the proposal to open up Teshekpuk has galvanized a few national organizations, the Yukon Flats proposal has gained less notice. Wedged between the Brooks Range and the White Mountains, the Yukon Flats refuge is bisected by the Yukon River. It is covered with spruce, muskeg, ponds, and thousands of lakes that support Alaska's highest density of breeding ducks.

Hemmed in by mountains, it gets some of the state's most extreme weather - cryogenic cold in the winter and in the summer, thanks to around-the-clock sunlight, temperatures that hit 100 degrees.

The area's oil and gas potential has long been recognized. The US Geological Survey's most recent estimates say the Yukon Flats basin probably holds 173 million barrels of oil, 5.5 trillion cubic feet of natural gas, and 127 million barrels of natural-gas liquids - a resource possibly on the scale of Alaska's mature Cook Inlet basin.

Doyon Ltd., an Athabascan Indian-owned corporation based in Fairbanks, is seeking to trade about 150,000 acres of low-lying wetlands for 110,000 upland acres with oil and gas potential. The swap would change the boundaries, freeing up parcels for petroleum development while folding some privately held holdings into the refuge.

Proponents say the move would not only ensure that the refuge gains ecologically important wetlands, but would open up economic opportunities and energy supplies for the Athabascan Indians.

Doyonbelieves it stands to win a lot from the deal, including jobs. The exchange represents "the only large scale opportunity ever identified on or near our land base," Doyon President Orie Williams said in the corporation's most recent newsletter to shareholders.

Among the boosters of the deal is the administration of Alaska Gov. Frank Murkowski (R). "It's truly a win-win," Tom Irwin, commissioner of the state Department of Natural Resources, said at an Anchorage public hearing. "This is gas that can significantly impact Alaska." Major native organizations, such as the Alaska Federation of Natives, are also backers.

But not all Doyon shareholders support the proposed trade. The tribal council from Fort Yukon, a village near the proposed drilling, has passed a resolution in opposition, and a similar but nonbinding resolution was approved by voice vote at Doyon's annual shareholder meeting in March.

To Ed Alexander, the shareholder who pushed the antitrade resolution, the proposed development will lead to an influx of outside workers, urban hunters, and roads that will cause social and environmental strains. "I think it's going to hurt the people up here for many years to come," says Mr. Alexander.

Critics worry, too, that the swap could open up other protected lands. "This would be a very bad precedent to do a land exchange to facilitate oil and gas development within a wildlife refuge," says Deborah Williams of the Alaska Conservation Foundation.

But the Fish and Wildlife Service argues that a trade is the best chance to protect the refuge because Doyon is already free to drill on its property. "We couldn't stop them," says Jerry Stroebele, superintendent for the eight northern Alaska refuges. "They're entitled to develop their land."