Bush lifts drilling ban in Alaska's Bristol Bay

WASHINGTON — President Bush on Tuesday lifted a ban on new oil and gas drilling in Alaska's Bristol Bay, a decision that angered environmentalists and could provoke a battle with the Democratic-controlled Congress over energy policy.

The 5.6 million acres of the bay on the west side of the Alaskan Peninsula just north of the Aleutian Islands have been off limits for energy exploration since 1989, after the Exxon Valdez spill.

Interior Secretary Dirk Kempthorne, in announcing Tuesday that the area would be opened for energy exploration, said the move would "enhance America's energy security" and pledged a thorough environmental review before drilling begins.

Environmentalists warned that Bush's action could endanger an area rich in marine life, as well as signal a new assault on the long-standing drilling moratorium off much of the U.S. coast.

"This is an area that is too special to open to drilling," said Sierra Club lobbyist Melinda Pierce, who vowed to lobby Congress to restore the drilling ban.

The area is a major fishing ground for North Pacific fleets, including many crab, salmon, pollock and cod vessels that are based in Puget Sound. The bay also supports an abundance of wildlife, including major seabird populations and marine mammals that include the endangered North Pacific right whale.

The bay is a part of the Bering Sea, notorious for winter storms with high winds and high seas that could increase the risks of a major oil spill.

"Why risk ruining a billion-dollar fishery, a valuable sport-hunting and fishing industry, a critical resource for Native Alaskans and one of the most important places for marine wildlife populations in the Bering Sea?" asked Bill Eichbaum, managing director and vice president of the marine portfolio at World Wildlife Fund.

While much of the nation's coast — except for large sections of the Gulf of Mexico — is off-limits to new drilling under congressional and presidential moratoriums, the congressional ban on new drilling in Bristol Bay was not renewed in 2003 at the urging of Sen. Ted Stevens, R-Alaska.

That left the presidential moratorium in place — until Tuesday.

Stevens praised Bush's action, saying it would help the region's economy.

"Imported farmed salmon, high energy costs and the area's remoteness have limited economic development and contributed to high poverty in the region," he said in a statement. "The possibility of oil and gas development in Bristol Bay presents a series of new opportunities to the people of this region."

Alaska's newly elected Republican governor, Sarah Palin, welcomed the possibility of more oil and gas production and promised "a very aggressive role in making sure our fisheries are protected."

But Eric Siy of the Alaska Marine Conservation Council said: "The president's action today ends an admirable history of bipartisan protection for Bristol Bay. We will be calling on Congress to restore protections for Bristol Bay and secure lasting moratorium on offshore drilling."

There are believed to be 200 million barrels of oil and 5 trillion cubic feet of natural gas beneath the bay's federal waters, three miles to 200 miles from shore. The Interior Department last year estimated energy development could produce up to 11,500 jobs and new tax revenue for the state.

Drilling is not likely to begin before 2010.

Material from Seattle Times staff reporter Hal Bernton and The Associated Press is included in this report.

Royalties increased

The Bush administration took steps Tuesday to try to calm the furor in Congress over lost royalty payments on Gulf of Mexico oil and gas drilling as a result of a government mistake.

The Interior Department announced a sharp increase in the royalties that will have to be paid on future deep-water drilling leases in the gulf.

Oil companies will have to pay the government 16.7 percent instead of 12.5 percent under any new agreements. The department estimated that would bring in $4.5 billion more over 20 years.

The move was widely viewed as an attempt to placate lawmakers who have been sharply critical of the department for its failure to get oil and gas companies to renegotiate flawed 1998-99 leases that allowed companies to avoid royalty payments even when making record profits with current high oil prices.

House Democrats have put forward legislation to force changes in the questionable leases. The oil companies argue the leases amount to contracts that should be honored, although a handful have agreed to pay royalties on future production.

Congressional auditors put the lost federal revenue at as much as $2 billion so far and estimated it could total as much as $10 billion over the life of the leases.

The Associated Press