Shell mulls Bristol Bay gas project

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   Web posted Sunday, October 16, 2005
   
   Shell mulls Bristol Bay gas project
   Liquefied natural gas project considered if supplies warrant
   
   By Tim Bradner
   Alaska Journal of Commerce
   
   Shell has tipped its hand on its interest in oil and gas prospects in the Bristol Bay region of Southwest Alaska in a briefing of fishing industry representatives in Anchorage Oct. 6.
   
   Shell International and Production Inc. told the fishing group that it is interested in the potential in the Bristol Bay area and foresees a possible liquefied natural gas project if large gas discoveries are made. No federal Outer Continental Shelf lease sale is now planned in the North Aleutian Shelf, the U.S. Minerals Management Service designation for the area. However, the state of Alaska will hold a lease sale Oct. 26 of state-owned submerged lands in Bristol Bay and adjacent onshore tracts along the Alaska Peninsula. State-owned submerged lands extend three miles from shore; the federal government regulates offshore activity past the three-mile limit.
   
   Meanwhile, the MMS is soliciting comments on its next five-year leasing schedule for Alaska, and Bristol Bay is being considered. Days before the comment period closed, the Aleutians East Borough assembly unanimously approved a resolution Oct. 10 supporting offshore leasing in the North Aleutians Shelf.
   
   A presidential moratorium on leasing in the area must be lifted, however, before any federal leases could be given, MMS Alaska regional director John Goll said. The area has been closed since 1998, despite a congressional moratorium on Bristol Bay leasing being removed in 2002.
   
   The prime geologic potential in the region, however, is in the OCS areas, state of Alaska geologists say.
   
   The company told the fishing industry groups that a hypothetical gas development plan in Bristol Bay could involve two to four platforms near Nelson Lagoon on the north side of the Alaska Peninsula with a pipeline across the peninsula to an LNG plant and port at Balboa Bay, on the Gulf of Alaska.
   
   An LNG project would require large discoveries of gas - about 2 trillion to 3 trillion cubic feet of gas - to make a pipeline and liquefaction plant economic, state of Alaska officials say. If smaller discoveries of gas are made, commercial development might still be possible with a gas-to-liquids project, the officials said. Shell is considered one of the world leaders in GTL technology.
   
   The Gulf of Alaska port sites and pipeline corridors across the Alaska Peninsula were identified in planning studies in the 1980s when MMS held an earlier OCS lease sale in the region. The sale was held in 1988 but the leases were purchased back by the government in 1994 after fishermen raised objections. Bristol Bay is the world's richest salmon fishery.
   
   The Bristol Bay region is considered one of Alaska's more geologically favorable regions for petroleum discoveries, but exploration drilling to date has shown the area to be more prone to natural gas rather than oil, state of Alaska geologists say.
   
   The resolution passed by the Aleutians East Borough requests the MMS to give it the designation of a cooperating agency, which means the borough would be involved in a federal environmental impact statement for a lease sale. The resolution also reserves the right for the borough to withdraw support if stipulations to the sale do not meet with its approval.
   
   The resolution states that maximum protection must be given to fishery resources, and exploration and development must be done in an environmentally safe manner.