GAO Report Faults Alaska Oil Cleanup Plans

Cleaning up the massive web of roads, drilling pads, production facilities and pipelines on Alaska’s North Slope could cost $2.7 billion to $6 billion, but oil companies have put up only a fraction of the money and are not legally obligated to meet any specific standards, the General Accounting Office said Tuesday.

In a report commissioned by congressional Democrats opposed to expanded oil drilling in the Arctic, the GAO said standards are “generally insufficient to ensure that any federal lands disturbed by oil industry activities will be restored,” and urged regulators to issue specific restoration requirements as well as assure there will be adequate funds to meet them as oil production winds down in the next several decades.

“The need for federal ... restoration requirements, and assurances that funds will be available to meet those requirements, is becoming increasingly important,” the agency said. The current bonding requirements for oil companies operating on federal land--about $500,000 each--”would cover only a fraction of the potential costs” of recovery, the report concluded.

Alaska officials criticized the report, saying its production at the request of opponents of drilling in the Arctic National Wildlife Refuge seemed “to call into question the GAO’s credibility.”

“So far as Alaska is aware, the power and resources of the GAO have never before been devoted to the investigation of state practices on state lands,” Pat Pourchot, commissioner of the state Department of Natural Resources, said in a response. The GAO acknowledged that state lands are Alaska’s concern but said upcoming oil leases on federal lands should be subject to tighter federal regulation. State officials said they have imposed a strict cleanup mandate on North Slope oil operators that is deliberately vague, specifying that oil companies return the land to a condition “satisfactory to the state.” That way, they said, the state can hold oil companies to standards that seem appropriate when the Prudhoe Bay and surrounding oil fields actually close--an event that is still 30 to 50 years away.

The North Slope oil fields, America’s largest, range over an 89,000-square-mile area of tundra and permafrost and include more than 3,108 active well sites, along with hundreds of miles of roads and pipelines and industrial processing facilities.

House Democratic leaders sought to explore what would happen to the Arctic when the oil industry leaves as Congress debates opening to oil production some new federal lands, from the National Petroleum Reserve-Alaska on the west side to the Arctic National Wildlife Refuge on the east. Most production until now has been on Alaska state-owned lands or offshore, in the Beaufort Sea.

Rep. Edward J. Markey (D-Mass.), one of the lawmakers who commissioned the report, condemned the oil companies for refusing to release their own estimates of how much the cleanup will cost.

Industry officials said that, to the contrary, North Slope operators have demonstrated their commitment, spending millions of dollars in an ongoing program to clean up stockpiles of old drilling wastes and have even cleaned up sites abandoned by previous oil producers on the North Slope.

“The company has the resources and is fully committed to meeting its [recovery] responsibilities in Alaska. Those activities have already started and will stretch over decades,” BP Alaska spokesman Ronnie Chappell said.

Chappell conceded that industry leaders would like the state to be more specific about what is expected in final cleanup. “It’s the eternal question of how clean is clean, and the answer to that question I think will always change based on new scientific information and the expectation of stakeholders,” he said.

While the GAO advised looking at the relatively small bonding guarantee required of oil companies for cleanup, it found that Alaska’s money requirements are stronger than those of most other oil-producing states. Alaska officials said there was no doubt the major multinational oil companies working on the North Slope would be able to come up with the money.

Environmental groups welcomed the GAO findings, saying that oil industry powerhouses could hand off to smaller, less viable companies as production winds down and leave taxpayers holding the bag for cleanup.