Editor’s Note: This month marks the 40th anniversary of the jack-up rig George Ferris being “stuck firmly in 82 feet of clay just off the Homer Spit,” as the Homer News reported it on May 13, 1976. The incident proved to be the catalyst for the state to buy back oil leases that had been sold in Kachemak Bay. In this three-part series, Loren Flagg gives details of the Kachemak Bay oil lease sale and how the bay eventually was designated a Critical Habitat Area. The series is an abridged version of Chapter 10, “Kachemak Bay Oil Lease Fiasco” from his book “Fish, Oil & Follies.”
It all started in late November 1973 when the Alaska Department of Natural Resources decided to rush through an oil lease sale for Kachemak Bay without holding a public hearing. Held on Dec. 13, 1973, the Kachemak Bay lease sale brought in nearly $25 million and was the second most profitable in state history following the Prudhoe Bay sale. Standard Oil of California had dominated this, the 28th oil and gas lease sale in state history, taking 17 tracts and paying $16.6 million. Other major bidders were Shell at $5.4 million and Texaco at $2.6 million. The tracts drawing the greatest interest happened to be smack in the middle of the most important crab breeding and rearing area in Cook Inlet.
Following the denial of a public hearing prior to the lease sale by DNR, the Senate Resources Committee, headed by Bob Palmer, held a hearing in Homer on Feb. 23, 1974. About 170 Homer citizens attended the hearing. Prior to the Senate Resources hearing, Alaska Department of Fish and Game Commissioner Jim Brooks and Habitat Chief Mike Smith had met with DNR Commissioner Charles Herbert.
Backing my recommendation as the area biologist and that of Smith, Brooks had told Herbert that his department strongly recommended that Kachemak Bay be withdrawn from the lease sale. I believe that Jim Brooks took a somewhat courageous stand at that time as he was not only going up against the desired direction of DNR, but also policy set by Governor Egan.
I was asked to prepare the ADF&G testimony for the hearing which Smith would deliver. He led off the hearing by highlighting the phenomenal biological value of the bay, recommended a two-year moratorium on drilling, and proposed that Kachemak Bay be designated by the Legislature as a Critical Habitat Area. This idea caught fire and the committee soon adopted it as a legislative priority.
Following Smith’s presentation to the Senate Resources Committee, two powerful testimonies were given by local citizens that were to set the tone and stage for other hearings to follow. Jim Rearden, former area biologist for the Commercial Fisheries Division, Board of Fish and Game member, and outdoors editor for Alaska Magazine, led off the hearing. Jim documented the importance of Kachemak Bay, which he called “one of the world’s most productive bays.” In his conclusion Jim stated, “That the state issued oil leases for such a highly productive, intensely managed, valuable fisheries area — to say nothing about the tremendous scenic value — without local public hearings, in my opinion was a flagrant dereliction, and certainly an affront to the several thousand people who depend upon Kachemak Bay for their livelihood.”
Bob Moss, a shrimp fisherman and former Board of Fish and Game chairman, presented testimony on the uniqueness of Kachemak Bay and his concern for damage possibilities from drilling or associated activities. In his conclusion, Bob said, “I believe the Legislature should declare a two-year moratorium on any drilling in this area, and with the period of time to be used researching and producing an environmental impact report. This should particularly include a complete marine inventory as well as detailed laboratory studies of the effects of hydrocarbons on shrimp and crab larvae by large spills or the long range effect of small build-up spills.”
The Senate Resources Committee took the concerns and recommendations from Smith, Rearden, Moss and others at the hearing to heart and soon there was action on several fronts. Sen. Palmer termed the public hearing in Homer the “most productive hearing in my seven years in the Legislature,” and by early March had asked the oil companies involved to hold up exploratory drilling in Kachemak Bay.
The battle to save the bay, which would eventually rage on for three years, had begun. Two citizens’ groups were formed — Citizens for a Better Community led by Dick Robinson and the Kachemak Bay Defense Fund headed up by Frank Tupper. Tupper became one of the lead players in the Kachemak Bay buy-back effort. There were many Homer fishermen and their wives, as well as other community members, who played key roles in a classic grassroots effort to save the bay.
Hearing on State and Corps of Engineers
A hearing was held in Homer on May 18, 1974, with 120 persons in attendance. Shell Oil Company had applied for a permit to drill a well in Kachemak Bay. Commercial fishing groups, citizens and environmental groups testified with concerns for potential damage to fisheries resources and asked for a delay before proceeding with drilling. Shell Oil gave an hour-and-a-half presentation explaining how safe their operation would be and assuring residents that even if there was a spill there was nothing to worry about as oil in the water didn’t really pose any threat to fisheries!
Col. Charles A. Debelius, district engineer for Alaska, after hearing the public concern displayed at the hearing, decided to withhold a permit until an environmental impact statement could be completed. The EIS process was completed by Nov. 4 and on Nov. 7 the Corps signed Shell’s permit for exploratory drilling in Kachemak Bay.
The legal fight was now about to begin. In December 1974, a group of Homer area commercial fishermen and citizens filed a suit in Superior Court in Kenai asking that the state’s oil lease sales of December 1973, be set aside. The suit claimed the sale and subsequent leasing of tracts in the Kachemak Bay area were unconstitutional, because public notice of the sale was inadequate.
Shortly after the lawsuit was filed, the Kachemak Bay Defense Fund asked for an injunction against exploratory drilling in Kachemak Bay until the court ruled on the legality of the oil and gas lease sale which had been held in December, 1973. When this injunction was turned down the KBDF appealed to the Alaska Supreme Court. These actions bought time for fishermen and held up drilling by Shell throughout 1975.
Standard Oil Comes to Town
Standard Oil of California was next up with plans to drill in the area. Standard had been using the drill rig George Ferris on an exploratory well up the inlet off Cape Kasilof, and was now ready to drill for oil in Kachemak Bay. Standard had applied for a drilling permit and a hearing on the permit was held in Homer before 150 citizens on Jan. 29, 1975. SOCAL experts attempted to calm and resolve all fears and concerns. Homer folks were told repeatedly that Standard Oil would take all possible steps to protect the environment and that the “best available technology” would be used.
Meanwhile, their drill rig George Ferris was in dire trouble from its drilling exploits at Cape Kasilof where dynamite had to be used to free it from the drill site. In addition, a tug used on the project had been sunk causing a small oil spill. Homer citizens were aware of this as well of the rumor going around that the Ferris was an elderly rig which had been condemned in California.
About the author: At the time of the Kachemak Bay oil lease sale in 1973, Loren Flagg was area biologist for Cook Inlet Commercial Fisheries. When the Legislature appropriated money for a marine study of Kachemak Bay in 1974, he was transferred to the Habitat Division and was assigned the position of field project leader for the studies. The marine studies occurred over a five-year period. The preliminary results released is a 1976 report helped provide justification for the creation of the Kachemak Bay Critical Habitat Area and the oil lease lease condemnation and buy-back. Flagg retired from the Alaska Department of Fish and Game in 1987. After his retirement, he worked as a consultant to the commercial fisheries industry and as a sport fishing guide on the Kenai River. In April 1989, he was hired by the Kenai Peninsula Borough to head up the Cook Inlet area response to the Exxon Valdez Oil Spill. He lives in Kenai.
The George Ferris drill rig incident, the Kachemak Bay oil & gas lease buyback and what they mean for Cook Inlet today
WHEN: 6-9 p.m. Wednesday, May 25
WHERE: Alaska Islands & Ocean Visitor Center
Clem Tillion, Tom Kizzia,
Loren Flagg, Frank Tupper, Nancy Lord