Top Interior official who pushed to expand drilling in Alaska to join oil company there

• Sep 04, 2019

Last summer, Scott Pruitt left his job heading the Environmental Protection Agency and within a few months had started consulting for coal magnate Joseph W. Craft III. Three weeks after leaving the Interior Department, energy counselor Vincent DeVito joined Cox Oil Offshore, which operates in the Gulf of Mexico, as its executive vice president and general counsel. Now, Joe Balash — who oversaw oil and gas drilling on federal lands before resigning from Interior on Friday — is joining a foreign oil company that is expanding operations on Alaska’s North Slope.

Balash, who served as the Interior Department’s assistant secretary for land and minerals management for nearly two years, confirmed in a phone interview Tuesday night that he will begin working for the Papua New Guinea-based Oil Search, which is developing one of Alaska’s largest oil prospects in years. On Wednesday, Oil Search officials said he would become senior vice president for external affairs in the company’s Alaska operations.

The company is drilling on state lands that lie outside — but nearby — two federal reserves where the Trump administration is pushing to increase oil and gas development: the Arctic National Wildlife Refuge and the National Petroleum Reserve-Alaska. During his time at Interior, Balash oversaw the department’s preparations to hold lease sales on the coastal plain of the 19.3 million-acre refuge and to expand drilling on the 22.8 million-acre reserve to the west of the refuge. Both sites are home to large numbers of migratory birds as well as caribou, polar bears and other wildlife.

Balash said that even though in his new role he would oversee employees who would work with the federal government on energy policy, he would abide by the Trump ethics pledge barring appointees from lobbying their former agencies for five years.

“I’ll supervise those who do,” he said, referring to Oil Search staffers with business before the federal government, “but I have a ton of restrictions dealing with the Department of Interior. Most of Oil Search’s properties are state lands. There isn’t really the federal nexus.”

Nonetheless, Sen. Tom Udall (D-N.M.) sent a letter to Interior’s designated ethics official Wednesday asking that the department provide copies of all ethics filings made by Balash and any notifications of his negotiations for future employment or compensation.

Udall is the ranking Democrat on the Senate Appropriations Subcommittee on the interior, environment and related agencies.

“I believe the public has a compelling interest in knowing whether the necessary steps were taken to address this potential conflict of interest,” Udall wrote.

Oil Search, along with its partner Repsol, has been expanding aggressively in Alaska, where it says it has acquired leases with more than 700 million barrels of crude reserves. In May, the company received the go-ahead from the Army Corps of Engineers, and it plans to ramp up production operations this year and over the winter.

Balash noted that Interior “was not even a cooperating agency” in the decision to grant Oil Search the recent permit under the Clean Water Act.

Oil Search staffers working on community outreach, government affairs and communications in Alaska will report to Balash in his new position, according to a company spokeswoman.

“Joe is a proud Alaskan and brings significant regulatory and external affairs experience to Oil Search, a company relatively new to operating in the United States,” said Keiran Wulff, Oil Search executive vice president and president for Alaska. “We are excited by the opportunities in Alaska and committed to working with stakeholders in a collaborative manner.”

Danielle Brian, executive director of the Project on Government Oversight, said in an interview that the fact that Balash had been working to make more land available for exploration near Oil Search’s ongoing development raises concerns.

If Balash’s jump to Oil Search "ends up being legal, it’s further confirmation to me that our laws are simply inadequate,” Brian said. “It is hard to have confidence that decisions he was making while he was working for the taxpayers were not impacted by his aspirations or hopes to go work for a company that was materially affected by his work.”

Asked about Balash’s job plans last week, Interior would not comment.

Balash has extensive experience in Alaska state politics. He served as the deputy commissioner for Alaska’s Department of Natural Resources and ran the agency on an acting basis for just over a year, before becoming chief of staff for Sen. Dan Sullivan (R-Alaska). He joined Interior in December 2017.

Earlier, Balash served in the governor’s office as a special assistant on energy and natural resource development. And before that, he worked on the state’s joint Legislative Budget and Audit Committee and served as chief of staff to the state Senate president. Balash also attended high school in Fairbanks.

Ethics experts said that regardless of the Alaskan’s job description, Balash’s decision to join an oil company raises potential conflicts of interest, depending in part on the nature of his negotiations with the firm before he left public office.

Under 18 U.S. Code Section 208, a federal official is barred “from participating personally and substantially in a particular Government matter that will affect his own financial interests, as well as the financial interests of” his spouse, children and “a person with whom he is negotiating for or has an arrangement concerning prospective employment.”

“At the point Balash began discussing employment opportunities with Oil Search, he was prohibited from personally and substantially participating in any particular matter that would affect Oil Search’s financial interests,” said Brendan Fischer, federal reform program director at the Campaign Legal Center.

Although Oil Search has not bid on federal leases in Alaska, officials from the firm met with Balash several times while he served as assistant secretary, according to his public calendar. On Jan. 10, 2018, he had a meeting classified as a video call with Wulff and other Oil Search executives, described as a “meet and greet” in his calendar notes.

“Oil Search is slated to be a large player in Alaska Oil development,” the notes read. “Further, AK is their first play in the USA. Anchorage is slated to be their North American headquarters.”

On April 17, 2018, Balash had a video call with Wulff. Nearly seven months later, Balash took part in what his calendar described as an “Oil Search Presentation/Update.”

This June, both Balash and Wulff appeared as featured speakers during a membership luncheon of the Resource Development Council in Anchorage.

Established in 1929, Oil Search owns oil production and 29 percent of a large liquefied natural gas project in Papua New Guinea. Papua New Guinea is the world’s 11th-largest exporter of liquefied natural gas. Oil Search and its partner ExxonMobil are planning to substantially enlarge LNG exports.

The company has also expanded quickly in Alaska. In 2018, it bought oil assets from two private companies and later exercised $450 million of options to buy other nearby fields. On May 14, it received Army Corps of Engineers approval to develop the Nanushuk field in the Pikka Unit, which is on state- and Native Alaskan-owned land on the North Slope. The company says the project could eventually produce 120,000 barrels a day.

“Alaska provides us with world class oil assets with significant upside,” the company said in a report. It also said that it was “building an independent, highly experienced management team to develop and operate our Alaskan assets.”

Even before joining the Trump administration, Balash has consistently argued in favor of curbing federal restrictions on energy development in Alaska, to help boost the state’s economy. In an interview this summer, Balash said he was committed to working with Alaska Natives on the North Slope to ensure that the region could expand energy exploration in a way that would improve people’s lives there.

“And so, you know, more than anything, I want to help empower the people who live there to manage those resources in a cooperative way with the federal government,” he said.

Alice Crites contributed to this report.


You can read the full article by Juliet Eilperin and Steven Mufson here

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