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ALASKA DEPARTMENT OF NATURAL RESOURCES

VIEWS: 10 PAGES: 84

  • pg 1
									I. Introduction

II. Proposed Actions and Scope of Decision

III. Authority and Administrative Record

IV. Land Classification Analysis

      A. Current Classifications and AS 29.65.130(10)
      B. Land Use Analysis

              1. Parcel by Parcel Analysis of Land Use Considerations
              2. Parcels That Could Be Reclassified
              3. Parcels Not Appropriate for Reclassification

      C. Conclusion and Determination

V. Preliminary Municipal Entitlement Decision

      A.   Administrative Record
      B.   Location of Parcels
      C.   Legal Description – Land Title – Third Party Interests
      D.   Background
      E.   Conveyance Under the Municipal Entitlement Act

              1. Timing of Selections
              2. Balancing of Interests

                     a. General Analysis of Interests Affected
                     b. Parcel by Parcel Analysis of Interests Affected
                     c. Conclusion

      F. Planning and Classification History

              1. Planning
              2. Land Use Classification History

      G. Alaska Costal Management Program
      H. Access
      I. Public and Navigable Waters
      J. Reservation of Mineral Estate
      K. Hazardous Substances and Contaminants
      L. Survey and Appraisal
       M. Unauthorized Use
       N. Disposition of Leases, Permits and Applications
       O. State Agency Comments

VI. Draft Site Specific Plan

VII. Decision Discussion and Alternatives

       A. Discussion
       B. Alternatives

VIII. Recommendations

       A. Site Specific Plan
       B. Municipal Entitlement Decision

              1. Land Proposed for Conveyance
              2. Land Proposed to be Rejected for Conveyance and Retained in State
              Ownership
              3. Land for Which Adjudication of the Borough’s Selection is Postponed

IX. Preliminary Municipal Entitlement Decision and Draft Site Specific Plan

APPENDIX A

APPENDIX B

APPENDIX C
                  ALASKA DEPARTMENT OF NATURAL RESOURCES
                     DIVISION OF MINING, LAND AND WATER

                PRELIMINARY MUNICIPAL ENTITLEMENT DECISION
                             UNDER AS 29.65.010

                                                and

                    DRAFT SITE SPECIFIC PLAN UNDER AS 38.04.065

                                      Related Action:
                Land Classification Order Under AS 38.04.065 and 38.05.300




                             NORTH SLOPE BOROUGH
                                LAND SELECTIONS
                             Prudhoe Bay/Deadhorse Area
             ADL 414784, ADL 414828, ADL 414829, ADL 414830, ADL 414831,
             ADL 414832, ADL 415433, ADL 417951, ADL 417952, ADL 417953,
                                     ADL 417963


I.     INTRODUCTION
By various statutes through the years, Alaska boroughs and unified municipalities have been
entitled to receive a general grant land entitlement (“municipal entitlement”) from the vacant,
unappropriated, and unreserved (“VUU”) state land within their boundaries, so long as they
complied with the procedural requirements of the statutes. See AS 29.65 (formerly AS 29.18).
A municipal entitlement is intended to serve as a land base for public facilities and industrial and
economic development within the borough or municipality.

In 1973, the North Slope Borough (“NSB” or “Borough”) filed applications for its municipal
entitlement that selected lands overlying the developing oil fields on the North Slope of Alaska,
at that time consisting primarily of the Prudhoe Bay field. The director of the Alaska
Department of Natural Resources (DNR), Division of Lands, rejected those applications on the
basis that it was in the best interests of the state to retain the lands. DNR’s decision was upheld
by the Alaska Supreme Court in North Slope Borough v. LeResche, 581 P.2d 1112 (Alaska
1978). While pursuing its appeal in LeResche, the NSB allowed its right to select any further
municipal entitlement lands under the then-current law to expire. See former AS 29.18.211(a);
1980 Inf. Op. Att’y Gen. (Nov. 3; A66-059-81) (1980 WL 27920). In 1987, the legislature
amended the Municipal Entitlement Act and granted the NSB new municipal entitlement rights.




                                            Page 1 of 82
Under the 1987 amendment, the NSB was granted a land entitlement of 89,850 acres.
AS 29.65.010. At the same time, the Legislature excluded from the definition of VUU land all
land that was classified as resource management land prior to September 1, 1983.
AS 29.65.130(10)(D). By this exclusion, the Legislature intended to prevent the NSB from
receiving land within the Prudhoe Bay field, which was virtually all classified as resource
management land prior to 1983, as part of its municipal entitlement. See Minutes of the Senate
Community and Regional Affairs Committee, March 5, 1987; Minutes of the Senate Finance
Committee, April 9, 1987.

Under the 1987 law, the NSB filed new municipal entitlement applications. Despite the
Legislature’s exclusion of pre-1983 resource management lands from the definition of VUU,
many of the NSB’s new selections include pre-1983 resource management lands that overlie the
Prudhoe Bay and surrounding oil fields. 1 To date, approximately 5,006 acres have been
approved for conveyance to the Borough, leaving an entitlement balance of 84,844 acres. 2


II.      PROPOSED ACTIONS AND SCOPE OF DECISION
Under consideration in this decision 3 are the Borough’s applications for several parcels within
the Central North Slope oil field area, which applications cover a total of approximately
23,521.432 acres. The selections covered by this decision are referred to by parcel, as listed
below, and are shown on the accompanying maps. 4

                   Map 1 – Colleen Lake – ADL 414784
                   Map 1 – Norgasco – ADL 414784
                   Map 1 – Lease Tract South – ADL 414784
                   Map 1 – Airfield – ADL 414784
                   Map 1 – Mine Site 3 – ADL 414784

1
  The general areas of the NSB’s selections are depicted on the attached Vicinity Map. With two exceptions (Mine
Site 102 and Deadhorse South), these selections are located within the Prudhoe Bay, Kuparuk River, and Milne
Point Units and Participating Areas, and Deadhorse. This decision collectively refers to the area of the NSB
selections as the “Central North Slope oil field” or simply “oil field.”
2
  The selections under consideration in this decision are only a portion of the total selections made by the Borough.
In total, the Borough has selected less than its full 89,850 acre entitlement.
3
  The term “decision” as used herein refers to the entirety of this document, which addresses two interrelated land
actions: the preliminary Municipal Entitlement Decision and the draft Site Specific Plan. Because the preliminary
Municipal Entitlement Decision and the draft Site Specific Plan are each at least partially dependent on the other,
changes to either may affect the other.
4
  For convenience and ease of reference, DNR has superimposed the approximate location of the NSB’s land
selections onto the accompanying maps. DNR refers to these areas as “parcels,” and has named each parcel with
respect to the general area in which it is located. For example, although there are numerous selections within the
area known as the “Airfield” (Map 1), the selections are identified together as one “parcel” because they are all
within the boundaries of the Airfield. The accompanying maps are for general identification only, and are not
precise depictions of the location and boundaries of each parcel. The maps also do not precisely depict the location
or size of rivers, lakes, or other waters. If there is a question as to the exact location or size of any land selected by
the NSB, or approved or rejected by DNR, the actual legal descriptions and source documents will control.


                                                       Page 2 of 82
               Map 1 – Mine Site 102 – ADL 414784
               Map 2 – Kuparuk Industrial Center – ADL 414828
               Map 2 – Kuparuk Mine Site C – ADL 414828
               Map 3 – Milne Point Road – ADL 414828
               Map 4 – Oliktok – ADL 414829 & 417963
               Map 5 – Kuparuk Mine Site E – ADL 414829
               Map 6 – Milne Point Mine Site – ADL 414830
               Map 7 – Service City – ADL 414831
               Map 8 – Pump 1 – ADL 414832
               Map 8 – PUT 23 Mine Site – ADL 414832
               Map 9 – Deadhorse South – ADL 415433
               Map 10 – ASTAC Site – ADL 417951
               Map 11 – Kuparuk Mine Site F – ADL 417951
               Map 12 – Meltwater East – Mine Site S – ADL 417952
               Map 12 – Meltwater West – ADL 417952
               Map 13 – East Dock – ADL 417953
               Map 13 – Surfcote Pad – ADL 417953
               Map 14 – Point McIntyre – ADL 417963

The decision to approve or reject these municipal entitlement applications requires a specific
land classification analysis and two interrelated land actions, all of which are discussed herein:

   •   Land Classification Analysis: Only two parcels or portions of parcels selected have
       current land classifications that fall within AS 29.65.130’s definition of VUU land that
       could be conveyed without any further action. Before any of the remaining parcels could
       potentially be conveyed, they would have to be reclassified. Accordingly, the Borough’s
       municipal entitlement applications have been treated as an implied request to review the
       land classification status of the selected parcels or portions of parcels that do not have a
       currently conveyable classification. The department’s land classification analysis
       reviews classifications, determines the appropriateness of reclassification of the parcels,
       and forms the basis for the two land actions contained in this decision.

   •   Preliminary Municipal Entitlement Decision: A municipal entitlement decision is
       made to determine whether or not land entitlement selections should be conveyed to a
       municipality. A municipal entitlement selection of conveyable land may be disapproved
       by the director “only upon a finding that the public interest in retaining state ownership of
       the land outweighs the municipality’s interest in obtaining the land.” AS 29.65.040(c).
       The department’s Preliminary Municipal Entitlement Decision is included herein.

   •   Draft Site Specific Plan: Parcels affected by this decision that are determined to be
       appropriate for reclassification must actually be reclassified through a site specific plan
       that establishes the classifications and management intent for the parcels. A site specific
       plan is implemented through a separate Land Classification Order at the time a final
       decision is made. The department’s draft Site Specific Plan is included herein for all
       lands ultimately determined to be appropriate for reclassification.




                                             Page 3 of 82
By this decision, the Department of Natural Resources, Division of Mining, Land and Water
(DMLW) proposes to approve for conveyance approximately 6,855.432 acres of the NSB’s
selections that are under consideration and to reclassify the lands under consideration as
necessary, ultimately leading to conveyance of the approved land to the NSB, subject to valid
existing rights. DMLW also proposes to reject approximately 16,074.46 acres of the NSB’s
selections that are under consideration, on the grounds of classification, overriding state interests,
or both. Finally, DMLW proposes to postpone any action or decision on approximately 591.54
acres of the NSB’s selections that are under consideration, on the grounds that the state does not
currently have title or tentative approval for conveyance or patent to the land, and postponement
will allow the state, in a decision made once title is received, to consider then-current facts and
circumstances.

The public is invited to comment on this decision. Specific comments may be submitted for each
of the preliminary Municipal Entitlement Decision and the draft Site Specific Plan. The deadline
for comments is August 7, 2009. Following the comment deadline, all written responses will be
considered and this decision may be modified. See the section titled Public Notice, Decision and
Appeal Procedures at the end of this decision for details on how to submit comments.


III.   AUTHORITY AND ADMINISTRATIVE RECORD
The preliminary Municipal Entitlement Decision is authorized and prepared under AS 29.65 and
AS 38.05.035(e). The draft Site Specific Plan is authorized under AS 38.04.065 and
AS 38.05.300. The Land Classification Order that is necessary to implement the reclassification
and Site Specific Plan will be prepared under the authority of AS 38.05.300. The land
classification analysis is guided by AS 38.05.300 and 38.04.065.

The administrative record for this decision consists of all documents, files, and information
received, reviewed, or relied upon in making this decision, including, but not limited to, the
following:

Department of Natural Resources municipal entitlement case files ADL 414784, ADL 414828,
ADL 414829, ADL 414830, ADL 414831, ADL 414832, ADL 415433, ADL 417951,
ADL 417952, ADL 417953, and ADL 417963.

Department of Natural Resources Oil and Gas Leases ADL 25512, ADL 25513, ADL 25514,
ADL 25569, ADL 25570, ADL 25639, ADL 25647, ADL 25648, ADL 25652, ADL 28312,
ADL 28231, ADL 28242, ADL 28282, ADL 28283, ADL 28307, ADL 28308, ADL 28315,
ADL 28316, ADL 28322, ADL 28324, ADL 28328, ADL 28329, ADL 28330, ADL 28335,
ADL 34631, ADL 47438, ADL 47451, ADL 373301, ADL 380052, ADL 380054, ADL 390987,
ADL 373112, ADL 389943, ADL 389944, ADL 390951 and all permits or authorizations issued
under the authority of these leases.

Division of Mining, Land and Water easement, permit, lease, and material sale case files
identified under the Legal Description – Land Title – Third Party Interests Section and
Appendix A.


                                             Page 4 of 82
Division of Mining, Land and Water planning files and water resource files.


IV.      LAND CLASSIFICATION ANALYSIS
         A. Current Classifications and AS 29.65.130(10)

Only vacant, unappropriated, unreserved land (VUU land) may be conveyed to a municipality in
satisfaction of its entitlement. Land that was classified as resource management land (RMG)
prior to September 1, 1983, or land classified as reserved use land (RSU), is not VUU land and
therefore is not conveyable absent reclassification. See AS 29.65.130(10). Nearly all of the land
selected by the NSB that is considered in this decision is classified as RMG (pre-1983) or RSU
and, therefore, is not presently conveyable to the NSB. All RMG and RSU land selected by the
NSB would have to be reclassified before it possibly could be conveyed. In this decision, DNR
is exercising its discretion to review the classifications of the selected parcels, to determine
whether or not a reclassification is possible or warranted. DNR’s reclassification review of the
parcels discussed herein will not prevent it from rejecting or refusing to accept other municipal
entitlement selection applications, whether existing or future, on the basis of land classification
alone and without a reclassification review.

Under AS 38.05.300, the commissioner of DNR has authority to classify land in areas considered
necessary and proper. The statute does not prevent reclassification of land where the public
interest warrants it, nor does it preclude the multi-purpose use of land whenever different uses
are compatible. DNR’s authority extends to land in the Central North Slope oil field, and DNR
may reclassify land in that area when the public interest warrants it.

In this case, the public interest may warrant reclassification of lands selected by the NSB for its
municipal entitlement where the current land classification is not appropriate or where (1) the
land use supports reclassification, i.e., the types of current and projected future uses of the land,
the availability of facilities and services, and the resource values of the area are more consistent
with a different classification identified in 11 AAC 55, (2) a reclassification potentially would
allow the selected land to be conveyed to the NSB, i.e., a reclassification would be to a
conveyable classification under AS 29.65.130(10), and (3) DNR determines that the land should
be conveyed to the Borough in satisfaction of its municipal entitlement. Only if these criteria are
met should the land at issue be reclassified.

The accompanying 14 maps depict the location of each parcel under consideration, and the
current classification for each parcel is listed in Table C, located on pp. 43-47. The Borough’s
selections include one parcel that is classified partially as settlement land and partially as
resource management land (Map 7-Service City), and one parcel that is classified wholly as
settlement land (Map 13-Surfcote). 5 The remainder of the parcels are classified as resource
management land (a classification that was established prior to September 1, 1983), or reserved
use land, or both. Based on the current classifications, DNR would be required to reject all of
the Borough’s selections that are under consideration, except for the areas currently classified as
5
  The Surfcote parcel was originally classified as industrial land, which is now defined as settlement land pursuant
to 11 AAC 55.277.


                                                    Page 5 of 82
settlement land. Only if DNR determines that reclassification of other parcels to a conveyable
classification is appropriate can those parcels even be considered for conveyance.

       B. Land Use Analysis

The decision to reclassify an area or a parcel depends in the first instance on whether or not the
land use warrants reclassification. In other words, whether a reclassification is appropriate
depends on the types of past, current, and projected land use, the availability of facilities and
services, the resource values of the area, and the requirements of various classification
regulations applicable to the area. See 11 AAC 55.040 -.230.

Classifications applied by DNR identify the primary use for which the land will be managed,
subject to valid existing rights and to multiple use, and directly relate to the predominant
resource value of an area, the current pattern of land uses, and the expected future pattern of such
uses. Classifications, as identified in 11 AAC 55, generally correspond to the resource value of
the land, and are intended to reflect surface impacts of surface or subsurface uses or both. See
11 AAC 55.040. For example, an area where the principal resource value relates to forest
products and where there is active logging is typically classified as forest land. Similarly, an
area that is next to existing residential subdivisions and that is in the path of future development
is typically classified as settlement land.

The area of the NSB’s selections is characterized by known or projected reserves of oil and gas
in commercial quantities, along with extensive oil and gas development and support facilities
that are distributed throughout the area. The most prevalent current use of this land relates to oil
and gas development, including exploration, production, storage, and transportation, and it is
expected that this will be the predominant use in the future as well.

In this area, therefore, the most appropriate classification is oil and gas land. The classification
of oil and gas land should be applied “where known oil and gas resources exist and where
development is occurring or is reasonably likely to occur, or where there is reason to believe that
commercial quantities of oil and gas exist.” 11 AAC 55.135. In other words, if DNR were to
reclassify the oil field area as a whole to something other than resource management or reserved
use land, the oil and gas land classification would be applied where the present or future use is
most probably related to oil and gas exploration and development. The attached Vicinity Map
depicts the Central North Slope oil field and many of the existing oil and gas facilities within it,
and demonstrates the widespread distribution of these facilities. Based on known and expected
resource and facility distribution, and current and expected uses of the land, including on-going
oil field development, an oil and gas land classification would be appropriate for the area if DNR
were to reclassify it as a whole. This would be an unconveyable classification and would not
result in the approval of any of the NSB’s selections under consideration.

Despite the appropriateness of an oil and gas classification over the area, it could be appropriate
under certain circumstances to reclassify individual parcels or portions of parcels that are within
the oil and gas development area to something other than oil and gas land. Individual parcels or
portions of parcels could be reclassified to a conveyable land use classification that corresponds
to a more specific use of the smaller area, if such use does not interfere with the on-going or



                                             Page 6 of 82
expected future oil and gas use of the area. Accordingly, DNR reviewed each parcel to
determine if any other classifications could be applied to any parcel or portion of a parcel,
without adversely affecting the predominant oil and gas use of the area. Sometimes the use of
land might fit within the parameters of more than one classification, in which case DNR must
use its judgment and expertise to determine which classification is most appropriate.

Under AS 29.65.130(10)(C) and (D), only land that is classified as agricultural, grazing,
material, public recreation, or settlement land, or was classified resource management land after
September 1, 1983, and is still classified resource management land, is considered VUU land
that is available to convey as municipal entitlement land (which classifications are referred to
herein as “conveyable classifications”). Settlement and material land classifications were the
only conveyable classifications determined to be applicable to certain parcels or portions of
parcels under consideration in this decision. Land may be appropriately classified settlement
land where it is “by reason of its physical qualities and location, suitable for … commercial or
industrial development.” 11 AAC 55.202. Land may be appropriately classified material land
where it “is suitable for the extraction of common varieties of sand, gravel, stone, peat, clay, and
other similar materials.” 11 AAC 55.120.

               1. Parcel by Parcel Analysis of Land Use Considerations

       Each of the parcels at issue in this decision is analyzed in this section to determine, based
       on past, present, and future land use considerations, if the parcel is correctly classified or
       if it (or a portion of it) can be appropriately reclassified to a different classification. The
       proposed decision to actually reclassify any parcel or portion of a parcel will be in the
       draft Site Specific Plan, found in Section VI, below. A land classification order then
       converts the recommendations of the Site Specific Plan to actual classifications.

       Map 1—Colleen Lake Parcel. This parcel is substantially undeveloped, except for an
       important access road to Spine Road and access to Colleen Lake. The parcel is located
       close to other industrial development and it is anticipated that this parcel would be used
       for future industrial development. Based on its anticipated future use for industrial
       expansion, it could be appropriate to reclassify this parcel to settlement land.

       Map 1—Norgasco Parcel. This parcel is substantially undeveloped, but does contain
       one leased area with a sublease, Spine Road, and a utility easement. This parcel adjoins
       current Borough land holdings containing industrial development. Some revenue is being
       generated from the on-site lease on the parcel and, given the strategic location of this
       parcel, it is considered to be valuable for future industrial type development. Based on its
       anticipated future use for industrial expansion and its proximity to other industrial areas,
       it could be appropriate to reclassify this parcel to settlement land.

       Map 1—Lease Tract South Parcel. This parcel is similar to the Norgasco parcel and
       the same considerations apply. Based on its anticipated future use for industrial
       expansion and its proximity to other industrial areas, it could be appropriate to reclassify
       this parcel to settlement land.




                                             Page 7 of 82
Map 1—Airfield Parcel. The NSB made numerous selections in an area surrounding
the Deadhorse airport that is subject to an interagency land management agreement
(“ILMA” -- ADL 49744) for operation of the airport. The boundaries of the ILMA
delineate the area determined necessary for the operation, maintenance, and potential
expansion of the airport. If this land was to be reclassified, it would be appropriate to
reclassify it to reserved use land (a portion of the parcel is already classified that way),
which is a non-conveyable classification under Municipal Entitlement Act. No
conveyable classification is appropriate for this parcel, and reclassification is not
warranted.

Map 1—Mine Site 3. This parcel is located about one mile south of Deadhorse and
contains an inactive mine site. The reclaimed mine site pond is used as a water source for
oil field development, operations, and maintenance. Mine Site 3 could be re-activated,
and could be expanded to the north and west. This parcel also contains a portion of the
Dalton Highway, which lies on the eastern side of the parcel, and an access road and
stockpiling area in the southeast corner of Section 36, which serve the mine site to the
south, Mine Site 102. It could be appropriate to reclassify this parcel as material land.

Map 1—Mine Site 102. This parcel is located south of Deadhorse and contains an active
mine site. Mine Site 102 is used primarily for maintenance of the Dalton Highway, a
portion of which traverses the parcel on the east side. It could be appropriate to reclassify
this parcel as material land.

Map 2—Kuparuk Industrial Center Parcel. The Kuparuk Industrial Center (KIC)
parcel contains a developed industrial center, a pipeline, a road, and a drillsite. The
industrial center itself sits on a surveyed parcel. It is a relatively small portion of the
entire parcel, and it was previously leased to the Borough. The industrial center sits
completely or mostly on Tracts A and B of the survey, is important as an industrial site,
and has a surface lease that is a source of income. The remainder of the KIC parcel,
including Tract C of the survey, contains significant existing oil and gas infrastructure.
The area surrounding the industrial center is primarily important for development and
operation of the field, and its future use is anticipated to be for oil and gas development
rather than general industrial development. Tracts A and B of ASLS 85-48 containing
the industrial center could appropriately be reclassified as settlement land based on its
current and expected continued industrial use. The remainder of this parcel, including
Tract C of ASLS 85-48, is appropriately classified as RMG or, if reclassified, it would be
reclassified to oil and gas land, neither of which are conveyable under the Municipal
Entitlement Act. Reclassification of the portion of the parcel outside the industrial center
(outside of Tracts A and B) is not warranted.

Map 2—Mine Site C. This parcel contains an active mine site, a portion of a central
processing facility (“CPF1”), a portion of the Kuparuk Operation Center, and it borders
the Kuparuk airstrip, all in the Kuparuk River Unit. It is bordered to the west by an
access road and a pipeline associated with Drillsite 1F. This mine site is used to provide
material for the maintenance of roads and pads in the Kuparuk River Unit. It is the only
active material site in the central part of the Kuparuk River Unit and is considered critical



                                      Page 8 of 82
to the maintenance of current oil and gas operations and for new construction. Planned
expansion and reconstruction of the Kuparuk airstrip will require large amounts of gravel
and this mine site will be the primary source of gravel for the project. Disputes over the
use of this mine site or the availability of gravel from this site would be extremely
disruptive to the development and operation of the Kuparuk River Unit. The primary use
of this parcel, including the mine site, is for oil and gas development and operation.
Although the portion of this parcel directly related to the mine site possibly could be
reclassified to material land, the lack of alternative mine sites in the area to support oil
and gas development make the existing RMG classification or a reclassification to oil and
gas land more suitable. For the portion of the parcel that is outside of the actual mine
site, the current RMG classification is appropriate or, if reclassified, it would be
reclassified to oil and gas land. Reclassification of the portion of the parcel outside of the
mine site is not warranted.

Map 3—Milne Point Rd. This parcel contains Spine Road, Milne Point Road, a
reclaimed mine site, two major pipelines, and the West Sak 24A pad. Mine Site B is not
in active use as a mine site, but the pond is used as a water source for oil field operation
and maintenance. In this area there are alternative mine sites that exist and Mine Site B is
not the only potential source of gravel for oil and gas development. This mine site is
located directly adjacent to and south of Spine Road and the Kuparuk and Oliktok
pipeline rights of way, and there is potential to expand the mine site to the south. The
portion of this parcel north of and including Spine Road and the pipeline rights of way is
primarily used for oil and gas development, and its materials value is unknown. This
northern area is expected to be important to the future oil and gas development of the
West Sak and Schraeder Bluffs areas.

It could be appropriate to reclassify the portion of this parcel that lies south of Spine
Road and the pipeline rights of way to material land. However, the portion of the parcel
that is north of and includes Spine Road and the pipeline rights of way is appropriately
classified RMG or, if reclassified, it would be reclassified to oil and gas land, neither of
which are conveyable under the Municipal Entitlement Act. Reclassification of the
northern portion of this parcel is not warranted.

Map 4—Oliktok. This parcel consists of four parts, and is located in a remote northern
section of the field. The parcel includes a privately owned lot (USS 8956) that is not
under the state’s jurisdiction for purposes of classification. The parcel also includes
Lot 2, USS 4275, of which the state does not have title nor does the state have a selection
on the lot. Lot 1, USS 4275, is a former DEW Line site that is subject to a military
withdrawal. The State has top-filed Lot 1, but does not have tentative approval or patent.
There is a hangar on Lot 1 in which the Borough has expressed particular interest in
obtaining. Finally, there is a fourth part of this parcel, located in sections 16 and 17,
which contains a lease, Drillsite 3Q, a pipeline and an access road servicing the drillsite.
There are other access roads, drillsites, and oil and gas facilities in the area, just off the
parcel.




                                     Page 9 of 82
         The state has no authority to classify or reclassify the private lot or Lot 2, USS 4275.
         With respect to Lot 1, while the state has identified a classification for the lot (RMG), the
         classification does not actually attach until the land is tentatively approved for
         conveyance by the federal government to the state. Reclassification alone would not
         make Lot 1 conveyable to the Borough. Setting aside issues of title, the current RMG
         classification is appropriate for Lot 1 or, if reclassified, the appropriate reclassification
         most likely would be oil and gas land. Reclassification of the Lot 1, USS 4275, portion
         of the Oliktok parcel is not warranted at this time. 6

         The fourth part of the Oliktok parcel, the area contained in sections 16 and 17, contains a
         lease and oil and gas facilities, including a drillsite and pipeline. The area is primarily
         used for purposes related to oil and gas. In addition to its use and proximity to oil and
         gas areas, the parcel is remote from general development, and it is not expected or
         anticipated that this portion of the parcel could be used for general industrial
         development. The materials value is unknown. This portion of the Oliktok parcel is
         appropriately classified RMG or, if reclassified, would be reclassified to oil and gas land,
         neither of which are conveyable under the Municipal Entitlement Act. Reclassification
         of this portion of the parcel is not warranted.

         Map 5—Mine Site E. This parcel is located in the northwest part of the Kuparuk River
         Unit and contains an active mine site. There are no reasonably available alternative mine
         sites in the area. It was the only source of gravel for the new Oooguruk and Nikaitchuq
         oil and gas developments, and it is anticipated that it will be the only source of gravel for
         other development in the northwest part of the Kuparuk River Unit and for continued use
         in maintenance of oil and gas facilities in the area, including roads and pads. Disputes
         over the use of this mine site or the availability of gravel from this site would be
         extremely disruptive to the development and operation of the Kuparuk River Unit. This
         parcel could possibly be reclassified to material land, but because its materials use is
         virtually all related and essential to oil and gas development, it more suitably would be
         reclassified to oil and gas land.

         Map 6—Milne Point Mine Site. This parcel contains a large, active mine site. The
         mine site is used for maintenance and expansion of the Milne Point Unit. It is the only
         mine site serving this unit, and it is considered critical for several new oil projects and for
         maintaining existing facilities in the Milne Point Unit. Disputes over the use of this mine
         site or the availability of gravel from this site would be extremely disruptive to the
         development and operation of the Milne Point Unit. This parcel could possibly be
         reclassified to material land, but because its materials use is virtually all related and
         essential to oil and gas development, it more suitably would be reclassified to oil and gas
         land.



6
  Because the state may obtain title to Lot 1, USS 4275, in the future, and the Borough has expressed a particular
interest in a very small part of Lot 1 (the hangar area), DNR proposes to postpone any decision concerning the
propriety of conveying Lot 1 or any part of Lot 1 to the NSB until such time as the state obtains title. See Section V,
below. The classification or reclassification issue for Lot 1 would appropriately be addressed at that time as well.


                                                    Page 10 of 82
        Map 7—Service City. This parcel contains a small area of existing industrial
        development, several important roads and pipelines, and significant oil and gas
        infrastructure located on U pad. The Kuparuk River runs through a large portion of the
        parcel. A portion of the Service City parcel, including the ASTAC lease/sublease, has a
        history of industrial use, and the parcel is currently classified settlement land in part and
        RMG for the remainder. 7 The parcel has one active lease.

        The portions of this parcel that are situated south of Spine Road and the M Pad Pipeline
        access road and corridor in Sec. 7, T11N, R13E, UM, west of the U Pad access road in
        the N2 of Sec. 18, T11N, R13E, UM and west of ASLS 87-15 in the S2 of Sec. 19, T11N,
        R13E, UM, are appropriate for, and could be expected to be used for, future industrial
        expansion. Further, the upland portions of this parcel 8 that are situated west of the east
        bank of the Kuparuk River could be used for industrial type development in connection
        with the existing development.

        However, the portion of this parcel that includes and is north of Spine Road and the M
        Pad Pipeline access road and corridor in Sec. 7, and the portion of this parcel that is
        situated east of the east bank of the Kuparuk River and is contained in the S2 of Sec. 18
        and the N2 of Sec. 19, T11N, R13E, UM, and the portions that include and are east of the
        U Pad access road in the N2 of Sec. 18, and include and are east of ASLS 87-15 in the S2
        of Section 19, which portions contain roads, pipelines, and U pad, are essential to the
        current and future operation and development of the field, and are not appropriate for
        future general industrial development.

        Based on its future use for industrial expansion and its proximity to other industrial areas,
        it could be appropriate to reclassify the portions of this parcel that are situated in Sec. 7,
        T11N, R13E, UM, south of Spine Road and the M Pad Pipeline access road and corridor,
        to settlement land to the extent that the land is not already so classified. However, as to
        the remainder of Sec. 7, situated north of and including Spine Road and the M Pad
        Pipeline access road and corridor, and the land situated east of the east bank of the
        Kuparuk River that is contained in the S2 of Sec. 18 and the N2 of Sec. 19, T11N, R13E,
        UM, and the portions of this parcel that include and are east of the U Pad access road in
        the N2 of Sec. 18, and include and are east of the pipeline (ASLS 87-15) in the S2 of
        Section 19, this land should be reclassified to oil and gas land, which is not conveyable
        under the Municipal Entitlement Act.

        Map 8—PUT 23 Mine Site. This parcel contains the Borough owned and operated
        Oxbow Landfill, a mine site, and several roads and pipelines. This parcel is situated in
        the heart of the Prudhoe Bay Unit and is the primary source of gravel for the Prudhoe

7
  Secs. 13 and 24, T11N, R12E, UM, Secs. 18 and 19, T11N, R13E, UM, and the SW4 and the W2W2SE4 of
Sec. 7, T11N, R13E, UM are currently classified settlement land. The remainder of the parcel is classified pre-1983
RMG.
8
  No navigable waters, nor the beds of navigable water bodies, are conveyed in this or any municipal entitlement
decision. Only uplands that are above the ordinary high water mark of the Kuparuk River may and are intended to
be conveyed. Exposed sand or gravel bars that are in the middle of the river and are not above the ordinary high
water mark are part of the bed of the river and are not uplands.


                                                   Page 11 of 82
Bay Unit. Gravel from this mine site is used for the maintenance and construction of
nearly all gravel facilities within the Prudhoe Bay Unit. Disputes over the use of this
mine site or the availability of gravel from this site would be extremely disruptive to the
development and operation of the Prudhoe Bay Unit. The primary use of this parcel,
including the mine site and except for the landfill, is for oil and gas development and
operation. However, the mine site is very large, and a portion of it that is adjacent to the
north side of the landfill is no longer significantly productive for materials. The
undeveloped area to the southwest of the landfill could have materials potential.

The portions of this parcel that are identified as the mine site itself and the undeveloped
portion of the parcel to the southwest of the landfill could possibly be reclassified to
material land, but because any materials use is virtually all related and essential to oil and
gas development, and the general character of the land is oil and gas land, it more
suitably would be reclassified to oil and gas land. The remaining portion of the parcel,
surrounding the mine site (possibly excluding the undeveloped area southwest of the
landfill), is appropriately classified as RMG or, if reclassified, would appropriately be
reclassified to oil and gas land, neither of which is conveyable under the Municipal
Entitlement Act. Reclassification of the area outside of the mine site, with the possible
exception of the undeveloped area southwest of the landfill, is not warranted.

Map 8—Pump Station 1. This parcel is adjacent to Pump Station 1, the initial pumping
station for oil as it enters the TAPS pipeline to Valdez. There is a lease located on the
parcel, and it contains Spine Road, several access roads and pipelines, a portion of Flow
Station 3, and a portion of facilities related to Drillsite 14. The primary current and
future use of this site is for oil and gas development. The current RMG classification is
appropriate or, if reclassified, it would be reclassified to oil and gas land.
Reclassification of this parcel is not warranted.

Map 9—Deadhorse South. This parcel runs along the Sagavanirktok River, contains a
portion of the Dalton highway and a fiber optic cable, a TAPS pipeline access road, and
is approximately five miles south of Deadhorse. The TAPS pipeline crosses a corner of
the parcel. This land is generally appropriate for industrial or settlement use and
reclassification to settlement land could be appropriate.

Map 10—ASTAC Site. This parcel contains a lease, an access road, and Drillsite 2L,
borders on a pipeline, and is generally isolated. Its materials value is unknown, and its
current and anticipated future use is expected to be related to oil and gas development.
Its current RMG classification is appropriate or, if reclassified, it would be reclassified to
oil and gas land. Reclassification is not warranted.

Map 11—Kuparuk Mine Site F. This parcel contains a large mine site area, and a road
and pipeline servicing Drillsite 2T. The reclaimed ponds and the large unnamed lake are
used as a water source for oil field development, operation, and maintenance. The mine
site was historically important to the construction and maintenance of the southwest
portion of the Kuparuk River Unit, but it is no longer critical as a materials source to the
development and maintenance of this Unit. It is important, however, as a water source.



                                     Page 12 of 82
Within the parcel there is room to expand the mine to the east. It could be appropriate to
reclassify the portion of this parcel that is east of the access road as material land.
However, the portion of this parcel that includes and is west of the access road is
appropriately classified as RMG or, if reclassified, would be reclassified to oil and gas
land. Reclassification of the portion of the parcel that includes and is west of the access
road is not warranted.

Map 12—Meltwater West Parcel. This parcel is north of Drillsite 2P, and contains a
road and pipeline servicing the drillsite. The parcel is generally isolated, its materials
value is unknown, and its current and anticipated future use is expected to be related to
oil and gas development. Its current RMG classification is appropriate or, if reclassified,
it would be reclassified to oil and gas land. Reclassification is not warranted.

Map 12—Meltwater East Parcel. This parcel is located in the southern reaches of the
field, it used to contain a mine site known as Mine Site S, which has been reclaimed, and
it is generally isolated. Although its use for future materials may be limited, it could be
appropriate to reclassify this parcel to material land.

Map 13—East Dock. This parcel borders the East Dock facility, and has significant
pipelines and access roads across it. Its materials value is unknown, and its current and
anticipated future use is primarily related to oil and gas development. Its current RMG
classification is appropriate or, if reclassified, it would be reclassified to oil and gas land.
Reclassification is not warranted.

Map 13—Surfcote Pad. This parcel is currently classified settlement land. However,
the parcel contains significant oil and gas infrastructure that is essential to the operation
and development of the oil field. On the southern portion of this parcel there is an oil and
gas fire training facility, drillsite access roads, a drillsite, a pipeline, and grind and inject
wells. These facilities are not general industrial development and are solely oil and gas
related. The southern portion of this parcel, including and south of the Drillsite L4 access
road, but excluding that portion of ASLS 81-3 lying more than 100 feet north of the
pipeline, should be reclassified to oil and gas land, which is not conveyable under the
Municipal Entitlement Act. The remainder of the parcel, including that portion of
ASLS 81-3 lying more than 100 feet north of the pipeline, does not need to be
reclassified to be considered for conveyance under the Municipal Entitlement Act.

Map 14—Point McIntyre. There are two lots within this parcel, Lot 1 and Lot 2,
USS 4044. Lot 1 contains a former DEW Line site, is subject to a military withdrawal,
and although the state has top-filed this lot, it does not have tentative approval or patent.
While the state could, in theory, identify a classification for Lot 1 (and has identified it
RMG), the classification actually means nothing until the land is tentatively approved to
be or is conveyed to the state. Reclassification would not make Lot 1 conveyable. Lot 2
contains the Northstar pipeline. This entire parcel is isolated, has no road access, the
materials value is unknown, and it is not expected to be suitable for general industrial
development. Setting aside issues of title, the current RMG classification is appropriate




                                      Page 13 of 82
        or, if reclassified, the appropriate reclassification would be oil and gas land.
        Reclassification of this parcel is not warranted.

               2. Parcels That Could Be Reclassified

        Based on the above analysis, Table A lists only those parcels that, based on land
        classification criteria, could potentially be reclassified, in whole or part. The current and
        possible classifications for each parcel are identified. Reclassification of these parcels or
        portions of parcels is warranted only if DNR determines that the current land
        classification is not appropriate or that the parcel or a portion of the parcel should be
        conveyed to the NSB under the standards of the Municipal Entitlement Act, as discussed
        in Section V.D, below.

                                             Table A
                                Potentially Reclassifiable Parcels

                                                 CLASSIFICATION
MAP        PARCEL                                Current to Possible                       APPLIES TO
Map 1      Colleen Lake Parcel                   RMG to STL                                Whole parcel
           Norgasco Parcel                       RMG to STL                                Whole parcel
           Lease Tract South Parcel              RSU to STL                                Whole parcel
           Mine Site 3 Parcel                    RMG to MAT                                Whole parcel
           Mine Site 102 Parcel                  RMG to MAT                                Whole parcel
Map 2      Kuparuk Industrial Center Parcel      RMG to STL                                Portion of parcel*
           Mine Site C Parcel                    RMG to OGL or possibly MAT                Portion of parcel*
Map 3      Milne Point Road                      RMG to MAT                                Portion of parcel*
           (Mine Site “B”)
Map 5      Kuparuk Mine Site E Parcel            RMG to OGL or possibly MAT                Whole parcel
Map 6      Milne Point Mine Site Parcel          RMG to OGL or possibly MAT                Whole parcel
Map 7      Service City Parcel                   RMG and STL to OGL and STL                Portion of parcel*
Map 8      PUT 23 Mine Site Parcel               RMG to OGL or possibly MAT                Portion of parcel*
Map 9      Deadhorse South Parcel                RMG to STL                                Whole parcel
Map 11     Kuparuk Mine Site F Parcel            RMG to MAT                                Portion of parcel*
Map 12     Meltwater East Parcel                 RMG to MAT                                Whole parcel
           (Mine Site “S”)
Map 13     Surfcote Pad Parcel                   STL to OGL                                Portion of parcel*

* The portion of the parcel that could potentially be reclassified is as described generally in the
parcel by parcel analysis. Reference also should be made to the attached maps for general
identification of the areas discussed.

               3. Parcels Not Appropriate for Reclassification

        The remaining parcels or portions of parcels, identified below in Table B, are not
        appropriate for reclassification to a conveyable classification, based on land use



                                             Page 14 of 82
        considerations. 9 Generally, the parcels in Table B contain oil and gas infrastructure or
        are in areas expected to be developed with oil and gas infrastructure, they are critical to
        the development and management of the fields, they are not suited to general industrial
        development, and they are not used or expected to be used as mine sites. These parcels,
        situated on the North Slope of Alaska, are not suitable for agricultural use or grazing as
        their predominant land use, nor are they suitable for public recreation or residential
        settlement, especially where the infrastructure, development, and existing facilities are
        primarily related to oil and gas exploration and development. There are few public roads,
        there is limited access, and the land is always subject to use by the oil and gas lease
        holders for development purposes.

                                             Table B
                          Parcels Where Reclassification Is Not Warranted

           MAP               PARCEL                                        APPLIES TO
           Map 1             Airfield Parcel                               Whole parcel
           Map 2             Kuparuk Industrial Center Parcel              Portion of parcel*
                             Mine Site C Parcel                            Portion of parcel*
           Map 3             Milne Point Road (Mine Site “B”)              Portion of parcel*
           Map 4             Oliktok Parcel                                Whole parcel
           Map 7             Service City Parcel                           Portion of parcel*#
           Map 8             PUT 23 Mine Site Parcel                       Portion of parcel*
                             Pump Station 1 Parcel                         Whole parcel
           Map 10            ASTAC Parcel                                  Whole parcel
           Map 11            Kuparuk Mine Site F Parcel                    Portion of parcel*
           Map 12            Meltwater West Parcel                         Whole parcel
           Map 13            East Dock Parcel                              Whole parcel
                             Surfote Pad Parcel                            Portion of parcel*#
           Map 14            Pt. McIntyre Parcel                           Whole parcel

* The portion of the parcel that is not appropriate for reclassification is as described generally in
the parcel by parcel analysis. Reference also should be made to the attached maps for general
identification of the areas discussed.

# Portions of the parcel do not need reclassification in order to be conveyable.

        C. Conclusion and Determination

The vast majority of the NSB’s selections that are under consideration are not presently
conveyable because they are subject to RSU or pre-1983 RMG classifications, which are not
conveyable. See AS 29.65.130(10)(D). The NSB’s selections could be denied on that basis
alone. However, because of the importance of the NSB’s municipal entitlement, DNR

9
  Under AS 29.65.130(10), the only relevant conveyable classifications are agricultural, grazing, material, public
recreation, settlement, or post-September 1, 1983, resource management. These classifications are further defined in
11 AAC 55.


                                                   Page 15 of 82
considered potential reclassification of the NSB selections. DNR has discretionary authority
under AS 38.05.300 to reclassify land, and DNR maintains the ability to reclassify an area, or all
or portions of the parcels selected, where it is appropriate from a land use standpoint and where it
is in the public’s interest to do so.

If DNR were to reclassify the oil field area as a whole, it would be reclassified as oil and gas
land, and all of these parcels would ultimately be rejected in an entitlement decision as non-
conveyable under AS 29.65.130. On the other hand, DNR has determined that, notwithstanding
the appropriateness of an oil and gas classification over the whole area, some individual parcels
could be reclassified to (or are already classified as) settlement or material land, in whole or part.
The NSB’s municipal entitlement applications for these parcels could be approved if the parcels
otherwise meet the standards for conveyance under the Municipal Entitlement Act (which
standards are evaluated in the Municipal Entitlement Decision in Section V, herein). 10 As
discussed in this land classification analysis and as recommended in the draft Site Specific Plan
that is contained herein, DNR proposes to reclassify the parcels or portions of the parcels listed
in Table A that are classified incorrectly or are determined in the preliminary Municipal
Entitlement Decision to be appropriate for conveyance.


V.      Preliminary Municipal Entitlement Decision
        A. Administrative Record

See Section III, above.

        B. Location of Parcels

Geographic:      NSB selections occupy the flat arctic coastal plain south of the Beaufort Sea coast
                 in the Prudhoe Bay – Kuparuk River area. The arctic coastal plain is
                 characterized by low relief, frozen soils (permafrost), and grass and shrub
                 vegetation. It is typically covered by a surface layer of organic soil that thaws
                 during the short arctic summer becoming soft and wet and making cross country
                 travel difficult. Underlying soils are varied. Thaw lakes that have neither an inlet
                 nor outlet are abundant. Streams and rivers typically have braided channels and
                 small streams may exhibit a beaded drainage pattern characteristic of permafrost
                 areas. Caribou and Musk Ox are the most common large land animals (but
                 mosquitoes constitute the largest bio-mass on the arctic plain). Wild birds are
                 plentiful during summer and fall.



10
   In this section, DNR determined that four of the parcels (Mine Sites C and E, Milne Point Mine Site, and PUT 23
Mine Site) potentially could be reclassified, in whole or part, to a material land classification, but more suitably
would be reclassified as oil and gas land. This conclusion involves the exercise of judgment based on a variety of
factors, including experience and familiarity with the area and its uses. However, because of the importance of the
NSB’s entitlement, DNR may consider the NSB’s interests in the parcels (as identified under the preliminary
Municipal Entitlement Decision) as a factor in the question of potential appropriate reclassification of all or a
portion of these four parcels.


                                                   Page 16 of 82
Municipality: North Slope Borough.
Coastal District: North Slope Borough.
Regional Native Corporation: Arctic Slope Regional Corporation.
Native Village Corporation: None.
Federally Recognized Tribes: None.

       C. Legal Description – Land Title – Third Party Interests

The general legal description and land title status for each parcel are presented in Appendix A.
More detailed legal descriptions are given in Section VIII, Recommendations, at p. 49, below. In
addition, Appendix A describes state oil and gas leases that are present within the boundaries of
the parcels. All oil and gas leases affecting the subject parcels remain under the jurisdiction and
control of the state. Such leases pertain to the sub-surface or mineral estate, whereas the
municipal land selections pertain to the surface estate only. It is important to note that oil and
gas lease holders have a right to use the surface of the land for purposes of exploring, developing
and producing subsurface resources (See AS 38.05.125; AS 38.05.130; 11 AAC 83), and oil and
gas leases may affect the use of the surface estate. Authorizations issued under the authority of
the subsurface leases are not identified in Appendix A and should be researched with the
assistance of DNR, Division of Oil and Gas (“DOG”).

       D. Background

The majority of the parcels require reclassification in order to make them conveyable and this, in
turn, requires an analysis of the appropriateness of reclassification in the Central North Slope oil
field. This reclassification analysis is contained in Section IV, above. The land classification
analysis concluded that some parcels or portions of parcels could be reclassified to settlement
land or material land, making them potentially conveyable as municipal entitlement lands.

For potentially conveyable parcels, “[t]he director may disapprove a selection only upon a
finding that the public interest in retaining state ownership of the land outweighs the
municipality’s interest in obtaining the land.” AS 29.65.050(c). This portion of the decision
evaluates, under the standards of the Municipal Entitlement Act, the appropriateness of
conveyance of the NSB’s selections. Only where the parcel is classified as or could be
reclassified to a conveyable classification AND where the Borough’s interest in obtaining the
parcel outweighs the state’s interest in retaining it is the parcel proposed for conveyance to the
NSB in satisfaction of its municipal entitlement.

       E. Conveyance Under the Municipal Entitlement Act

               1. Timing of Selections

       AS 29.65.040(c) provides that in order to satisfy its general grant entitlement of 89,850
       acres, the NSB may select or nominate land “at any time before October 1, 1990.” Some
       of the NSB’s selections discussed herein were made on that date. However, other
       selections were made in 1994, 2006, 2007, and 2008, which were made either to




                                            Page 17 of 82
accommodate a landfill need or at the behest of DNR in order to enlarge the area
selected.

Arguably, selections made after October 1, 1990, were untimely. However, DNR
accepted the late selections, and denial of these selections now on the basis of timing
would be unreasonable. Further, AS 29.65.040(e)(1) provides that the time limits of
AS 29.65.040(c) do not apply to “the portion of an entitlement that cannot be satisfied by
that date because of a shortage of land suitable for residential, commercial, and industrial
purposes that is vacant, unappropriated, unreserved land.”

Much of the state-owned land within the NSB is either non-VUU land or may not be
preferable for residential, commercial, or industrial purposes. Much of the land in the
NSB is difficult to access or is located many miles south of the developed areas of the
Borough. At this time, this land has limited near-term development potential.

Based on these considerations, DNR concludes that the Borough’s selections that were
made after October 1, 1990, and which are under consideration in this decision, will not
be rejected as untimely. DNR notes, however, that its decision to adjudicate the
Borough’s applications does not establish a precedent to prevent it from rejecting
untimely entitlement applications in the future, either at the time they are made or
thereafter.

       2. Balancing of Interests

This portion of the decision analyzes whether the state’s interests in retaining all or any
of the NSB’s potentially conveyable selections outweighs the NSB’s interests in
obtaining the selections, including consideration of DNR’s prior decision to reject the
NSB’s 1973 Prudhoe Bay selections, and the affirmance of that decision by the Alaska
Supreme Court in North Slope Borough v. LeResche, 581 P.2d 1112 (Alaska 1978). The
state may reject a selection, where it otherwise meets conveyance criteria, only when the
“public interest in retaining state ownership of the land outweighs the municipality’s
interest in obtaining the land.” AS 29.65.050(c).

As discussed in Section I, above, when the legislature revived the NSB’s municipal
entitlement, it specifically exempted Prudhoe Bay and other oil field land from the
definition of VUU land. AS 29.65.130(10)(D). This action was taken after, and with the
express awareness of, DNR’s decision to reject the NSB’s previous municipal entitlement
selections within the Prudhoe Bay field on the grounds that the character of the selections
within the area of the Prudhoe Bay field and their importance to the state’s interests
precluded their conveyance to the NSB. The legislature’s action was also taken with
knowledge that the Alaska Supreme Court had specifically affirmed DNR’s denial of the
oil field selections in North Slope Borough v. LeResche, 581 P.2d 1112 (Alaska 1978).
DNR’s previous decision on the NSB’s 1973 selections, together with the LeResche
court’s affirmance of that decision and the legislature’s subsequent exclusion of oil field
land, creates a functional presumption that the state’s interest in retaining oil field land
outweighs the NSB’s interest in receiving it.



                                    Page 18 of 82
In order to approve conveyance of the selected oil field land to the NSB, DNR should be
able to demonstrate that conditions have changed sufficiently since 1973 such that the
state’s interest in retaining the land no longer outweighs the NSB’s interest in obtaining
the land. To support such a finding – and overcome the presumption created by DNR’s
original decision – it is necessary for DNR to address the factors previously identified by
DNR in its decision on the NSB’s 1973 selections, which were also analyzed by the
LeResche court. Specifically, these factors include: (1) the state’s expectation of future
revenue from the land, (2) the extent to which plans and programs remain dependent on
those funds, (3) the extent to which continued state ownership of the surface estate would
facilitate state regulatory authority of the oil field and tend to protect state revenues, (4)
the extent to which state ownership would lessen the likelihood of conflicts between
mineral lessees and the surface estate owner, and (5) the extent to which the placement of
facilities necessary for the efficient operation of the oil field could be affected by
conveyance or retention of the land. In addition, any other factors may be considered in
determining what interests the state has in the land selected, and whether those interests
are paramount to the NSB’s interests in obtaining the land in fulfillment of its municipal
entitlement. A general analysis of these factors is followed by a parcel by parcel
analysis.

               a. General Analysis of Interests Affected

Expectation of Future Revenue. The state continues to receive the majority of its
revenues from the oil production in the Central North Slope oil field and it is virtually
certain that such revenues will continue to play a significant role in the state’s budget.
Continuing production in the Central North Slope oil field should provide significant
state revenues for a substantial period of time, perhaps upwards of 20-30 years. It is
likely that the less economic oil fields in the area will also come into production over
time as a result of continuing strong demand and improvements in technology allowing
for production from previously marginal reservoirs. The likelihood of significant gas
production is also on the horizon. The state’s expectation of financial support from the
oil field generally has not materially decreased since 1973, and in fact has increased.
While most of the potentially conveyable industrial areas and mine sites do not
individually produce significant revenues relative to the royalties derived from the
subsurface resources that the state retains, all or portions of the individual sites are
nevertheless highly important to the support of the entire oilfield operation. Conveyance
to the NSB of all of these areas could, therefore, affect the income stream as a whole.
However, conveyance to the Borough of areas that are not essential to the operation or
development of the oil field is unlikely to significantly affect the state’s overall income
stream.

Dependency of State Plans and Programs. State plans and programs are dependent on
income generated from the oil field operations and this situation is unlikely to change.
Over 70% of the state’s budget is related to oil revenues and it is unlikely, given the
inability of other economic bases (like agriculture or fishing) to provide an effective
alternative revenue source that this dependence will change. The state’s ability to create
alternative economic bases has been mixed at best and most analyses that have occurred



                                     Page 19 of 82
        over the last ten years have concluded that the state will remain dependent on oil and gas
        royalties for revenue for the foreseeable future.11 This dependency has not decreased
        since 1973, when oil production on the North Slope was in its infancy, and in fact has
        increased in the face of full production and new discoveries.

        State Regulatory Control over Surface. Continued state ownership of the surface
        would facilitate state regulatory authority over the oil field. If parcels are conveyed to the
        Borough, the state would still maintain control over the oil and gas leases and surface
        operations approvals (Lease Operations – North Slope or LONS) that affect the conveyed
        land. All of the parcels, except for a small portion within the Deadhorse South parcel
        (Map 9), are affected by these leases and approvals. Sometimes there are multiple leases
        on a single parcel, with varying and complex lease ownership. The leases give the
        lessees the exclusive right to drill for, extract, and dispose of oil, gas and associated
        substances; and the nonexclusive right to install pipelines and build structures on the
        leased areas to produce, store, treat, process, and transport these substances. DOG has
        the authority to approve the plans of operation and improvements allowed under the lease
        and, essentially, this constitutes a control over the type of land use that would be allowed
        on the surface. Due to the nearly exclusive use of this area for intensive oil and gas
        production, development, and support services, this could result in disputes between the
        state and the Borough over the types of uses that could occur on land conveyed to the
        Borough and, at a minimum it would result in the need to coordinate with the Borough on
        an on-going basis.

        These leases and authorizations are likely to continue for an indefinite period. Many of
        the leases were issued in the early 1960’s; some leases were issued more recently due to
        changes in unit boundaries. Regardless of the original lease issuance date and original
        date of expiration, unitization extends the leases’ primary term until such time as the unit
        is contracted and the contracted lease expires. The Central North Slope oil fields,
        although declining, collectively are still the highest producing fields in the United States,
        still provide the greatest percentage of royalty revenues to the state, and are expected to
        continue substantial production into the foreseeable future due to increases in technology
        allowing for production from previously marginal reservoirs (enhanced oil recovery).
        Further, gas production in the near future is anticipated, which could extend production in
        the area by another 40 years.

        Regulatory control over the Central North Slope oil field is maximized by continued state
        ownership of the entire surface. Not conveying land to the Borough ensures that the
        present management program for oil and gas development will continue, including uses
        related to the surface. Conveying the surface to the Borough would create the potential
        for conflicts between the mineral lessees and the Borough, and between the state and the
        Borough. Should either of these situations occur, DNR’s regulatory control over the
        surface would be diminished and that control is important to systematic and efficient oil
        and gas development.


11
  See revenue sources books, located at http://www.tax.alaska.gov/programs/sourcebook/index.aspx (February 26,
2009).


                                                 Page 20 of 82
The state’s need to maintain regulatory control over the surface in order to allow for the
orderly management and development of oil and gas facilities and mineral leases, has not
changed since 1973. However, conveyance to the Borough of areas that are not essential
to the operation or development of the oil field may not significantly affect the state’s
overall management of the surface operations or conflict with the management of state oil
and gas leases or permits.

Conflict with Mineral Lessees. As also discussed in the previous paragraphs, continued
control of the surface would materially lessen the potential for conflict with the mineral
lessees. The need to maintain this control over the field as a whole has not decreased
since 1973 and, in fact, has increased with increased development. As indicated above,
the state would retain the oil and gas leases if state land were to be conveyed to the
Borough, and virtually all of the parcels are affected by both these leases and by LONS
authorizations. The leases are directly between the state and the oil companies, and DOG
has the authority to approve plans of operations and improvement, including authority
over what can and cannot occur on the surface. The leases essentially constitute a control
over the type of land use that can and cannot occur on the surface.

If land is retained by the state and is to be managed primarily, if not exclusively, for oil
and gas development, the expectation would be that the surface (land) also would be
available for oil and gas development. Conflict between the state and the oil companies
would be minimal or at least no greater than now occurs, and in any event the conflict
likely would be over plans of operations, not other issues. Conveyance of land to the
Borough creates the potential for additional conflict. As landowner, the Borough has a
greater ability to place restrictions on land than it might have under local planning and
zoning ordinances. Borough ownership and management of the surface could require an
additional level of review for authorizations, which could increase the timelines for
getting projects approved and started. Additionally, the Borough could sell or lease the
property to other parties, further complicating management of the land. A question of
authority over surface uses could exist because, among other reasons, the state would
retain the oil and gas leases, but the Borough would acquire direct management over the
surface itself. The Borough may exercise a different perspective than the state in the
administration of its land and could permit land use development that might promote
short term gains, but complicate the long term development of oil and gas facilities. In
the latter case, additional local requirements could result in conflicts between the oil
company and the Borough or its successors over appropriate uses, which might be further
complicated by the state retaining control over the surface through the oil and gas leases.
A variant situation could exist where the Borough might want to pursue development of
the surface to which the state might object, based on the need to maintain the surface for
oil and gas purposes. In either situation, further complication and uncertainty is
introduced into oil and gas development, which is avoided by simply not transferring
state land. This lessens the chance for conflict between the Borough and the state or the
oil and gas lessees to arise. Accordingly, it can be concluded that the potential for
conflict with lessees has not decreased since 1973 and, in fact, has increased with
expanded development.




                                    Page 21 of 82
Although most of the potentially conveyable parcels are affected by oil and gas leases
and LONS authorizations, the level of conflict between the surface uses of land and the
oil and gas leases or LONS authorizations on some portions of the parcels may be less
likely to occur than on other portions of the parcels, at least in the near future. Some
portions of the industrial areas and the mine sites have purposely been developed by
taking into account the oil and gas production and storage facilities, pipelines, and roads.
Accordingly, it is less likely that active oil and gas operations will locate on or near these
parcels in the future. While this does not preclude future conflicts, it indicates that the
potential for such conflicts is less in some limited areas.

Placement of Facilities. The retention of the surface would ensure that the placement of
facilities could occur and that such placement would be consistent with the state’s long
term management objectives for the oil field. To the degree that portions of the oil field
are conveyed to the Borough, the state loses control over portions of the surface. By
virtue of this, the state necessarily loses the unfettered ability to determine the best
placement of facilities since the entire oil field will not be under a single administrative
entity. The state’s ownership of land ensures that the placement of facilities to support
oil and gas development is optimal for the state’s interests in managing the land and
receiving the benefits of its mineral leases. Retaining land in state ownership ensures that
the placement of facilities will not be affected by bifurcated ownership. The desirability
of maintaining ownership of the surface, to expedite oil and gas development, has not
materially decreased since 1973 and, in fact, has increased with increased development.
Development of the area, however, has sometimes resulted in redundant services or
facilities. Conveyance of some portions of the parcels may not seriously hinder the
state’s management choices for its land or the development options under the leases.

The general considerations discussed above weigh heavily in favor of the state retaining
all parcels within the oil field area. However, DNR again conducted a specific parcel by
parcel analysis to determine if there were parcels or portions of parcels that could
individually be conveyed without negatively affecting the state’s significant interests.
Each of the above general considerations was weighed with respect to each parcel, as
well as any parcel specific considerations.

               b. Parcel by Parcel Analysis of Interests Affected

In this part of the decision, DNR analyzes the state’s and the NSB’s interests in each
individual parcel, under the standards of the Municipal Entitlement Act. Based on this
parcel by parcel analysis, the general analysis above, and the land classification analysis
in Section IV, DNR makes its proposed decision regarding each parcel. Reference
should be made to the attached maps for general identification of the areas discussed.

Map 1—Colleen Lake Parcel. This parcel is an industrial site that contains important
access roads. It is also one of only a few undeveloped industrial sites in the Deadhorse
area. Conveyance to the NSB could compromise access between the developed industrial
areas and other areas of the oil field and limit future industrial expansion. Disputes over
access or industrial expansion would be detrimental to the operation and development of



                                     Page 22 of 82
         the field. Retention of this site would reduce the risk of disputes between the NSB and
         the State or the oil and gas lease holders over future industrial development essential to
         the operation or development of the field because it would provide a reasonable
         alternative site for such development. The public interest in a retained ability to control
         industrial development is best protected by a distribution of state and Borough owned
         land at Deadhorse, which is achieved in part through the state’s retention of the Colleen
         Lake parcel and conveyance of most of the Norgasco and Lease Tract South parcels (see
         below).

         DNR proposes to reject the NSB’s application for the Colleen Lake parcel in its entirety.

         Map 1—Norgasco Parcel. This parcel adjoins current Borough land holdings and
         contains limited industrial development that is not considered essential to the operation or
         development of the oil field, with the exception of Spine Road, which runs across a
         portion of the parcel. An alternative potential industrial area (the Colleen Lake parcel) is
         being retained by the state (see above) and will be available to it if necessary for
         industrial purposes that may be essential to the future operation or development of the
         field. Conveyance of this parcel (less Spine Road) will augment the Borough’s holdings
         in the Deadhorse industrial area. Some revenue is being generated from the on-site lease
         and sublease on the parcel and, given the strategic location of this parcel, it is considered
         to be a valuable developmental asset.

         DNR proposes to reclassify the Norgasco parcel and convey all of it to the NSB except
         for Spine Road. 12 DNR proposes to reject the NSB’s application for this small portion.

         Map 1—Lease Tract South Parcel. This parcel is similar to the Norgasco parcel and
         the same considerations apply. There is an important access road that crosses the west
         side of the parcel, and this road provides critical access to the fields.

         DNR proposes to reclassify the Lease Tract South parcel and convey all of it to the NSB
         except for the small portion containing the access road. DNR proposes to reject the
         NSB’s application for this small portion.

         Map 1—Airfield Parcel. In the land classification analysis, DNR determined that this
         parcel could not be reclassified to a conveyable classification and that reclassification
         was not warranted. Accordingly, this parcel is not conveyable under the Municipal
         Entitlement Act.

         DNR proposes to reject the NSB’s application for the Airfield parcel in its entirety.

         Map 1—Mine Site 3. This parcel is located about one mile south of Deadhorse and
         contains an inactive mine site. The parcel also contains a portion of the Dalton Highway
         and an access road and stockpile area for the active mine site that is on the parcel to the
         south. The access road and stockpile area are situated close to the southeast corner of

12
  The specific legal description of the land proposed to be conveyed or rejected for all of the individual parcels is
contained in Section VIII, Recommendations, at p. 49 below.


                                                    Page 23 of 82
section 36, T10N, R14E, UM, just west of the Dalton Highway. There are plans to use
the reclaimed pond in the southeast quarter of section 36 in the eventual reclamation of
the mine site to the south, and the pond is currently used as an important water source for
oil and gas exploration, production, and maintenance. Mine Site 3 could be re-opened
and expanded to the north, and its close proximity to Deadhorse makes it valuable. The
state’s interest in retaining this site is reduced because of the close proximity of Mine Site
102, which DNR proposes to retain (see below).

Although most of this parcel is appropriate for conveyance, the portion of this parcel that
contains the Dalton Highway is critical to the management and development of the field.
The Dalton Highway is the sole road into the oil field from the more populated areas of
the state. On this parcel, the Dalton Highway runs close to the Sagavanirktok River. In
recent years there have been bank erosion problems, where the river bank has been
eroding into the highway corridor. As a result, the state has had to construct erosion
control structures (ADL 417402). In order to protect the highway in the future, to
provide sufficient room for maintenance, to allow for erosion control along the river, to
protect the river, and to avoid an isolated corridor of state land containing the highway,
DNR proposes to reject the NSB’s application for the Dalton Highway right of way and
the land to the east of the highway. DNR also proposes to reject the NSB’s application
for the portion of this parcel that contains the access road into Mine Site 102, the
stockpile area, and the southern part of the pond as those portions are important to the
operation and maintenance of the oil field, including the operation, development, and
eventual reclamation of Mine Site 102 to the south.

DNR proposes to reclassify and convey the Mine Site 3 parcel to the NSB, excluding the
Dalton Highway right of way, the land east of the highway, and the small portion west of
the Dalton Highway in section 36 that contains the southern portion of the pond and the
access road and stockpile area for Mine Site 102. DNR proposes to reject the NSB’s
application for these portions of the Mine Site 3 parcel.

Map 1—Mine Site 102. This parcel contains an active mine site and a portion of the
Dalton Highway. Mine Site 102 was developed by the Alaska Department of
Transportation and Public Facilities and is considered critical for the maintenance of the
north end of the Dalton Highway. Because transportation costs constitute a significant
portion of the overall cost of gravel, and because those costs increase significantly with
increased distance from the point of use, it is imperative that the state retain a reasonable
source of gravel in this area to reduce disputes over cost and availability and to ensure
control of the development and maintenance of the oil field and the highway serving it.

DNR proposes to reject the NSB’s application for the Mine Site 102 parcel in its entirety.

Map 2—Kuparuk Industrial Center. In the land classification analysis, DNR
determined that all of this parcel except Tracts A and B of ASLS 85-48 (on which the
industrial center sits) could not be reclassified to a conveyable classification, and that
reclassification of that portion was not warranted. Accordingly, the portion of this parcel




                                     Page 24 of 82
surrounding Tracts A and B of ASLS 85-48 is not conveyable under the Municipal
Entitlement Act.

In the land classification analysis, DNR also determined that Tracts A and B of ASLS 85-
48, on which the industrial center itself sits, was appropriate for reclassification to a
conveyable classification and, therefore, is appropriate to consider for conveyance under
the Municipal Entitlement Act.

The industrial center sits wholly or mostly on Tracts A and B of ASLS 85-48, and was
previously leased to the Borough. It is important as an industrial site and has an existing
surface lease that is a source of income. There is little risk to the state in conveying to the
Borough the portion of the KIC parcel containing the industrial center because alternative
sites for industrial development exist in the immediate vicinity.

DNR proposes to reclassify and convey to the NSB Tracts A and B of ASLS 85-48,
which is the portion of the KIC parcel containing the industrial center, and proposes to
reject the NSB’s application for the remainder of the KIC parcel, including Tract C of
ASLS 85-48.

Map 2—Mine Site C. In the land classification analysis, DNR determined that the area
surrounding the actual mine site could not be reclassified to a conveyable classification
and that reclassification of that portion of this parcel was not warranted. Accordingly, the
portion of this parcel that is outside the actual mine site is not conveyable under the
Municipal Entitlement Act.

In the land classification analysis, DNR also determined that although the portion of this
parcel directly related to the mine site could possibly be reclassified material land, it
more suitably should be reclassified oil and gas land, which is a non-conveyable
classification. DNR nevertheless is considering its interests in this parcel as weighed
against the Borough’s interests, under the Municipal Entitlement Act standards, to
determine if such interests should be considered as a factor in the land classification
decision.

This mine site is near CPF1 in the Kuparuk River Unit and is used to provide material for
the maintenance of roads and pads. It is the only active material site in the central part of
the Kuparuk Unit and is considered critical to the maintenance of current operations and
for new construction. Planned expansion and reconstruction of the Kuparuk airstrip will
require large amounts of gravel and this mine site will be the primary source of gravel for
the project. Transportation costs, limited availability of gravel, and the need to retain
control over the development of the fields give the state a greater interest in retaining this
parcel than the Borough’s interest in obtaining it.

DNR does not find any overriding Borough interests or other factors that would support
reclassifying this parcel to a conveyable classification, and DNR concludes that an oil
and gas land classification is more appropriate for this parcel than material land. Further,
since the state’s interests in retaining this parcel outweigh the Borough’s interests in



                                     Page 25 of 82
         obtaining it, this parcel is inappropriate for conveyance under the Municipal Entitlement
         Act standards even if it could be reclassified.

         DNR proposes to reject the NSB’s application for the Mine Site C parcel in its entirety.

         Map 3—Milne Point Rd. In the land classification analysis, DNR determined that the
         area including and north of Spine Road and the pipeline rights of way could not be
         reclassified to a conveyable classification and that reclassification of that portion of this
         parcel was not warranted. Accordingly, that portion of this parcel is not conveyable
         under the Municipal Entitlement Act.

         In the land classification analysis, DNR also determined that the portion of this parcel
         that is south of Spine Road and all pipeline rights of way, containing Mine Site B, could
         be appropriate for reclassification to a conveyable classification and, therefore, is
         appropriate to consider for conveyance under the Municipal Entitlement Act.

         The southern portion of this parcel contains an inactive, reclaimed mine site. The
         reclaimed pond is used as a major water source for oil field operation, development, and
         maintenance. There is a water right in the northern portion of the pond, and temporary
         water use permits for the southern pond area. In this area there are alternative mine sites
         that exist and Mine Site B is no longer critical to oil and gas development as a material
         source. Its use as a water source, however, is still critical. 13 This mine site is located
         directly adjacent to both Spine Road and Milne Point Road and there is potential to
         expand the mine site to the south; possible expansion of this site is considered a
         prospective source of income to the Borough.

         DNR proposes to reclassify and convey to the NSB the portion of this parcel that is south
         of Spine Road and all pipeline rights of way, excluding the northern portion of the
         reclaimed pond, access to the southern portion of the pond, and the developed access and
         pad areas that are adjacent to the northern and eastern portion of the pond. See
         Recommendations, Section VIII, for a complete legal description. DNR proposes to
         reject the NSB’s application for the area described above that is excluded from
         conveyance, and the portion of this parcel that includes and is north of Spine Road and all
         pipeline rights of way.

         Map 4—Oliktok. The state does not have title to or even a selection on two parts of this
         parcel (USS 8956 and Lot 2, USS 4275) and, therefore, those two parts cannot be
         conveyed under the Municipal Entitlement Act.

         In the land classification analysis, DNR determined that reclassification for another part
         of this parcel, Lot 1, USS 4275, was not warranted because the state does not have
         tentative approval or patent to the lot, and reclassification alone would not make the lot
         conveyable. DNR also determined that even if Lot 1, USS 4275 was reclassified, it most

13
   Although there are many water sources available in the oil field, their winter use is limited because they freeze
solid. Reclaimed mine sites are important as water sources because they are deep enough that they do not freeze
solid in the winter.


                                                    Page 26 of 82
likely would be reclassified to oil and gas land, which is not a conveyable classification.
However, because the Borough has expressed an interest in a very small portion of Lot 1,
USS 4275, related to an existing hangar, DNR proposes to postpone analyzing the
parties’ interests in this lot or the small portion of the lot containing the hangar until such
time as the state actually obtains title that potentially could be conveyed. A
reclassification review appropriately would be postponed until then, as well.
Postponement of a decision would allow then-current facts and circumstances to be
considered.

Finally, DNR determined that the fourth part of this parcel, located in sections 16 and 17,
could not be reclassified to a conveyable classification and that reclassification was not
warranted. Accordingly, this portion of the parcel is not conveyable under the Municipal
Entitlement Act.

DNR proposes to reject the NSB’s application for the parts of the Oliktok parcel
identified as USS 8956, Lot 2 (USS 4275), and the area within sections 16 and 17. DNR
proposes to postpone a municipal entitlement decision on the part of the Oliktok parcel
identified as Lot 1, USS 4275, until such time as the state obtains title or tentative
approval for title to the lot.

Map 5—Mine Site E. In the land classification analysis, DNR determined that although
this parcel could possibly be reclassified material land, it more appropriately would be
reclassified oil and gas land, which is a non-conveyable classification. DNR nevertheless
is considering its interests in this parcel as weighed against the Borough’s interests, under
the Municipal Entitlement Act standards, to determine if such interests should be
considered as a factor in the land classification decision.

This mine site is located near Oliktok in the Kuparuk River Unit and is used to provide
material for maintenance of roads and pads in the area. It is also important to
development of the new Oooguruk and Nikaitchuq oil projects. There is no other
reasonably available material site, and Mine Site E is considered critical for the
development of the northwest part of the Kuparuk River Unit. Transportation costs,
limited availability of gravel, and the need to retain control over the development of the
fields give the state a greater interest in retaining this parcel than the Borough’s interest
in obtaining it.

DNR does not find any overriding Borough interests or other factors that would support
reclassifying this parcel to a conveyable classification, and DNR concludes that an oil
and gas land classification is more appropriate for this parcel than material land. Further,
since the state’s interests in retaining this parcel outweigh the Borough’s interests in
obtaining it, this parcel is inappropriate for conveyance under the Municipal Entitlement
Act standards even if it could be reclassified.

DNR proposes to reject the NSB’s application for the Mine Site E parcel in its entirety.




                                     Page 27 of 82
Map 6—Milne Point Mine Site. In the land classification analysis, DNR determined
that although this parcel possibly could be reclassified material land, it more suitably
should be reclassified oil and gas land, which is a non-conveyable classification. DNR
nevertheless is considering its interests in this parcel as weighed against the Borough’s
interests, under the Municipal Entitlement Act standards, to determine if such interests
should be considered as a factor in the land classification decision.

This mine site is used for maintenance and expansion of the Milne Point Unit; it is the
only mine site serving this unit. This mine site is considered critical for several new oil
projects and for maintaining existing facilities in this unit. Known projects expanding the
oil and gas facilities will require over 750,000 cubic yards of gravel from this site, which
could not reasonably be brought from another mine site. Transportation costs, limited
availability of gravel, and the need to retain control over the development of the fields
give the state a greater interest in retaining this parcel than the Borough’s interest in
obtaining it.

DNR does not find any overriding Borough interests or other factors that would support
reclassifying this parcel to a conveyable classification, and DNR concludes that an oil
and gas land classification is more appropriate for this parcel than material land. Further,
since the state’s interests in retaining this parcel outweigh the Borough’s interests in
obtaining it, this parcel is inappropriate for conveyance under the Municipal Entitlement
Act standards even if it could be reclassified.

DNR proposes to reject the NSB’s application for the Milne Point Mine Site parcel in its
entirety.

Map 7—Service City. In the land classification analysis, DNR determined that the
portion of this parcel situated in Sec. 7, T11N, R13E, UM, north of and including Spine
Road and the M Pad Pipeline access road and corridor, is appropriately classified as
RMG or should be reclassified to oil and gas land, neither of which is conveyable under
the Municipal Entitlement Act. Accordingly, this portion of the parcel is not conveyable
under the Municipal Entitlement Act.

DNR also determined that the portion of the parcel situated east of the east bank of the
Kuparuk River that is contained in the S2 of Sec. 18 and the N2 of Sec. 19, T11N, R13E,
UM, and the portions of this parcel that include and are east of the U Pad access road in
the N2 of Sec. 18, and include and are east of ASLS 87-15 in the S2 of Section 19, should
be reclassified to oil and gas land, which is not conveyable under the Municipal
Entitlement Act. Further, these portions of this parcel contain two major pipelines,
significant oil development infrastructure on U Pad, and several access roads, all of
which is critical to the development and maintenance of this area. Disputes over access
or use, or over maintenance, expansion, or realignment of any of these facilities would be
extremely disruptive to the operation of the field. The state’s interests in these portions
of this parcel outweigh the Borough’s interests.




                                    Page 28 of 82
DNR also determined that the portion of this parcel that is situated in Sec. 7 and the N2
of Sec. 18, T11N, R13E, UM, and is south of Spine Road and the M Pad Pipeline access
road and corridor and west of the U Pad access road, the portion that is situated in the S2
of Sec. 19, T11N, R13E, UM, and is west of ASLS 87-15, and the upland portions of this
parcel that are situated west of the east bank of the Kuparuk River, are appropriate to
classify as settlement land, to the extent that they are not already so classified.

These portions of this parcel contain a small area of existing industrial development,
several roads, and a pipeline. There is a history of industrial use in this area, and a large
portion of this parcel is currently classified settlement land. The area has one active lease
and has potential for future income generation. The existing industrial development is
not considered critical to current or future oil and gas production or development, and the
state has other land in the immediate vicinity that can accommodate additional industrial
development in the future if necessary.

However, the pipeline is a major pipeline that has an associated survey of its location. It
is essential to the current and future operation and development of the field. Pipelines
require maintenance, and sometimes they require expansion or realignment. Split
management of such facilities raises the potential for conflict and may disrupt the
operation and development of the field. Accordingly, the state’s interest in retaining title
to the land identified by ASLS 87-15, containing the pipeline in the south half of this
parcel, outweighs the Borough’s interest in obtaining that land.

DNR proposes to reclassify as necessary, and to convey the Service City parcel, except
for the area north of and including Spine Road and the M Pad Pipeline access road and
corridor in Sec. 7, T11N, R13E, UM, the area situated east of the east bank of the
Kuparuk River that is contained in the S2 of Sec. 18 and the N2 of Sec. 19, T11N, R13E,
UM, the areas that include and are east of the U Pad access road in the N2 of Sec. 18 and
include and are east of ASLS 87-15 in the S2 of Section 19, and ASLS 87-15, containing
the pipeline right of way, all of which it proposes to reject.

Map 8—PUT 23 Mine Site. In the land classification analysis, DNR determined that the
portion of this parcel outside the mine site area, with the possible exception of the
undeveloped area to the southwest of the landfill, could not be reclassified to a
conveyable classification and that reclassification of that portion was not warranted.
Accordingly, the portion of this parcel outside the mine site, with the possible exception
of the undeveloped area to the southwest of the landfill, is not conveyable under the
Municipal Entitlement Act.

DNR also determined that although the portions of this parcel that are identified as the
mine site itself and the undeveloped area southwest of the landfill could possibly be
reclassified to material land, they more suitably should be reclassified oil and gas land,
which is a non-conveyable classification. DNR nevertheless is considering its interests in
these portions of the parcel as weighed against the Borough’s interests, under the
Municipal Entitlement Act standards, to determine if such interests should be considered
as a factor in the land classification decision of these portions.



                                    Page 29 of 82
These portions of the parcel contain the Borough-owned and operated Oxbow Landfill
and an active mine site. The landfill actually occupies a mined out portion of the mine
site. The Borough has an urgent need to expand the landfill, which is rapidly
approaching its maximum capacity. The area of the mine site that is directly to the north
of the landfill is either mined out or has limited materials availability. Most of the active
mining occurs significantly north of the landfill. The area to the southwest of the landfill
is not currently developed with any oil and gas infrastructure, and offers potential for
additional expansion of the landfill or materials.

The PUT 23 mine site is situated in the heart of the Prudhoe Bay Unit and is the primary
source of gravel for the Prudhoe Bay Unit. Gravel from this mine site is used for the
maintenance and construction of nearly all gravel facilities within the Unit. There is
limited gravel availability from other sources in the area, and this mine site is considered
critical to development and operation of the field.

Both the Borough and the state have significant interests in this parcel. The NSB’s
interest in obtaining at least a portion of this parcel in order to expand its landfill
outweighs the state’s interest in retaining the portion of the mine site that would be
available for landfill expansion, which has limited materials availability, is mined out, or
is separated from the active area of mining. The state’s interests outweigh the NSB’s
interests in the remaining portions of the parcel, however.

The NSB’s significant interests in the portions of this parcel that could be used for
landfill expansion is a factor that supports reclassifying these portions of the parcel to a
conveyable, material land classification. The state’s overriding interests in the remainder
of the mine site support retaining the RMG classification or reclassifying the land to oil
and gas land, neither of which is conveyable.

Accordingly, DNR proposes to reclassify and convey to the NSB the portion of this
parcel that is adjacent to the landfill to the north and to the southwest, as shown on Map 8
and more fully described in Section VIII, Recommendations, herein, and to reject the
NSB’s application for the remainder of the parcel.

Map 8—Pump 1. In the land classification analysis, DNR determined that this parcel
could not be reclassified to a conveyable classification and that reclassification was not
warranted. Accordingly, this parcel is not conveyable under the Municipal Entitlement
Act.

DNR proposes to reject the NSB’s application for the Pump 1 parcel in its entirety.

Map 9—Deadhorse South. This parcel contains a portion of the Dalton Highway
(including a fiber optic cable), and is located approximately five miles south of
Deadhorse. The highway runs very close to the Sagavanirktok River on the east side of
the parcel. The TAPS pipeline crosses a corner of the parcel to the southwest, and is
accessed from the Dalton Highway by an access road that crosses the parcel east-west.




                                     Page 30 of 82
This parcel has potential for income generation for the Borough. The state has other land
in this area suitable for industrial use, including parcels within Deadhorse itself.

The portion of this parcel that contains the Dalton Highway, however, is critical to the
management and development of the field. The Dalton Highway is the sole road into the
oil field from the more populated areas of the state. On this parcel, the Dalton Highway
runs close to the Sagavanirktok River and other water bodies. The state has a significant
interest in having sufficient room for maintenance of the highway, erosion control along
the river, and protection of the river. Likewise, the state has a significant interest in
retaining the land on which the TAPS pipeline and its access road sits, including enough
land surrounding the pipeline to maintain it and provide sufficient room for additional
facilities, in order to ensure access, use, and to minimize conflict.

DNR proposes to reclassify and convey the Deadhorse South parcel to the NSB, except
for the portion including and to the west of the TAPS pipeline right of way, the TAPS
pipeline access road (the land under the access road will be reclassified, but the access
road itself will not be conveyed), and the portion including and to the east of the Dalton
Highway and fiber optic cable rights of way.

Map 10—ASTAC Site. In the land classification analysis, DNR determined that this
parcel could not be reclassified to a conveyable classification and that reclassification
was not warranted. Accordingly, this parcel is not conveyable under the Municipal
Entitlement Act.

DNR proposes to reject the NSB’s application for the ASTAC parcel in its entirety.

Map 11—Kuparuk Mine Site F. In the land classification analysis, DNR determined
that the portion of this parcel that includes and is west of the access road could not be
reclassified to a conveyable classification and that reclassification was not warranted.
Accordingly, the portion of this parcel that includes and is west of the access road is not
conveyable under the Municipal Entitlement Act.

The remainder of this parcel contains a large, inactive mine site area. The mine site was
historically important to the construction and maintenance of the southwest portion of the
Kuparuk River Unit, but it is no longer critical as a materials source to the development
and maintenance of this Unit. The reclaimed ponds and the large unnamed lake,
however, are used as critical water sources for oil field operation and maintenance. See
footnote 13, above. There is an existing water right and several temporary water use
permits for the ponds. Within the parcel there is room to expand the mine site and
therefore an income potential exists for the Borough.

DNR proposes to reclassify and convey to the NSB the portion of this parcel that is east
of the road and pipeline, except for a portion adjacent to the access road that is sufficient
to ensure access to the ponds and the lake, and to reject the NSB’s application for the
excluded portion described above and the remainder of this parcel, which includes and is




                                     Page 31 of 82
to the west of the access road. See Recommendations, Section VIII, for a complete
description.

Map 12—Meltwater East Parcel (Mine Site S). This parcel is located in the southern
reaches of the field, and it used to contain a mine site known as Mine Site S. It was used
to construct the Drillsite 2P pad and access road. At the time, this gravel source had to be
supplemented by use of gravel from Mine Site F. Mine Site S has been reclaimed, but
could be reopened and expanded. DNR proposes to reclassify and convey the Meltwater
East Parcel (Mine Site S) to the NSB in its entirety.

Map 12—Meltwater West Parcel. In the land classification analysis, DNR determined
that this parcel could not be reclassified to a conveyable classification and that
reclassification was not warranted. Accordingly, this parcel is not conveyable under the
Municipal Entitlement Act.

DNR proposes to reject the NSB’s application for the Meltwater West parcel in its
entirety.

Map 13—Surfcote Pad. In the land classification analysis, DNR determined that it
would be appropriate to reclassify the southern portion of this parcel, including and south
of the Drillsite L4 access road, but excluding that portion of ASLS 81-3 lying more than
100 feet north of the pipeline, to oil and gas land, which is not conveyable under the
Municipal Entitlement Act. Further, because the existing facilities on the southern part of
this parcel are essential to the operation and development of the field, there is some
contamination on the site, and relocation or joint management of the facilities would be
disruptive, the state’s interests in retaining the southern portion of this parcel and the
existing infrastructure outweigh the NSB’s interests in obtaining it.

In the land classification analysis, DNR also determined that the remainder of the parcel,
north of the Drillsite L4 access road, plus that portion of ASLS 81-3 lying more than 100
feet north of the pipeline, is appropriately classified settlement land. This portion of the
parcel is considered to have good potential for future industrial development. A land use
permit in this area currently provides income. The permit and the income will transfer to
the Borough if conveyance is approved. Alternative sites suitable for additional
industrial development exist on nearby state land, reducing the state’s interests in the
north portion of this parcel.

DNR proposes to convey the portion of the Surfcote Pad parcel that is north of the
Drillsite L4 access road, plus that portion of ASLS 81-3 lying more than 100 feet north of
the pipeline. DNR proposes to reclassify and reject the NSB’s application for the portion
of this parcel that includes and is south of the Drillsite L4 access road (except for that
portion of ASLS 81-3 lying more than 100 feet north of the pipeline), as shown on Map
13 and more fully described in Section VIII, Recommendations, herein.

Map 13—East Dock. In the land classification analysis, DNR determined that this
parcel could not be reclassified to a conveyable classification and that reclassification



                                    Page 32 of 82
       was not warranted. Accordingly, this parcel is not conveyable under the Municipal
       Entitlement Act.

       DNR proposes to reject the NSB’s application for the East Dock parcel in its entirety.

       Map 14—Pt. McIntyre. In the land classification analysis, DNR determined that this
       parcel could not be reclassified to a conveyable classification and that reclassification
       was not warranted. Accordingly, this parcel is not conveyable under the Municipal
       Entitlement Act.

       DNR proposes to reject the NSB’s application for the Pt. McIntyre parcel in its entirety.

                       c. Conclusion

       Based on the analysis above, DNR proposes to reclassify and convey or reject for
       conveyance the parcels or portions of parcels as were identified generally above and as
       are more fully described in Section VIII, Recommendations, herein.

       F. Planning and Classification History

               1. Planning

There are no DNR Area or Site Specific Plans that currently affect the parcels under
consideration in this decision. For lands that are to be reclassified by the Land Classification
Decision and conveyed by the Municipal Entitlement Decision, a Site Specific Plan will be
adopted, as proposed in this decision.

               2. Land Use Classification History

Classifications were established under several Land Classification Orders. Classification Order
618 affects the majority of the parcels. All land classification orders affecting the parcels that
are the subject of this decision were adopted prior to September 1, 1983, and nearly all these
parcels were assigned a Resource Management Land classification. Reclassification is addressed
in the land classification analysis contained in Section IV, above.

The draft Site Specific Plan, found in Section VI, below, identifies all of the parcels that the
Borough has selected that are part of this decision, their current classification, and their proposed
reclassification. See Table C, pp. 43-47. A land classification order, implementing the land
classification recommendations of the Site Specific Plan, will accompany the final decision.

       G. Alaska Coastal Management Program

Municipal selections decisions under AS 29.65 do not require an ACMP review. This action is
listed in the Categorically Consistent Approvals section of the Classification of State Agency
Approvals (OMB/DGC May 26, 2004).




                                            Page 33 of 82
       H. Access

Primary access to the Central North Slope oil field from the south is available either by fly-in to
the Deadhorse airport or travel by the Dalton Highway to Deadhorse. Local roads in the
Deadhorse area are open to public use. To enter the oil field where the majority of the parcels
are located, access is controlled by two security check points on the northern boundary of
Deadhorse. Roads within the oil field have restricted access. Use of these gravel roads is
controlled by Purcell Security on behalf of the oil field operators. There are no public roads in
the oil field.

The following parcels are accessible by roads open to public travel: Colleen Lake (Map 1),
Norgasco (Map 1), Lease Tract South (Map 1), Airfield (Map 1), Mine Site 3 (Map 1), Mine Site
102 (Map 1), and Deadhorse South (Map 9).

The following parcels are accessible only by controlled-access roads: Kuparuk Industrial Center
(Map 2), Kuparuk Mine Site C (Map 2), Milne Point Road (Map 3), Oliktok (Map 4), Kuparuk
Mine Site E (Map 5), Milne Point Mine Site (Map 6), Service City (Map 7), PUT 23 Mine Site
(Map 8), Pump 1 (Map 8), ASTAC (Map 10), Kuparuk Mine Site F (Map 11), Meltwater West
(Map 12), Surfcote Pad (Map 13), and East Dock (Map 13).

The following parcels have no existing road access: Meltwater East (Map 12) and Point
McIntyre (Map 14).

There are non-operational landing strips on the abandoned DEW Line sites on the Oliktok and
Point McIntyre parcels, for which the state has a selection, but does not have tentative approval
or patent. There may be other parcels that have old or abandoned airstrips of various quality or
use, and there may be areas suitable for building airstrips. The state makes no representation
concerning the availability or suitability of air access to any parcel.

       I. Public and Navigable Waters

Appendix B lists all public and navigable waters identified by DNR on lands proposed to be
conveyed to the Borough, as required by 11 AAC 51.035. All lands actually conveyed to the
Borough that are adjacent to these public and navigable waters will be subject to “along” public
access easements 50 feet wide, upland of and adjoining the ordinary high water mark, in
accordance with AS 38.05.127 and 11 AAC 51.045. The “to” easement required under
AS 38.05.127 for public and navigable waters will be provided by section line easements. If
there is no available section line easement, or if the section line easement proves to be physically
impractical, an alternative route will be established at the time of survey with the approval of
DNR.

The public and navigable waters of the state are held by the state in trust for its people and are
not conveyed to the Borough. Ownership of the land under public waters located on conveyed
parcels will be conveyed to the Borough subject to a public access easement along and on the
bed of the water pursuant to 11 AAC 51.045(e). Ownership of the land under navigable waters
located on conveyed parcels will be retained by the state. If there are public or navigable waters



                                            Page 34 of 82
within any parcel that are not identified in Appendix B, they nevertheless are held by the state in
trust for its people and not conveyed, and the land under any navigable waters on any conveyed
parcel, whether identified or not, is withheld from conveyance.

       J. Reservation of Mineral Estate

In accordance with section 6(i) of the Alaska Statehood Act and AS 38.05.125, for any parcels to
be conveyed, the State of Alaska reserves from conveyance the mineral estate, including oil and
gas, and the rights expressed in the reservation clause of the statute, including the right to
reasonable access to the surface for purposes of exploring for, developing, and producing the
reserved minerals. Any exploration and development that may occur must be consistent with
AS 38.05.130 and other applicable statutes and regulations.

Further, in accordance with AS 38.05.125, AS 38.05.130, and 11 AAC 83, and where not
prohibited by law, the oil and gas lease holder has the right to enter upon the land and use the
land in accordance with the lease plan of operations and/or the lease plan of development
approved by the state.

       K. Hazardous Substances and Contaminants

The Borough is expected to and has been given the opportunity to inspect the selected parcels
and familiarize itself with the condition and quality of the land. The State makes no
representations and no warranties, express or implied, concerning the existence or absence of any
hazardous substances, hazardous wastes, contaminants, or pollutants on the land here proposed
for conveyance. The Borough is hereby informed, however, that it is aware that prior
environmental clean ups have occurred on certain parcels. Information concerning prior clean
ups is available from the Northern Regional Office of the Division of Mining, Land and Water or
the Department of Environmental Conservation, Contaminated Sites Program, but the Borough is
advised to do its own inspection and investigation. The State of Alaska does not assume any
liability for the removal of hazardous substances, hazardous wastes, contaminants, or pollutants,
nor for the remediation of the site should such substances be found.

       L. Survey and Appraisal

A survey determination will be requested following a final decision to convey. The Borough
will be required to survey, at Borough expense, any conveyed land determined to be unsurveyed.
An appraisal is not necessary because the land will be conveyed to the municipality at no cost.

       M. Unauthorized Use

DNR has not physically inspected all areas of the land herein proposed for conveyance for
unauthorized use, but it has reviewed department records and it is unaware of any existing
unauthorized use. The Borough is expected to and has been given the opportunity to inspect the
selected parcels and familiarize itself with the condition and quality of the land.




                                            Page 35 of 82
       N. Disposition of Leases, Permits and Applications

Administration of active leases, permits, and easements issued by DNR Division of Mining,
Land and Water on land to be conveyed will be transferred to the Borough when the Final
Finding and Decision of the Municipal Entitlement Decision has been issued and takes effect,
unless such authorizations are specifically excluded from conveyance. Applications for
authorizations that have not been adjudicated will be closed and the applicant advised to apply to
the Borough to obtain authorization to occupy or use Borough land.

(Note: This section does not apply to LONS authorizations issued by DNR Division of Oil and
Gas. These authorizations will remain under the jurisdiction of DNR Division of Oil and Gas
and will not be transferred to the Borough.)

       O. State Agency Comments

Summarized below are each agency’s general comments and any comments that are specific to
the selections that the land classification analysis found appropriate for reclassification.

Department of Commerce, Community and Economic Development (DCCED):

No comments were received.

Comments of the State Pipeline Coordinators Office (SPCO):

1) All lands encumbered by issued leases for pipeline rights-of-way should be excluded from
conveyance.

DNR Response: All lands encumbered by issued pipeline leases will be excluded from
conveyance.

2) All lands encumbered by the Alaska Natural Gas Transportation System (ANGTS)
(ADL 403427) pipeline right of way lease application should be excluded from conveyance.

DNR Response: No state land will be excluded for the ANGST pipeline right of way application
because this application was withdrawn by the applicants by letter on February 19, 2008 and
accepted by DNR’s commissioner on February 29, 2008.

3) All lands encumbered by TAPS access road 135-APL-3 (ADL 403060) should be excluded
from conveyance. This road is necessary for operations and performing maintenance on TAPS.

DNR Response: TAPS access road 135-APL-3 will be excluded from conveyance. (The right of
way easement for this road is 100 feet wide.)

4) SPCO is in the process of issuing a 50,000 cubic yard material sale contract in the PUT23
mine site to Alyeska Pipeline Service Company. Lands affected by this material sale should be
excluded from conveyance.



                                           Page 36 of 82
DNR Response: That portion of the PUT 23 Mine Site selection where gravel extraction is
occurring is being rejected and retained in state ownership. The mined-out portion of the PUT23
mine site located north of the borough-owned landfill is proposed for conveyance.

Comments of the Department of Fish and Game:

1) In accordance with the applicable state approved reclamation plan, mine sites (e.g. an area
mined for gravel; a borrow pit) should be reclaimed and rehabilitated as fish and wildlife habitat
when mining is complete. The rehabilitated mine site should be protected and managed for the
long term as habitat land. If such rehabilitation and preservation as habitat cannot be assured,
then ADF&G opposes conveyance of mine sites to the borough.

DNR Response: The requirement for a mine site rehabilitation plan is typically part of the
material sale contract under which the mine site is operated and the plan is an obligation upon
the contractor. The material sale contract governs the use of the mine site and its eventual
closure. If a municipal land selection that contains an active mine site is conveyed to the
borough, the material sale contract will be transferred to the borough. As the new land owner,
the borough will have the same rights and obligations under the contract as were previously held
by the state. If the mine site is inactive at the time the borough acquires management authority
for the land, the borough will assume the duties and responsibilities of the prior land owner with
regard to any ongoing or remaining rehabilitation to be accomplished under the operative
contract.

The borough will be informed that ADF&G recommends mine sites be rehabilitated in
accordance with existing state reclamation plans and be protected and managed for the long term
as habitat land. While DNR supports the concept of rehabilitating mine sites for a particular
purpose such as habitat, AS 29.65 does not give DNR the authority to enforce such a specific
rehabilitation plan as a condition of conveyance. DNR does have authority to enforce mine
reclamation under AS 27.19.

2) Pursuant to AS 38.05.127, public access easements should be reserved along all navigable
and public waters, including those water bodies created by the mining of surface materials.

DNR Response: Public and navigable waters affecting those parcels proposed to be conveyed to
the borough have been identified in accordance with 11 AAC 51.035 and are listed in
Appendix B. Public access easements will be reserved in accordance with 11 AAC 51.045.
Easements will be reserved along all identified public and navigable waters. Mine sites that have
been reclaimed and flooded for habitat purposes will be subject to public access easements.

3) Riparian buffers should be established and retained in state ownership along anadromous
water bodies.

DNR Response: A buffer will be established on the Sagavanirktok River; however, the buffer
will not be retained in state ownership. This buffer will affect only the Norgasco parcel at
Deadhorse; imposition of the buffer on the Norgasco parcel is consistent with DNR’s past action
in the Deadhorse “Lease Tracts” conveyance. Generally, retaining buffers in state ownership is



                                           Page 37 of 82
neither practicable nor desirable. It can substantially increase the survey costs to the borough
and complicate future management of the land.

Comments of the DNR Northern Regional Office:

The Northern Regional Office Land Section has reviewed the proposal to convey land in the
general vicinity of Prudhoe Bay to the North Slope Borough (NSB). Following are general
comments followed by specific comments regarding the proposed transfers:

1) Material Sites. The NSB has selected lands where eight material sites (both active and
inactive) are located within the oil field. These material sites provide the gravel that is used for
construction of new roads and pads and for maintenance of existing roads and pads. Availability
of guaranteed sources of gravel within a reasonable hauling distance to where it is needed is
critical to the maintenance and development of the oil field. As the oil reserves are drawn down,
it may be necessary to construct new pads to be able to access smaller pockets of oil. While
material sales would probably continue if some of the material sites were transferred to the NSB,
by retaining the critical sites DNR can ensure that the future oil field development would not be
impeded by lack of a willing seller of gravel. This office has reviewed the different sites that are
proposed for transfer. Following is a list of the sites and their characteristics.

                          Active or
  Mine Site               Inactive           Comments
  Mine Site 102           Active             This site is adjacent to MS3. It was developed by
                                             the Department of Transportation and Public
                                             Facilities (DOT/PF) and is critical for the
                                             maintenance of the north end of the Dalton
                                             Highway. Also includes a long-term climatological
                                             monitoring station run by the University of Alaska.
  Mine Site E             Active             This site is located near Oliktok in the Kuparuk
                                             River Unit and is used to provide material for
                                             maintenance of roads & pads. It is also important
                                             for the new Oooguruk Development and Nikaitchuq
                                             Developments. It is critical for development of the
                                             northwest part of the Kuparuk River Unit.
  Mine Site C             Active             This site is located near CPF1 in the Kuparuk River
                                             Unit and is used to provide material for
                                             maintenance of roads and pads. It is the only active
                                             material site in the central part of the Kuparuk
                                             River Unit.




                                            Page 38 of 82
                          Active or
  Mine Site               Inactive           Comments
  Put 23 Mine Site        Active             This site is located in the heart of the Prudhoe Bay
                                             Unit. Gravel from this pit is used for maintenance
                                             and construction of nearly all gravel facilities
                                             within the Prudhoe Bay Unit. It is currently the
                                             only active mine site inside this oil field. Thus, it is
                                             critical that this site be retained. This site is also
                                             the location of the Oxbow Landfill. The issues
                                             involving the landfill are discussed below.
  Milne Point Mine        Active             Used for maintenance and expansion of Milne Point
  Site                                       Unit. This is the only material site for this unit. BP
                                             is planning construction of several new pads. This
                                             site is critical for these new projects as well as for
                                             maintaining existing facilities.
  Mine Site 3             Inactive           This site is located roughly one mile south of
                                             Deadhorse. There is room for expansion of this
                                             mine site to the north. Its proximity to Deadhorse
                                             and Prudhoe Bay make it a valuable asset.
  Mine Site F             Inactive           This site is located on the west side of the Kuparuk
                                             River Unit. Gravel from this site has been used for
                                             maintenance of Kuparuk. While there are no
                                             current plans for expansion, new developments to
                                             the south and west of this pit may use gravel from
                                             an expansion of this pit. Kuparuk River Unit
                                             Drillsite 2T is located within Section 12, T11N,
                                             R8E, UM. The acreage covered by Drillsite 2T
                                             should be retained.
  Mine Site S             Inactive           This site was used for construction of the Meltwater
                                             Development. This site has been closed. However,
                                             it could be reopened and expanded if there is
                                             additional development in the area.

2) Oxbow Landfill. The NSB is the owner and operator of the Oxbow Landfill. It is located
within the original Put 23 mine site. The landfill is rapidly filling up and is in need of expansion
or replacement. We believe that one of the reasons the NSB wants the property at Put 23 is to be
able to expand the landfill into the existing pit. We would have no objection to the transfer of
that portion of Put 23 that is needed for the landfill expansion. Because of its importance in
providing gravel for maintenance and expansion of the Prudhoe Bay oil field, the remainder of
Put 23 should be retained by the State.

Following are comments on the individual parcels:

Map 1 - Deadhorse Area - ADL 414784. Norgasco Parcel: No objection to conveyance of this
parcel; the oil field access road should be excluded. Mine Site 3 Parcel: No objection to
conveyance of this parcel; a staging pad and access through Mine Site 3 should be excluded.


                                            Page 39 of 82
Map 2 - Kuparuk Industrial Center - ADL 414828. We have no objection to the transfer of a
discreet area around the KIC property (ASLS 85-48); otherwise this parcel should be retained.

Map 3 - Milne Point Road - ADL 414828. The area north of and including Spine Road is
general oil field lands that may be important to the future development of West Sak and
Schraeder Bluffs oil; this area should be retained. In this selection Spine Road is mostly located
within the Kuparuk-Oliktok pipeline right of way (ASLS 87-15). The area south of Spine Road
and the pipeline right of way contains Mine Site B. This is a closed mine site that has been
flooded and is now an important source of water for oil field operations; it should be retained.
The area south of Mine Site B and the pipeline rights of way may contain additional gravel
resources, and we have no objection to this area being transferred.

Map 7 - Service City - ADL 414831. Prudhoe Bay Unit U-Pad is located within Sections 18 and
19, T11N, R13E, UM. Various important roads and pipelines are located in these sections.
Section 19 should be retained in its entirety, and the areas within Section 18 that contain the U
pad and the U Pad Access Road should be retained. An important access road and pipeline are
located in the NE4 Section 7. These facilities should be retained. Sections 13 and 24 are either
submerged lands or are inaccessible. They should be retained. We have no objection to the
transfer of the Service City pads and the lands adjacent to the pads that are not in conflict with
the above features.

Map 9 - Deadhorse South - ADL 415433. NRO has no objection to this parcel.

Map 13 - Surfcote Pad - ADL 417953. The Prudhoe Bay Unit Grind and Inject wells, Drillsite 4,
and Fire Training Facility are located within this section. The property where these facilities are
located should be retained. Area of contaminated soils east of ASLS 81003 should be retained.

DNR Response: The Land Classification Decision supports the comments made on these parcels.
Parcel boundaries will coincide with the recommendations made and no shorelands will be
conveyed. Access may be limited to some of the parcels which the borough may need to
develop.

Comments of the Division of Oil and Gas:

General comments:

1) Infrastructure. Oil and gas processing facilities, pipelines, drill sites, mine sites, roads, utility
lines, and development pads should be surveyed and excluded from the conveyance.

2) Access Roads. Most roads within the oil field were built by the oil companies and are
generally not constructed to public road standards. The companies restrict access on these roads
and the roads are not considered to be public rights-of-way. Access to the oil field area is
currently restricted. These roads need to be located and surveyed.

3) Pipelines. Many of the parcels enclose or are near high pressure gas lines. Under federal
regulations, land in close proximity (up to several hundred feet) of these high pressure gas lines



                                              Page 40 of 82
are considered “high consequence areas” and have higher regulatory and maintenance issues
associated with them. There are substantially increased costs to the pipeline owners/operators to
maintain pipeline integrity if there is any kind of development near them.

4) Exclusion Zones Around Existing Facilities. It is of major importance to the state and the
owners/operators of the facilities and pipelines to retain an adequate exclusion zone around the
facilities, pads, pipelines, roads, etc.

5) Closely Contiguous Exclusion Zones. In the oil field many pipelines have been constructed in
close proximity to roads. This may cause a survey and conveyance problem by leaving a narrow
strip of vacant land between the pipeline and road and their associated exclusion zones. Such
narrow strips should be excluded from conveyance.

6) Reservation of Rights. All land conveyance actions should stress that the state retains the
sub-surface rights, i.e., the mineral estate. Reservation of the mineral estate includes the right of
reasonable access to the surface for purposes of exploration, development and production of
reserved minerals including oil and gas and this access reservation is superior to any and all other
surface uses. Surface owners and lessees do not have the legal ability to deny access.

7) Active Oil and Gas Leases. Virtually all of the Prudhoe Bay area, and much of the North
Slope, has active oil and gas leases. The leases give the lessees the exclusive right to drill for,
extract, remove, clean, process, and dispose of oil, gas, and associated substances in or under the
land. Leases also grant a nonexclusive right to conduct geological and geophysical exploration;
to install pipelines and build structures on the leased area; and to house and board employees in
its operations on the leased area. The rights granted by a lease, however, must be exercised in a
manner which will not unreasonably interfere with the rights of any permittee, lessee or grantee
of the state.

8) Water Bodies. Water bodies are constantly shifting in the Prudhoe Bay area due to
environmental factors such as the presence of permafrost and flat, low lying terrain. The
location of water bodies as depicted USGS topographic maps may be inaccurate.

9) Land Pattern. Many of the parcels included all or portions of developed oil field
infrastructure.

10) Suitability. The outlying area beyond the community of Deadhorse is a highly specialized
management area unlike any other area of the state. Access is difficult and activities are strictly
monitored and regulated due to safety and other concerns.

Summary comment:

DOG has concerns about approving lands that are currently used intensively for oil and gas
exploration and development, and are expected to continue to be used in that manner for the long
term. New methods of production and technology have extended the life of the Prudhoe and
Kuparuk oil fields, new exploration is continuing to occur and anticipated future gas production




                                            Page 41 of 82
would extend the life of the fields even further. This continues to be the highest and best use of
the area.

Comments on specific parcels:

Map 1 - Deadhorse Area - ADL 414784. Norgasco Parcel: The existing road through the west
side of the parcel should be excluded; just past the parcel [northwest corner] there is a guard
shack and access is restricted beyond that point. DOG has no objection to the Borough selection
of this parcel. Mine Site 3 Parcel: No objection to conveyance of this parcel; Dalton Hwy
should be excluded.

Map 2 - Kuparuk Industrial Center - ADL 414828. DOG has no objection to conveyance of the
KIC parcel; however, Drillsite 1H and its associated road, pad, and pipeline should be excluded.

Map 3 - Milne Point Road - ADL 414828. Several common carrier pipelines traverse this parcel.
Spine Road and Milne Point Road, primary oil field access roads, cross this parcel and access
may be restricted. The roads and pipelines are in close proximity and should be excluded.

Map 7 - Service City - ADL 414831. The Kuparuk River changes course frequently and its
current location in this area is not correctly shown on the USGS map. The area between
channels of the river is active floodplain. The Spine Road bridge across the river closes during
certain times of the year due to flooding. The U-PAD facility and other pipelines, power lines
and roads should be excluded.

Map 8 - PUT 23 Mine Site - ADL 414832. There is a natural gas pipeline traversing this parcel
N-S along its eastern edge. This is a high pressure 60” diameter pipeline with a major high
consequence area around it. The pipeline and the appropriate buffer should be excluded. The
Lisburne Oil Transit Line also traverses this selection and should be excluded as well.

Map 9 - Deadhorse South - ADL 415433. The division has no objection to conveyance of this
parcel.

Map 11 - Kuparuk Mine Site F - ADL 417951. DOG has no objection to conveyance of this
parcel provided the pipeline and road located along the west side, and Drillsite 2U [sic-2T], are
excluded from the conveyance.

Map 12 - Meltwater Area - ADL 417952. Section 15: DOG has no objection to conveyance of
this parcel.

Map 13 - Surfcote Pad - ADL 417953. Surfcote Parcel: This parcel contains critical
infrastructure: Drillsite 4 and a muds and cuttings slurry pipeline and injection wells. These
facilities should be excluded. This parcel also includes Surfcote Pad, the main road to East Dock
and the access road to Drillsite L4. The roads should be excluded.

DNR Response: The Land Classification Decision supports the comments made on these
selections. Parcel boundaries will coincide with the recommendations made.



                                            Page 42 of 82
VI.    Draft Site Specific Plan
The draft Site Specific Plan is based on the results of the land classification analysis, the
conveyance recommendations in the preliminary Municipal Entitlement Decision, and the factors
contained in AS 38.04.065(b). See Appendix C for an assessment of the AS 38.04.065(b)
requirements. Only those parcels or portions of parcels that are inappropriately classified or that
are both appropriate for reclassification and recommended for conveyance are actually
reclassified in the draft Site Specific Plan. Parcels or portions of parcels that do not satisfy these
conditions are not reclassified.

Table C, below, identifies the classification history for all parcels and the proposed
reclassifications. The management intent for those parcels or portions of parcels that are
recommended for conveyance is disposal, and both settlement land and material land are
conveyable classifications under the Municipal Entitlement Act. See AS 29.35.130. The
classifications of the Site Specific Plan will cease to apply to parcels actually conveyed to the
Borough once the final decision takes effect and management authority passes to the NSB.

A Land Classification Order takes the classifications recommended in the Site Specific Plan and
converts them, formally, into new land use classifications, consistent with the requirements for
classification and reclassification under AS 38.05.300. It will accompany the Final Finding and
Decision of the Municipal Entitlement Decision and is to be approved or revised concurrently
with the Municipal Entitlement Decision.

                              TABLE C
           CURRENT AND RECOMMENDED LAND USE CLASSIFICATIONS

                          Existing
                          Classification      Existing            Proposed
 Land Selection           Order               Classification      Classification
 Map 1                    CL 618              RMG                 No Change

 Colleen Lake Parcel
 Map 1                    CL 618              RMG                 STL

 Norgasco Parcel
 Map 1                    CL 10N15EUA         RSU                 STL

 Lease Tract South
 Parcel
 Map 1                    CL 618              RMG and RSU         No Change
                          CL 10N15EUA
 Airfield Parcel




                                             Page 43 of 82
                       Existing
                       Classification    Existing         Proposed
Land Selection         Order             Classification   Classification
Map 1                  CL 618            RMG              MAT
                                                          This classification applies to the
Mine Site 3 Parcel                                        portion of the parcel within Sec.
                                                          31, T10N, R15E, UM, and Sec.
                                                          36, T10N, R14E, UM, west of the
                                                          Dalton Highway, excluding the
                                                          access road, stockpile area, and
                                                          southern end of the pond in the SE
                                                          corner of Sec. 36. The excluded
                                                          portions and the remainder of
                                                          the parcel will not be
                                                          reclassified.
Map 1                  CL 618            RMG              No Change

Mine Site 102 parcel
Map 2                  CL 618            RMG              STL
                                                          This classification applies to that
Kuparuk Industrial                                        portion of the parcel covered by
Center parcel                                             Tracts A & B of ASLS 85-48.
                                                          The remainder of the parcel will
                                                          not be reclassified.
Map 2                  CL 618            RMG              No Change

Mine Site C parcel
Map 3                  CL 618            RMG              MAT
                                                          This classification applies to that
Milne Point Road                                          portion of the parcel lying south of
parcel (Mine Site                                         Spine Road and the pipeline rights
“B”)                                                      of way ASLS 87-15 and ASLS 84-
                                                          114, excluding the northern
                                                          portion of the reclaimed pond,
                                                          access to the southern portion of
                                                          the pond, and the pads adjacent to
                                                          the northern pond. The excluded
                                                          portion and the remainder of the
                                                          parcel will not be reclassified.
Map 4                  CL 618            RMG              No change at this time; DNR has
                                                          postponed classification and a
Oliktok parcel                                            conveyance decision on Lot 1,
                                                          USS 4275, until title or tentative
                                                          approval is obtained.




                                        Page 44 of 82
                      Existing
                      Classification    Existing         Proposed
Land Selection        Order             Classification   Classification
Map 5                 CL 618            RMG              No Change

Kuparuk Mine Site E
parcel
Map 6                 CL 618            RMG              No Change

Milne Point Mine
Site parcel
Map 7                 CL 618            STL              OGL
                                                         This classification applies to those
Portion of Service                                       portions of the parcel lying east of
City parcel                                              the east bank of the Kuparuk River
                                                         that are contained in the S2 of Sec.
                                                         18 and the N2 of Sec. 19, T11N
                                                         R13E, UM, and the areas that
                                                         include and are east of the U Pad
                                                         access road in the N2 of Sec. 18
                                                         and that include and are east of
                                                         ASLS 87-15 in the S2 of Section
                                                         19.

                      CL NC-80-048      STL              No Change.

                      CL 618            RMG              STL
                                                         This classification applies to that
                                                         portion of the parcel within
                                                         Section 7, T11N, R13E, UM that
                                                         is south of Spine Road and the M
                                                         Pad Pipeline access road and
                                                         corridor that are not already
                                                         classified settlement land.

                                                         The remainder of the parcel will
                                                         not be reclassified.
Map 8                 CL 618            RMG              No Change

Pump 1 parcel




                                       Page 45 of 82
                        Existing
                        Classification    Existing         Proposed
Land Selection          Order             Classification   Classification
Map 8                   CL 618            RMG              MAT
                                                           This classification applies to that
PUT 23 Mine Site                                           portion of the parcel within S2
parcel                                                     Section 23 & NW4 Section 26,
                                                           T11N, R14E, UM lying west of
                                                           Oxbow Road and east of the
                                                           Putuligayuk River, excluding the
                                                           Oxbow Landfill. The remainder
                                                           of the parcel will not be
                                                           reclassified.
Map 9                   CL 618            RMG              STL
                                                           This classification applies to that
Deadhorse South                                            portion of the parcel (within T9N,
parcel                                                     R14E, Secs. 23, 26, 34, and 35,
                                                           UM and T8N, R14E, Sec.2, UM)
                                                           located west of the Dalton
                                                           Highway right of way and east of
                                                           the TAPS Pipeline right of way.
                                                           The remainder of the parcel will
                                                           not be reclassified.
Map 10                  CL 618            RMG              No Change

ASTAC Site parcel
Map 11                  CL 618            RMG              MAT
                                                           This classification applies to that
Kuparuk Mine Site F                                        portion of the parcel lying east of
parcel                                                     the access road to Drillsite 2T,
                                                           excluding any portion of Drillsite
                                                           2T, and excluding a portion
                                                           adjacent to the access road that is
                                                           sufficient to ensure access to the
                                                           pond and lake. See legal
                                                           description for further detail. The
                                                           excluded portion and the
                                                           remainder of the parcel will not
                                                           be reclassified.
Map 12                  CL 617            RMG              MAT

Meltwater East parcel
(Mine Site “S”)




                                         Page 46 of 82
                          Existing
                          Classification      Existing            Proposed
 Land Selection           Order               Classification      Classification
 Map 12                   CL 617              RMG                 No Change

 Meltwater West
 parcel
 Map 13                   CL 618              RMG                 No Change

 East Dock parcel
 Map 13                   CL NC-80-048        STL                 OGL
                                                                  This classification applies to that
 Surfcote Pad parcel                                              portion of this parcel that includes
                                                                  and is south of the Drillsite L4
                                                                  access road, except for that portion
                                                                  of ASLS 81-3 lying more than 100
                                                                  feet north of the G&I pipeline.
                                                                  The excluded portion and the
                                                                  remainder of the parcel will not
                                                                  be reclassified.
 Map 14                   CL 618              RMG                 No Change

 Point McIntyre parcel

Definitions: STL – settlement land; MAT – material land; RMG – resource management land;
RSU – reserved use land.


VII. DECISION DISCUSSION AND ALTERNATIVES

       A. Discussion

This decision involves three related parts: (1) the land classification analysis, which addresses
the appropriateness of reclassification of state land within the Central North Slope oil field, (2)
the preliminary Municipal Entitlement Decision, which addresses the appropriateness of
conveyance of parcels to the NSB under the Municipal Entitlement Act, and (3) a draft site
specific plan that proposes reclassification of those parcels that are incorrectly classified or are
appropriate for both reclassification and conveyance to the NSB. This single decision
incorporates each of these analyses and actions, and each action is somewhat dependent on the
other.

In the land classification analysis, DNR determined that the most appropriate classification for
the area of the NSB’s selections as a whole would be oil and gas land. Land classified as oil and
gas land is not VUU land and, therefore, is not conveyable to a municipality under the Municipal
Entitlement Act. However, because of the importance of the NSB’s entitlement, DNR then
analyzed each parcel separately and in more detail, and determined that some parcels or portions


                                             Page 47 of 82
of parcels potentially could be reclassified to a conveyable classification under AS 29.65.130(10)
(either settlement land or material land), based on the land use of each parcel or portion of the
parcel. Four of the parcels were determined most suitable for classification as oil and gas land,
but possibly suitable for reclassification to material land.

The preliminary Municipal Entitlement Decision was based in part on the findings of the land
classification analysis. Any parcel or portion of a parcel that was determined to be inappropriate
for reclassification to a conveyable classification was necessarily inappropriate for conveyance
in the Municipal Entitlement Decision because it was not conveyable, VUU land. For those
parcels that the land classification analysis determined were potentially reclassifiable, the
preliminary Municipal Entitlement Decision examined each parcel and determined which parcels
were, and which parcels were not, appropriate for reclassification and conveyance under the
Municipal Entitlement Act. The draft Site Specific Plan, which is based on the land
classification analysis and the Municipal Entitlement Decision, recommends reclassification for
those parcels determined to be incorrectly classified or appropriate for both reclassification to a
conveyable classification and conveyance to the NSB. 14

         B. Alternatives

The preliminary Municipal Entitlement Decision and the draft Site Specific Plan included in this
decision are interrelated and dependent on each other, as well as on the land classification
analysis. It is necessary to include all three analyses together because of the unique nature of the
NSB’s municipal entitlement selections that are under consideration. The only viable
alternatives in this case are (1) to reject all of the NSB’s selections that are currently classified as
pre-1983 resource management land or reserved use land (both unconveyable under the
Municipal Entitlement Act), and consider only the one parcel and portion of another parcel that
are classified as settlement land, or (2) conduct a parcel by parcel analysis of the NSB’s
selections to determine if any parcels or portions of parcels are appropriate for both
reclassification to a conveyable classification and conveyance under the municipal entitlement
standards. Because of the importance of the NSB’s municipal entitlement, and because DNR
accepted the Borough’s applications for this non-VUU land at the time they were made,
alternative (2) is considered to be most appropriate. 15




14
   Some small portions that are not being conveyed are nevertheless reclassified, consistent with the overall
classification of the parcel and to prevent small “corridors” of differently classified land. See, e.g., the Norgasco and
Lease Tract South parcels, where the entire parcel is reclassified, but a small portion for an access road is withheld
from conveyance.
15
   DNR’s acceptance of the Borough’s selection applications for non-VUU land at the time they were made will not
prevent it from rejecting or refusing to accept other municipal entitlement selection applications, whether existing or
future, on the basis of land classification and statutory considerations alone and without a reclassification review.


                                                     Page 48 of 82
VIII. RECOMMENDATIONS
Pursuant to the authorities and analysis provided in this decision, DNR’s recommendations are as
follows:

       A. Site Specific Plan

DNR recommends reclassifying selected parcels in accordance with the reclassifications set forth
in Table C.

       B. Municipal Entitlement Decision

               1. LAND PROPOSED FOR CONVEYANCE

The following parcels or portions of parcels are determined by this decision to be both
appropriate for reclassification to a conveyable classification and appropriate for conveyance to
the Borough in satisfaction of a portion of its municipal entitlement.

                                            Map #1
                                      Proposed Conveyance
                                        Deadhorse Area
                                          ADL 414784

Norgasco Parcel
T10N, R15E, UM
Sec. 8: ASLS 91-262.
         That portion of the east half (E2) excluding ASLS 76-227, ASLS 91-262 and Spine
         Road*.
Sec. 9: That portion lying west of Sagavanirktok River.
Containing approximately 372 acres.

Subject to:
   • ADL 413263, easement issued to Norgasco, Inc.
   • ADL 414560, lease issued to Norgasco, Inc., expires 10/13/2016.
   • ADL 414560, sublease issued to TDX Power, Inc., expires 03/25/2013.
   • Reservation of a continuous public access easement 50 feet wide, upland of and adjoining
       the ordinary high water mark of the Sagavanirktok River pursuant to AS 38.05.127 and
       11 AAC 51.045.
   • Reservation of a continuous 200-foot wide easement of land and vegetation, to be
       undisturbed except as necessary to fulfill the purposes stated herein, which easement
       shall be located upland of and adjoining the ordinary high water mark of the
       Sagavanirktok River and shall be maintained and preserved for the purpose of public
       access as well as the protection of riparian habitat and water quality.




                                           Page 49 of 82
*Note: The area to be excluded and retained in state ownership for Spine Road is 100-feet wide
(50-feet each side of the centerline) and shall abut the eastern boundary line of ASLS 91-262 and
not encroach into the ASLS.

Lease Tract South Parcel
T10N, R15E, UM
Sec. 19: W2SE4NE4, SW4NE4, and the S2NW4 excluding Colleen Lake and the unnamed
         road.*
Containing approximately 92 acres.

Subject to:
   • ADL 63237, easement application from Arctic Slope Telephone Association, Inc.
   • ADL 400161 easement issued to TDX North Slope Generating, Inc.
   • ADL 410431, easement issued to Alaska Department of Transportation and Public
       Facilities.
   • ADL 413263, easement issued to Norgasco, Inc.
   • Reservation of a continuous public access easement 50 feet wide, upland of and adjoining
       the ordinary high water mark of Colleen Lake pursuant to AS 38.05.127 and
       11 AAC 51.045.

*Note: The area to be excluded and retained in state ownership for the unnamed road is 100-
feet wide (50-feet each side of the centerline).

Mine Site 3 Parcel
T10N, R14E, UM
Sec. 36: That portion lying west of the Dalton Highway right of way,* excluding S2SE4SE4,
         S2N2SE4SE4, SE4SW4SE4, S2NE4SW4SE4 and the unnamed lake located in
         Sections 35 and 36.
Containing approximately 563 acres.

Subject to:
   • ADL 416097, rehabilitation plan, as referenced in the on-line case file for ADL 415922.
   • ADL 410431, easement issued to Alaska Department of Transportation and Public
       Facilities.
   • LAS 23611, permit issued to BP Exploration (Alaska) Inc., expires 12/31/2012.
   • Reservation of a continuous public access easement 50 feet wide, upland of and adjoining
       the ordinary high water mark of the unnamed lake in Sections 35 and 36 pursuant to
       AS 38.05.127 and 11 AAC 51.045.
   • Reservation of a continuous public access easement on the bed of, and 50 feet wide,
       upland of and adjoining the ordinary high water mark of the unnamed lake in Sections 25,
       26, 35 & 36; the two unnamed lakes in the S2 of Section 36, the unnamed tributary of the
       Sagavanirktok River and the unnamed lake (former Mine Site 3) in Section 36 that
       connects to the unnamed tributary stream of the Sag River pursuant to AS 38.05.127 and
       11 AAC 51.045.

*Note: The Dalton Highway right of way ADL 63826 is 200-feet wide.


                                          Page 50 of 82
T10N, R15E, UM
Sec. 31: That portion lying west of the Dalton Highway right of way.*
Containing approximately 140 acres.

Subject to:
   • ADL 410431, easement issued to Alaska Department of Transportation and Public
       Facilities.
   • ADL 416097, rehabilitation plan, as referenced in the on-line case file for ADL 415922.
   • LAS 23611, permit issued to BP Exploration (Alaska) Inc., expires 12/31/2012.
   • Reservation of a continuous public access easement on the bed of, and 50 feet wide,
       upland of and adjoining the ordinary high water mark of the unnamed tributary of the
       Sagavanirktok River pursuant to AS 38.05.127 and 11 AAC 51.045.

*Note: The Dalton Highway right of way ADL 63826 is 200-feet wide.

Total Mine Site 3 Parcel contains approximately 703 acres.

                                        Map #2
                                  Proposed Conveyance
                             Kuparuk Industrial Center Parcel
                                      ADL 414828

Kuparuk Industrial Center Selection
T11N, R10E, UM
Tracts A and B of Alaska State Land Survey No. 85-48.
Containing approximately 152.432 acres.

Subject to:
   • ADL 407810, public and charitable lease issued to ConocoPhillips Alaska, Inc., expires
       03/17/2023.
   • ADL 410736, right of way easement issued to ConocoPhillips Alaska, Inc., expires
       3/17/2023.
   • Reservation of a continuous public access easement 50 feet wide, upland of and adjoining
       the ordinary high water mark of the Ugnuravik River and its unnamed tributary pursuant
       to AS 38.05.127 and 11 AAC 51.045.

                                          Map #3
                                    Proposed Conveyance
                                     Milne Point Road
                                        ADL 414828

T11N, R11E, UM
Sec. 8: That portion lying south of ASLS 84-114 and ASLS 87-15, and excluding a parcel of
        land more particularly described as follows:
        Commencing at the intersection of the centerline of ASLS 87-15 and the centerline of
        the Mine Site B access road; thence southeast along the centerline of ASLS 87-15 a


                                         Page 51 of 82
         distance of 250 feet; thence S 19° 02’ 23” W to a point on the south boundary line of
         ASLS 87-15, said point being the True Point Of Beginning; thence S 19° 02’ 23” W
         450 feet; thence N 70° 57’ 37” W 680 feet, more or less, to the ordinary high water
         mark on the west bank of the Oogrukpuk River; thence northerly along the line of
         ordinary high water on the west bank of Oogrukpuk River to the south boundary line of
         ASLS 87-15; thence easterly along the south boundary line of ASLS 87-15 to the True
         Point of Beginning.*
Containing approximately 193 acres.

Subject to:
   • Reservation of a continuous public access easement on the bed of, and 50 feet wide,
       upland of and adjoining the ordinary high water mark of the Oogrukpuk River and the
       unnamed lake (former Mine Site B) pursuant to AS 38.05.127 and 11 AAC 51.045.

*Note: Mine Site B has been closed and the mine cells have been flooded. The metes and
bounds parcel described above is intended to include the north-cell pond and Oogrukpuk River,
the pad areas on the north and east sides of the north-cell pond, and the remnants of the
breached cell wall between the two cells which appear as a small peninsula and island visible on
aerial photography dated 2003. The referenced access (gravel) road is shown on Sheet 9 of
ASLS 87-15.

                                           Map #7
                                     Proposed Conveyance
                                         Service City
                                         ADL 414831

T11N, R12E, UM
Sec. 13: All uplands.
Sec. 24: All uplands excluding ASLS 87-15.
Containing approximately 808 acres.

Subject to:
 • Reservation of a continuous public access easement 50 feet wide, upland of and adjoining
     the ordinary high water mark of the Kuparuk River pursuant to AS 38.05.127 and
     11 AAC 51.045.

T11N, R13E, UM
Sec. 7: ASLS 2002-41 (Tract A and portion of Tract B).
        All uplands lying west of the east bank of Kuparuk River and south of Spine Road*;
        That portion lying east of the Kuparuk River bounded by Spine Road* on the north, the
        M Pad Pipeline access road and corridor to the northeast*, the east section line, and the
        south section line, excluding ASLS 2002-41.




                                          Page 52 of 82
Sec. 18: ASLS 2002-41 (Portion of Tract B).
         All uplands in the N2 excluding ASLS 2002-41, the U Pad Access Road**, and that
         portion lying east of the U Pad Access Road;
         All uplands in the S2 lying west of the east bank of Kuparuk River.
Sec. 19: All uplands in the N2 lying west of the east bank of Kuparuk River excluding
         ASLS 87-15;
         All uplands in the S2 excluding ASLS 87-15 and that portion lying east of ASLS 87-
         15.
Containing approximately 845 acres.

Subject to:
   • ADL 416862 public and charitable use lease issued to Arctic Slope Telephone
       Association Cooperative, Inc., expires 12/12/2027.
   • ADL 416862, sublease issued to Alaska Communication, expires 12/12/2027.
   • Reservation of a continuous public access easement 50 feet wide, upland of and adjoining
       the ordinary high water mark of the Kuparuk River pursuant to AS 38.05.127 and
       11 AAC 51.045.

*Note: The area to be excluded and retained in state ownership for Spine Road and for M Pad
Pipeline Access Road is 100 feet wide, 50 feet each side of the centerline. The “corridor”
includes the road, the pipeline(s) and power line, all of which are excluded from conveyance.

**Note: The area to be excluded and retained in state ownership for U Pad Access Road is 100-
feet wide (50-feet each side of the centerline).

Total Service City Parcel contains approximately 1,653 acres.

                                          Map #8
                                    Proposed Conveyance
                                     PUT 23 Mine Site
                                        ADL 414832

PUT 23 Mine Site Parcel
T11N, R14E, UM
Sec. 23: That portion of the S2 lying west of Oxbow Road* and east of the Putuligayuk River
         excluding ASLS 82-128 and the access road into PUT 23*.
Sec. 26: That portion of the NW4 lying west of Oxbow Road* excluding ASLS 82-128.
Containing approximately 175 acres.

Subject to:
   • Reservation of a continuous public access easement 50 feet wide, upland of and adjoining
       the ordinary high water mark of the Putuligayuk River pursuant to AS 38.05.127 and
       11 AAC 51.045.

*Note: The area to be excluded and retained in state ownership for Oxbow Road and the
PUT 23 access road is 100-feet wide (50-feet each side of the centerline).


                                          Page 53 of 82
                                          Map #9
                                    Proposed Conveyance
                                      Deadhorse South
                                        ADL 415433

T08N, R14E, UM
Sec. 1: That portion lying west of the Dalton Highway right of way* excluding pipeline access
         road right of way 135 APL/AMS-3 (ADL 403060)*.
Sec. 2: That portion lying west of the Dalton Highway right of way excluding pipeline access
         road right of way 135 APL/AMS-3 (ADL 403060), the TAPS pipeline right of way
         (ADL 63574), and the land lying west of the TAPS pipeline right of way.
Containing approximately 555 acres.

Subject to:
   • Reservation of a continuous public access easement on the bed of, and 50 feet wide,
       upland of and adjoining the ordinary high water mark of the unnamed lake in Section 2
       pursuant to AS 38.05.127 and 11 AAC 51.045.

*Note: The Dalton Highway right of way ADL 63826 is 200-feet wide. The pipeline access road
right of way ADL 403060 is 100 feet wide. The TAPS pipeline right of way ADL 63574 is 125
feet wide.

T09N, R14E, UM
Sec. 23: That portion lying west of the Dalton Highway right of way.*
Sec. 26: That portion lying west of the Dalton Highway right of way.
Sec. 34: That portion lying west of the Dalton Highway right of way excluding pipeline access
         road right of way 135 APL/AMS-3 (ADL 403060), the unnamed lake in Secs. 34 & 35,
         and the unnamed lake in Secs. 27, 28 and 34.
Sec. 35: That portion lying west of the Dalton Highway right of way, excluding the unnamed
         lake in Secs. 34 and 35.
Containing approximately 1,530 acres.

Subject to:
   • Reservation of a continuous public access easement 50 feet wide, upland of and adjoining
       the ordinary high water mark of the unnamed lake in 27, 28 and 34, the unnamed lake in
       Sections 34 and 35 pursuant to AS 38.05.127 and 11 AAC 51.045.
   • Reservation of a continuous public access easement on the bed of, and 50 feet wide,
       upland of and adjoining the ordinary high water mark of the unnamed tributary of the Sag
       River in Sections 23, 26, and 34, the unnamed lake in Section 26, the unnamed lake in the
       SW4 Section 34, and the unnamed lake in the NW4 Section 35 pursuant to AS 38.05.127
       and 11 AAC 51.045.

*Note: The Dalton Highway right of way ADL 63826 is 200-feet wide. The pipeline access road
right of way ADL 403060 is 100 feet wide.

Total Deadhorse South Parcel contains approximately 2,085 acres.


                                          Page 54 of 82
                                         Map #11
                                    Proposed Conveyance
                                    Kuparuk Mine Site F
                                        ADL 417951

T11N, R08E, UM
Sec. 12: E2, E2E2W2.
Sec. 13: NE4 and E2NE4NW4 excluding the large unnamed lake;
         S2NW4 excluding the large unnamed lake, Drillsite 2T access road* and portion west
         of said access road.
Containing approximately 600 acres.

Subject to:
   • ADL 417381, material sale issued to ENI Petroleum Exploration Company, Inc., expires
       04/04/2009.
   • ADL 417633, material sale issued to ConocoPhillips Alaska, Inc., expires 11/14/2011.
   • Reservation of a continuous public access easement 50 feet wide, upland of and adjoining
       the ordinary high water mark of the unnamed lake in Section 13 pursuant to
       AS 38.05.127 and 11 AAC 51.045.
   • Reservation of a continuous public access easement on the bed of, and 50 feet wide,
       upland of and adjoining the ordinary high water mark of the East Fork Kalubik Creek and
       the two unnamed lakes in Mine Site F pursuant to AS 38.05.127 and 11 AAC 51.045.

*Note: The area to be excluded and retained in state ownership for the Drillsite 2T access road
is 100-feet wide (50-feet each side of the centerline).

                                           Map #12
                                      Proposed Conveyance
                                        Meltwater Area
                                          ADL 417952

Meltwater East Parcel
T08N, R07E, UM
Sec. 15: All.
Containing approximately 640 acres.

Subject to:
   • Reservation of a continuous public access easement on the bed of, and 50 feet wide,
       upland of and adjoining the ordinary high water mark of the Kachemack River and its
       unnamed tributaries pursuant to AS 38.05.127 and 11 AAC 51.045.




                                          Page 55 of 82
                                           Map #13
                                      Proposed Conveyance
                                         Surfcote Pad
                                          ADL 417953

T11N, R15E, UM
Sec. 26: ASLS 81-3 excluding the Drillsite L4 access road, the G&I pipeline, and the land to the
         south of the pipeline.*
         That portion lying east of East Dock Road* and north of the Drillsite L4 access road*
         excluding ASLS 81-3 and the two large lakes along the north boundary.
Containing approximately 190 acres.

Subject to:
   • LAS 23316, permit issued to BP Exploration (Alaska) Inc., expires 05/02/2011.
   • Reservation of a continuous public access easement 50 feet wide, upland of and adjoining
       the ordinary high water mark of the unnamed lake in Sections 23, 24, 25 and 26 and the
       unnamed lake in Sections 23 and 26 pursuant to AS 38.05.127 and 11 AAC 51.045.

*Note: The areas to be excluded and retained in state ownership for the Drillsite L4 Access
Road and East Dock Road are 100-feet wide (50-feet each side of the centerline).

The area to be excluded and retained in state ownership for the G&I pipeline is 100-feet from
the north edge of the pipeline.

Total acreage proposed for conveyance is approximately 6,855.432 acres.

The above selections recommended for conveyance will be subject to the following reservations
and conditions:

1.   Valid existing rights, including reservations, easements, and exceptions in the U.S. Patent or
     other state or federal conveyance, and in acts authorizing the issue thereof; easements,
     rights-of-way, covenants, conditions, reservations, notes on the plat, and restrictions of
     record, if any.

2.   Reservation of the mineral estate pursuant to section 6(i) of the Alaska Statehood Act and
     AS 38.05.125, and reasonably necessary access to the mineral estate in accordance with
     AS 38.05.130.

3.   Reservation of a 50-foot wide easement on each side of all surveyed and protracted section
     lines in accordance with AS 19.10.010 and 11 AAC 51.025.

4.   Reservation of a continuous public access easement 50 feet wide, upland of and adjoining
     the ordinary high water mark (OHWM) of all public or navigable water bodies and
     waterways pursuant to AS 38.05.127 and 11 AAC 51.045. Additionally, an easement is
     reserved on the bed of all public waters pursuant to 11 AAC 51.045.




                                            Page 56 of 82
5.   Reservation of a continuous 200-foot wide easement of land and vegetation, to be
     undisturbed except as necessary to fulfill the purposes stated herein, which easement shall
     be located upland of and adjoining the ordinary high water mark of the Sagavanirktok River
     and shall be maintained and preserved for the purposes of public access as well as the
     protection of riparian habitat and water quality.

6.   Exclusion of all public waters, all navigable waters, and the land beneath all navigable
     waters.

7.   The net chargeable acreage for this conveyance will be credited toward fulfillment of the
     borough’s land entitlement under AS 29.65.

8.   Land management authority will transfer to the NSB at such time as the final finding and
     decision takes effect, which authority includes the right of the borough to execute
     conditional leases and make conditional sales. Also, administration of issued permits,
     easements and leases will transfer to the borough and lease rental monies will be prorated as
     of the effective date of the final finding and decision.

               2. LAND PROPOSED TO BE REJECTED FOR CONVEYANCE AND
               RETAINED IN STATE OWNERSHIP

The parcels or portions of parcels in this section are rejected for conveyance because they are not
appropriately classified, cannot appropriately be reclassified to a conveyable classification,
and/or the state’s interests in retaining the parcels (or portions of parcels) outweighs the NSB’s
interests in obtaining them.

                                             Map #1
                                        Proposed Rejection
                                         Deadhorse Area
                                           ADL 414784

Colleen Lake Parcel
T10N, R14E, UM
Sec. 13: N2 excluding Colleen Lake.
Containing approximately 280 acres.

Norgasco Parcel
T10N, R15E, UM
Sec. 8: Spine Road (100-feet wide).
Containing approximately 3 acres.

Lease Tract South Parcel
T10N, R15E, UM
Sec. 19: The unnamed road (100-feet wide) adjacent to Colleen Lake.
Containing approximately 3 acres.




                                            Page 57 of 82
Airfield Parcel
The following described parcels are situated within the two townships listed below and are
further identified by the accompanying decision map and selections maps within the case file.

T10N, R14E, UM                       T10N, R15E, UM
Secs.: 24, 25 and 26.                Secs.: 19 and 30.

A parcel of land located within the northeast portion of Tract I, per the Deadhorse Airport
Property Plan.
Containing approximately 164 acres.

A parcel of land located within the southwest portion of Tract I, per the Deadhorse Airport
Property Plan.
Containing approximately 76 acres.

The north 400 feet of Lots 1, 2, 3 and 4, Block 700, located within Tract I, per the Deadhorse
Airport Property Plan.
Containing approximately 13.7 acres.

Lots 1 through 6 and Lot 7B, Block 200, located within Tract I, per the Deadhorse Airport
Property Plan.
Containing approximately 19.8 acres.

The north 400 feet of Lots 1 through 4, Block 600, located within Tract I, per the Deadhorse
Airport Property Plan.
Containing approximately 14.9 acres.

Blocks 100, 1200, 1300, 1400, 1500, 1700, 1800, 1900, 2000 and 2300 located within Tract I,
per the Deadhorse Airport Property Plan.
Containing approximately 346.1 acres.

That portion of Block 2100 located within Tract I, per the Deadhorse Airport Property Plan.
Containing approximately 8.6 acres.

That portion of Block 2200 located within Tract I, per the Deadhorse Airport Property Plan.
Containing approximately 34.4 acres.

That portion of Block 2700 located within Tract I, per the Deadhorse Airport Property Plan.
Containing approximately 7.5 acres.

Total Airfield parcel contains approximately 685 acres.




                                           Page 58 of 82
Mine Site 3 Parcel
T10N, R14E, UM
Sec. 36: S2SE4SE4, S2N2SE4SE4, SE4SW4SE4, S2NE4SW4SE4, Dalton Highway
(ADL 63826 – 200 feet wide) and the unnamed lake located in Sections 35 and 36.
Containing approximately 77 acres.

T10N, R15E, UM
Sec. 31: The Dalton Highway (ADL 63826 – 200 feet wide) and that portion lying east of
Dalton Highway right of way.
Containing approximately 104 acres.

Total Mine Site 3 parcel contains approximately 181 acres.

Mine Site 102 Parcel
T09N, R14E, UM
Section 1: All.
Containing approximately 640 acres.

                                          Map #2
                                     Proposed Rejection
                                  Kuparuk Industrial Center
                                    Kuparuk Mine Site C
                                        ADL 414828

Kuparuk Industrial Center Parcel
T11N, R10E, UM
Sec. 3: N2 excluding Tracts A and B of ASLS 85-48.
Sec. 4: N2 excluding Tract A of ASLS 85-48.
Containing approximately 488 acres.

T12N, R10E, UM
Sec. 28: S2.
Sec. 33: All.
Sec. 34: All.
Containing approximately 1,600 acres.

Total Kuparuk Industrial Center parcel contains approximately 2,088 acres.

Kuparuk Mine Site C Parcel
T11N, R10E, UM
Sec. 8: Land lying east of pipeline and road to Drillsite 1F.
Sec. 9: W2NE4, W2.
Sec. 17: Land lying east of pipeline and road to Drillsite 1F.
Containing approximately 900 acres.




                                           Page 59 of 82
                                            Map #3
                                       Proposed Rejection
                                       Milne Point Road
                                          ADL 414828

T11N, R11E, UM
ASLS 84-114.
ASLS 87-15.
Sec. 5: All excluding ASLS 84-114.
Sec. 8: Spine Road (100 feet wide), that portion lying north of Spine Road, any portion lying
         between Spine road and ASLS 87-15, and a parcel of land* more particularly described
         as follows:
         Commencing at the intersection of the centerline of ASLS 87-15 and the centerline of
         the Mine Site B access road; thence southeast along the centerline of ASLS 87-15 a
         distance of 250 feet; thence S 19° 02’ 23” W to a point on the south boundary line of
         ASLS 87-15, said point being the True Point Of Beginning; thence S 19° 02’ 23” W
         450 feet; thence N 70° 57’ 37” W 680 feet, more or less, to the ordinary high water
         mark on the west bank of Oogrukpuk River; thence northerly along the line of ordinary
         high water on the west bank of Oogrukpuk River to the south boundary line of
         ASLS 87-15; thence easterly along the south boundary line of ASLS 87-15 to the True
         Point of Beginning.
Containing approximately 1,087 acres.

*Note: Mine Site B has been closed and the mine cells have been flooded. The metes and
bounds parcel described above is intended to include the north-cell pond and Oogrukpuk River,
the pad areas on the north and east sides of the north-cell pond, and the remnants of the
breached cell wall between the two cells which appear as a small peninsula and island visible on
aerial photography dated 2003. The referenced access (gravel) road is shown on Sheet 9 of
ASLS 87-15.

                                          Map #4
                                     Proposed Rejection
                                          Oliktok
                                  ADL 414829 & ADL 417963

ADL 417963
T13N, R09E, UM (Sec. 7)
USS 8956. (Parcel is rejected as it is private property.)
Containing approximately 91.49 acres.

ADL 417963
T13N, R09E, UM (Secs. 7 and 8)
Lot 2 of USS 4275. (Parcel is rejected as no state selection was filed for this parcel.)
Containing approximately 68.48 acres.




                                            Page 60 of 82
ADL 414829
T13N, R09E, UM
Tract B-2 of ASLS 2006-64
Sec. 16: W2NW4 excluding a portion of Tract B-2 of ASLS 2006-64 and the unnamed lake.
Sec. 17: N2 excluding a portion of Tract B-2 of ASLS 2006-64, Drillsite 3Q, and the unnamed
         lake.
Containing approximately 380 acres.

Total Oliktok selection contains approximately 539.97 acres.

                                          Map #5
                                     Proposed Rejection
                                    Kuparuk Mine Site E
                                        ADL 414829

T13N, R09E, UM
Sec. 24: All.
Containing approximately 640 acres.


                                           Map #6
                                     Proposed Rejection
                                    Milne Point Mine Site
                                        ADL 414830

T13N, R11E, UM
Sec. 20: S2.
Sec. 29: All.
Containing approximately 960 acres.

                                           Map #7
                                      Proposed Rejection
                                         Service City
                                         ADL 414831

T11N, R12E, UM
Sec. 13: Kuparuk River.
Sec. 24: Kuparuk River and ASLS 87-15.
Containing approximately 472 acres.

T11N, R13E, UM
Sec. 7: Kuparuk River;
        Spine Road (100 feet wide) and that portion lying north of Spine Road;
        M Pad Pipeline access road and corridor (100 feet wide);
        That portion bounded by the M Pad Pipeline access road and corridor on the southwest,
        Spine Road to the north and the east section line.



                                          Page 61 of 82
Sec. 18: Kuparuk River;
         That portion of the N2 lying east of U Pad access road (100 feet wide);
         That portion of the S2 lying east of the east bank of the Kuparuk River.
Sec. 19: Kuparuk River;
         ASLS 87-15;
         That portion of the N2 lying east of the east bank of the Kuparuk River;
         That portion of the S2 lying east of ASLS 87-15.
Containing approximately 951 acres.

Total Service City selection contains approximately 1,423 acres.

                                           Map #8
                                      Proposed Rejection
                                           Pump 1
                                      PUT 23 Mine Site
                                         ADL 414832

Pump 1 Parcel
T10N, R14E, UM
Sec. 4: All excluding ASLS 74-84 (Pump Station No. 1).
Containing approximately 600 acres.

PUT 23 Mine Site Parcel
T11N, R14E, UM
Sec. 14: W2SE4 and E2SW4.
Sec. 23: NW4, W2NE4, Oxbow Road (100-feet wide), PUT 23 access road (100-feet wide),
         Putuligayuk River, that portion of the S2 lying east of Oxbow Road, and that portion of
         the S2 lying west of the Putuligayuk River.
Sec. 26: Oxbow Road (100-feet wide) and that portion of the NW4 lying east of Oxbow Road.
Containing approximately 570 acres.

                                           Map #9
                                      Proposed Rejection
                                      Deadhorse South
                                         ADL 415433

T08N, R14E, UM
Sec. 1: The Dalton Highway right of way (200 feet wide), that portion lying east of the Dalton
         Highway right of way, and the pipeline access road right of way 135 APL/AMS-3
         (ADL 403060) (100 feet wide).
Sec. 2: The Dalton Highway right of way, that portion lying east of the Dalton Highway right
         of way, the pipeline access road right of way 135 APL/AMS-3 (ADL 403060), the
         TAPS pipeline right of way (125 feet wide), and that portion lying west of the TAPS
         pipeline right of way.
Containing approximately 145 acres.




                                          Page 62 of 82
T09N, R14E, UM
Sec. 23: Dalton Highway right of way (200 feet wide) and that portion lying east of Dalton
         Highway right of way.
Sec. 26: The Dalton Highway right of way and that portion lying east of Dalton Highway right
         of way.
Sec. 34: The Dalton Highway right of way, that portion lying east of the Dalton Highway right
         of way, the pipeline access road right of way 135 APL/AMS-3 (ADL 403060), the
         unnamed lake in Sections 34 and 35, and the unnamed lake in Sections 27, 28 and 34.
Sec. 35: The Dalton Highway right of way, that portion lying east of the Dalton Highway, and
         the unnamed lake in Sections 34 and 35.
Containing approximately 650 acres.

Total Deadhorse South selection contains approximately 795 acres.

                                         Map #10
                                     Proposed Rejection
                                        ASTAC Site
                                        ADL 417951

T10N, R07E, UM
ASLS 2004-8
Sec. 22: All.
Sec. 27: All, excluding ASLS 2004-8.
Containing approximately 1,280 acres.

                                         Map #11
                                     Proposed Rejection
                                    Kuparuk Mine Site F
                                        ADL 417951

T11N, R08E, UM
Sec. 12: W2W2, W2E2W2.
Sec. 13: NW4NW4, W2NE4NW4, Drillsite 2T access road (100-feet wide), that portion lying
         west of said access road, and the large unnamed lake.
Containing approximately 360 acres.

                                         Map #12
                                     Proposed Rejection
                                    Meltwater West Area
                                        ADL 417952

T08N, R07E, UM
Sec. 7: All.
Sec. 8: All.
Containing approximately 1,221 acres.




                                         Page 63 of 82
                                            Map #13
                                       Proposed Rejection
                                           East Dock
                                         Surfcote Pad
                                          ADL 417953

East Dock Parcel
T11N, R15E, UM
Sec. 10: All uplands excluding EPF 130023.
Sec. 15: All uplands excluding EPF 130023.
Containing approximately 690 acres.

Surfcote Parcel
T11N, R15E, UM
Sec. 26: East Dock Road (100-feet wide), Drillsite L4 access road (100-feet wide) and the two
         large unnamed lakes along the northern boundary.
         That portion bounded by East Dock Road and the west boundary line of Section 26;
         that portion lying south of East Dock Road; and that portion lying south of Drillsite L4
         access road excluding ASLS 81-3 but including that portion of ASLS 81-3 containing
         the G&I pipeline,* and land to the south of the G&I pipeline.
Containing approximately 110 acres.

*The area of ASLS 81-3 to be retained in state ownership for the G&I pipeline is 100-feet from
the north edge of the pipeline.

                                           Map #14
                                       Proposed Rejection
                                        Point McIntyre
                                          ADL 417963

T12N, R14E, UM (Secs. 7, 8, and 17-20)
Lots 1 and 2 of USS 4044.
Containing approximately 1,018.49 acres.

Total acreage proposed to be rejected and retained by state is approximately 16,074.46 acres.




                                           Page 64 of 82
                                              Map #4
                                 Postponed Acijudicafiol1 afSelection
                                              Oliktok
                                           ADL 417963

The adjudication of the borough's selection for the following portion of the selection area is
postponed until the State receives title to the land.

T13N, R09E, UM

Lot 1 ofUSS 4275.

Containing approximately 591.54 acres.


Total acreage of '~)ostponed" land is approximately 591.54 acres.


IX.	    PRELIMINARY MUNICIPAL ENTITLEMENT DECISION AND
        DRAFT SITE SPECIFIC PLAN

I have reviewed the facts of the case and the different analyses, presented above and find that the
proposed actions discussed in the Recommendation Section are in the state's best interest.
Therefore, they are approved to proceed 10 public notice. The transfer of state land is contingent
upon adoption of the site specific plan and land classification order reclassifying those lands
considered appropriate for conveyance to the Borough.




----'''-«-~~_-+--'-'-   __   v
Richard H . , Director                                        Date
Division of Mining, Land and Water




                                             Page 65 of 82
Public Notice, Decision and Appeal Procedure

A public notice inviting comment on this preliminary Municipal Entitlement Decision and draft
Site Specific Plan will be published in the Anchorage Daily News and Arctic Sounder per
AS 38.05.945(b)(3). The Postmaster in Prudhoe Bay 99734 will be requested to post the public
notice per AS 38.05.945(b)(3)(B). Notice will be sent to Arctic Slope Regional Native
Corporation and the North Slope Borough pursuant to AS 38.05.945(c)(1). Public notice will be
posted on the Internet under Online Public Notice on the State’s web page at
http://www.state.ak.us.

A copy of the combined preliminary Municipal Entitlement Decision and draft Site Specific Plan
is available on the internet at http://dnr.alaska.gov/mlw/muni/ or from the Division of Mining,
Land and Water, Resource Assessment and Development Section (RADS), Attention: Mike
Mitchell, 550 W 7th Avenue, Suite 1050, Anchorage, AK 99501-3579; telephone 1-907-269-
8531; fax 1-907-269-8915; email mike.mitchell@alaska.gov. The public is invited to comment
on the Preliminary Municipal Entitlement Decision and proposed reclassification of state land to
transfer ownership of state land to the North Slope Borough. Comments must be received in
writing by the Division of Mining, Land and Water at the above address, or by email to
mike.mitchell@alaska.gov, on or before 4:30 p.m., August 7, 2009 in order to ensure
consideration.

Following the comment deadline, all timely written responses will be considered and the
preliminary Municipal Entitlement Decision and draft Site Specific Plan may be modified to
incorporate public comments. Only persons who comment during the public comment period
will be eligible to file an administrative appeal of the final municipal entitlement decision. A
copy of the final municipal entitlement decision and site specific plan will be sent to any person
who comments during the public notice period, and will include appeal instructions. If you have
any questions concerning these proposed actions, please contact Mike Mitchell at (907) 269-
8531 or e-mail mike.mitchell@alaska.gov.

The Department of Natural Resources is prepared to accommodate individuals with disabilities
by providing auxiliary aids or services when requested at least five days before the comment
period deadline. Individuals with audio impairments who wish to respond to the proposed
actions by telephone may call the department's Public Information Center in Anchorage between
the hours of 10:00 a.m. and 5:00 p.m., M-F, at TDD# 1-907-269-8411.

The right is reserved to waive technical defects in this document.

Attachments: List of Map Acronyms, Vicinity Map, and Maps 1-14.




                                           Page 66 of 82
List of Map Acronyms

ADL                Alaska Division of Lands (case file prefix)
ASLS               Alaska State Land Survey
ASTAC              Arctic Slope Telephone Association Cooperative, Inc.
CC                 Construction Camp
CPF                Central Processing Facility
DEW Line Site      Distant Early Warning Station (Military)
DOT                Department of Transportation (State of Alaska)
DS                 Drillsite
EPF                Engineering Plat File (survey)
FS                 Flow Station
GC                 Gathering Center
G&I                Grind and Inject (pipeline)
ILMA               Inter-Agency Land Management Assignment
LAS                Land Administration System (case file prefix)
Mine Site          Borrow Pit (gravel source)
MPU                Milne Point Unit (oil field designation)
TAGS               Trans-Alaska Gas System
TAPS               Trans-Alaska Pipeline System
USS                United States Survey




                                      Page 67 of 82
                                        APPENDIX A
A general legal description and land title status for each selection are presented below. Included
are third party interests that pertain to the surface estate if the selection is recommended for
approval. In addition, this appendix identifies oil and gas leases that are present within the
boundaries of the borough’s selections. Such leases pertain to the sub-surface or mineral estate
and are state retained and managed and are provided for informational purposes.

                                           Map #1
                                        Deadhorse Area
                                         ADL 414784

Colleen Lake Parcel
T10N, R14E, UM                                        (USGS Map Coverage: Beechey Point A-3)
Section 13.

 State Title                        Date Title Received                State Selection File
 Patent 50-74-0092                  March 27, 1974                     GS 1334
 Third Party Interest: N/A due to rejection.
 State Owned and Managed Oil & Gas Lease:
 ADL 28315 issued to BP Exploration (Alaska) Inc.

Norgasco Parcel
T10N, R15E, UM                                        (USGS Map Coverage: Beechey Point A-3)
Sections 8 and 9.

 State Title                     Date Title Received             State Selection File
 Patent 50-74-0092               March 27, 1974                  GS 1338
 Third Party Interest:
 ADL 413263, easement issued to Norgasco, Inc.
 ADL 414560, lease issued to Norgasco, Inc., expires 10/13/2016.
 ADL 414560, sublease issued to TDX Power, Inc., expires 03/25/2013.
 State Owned and Managed Oil & Gas Leases:
 ADL 28329 issued to BP Exploration (Alaska) Inc. (Sec. 8)
 ADL 28328 issued to BP Exploration (Alaska) Inc. (Sec. 9)




                                           Page 68 of 82
Lease Tract South Parcel
T10N, R15E, UM                                      (USGS Map Coverage: Beechey Point A-3)
Section 19.

 State Title                     Date Title Received             State Selection File
 Patent 50-74-0092               March 27, 1974                  GS 1338
 Third Party Interest:
 ADL 63237, easement application from Arctic Slope Telephone Association, Inc.
 ADL 400161, easement issued to TDX North Slope Generating, Inc.
 ADL 410431, easement issued to Alaska Department of Transportation and Public Facilities.
 ADL 413263, easement issued to Norgasco, Inc.
 State Owned and Managed Oil & Gas Lease:
 ADL 28330 issued to BP Exploration (Alaska) Inc.

Airfield Parcel
T10N, R14E, UM                                      (USGS Map Coverage: Beechey Point A-3)
Sections 24, 25 and 26.

 State Title                        Date Title Received           State Selection File
 Patent 50-74-0092                  March 27, 1974                GS 1334
 Third Party Interest: N/A due to rejection.
 State Owned and Managed Oil & Gas Leases:
 ADL 28315 issued to BP Exploration (Alaska) Inc. (Sec. 24)
 ADL 28316 issued to BP Exploration (Alaska) Inc. (Secs. 25 & 26)

Airfield Parcel continued
T10N, R15E, UM                                      (USGS Map Coverage: Beechey Point A-3)
Sections 19 and 30.

 State Title                        Date Title Received            State Selection File
 Patent 50-74-0092                  March 27, 1974                 GS 1338
 Third Party Interest: N/A due to rejection.
 State Owned and Managed Oil & Gas Leases:
 ADL 28330 issued to BP Exploration (Alaska) Inc. (Sec. 19)
 ADL 28335 issued to BP Exploration (Alaska) Inc. (Sec. 30)




                                         Page 69 of 82
Mine Site 3 Parcel
T10N, R14E, UM                                      (USGS Map Coverage: Beechey Point A-3)
Section 36.

 State Title                      Date Title Received                 State Selection File
 Patent 50-74-0092                March 27, 1974                      GS 1334
 Third Party Interest:
 ADL 416097, rehabilitation plan as referenced in the on-line case file for ADL 415922.
 ADL 410431, easement issued to Alaska Department of Transportation and Public Facilities.
 LAS 23611, permit issued to BP Exploration (Alaska) Inc., expires 12/31/2012.
 State Owned and Managed Oil & Gas Lease:
 ADL 28316 issued to BP Exploration (Alaska) Inc.

Mine Site 3 Parcel continued
T10N, R15E, UM                                      (USGS Map Coverage: Beechey Point A-3)
Section 31.

 State Title                      Date Title Received                 State Selection File
 Patent 50-74-0092                March 27, 1974                      GS 1338
 Third Party Interest:
 ADL 410431, easement issued to Alaska Department of Transportation and Public Facilities.
 ADL 416097, rehabilitation plan as referenced in the on-line case file for ADL 415922.
 LAS 23611, permit issued to BP Exploration (Alaska) Inc., expires 12/31/2012.
 State Owned and Managed Oil & Gas Lease:
 ADL 28335 issued to BP Exploration (Alaska) Inc.

Mine Site 102 Parcel
T09N, R14E, UM                                      (USGS Map Coverage: Beechey Point A-3)
Section 1.

 State Title                        Date Title Received           State Selection File
 Patent 50-74-0092                  March 27, 1974                GS 1335
 Third Party Interest: N/A due to rejection.
 State Owned and Managed Oil & Gas Lease:
 ADL 390987 issued to Daniel K. Donkel.




                                         Page 70 of 82
                                         Map #2
                                 Kuparuk Industrial Center
                                   Kuparuk Mine Site C
                                       ADL 414828

Kuparuk Industrial Center
T11N, R10E, UM                                       (USGS Map Coverage: Beechey Point B-5)
Sections 3 and 4.

 State Title                     Date Title Received               State Selection File
 Patent 50-74-0093               March 27, 1974                    GS 1317
 Third Party Interest:
 ADL 407810, public and charitable lease issued to ConocoPhillips Alaska, Inc., expires
 03/17/2023.
 ADL 410736, right of way easement issued to ConocoPhillips Alaska, Inc., expires
 03/17/2023.
 State Owned and Managed Oil & Gas Lease:
 ADL 25648 issued to ConocoPhillips Alaska, Inc.

Kuparuk Industrial Center continued
T12N, R10E, UM                                       (USGS Map Coverage: Beechey Point B-5)
Sections 28, 33 and 34.

 State Title                        Date Title Received            State Selection File
 Patent 50-74-0093                  March 27, 1974                 GS 1316
 Third Party Interest: N/A due to rejection.
 State Owned and Managed Oil & Gas Lease:
 ADL 25639 issued to ConocoPhillips Alaska, Inc.

Kuparuk Mine Site C
T11N, R10E, UM                                       (USGS Map Coverage: Beechey Point B-5)
Sections 8, 9 and 17.

 State Title                        Date Title Received            State Selection File
 Patent 50-74-0093                  March 27, 1974                 GS 1317
 Third Party Interest: N/A due to rejection.
 State Owned and Managed Oil & Gas Leases:
 ADL 25652 issued to ConocoPhillips Alaska, Inc. (Sec. 17)
 ADL 25647 issued to ConocoPhillips Alaska, Inc. (Sec. 8)
 ADL 25648 issued to ConocoPhillips Alaska, Inc. (Sec. 9)




                                          Page 71 of 82
                                          Map #3
                                      Milne Point Road
                                        ADL 414828

T11N, R11E, UM                                  (USGS Map Coverage: Beechey Point B-4; B-5)
Sections 5 and 8.

 State Title                    Date Title Received                  State Selection File
 Patent 50-74-0093              March 27, 1974                       GS 1321
 Third Party Interest: None.
 State Owned and Managed Oil & Gas Lease:
 ADL 28242 issued to ConocoPhillips Alaska, Inc.

                                         Map #4
                                         Oliktok
                                 ADL 414829 & ADL 417963

T13N, R09E, UM (ADL 417963)                          (USGS Map Coverage: Beechey Point B-5)
Lot 1 of USS 4275

 State Title                        Date Title Received              State Selection File
 ANILCA Top Filed                   ----                             GS 1302
 Third Party Interest: N/A as the State does not have an ownership interest at this time.
 State Owned and Managed Oil & Gas Lease:
 ADL 373301 issued to Conoco Phillips Alaska, Inc.

T13N, R09E, UM (ADL 417963)                          (USGS Map Coverage: Beechey Point B-5)
Lot 2 of USS 4275

 State Title                        Date Title Received              State Selection File
 No State Selection                 ----                             N/A
 Third Party Interest: N/A due to rejection.
 State Owned and Managed Oil & Gas Lease:
 ADL 373301 issued to Conoco Phillips Alaska, Inc.

T13N, R09E, UM (ADL 417963)                          (USGS Map Coverage: Beechey Point B-5)
USS 8956

 State Title                        Date Title Received              State Selection File
 None/Private Property              ----                             N/A
 Third Party Interest: N/A due to rejection.
 State Owned and Managed Oil & Gas Lease: None identified.




                                          Page 72 of 82
T13N, R09E, UM (ADL 414829)                         (USGS Map Coverage: Beechey Point B-5)
Sections 16 and 17.

 State Title                        Date Title Received           State Selection File
 Patent 50-91-0136                  January 29, 1991              GS 1302
 Third Party Interest: N/A due to rejection.
 State Owned and Managed Oil & Gas Leases:
 ADL 25512 issued to ConocoPhillips Alaska, Inc. (Sec. 17)
 ADL 25513 issued to ConocoPhillips Alaska, Inc. (Sec. 16)

                                         Map #5
                                    Kuparuk Mine Site E
                                       ADL 414829

T13N, R09E, UM                                      (USGS Map Coverage: Beechey Point B-5)
Section 24.

 State Title                        Date Title Received           State Selection File
 Patent 50-91-0136                  January 29, 1991              GS 1302
 Third Party Interest: N/A due to rejection.
 State Owned and Managed Oil & Gas Lease:
 ADL 25514 issued to BP Exploration (Alaska), Inc.

                                          Map #6
                                   Milne Point Mine Site
                                       ADL 414830

T13N, R11E, UM                                      (USGS Map Coverage: Beechey Point B-4)
Sections 20 and 29.

 State Title                        Date Title Received           State Selection File
 Patent 50-91-0136                  January 29, 1991              GS 1306
 Third Party Interest: N/A due to rejection.
 State Owned and Managed Oil & Gas Leases:
 ADL 47438 issued to BP Exploration (Alaska), Inc. (Sec. 20)
 ADL 28231 issued to BP Exploration (Alaska), Inc. (Sec. 29)




                                         Page 73 of 82
                                          Map #7
                                        Service City
                                        ADL 414831

T11N, R12E, UM                                      (USGS Map Coverage: Beechey Point B-4)
Sections 13 and 24.

 State Title                     Date Title Received               State Selection File
 Patent 50-74-0093               March 27, 1974                    GS 1325
 Third Party Interest:
 ADL 402294, Kuparuk Pipeline lease, issued to ConocoPhillips Alaska, Inc., expires 5/2/2034.
 ADL 411731, Oliktok Pipeline lease, issued to ConocoPhillips Alaska, Inc., expires 5/2/2034.
 State Owned and Managed Oil & Gas Lease:
 ADL 47451 issued to BP Exploration (Alaska), Inc.

T11N, R13E, UM                                      (USGS Map Coverage: Beechey Point B-4)
Sections 7, 18 and 19.

 State Title                        Date Title Received             State Selection File
 Patent 50-74-0093                  March 27, 1974                  GS 1329
 Third Party Interest:
 ADL 416862, public and charitable use lease issued to Arctic Slope Telephone Association
 Cooperative, Inc., expires 12/12/2027.
 ADL 416862, sublease issued to Alaska Communication, expires 12/19/2012.
 ADL 402294, Kuparuk Pipeline lease, issued to ConocoPhillips Alaska, Inc., expires 5/2/2034.
 ADL 411731, Oliktok Pipeline lease, issued to ConocoPhillips Alaska, Inc., expires 5/2/2034.
 State Owned and Managed Oil & Gas Leases:
 ADL 28282 issued to BP Exploration (Alaska), Inc. (Sec. 7)
 ADL 28283 issued to BP Exploration (Alaska), Inc. (Secs. 18 & 19)

                                          Map #8
                                         PUMP 1
                                      PUT 23 Mine Site
                                        ADL 414832

Pump 1
T10N, R14E, UM                                 (USGS Map Coverage: Beechey Point A-3; B-3)
Section 4.

 State Title                        Date Title Received            State Selection File
 Patent 50-74-0092                  March 27, 1974                 GS1334
 Third Party Interest: N/A due to rejection.
 State Owned and Managed Oil & Gas Lease:
 ADL 28312 issued to BP Exploration (Alaska), Inc.




                                         Page 74 of 82
Put 23 Mine Site
T11N, R14E, UM                                      (USGS Map Coverage: Beechey Point B-3)
Sections 14, 23 and 26.

 State Title                     Date Title Received               State Selection File
 Patent 50-74-0093               March 27, 1974                    GS1333
 Third Party Interest: None.
 State Owned and Managed Oil & Gas Leases:
 ADL 28307 issued to BP Exploration (Alaska), Inc. (Secs. 14 & 23)
 ADL 28308 issued to BP Exploration (Alaska), Inc. (Sec. 26)

                                          Map #9
                                      Deadhorse South
                                        ADL 415433

T08N, R14E, UM                                      (USGS Map Coverage: Beechey Point A-3)
Sections 1 and 2.

 State Title                   Date Title Received                 State Selection File
 Patent 50-74-0107             March 27, 1974                      GS 1609
 Third Party Interest: None.
 State Owned and Managed Oil & Gas Lease: None identified.

T09N, R14E, UM                                      (USGS Map Coverage: Beechey Point A-3)
Sections 23, 26, 34 and 35.

 State Title                     Date Title Received              State Selection File
 Patent 50-74-0092               March 27, 1974                   GS 1335
 Third Party Interest:
 ADL 403060, private easement issued to Alyeska Pipeline Service Co., expires 05/02/2034.
 State Owned and Managed Oil & Gas Lease: None identified.

                                         Map #10
                                        ASTAC Site
                                        ADL 417951

T10N, R07E, UM                                       (USGS Map Coverage: Harrison Bay A-1)
Sections 22 and 27.

 State Title                        Date Title Received            State Selection File
 Patent 50-74-0100                  March 27, 1974                 GS 1295
 Third Party Interest: N/A due to rejection.
 State Owned and Managed Oil & Gas Leases:
 ADL 380052 issued to ConocoPhillips Alaska Inc. (Sec. 22)
 ADL 380054 issued to ConocoPhillips Alaska Inc. (Sec. 27)



                                         Page 75 of 82
                                         Map #11
                                    Kuparuk Mine Site F
                                       ADL 417951

T11N, R08E, UM                  (USGS Map Coverage: Harrison Bay B-1; Beechey Point B-5)
Sections 12 and 13.

 State Title                      Date Title Received               State Selection File
 Patent 50-74-0093                March 27, 1974                    GS 1298
 Third Party Interest:
 ADL 417381, material sale issued to ENI Petroleum Exploration Company, Inc., expires
 04/04/2009.
 ADL 417633, material sale issued to ConocoPhillips Alaska, Inc., expires 11/14/2011.
 State Owned and Managed Oil & Gas Leases:
 ADL 25569 issued to ConocoPhillips Alaska Inc. (Sec. 12)
 ADL 25570 issued to ConocoPhillips Alaska Inc. (Sec. 13)

                                         Map #12
                                      Meltwater Area
                                       ADL 417952

Meltwater West
T08N, R07E, UM                                       (USGS Map Coverage: Harrison Bay A-1)
Sections 7 and 8.

 State Title                        Date Title Received             State Selection File
 Patent 50-74-0086                  March 27, 1974                  GS 1607
 Third Party Interest: N/A due to rejection.
 State Owned and Managed Oil & Gas Leases:
 ADL 373112 issued to ConocoPhillips Alaska Inc. (Secs. 7 & 8)

Meltwater East
T08N, R07E, UM                                       (USGS Map Coverage: Harrison Bay A-1)
Section 15.

 State Title                    Date Title Received                 State Selection File
 Patent 50-74-0086              March 27, 1974                      GS 1607
 Third Party Interest: None.
 State Owned and Managed Oil & Gas Leases:
 ADL 390951 issued to ConocoPhillips Alaska Inc. (Sec. 15)




                                         Page 76 of 82
                                            Map #13
                                           East Dock
                                          Surfcote Pad
                                          ADL 417953

East Dock
T11N, R15E, UM                                        (USGS Map Coverage: Beechey Point B-3)
Sections 10 and 15.

 State Title                        Date Title Received             State Selection File
 Patent 50-74-0093                  March 27, 1974                  GS 1337
 Third Party Interest: N/A due to rejection.
 State Owned and Managed Oil & Gas Leases:
 ADL 34631 issued to BP Exploration (Alaska) Inc. (Sec. 10)
 ADL 28322 issued to BP Exploration (Alaska) Inc. (Sec. 15)

Surfcote Pad
T11N, R15E, UM                                        (USGS Map Coverage: Beechey Point B-3)
Section 26.

 State Title                     Date Title Received                State Selection File
 Patent 50-74-0093               March 27, 1974                     GS 1337
 Third Party Interest:
 LAS 23316, permit issued to BP Exploration (Alaska) Inc., expires 05/02/2011.
 State Owned and Managed Oil & Gas Lease:
 ADL 28324 issued to BP Exploration (Alaska) Inc.

                                            Map #14
                                         Point McIntyre
                                          ADL 417963

T12N, R14E, UM                                        (USGS Map Coverage: Beechey Point B-3)
Lot 1 of USS 4044 (Sections 7 and 18).

 State Title                        Date Title Received             State Selection File
 ANILCA Top Filing                  N/A                             GS 1332
 Third Party Interest: N/A due to rejection.
 State Owned and Managed Oil & Gas Leases:
 ADL 389943 issued to Ultrastar Exploration LLC (Sec. 7)
 ADL 389944 issued to Ultrastar Exploration LLC (Sec. 18)




                                           Page 77 of 82
T12N, R14E, UM                                      (USGS Map Coverage: Beechey Point B-3)
Lot 2 of USS 4044 (Sections 7, 8 and 17-20).

 State Title                        Date Title Received           State Selection File
 Patent 50-90-0452                  August 9, 1990                GS 1332
 Third Party Interest: N/A due to rejection.
 State Owned and Managed Oil & Gas Leases:
 ADL 389943 issued to Ultrastar Exploration LLC (Secs. 7 & 8)
 ADL 389944 issued to Ultrastar Exploration LLC (Secs. 17-20)




                                         Page 78 of 82
                                      APPENDIX B
                                 Public and Navigable Waters

Land Selection              Public Water                   Navigable Water
Map #1                                                     Sagavanirktok (Sag) River
Deadhorse Area              --
Norgasco Parcel
ADL 414784
Map #1                                                     Colleen Lake
Deadhorse Area              --
Lease Tract South Parcel
ADL 414784
Map #1                      Unnamed lake in Secs. 25,      Unnamed lake in Secs. 35 & 36.
Deadhorse Area              26, 35 & 36.
Mine Site 3 Parcel          Two unnamed lakes in
ADL 414784                  south half of Sec. 36.
                            Unnamed lake (former
                            Mine Site 3) in Sec. 36 that
                            connects to the unnamed
                            tributary stream of the Sag
                            River.
                            Unnamed tributary stream
                            of the Sag River.
Map #2                                                     Ugnuravik River and its unnamed
Kuparuk Industrial Center   --                             tributary.
ADL 414828
Map #3                                                     --
Milne Point Road            Unnamed lake (former
ADL 414828                  Mine Site B) in Sec. 5.
                            Oogrukpuk River
Map #7                                                     Kuparuk River
Service City                --
ADL 414831
Map #8                                                     Putuligayuk River
PUT 23 Mine Site            --
ADL 414832




                                         Page 79 of 82
Land Selection          Public Water                  Navigable Water
Map #9                  U9N14E                        U9N14E
Deadhorse South         Unnamed tributary of Sag      Unnamed lake in Secs. 34 & 35.
ADL 415433              River in Secs. 23, 26 & 34.   Unnamed lake in Secs. 27, 28 &
                        Unnamed lake in Sec. 26.      34.
                        Unnamed lake in SW4 Sec.
                        34.
                        Unnamed lake in NW4
                        Sec. 35.
                        U8N14E
                        Unnamed lake in Sec. 2.
Map #11                 Two unnamed lakes in          Unnamed lake in Section 13.
Kuparuk Mine Site F     Mine Site F.
ADL 417951              East Fork Kalubik Creek
Map # 12                Kachemach River and its       --
Meltwater Area          unnamed tributary.
Meltwater East Parcel
ADL 417952
Map # 13                                              Unnamed lake in Secs. 23 & 26.
Surfcote Pad            --                            Unnamed lake in Secs. 23, 24, 25
ADL 417953                                            & 26.




                                   Page 80 of 82
                                         APPENDIX C
                         Consideration of AS 38.04.065(b) Requirements

AS 38.04.065(b) requires that the department consider certain factors in the adoption or revision
of regional and site specific land use plans. These factors were considered by the department in
the preparation of the draft Site Specific Plan, in conjunction with the land classification analysis
and the preliminary Municipal Entitlement Decision. The statutory factors are listed below,
followed by a brief description of the department’s consideration of each factor.

   •   Observe and use the principles of multiple use and sustained yield. DNR evaluated
       alternative uses of land, analyzed the use on a long-term basis, and considered the effects
       of multiple use. It determined in the land classification analysis that all uses in the
       Central North Slope oil field are related, with only a few exceptions, to oil and gas
       development, extraction, storage, and distribution. Surface use for other purposes would
       often conflict and be disruptive to the primary use. Oil and gas resources by their nature
       are not renewable in character.

   •   Consider physical, economic, and social factors and involve the public and agencies in
       achieving a systematic interdisciplinary approach. A wide variety of physical, economic,
       and social factors were considered in the preparation of the decision. The physical
       attributes of each parcel were analyzed along with the long term economic considerations
       involving the future use and management of the Central North Slope oil field. The
       comments and review provided by agencies and the general public will be considered and
       will result in an interdisciplinary review of all aspects of the decision.

   •   Give priority to planning and classification in areas of potential settlement, renewable
       and nonrenewable resource development, and critical environmental concern. The
       Central North Slope oil field is not considered an appropriate area for settlement except
       as related to industrial uses. It is, of course, an area of resource development and
       environmental concern. Each parcel of land that might be used in the future for industrial
       purposes was evaluated on a case by case basis in both the land classification analysis
       and the preliminary Municipal Entitlement Decision. The impacts and concerns of
       resource development were a primary focus of the decision.

   •   Rely on the inventory of state land. This decision relied on land status information in the
       DNR land administration system (LAS). Land use analyses (2008) were conducted by
       DNR as part of this decision to determine the uses of state land.

   •   Consider present and potential uses of state land. The present and potential uses of the
       land were considered for each parcel selected by the Borough, as described in the parcel
       by parcel analyses in both the land classification analysis and the preliminary Municipal
       Entitlement Decision. DNR determined that all land uses in the Central North Slope oil
       field are related to oil and gas development, extraction, storage, and distribution, with
       only a few exceptions.




                                            Page 81 of 82
•   Consider the present and potential uses of land under other ownership. Essentially all of
    the land within the Central North Slope oil field is owned by the state. There are only a
    few private and federal holdings within this area, the majority of which are Borough
    holdings at Deadhorse. The future use of this land was considered, and its future use is
    likely to be related to oil and gas development and support of that development.

•   Plan for compatible surface and mineral land use classifications. This decision evaluated
    the surface classifications that would be compatible with the subsurface uses and
    resources of the Central North Slope oil field. This evaluation occurred at length in the
    land classification analysis.

•   Provide for meaningful participation in the planning process by affected local
    governments, state, and federal agencies, adjacent land owners, and the general public.
    Substantial meaningful participation has been or will be provided to these entities through
    the review processes that the Department has and will conduct with other agencies
    (agency review), with the Borough, and with general public notice and review of the
    preliminary Municipal Entitlement Decision and the draft Site Specific Plan, which
    occurs under the requirements of AS 38.05.945.




                                       Page 82 of 82

								
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