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MMS Alaska sales to go farther out Sales planned for 2007-12 could help keep trans-Alaska oil pipeline flowing; development in Arctic OCS will take 10-20 years Kristen Nelson Petroleum News
North Slope production is declining and the trans-Alaska oil pipeline is running at less than half the volume it carried in the 1980s. Resources from offshore Alaska could help keep flow rates up in the pipeline, but it will take as long as two decades for such resources to be developed, John Goll, director for the U.S. Minerals Management Service Alaska outer continental shelf region, told the Resource Development Council May 3.
Moving ahead with the agency’s upcoming five-year lease sale plan is one step in this process, he said.
“If we don’t start looking for resources today to get into this pipeline, 10 to 20 years down the road” both the state and the trans-Alaska pipeline could be in trouble, he said.
While offering leases in the Beaufort and Chukchi seas is “not uncontroversial,” exploration is needed now to put oil in the pipeline in that window 10 to 20 years from now because seasonal restrictions on drilling and the Arctic climate mean it will take about that long to get new resources on production, he said.
Sales reach farther offshore The Arctic Alaska sales included in the 2007-12 outer continental shelf proposed sale program go a little farther north, and exclude near-shore areas in the Chukchi and the Barrow and Kaktovik hunt areas, Goll said.
In the Beaufort Sea the agency has proposed two sales, 2009 and 2011. “We did do something different in this program than we have in the past,” Goll said. “We are taking out, right up front, the Barrow and the Kaktovik hunt areas.” In the past, he said, those areas have been taken out during the evaluation process preceding, but this time they were removed from consideration up front.
The sale also moves “into deeper water in the eastern part of the Beaufort,” Goll said, expanding somewhat the area offered in the last sale program.
Three sales are planned in the Chukchi Sea, 2008, 2010 and 2012. There is a 25-mile buffer “similar to the polynya area that we had in the current program.” This is the near-shore area where whales, marine mammals and belugas migrate in the spring, he said.
The proposed Cook Inlet sale area, including the Shelikof Strait area, will have interest-based sales only. “We would go out with a call on an annual basis,” Goll said, to see if there is interest in leasing in the area.
The North Aleutian basin has one sale proposed, the first time in some 20 years MMS has offered the area. Both former Gov. Frank Murkowski and current Gov. Sarah Palin requested that the area be included in the upcoming five-year program, Goll said. The area had previously been under both congressional moratorium and presidential withdrawal.
Goll said MMS did several things in response to comments, especially from the State of Alaska and the Aleutians East Borough. Two sales were initially proposed, for 2010 and 2012, but that has been reduced to a single sale in 2011, giving MMS “more time to do some of the environmental research” that it needs to do, he said.
And the area for the North Aleutians sale has been limited to the area previously offered in the late 1980s, the Sale 92 area.
Goll said MMS will “work very closely with the Aleutians East Borough and the State of Alaska and others to really assure that we protect the important fisheries in that area, while we work with them to develop appropriate mitigation.”
Work continues in Arctic Work is ongoing in Alaska OCS areas.
There were three seismic surveys in the Chukchi Sea last summer and fall. “The seismic vessels could not get into the Beaufort Sea because of the ice,” Goll said.
MMS expects just one survey in the Chukchi Sea this year and possibly one in the Beaufort Sea, he said.
MMS has received a development plan from BP Exploration (Alaska) for the Liberty prospect (see stories in this issue of Petroleum News and in the May 6 issue). BP plans to drill from shore at Liberty, and Goll said: “If they do that and are successful these will be the longest wells in the world.”
Pioneer Natural Resources, the operator at the Cosmopolitan unit in Cook Inlet — a joint state-federal unit — “is planning to drill another well to delineate that prospect and this one may go into the federal waters part of this structure,” Goll said.
As with Liberty, the Cosmopolitan well will be an extended reach well from onshore, he said.
Goll said the MMS Beaufort Sea sale in April — the last in the agency’s current five-year Alaska OCS plan — “exceeded our expectation. … And what was more important, I believe, we had five majors show up.”
“I think the message that they were giving is that companies are still interested in Alaska if there is a chance. … It’s still not that easy to work up here, but they’re willing to again come to the table and see if things can move forward.”
Goll said MMS is doing a fair-market review of the bids and no leases have yet been let from the sale.
Shell had the most high bids, 49, and the highest total, $39.3 million, followed by Total with 32 high bids at $2.2 million; Eni with seven high bids; ConocoPhillips with one high bid; and BP with one high bid. The total of high bids in the sale was $42.2 million. One individual, Keith Forsgren, had high bids on two tracts.
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