Parnell budgets Umiat road permitting

Proposes $8 million line item in FY 2011 budget for permitting an all-season road; claims lack of infrastructure holding up development

Eric Lidji

For Petroleum News

Alaska Gov. Sean Parnell is planning to include $8 million in his fiscal year 2011 budget for the Department of Transportation and Public Facilities to permit a road to Umiat.

A road to Umiat, a staging area along the Colville River near the northern foothills of the Brooks Range, would allow year-round access to oil and gas prospects in the region.

On Dec. 8, Parnell said transportation costs account for 40 percent of exploration in remote areas like the foothills, which he claimed has delayed production in the region.

“Getting this road built will significantly lower costs for the explorers and will likely speed up production of the first gas and oil from the region,” Parnell said in a statement. “Development of these fields will provide jobs for Alaskans and revenue for the state.”

The project is a carry-over from the final months of the Palin administration, with roots in the Murkowski administration, based on ideas that go back decades in Alaska politics.

In her State of the State address in January 2009, then-Gov. Sarah Palin announced plans to commission “preliminary” work on a road to Umiat as a way to “access our resources.”

In March, DOT&PF set an “accelerated schedule” to conduct $1 million in fieldwork before winter. The Joint Pipeline Office and DOT&PF outlined a two-phase project: an 85-mile section from the Dalton Highway to the Gubik gas fields east of the Colville River and a 15-mile stretch to Umiat including a bridge across the Colville River.

State active this past summer

DOT&PF also studied five potential corridors for the road. The department is currently leaning toward a route running northwest to Umiat from Galbraith Lake.

The other potential corridors include an alternate path heading out of Galbraith Lake, and paths starting at Pump Station 3, Pump Station 2 and Franklin Bluffs respectively.

In his recent announcement, Parnell suggested the road could eventually be extended into the National Petroleum Reserve-Alaska, a remote, but resource-rich corner of the state.

Parnell said the Umiat reservoir “holds about 250 million barrels of economically recoverable oil, with the potential for hundreds of millions more in place,” and NPR-A holds an “estimated 12 billion barrels of oil and 73 trillion cubic feet of natural gas.”

While a road from the Dalton Highway to the foothills and Umiat and farther west would significantly increase access to NPR-A, a single road could not intersect the entirety of the oil, natural gas and coal deposits spread across the 23 million-acre federal reserve.

$3 million to $4 million per mile

In a September 2009 talk before the Anchorage Chamber of Commerce, Parnell estimated that a road to Umiat would cost around $3 million per mile. At that rate, a 100-mile road would cost $300 million, likely higher with a bridge across the Colville.

Previous estimates have put construction costs for the road at $4 million a mile.

The current push to build a road to Umiat is tied to increased exploration in the region.

Anadarko Petroleum is in the middle of a multiyear search for natural gas in the Gubik Complex, while Renaissance Alaska is judging the economics of oil exploration at Umiat.

The road project, though, isn’t new.

The state requested preliminary information about a road to Umiat in 2005 and 2006.

Former Gov. Frank Murkowski created the “Roads to Resources” program to direct state dollars toward transportation projects designed to encourage development. Former Gov. Wally Hickel also proposed major road projects as a way to spur economic development.