Providing coverage of Alaska and northern Canada's oil and gas industry
December 2010

Vol. 15, No. 50 Week of December 12, 2010

Corps remands CD-5 to district engineer

Denies ConocoPhillips request to elevate decision to division engineer; some reasons for appeal rejected; some remanded to district

Kristen Nelson

Petroleum News

The U.S. Army Corps of Engineers issued an administrative appeal decision Dec. 2 on ConocoPhillips Alaska’s appeal of the rejection of a permit for the Colville River 5 drill site development by the corps’ Alaska district engineer.

ConocoPhillips had asked that the permit decision be elevated to the division engineer, “but that request is without merit and is being denied,” the review officer, David Gesl, said in his decision.

Gesl found many of the stated reasons in ConocoPhillips’ request for appeal to be “without merit,” but said several aspects of the appeal “have merit and the decision is being remanded to the District Engineer for further consideration and final action.”

“We are still reviewing the decision and evaluating our options,” ConocoPhillips Alaska spokeswoman Natalie Lowman told Petroleum News in a Dec. 9 e-mail.

February rejection

The denial of permits came in a record of decision issued Feb. 5.

The CD-5 project would be the first development of oil from the National Petroleum Reserve-Alaska. ConocoPhillips proposed to build a drill site, CD-5, across the Nigliq Channel of the Colville River from existing Alpine field facilities. Crude oil would have been moved by pipeline supported on vertical support members across a bridge which would have been built across the Nigliq Channel. The project included a road from Alpine across the bridge to CD-5 on the west side of the channel.

The corps objected to the road and said there were alternatives with less environmental impact, including a roadless development with horizontal directional drilling under the Nigliq Channel to take the crude oil to Alpine via a line under the channel.

Issues remanded

One issue remanded to the district engineer was the district’s inclusion of an airstrip location in its record of decision which was not discussed with ConocoPhillips, the local community or involved resource agencies. The airstrip was included as part of the corps’ identification of horizontal directional drilling as having less environmental impact than the bridge alternative.

The issue of the airstrip was remanded, Gesl said, because “it is not clear why the alternative airstrip location was not identified to CPAI, and CPAI should be given an opportunity to address that alternative.”

Another decision remanded for reconsideration was the district engineer’s decision that the cost of a three-phase HDD alternative is practicable.

Gesl said ConocoPhillips argued that three-phase HDD is not practicable on the basis of cost, and said the corps rejected its cost analysis and demanded a third-party cost analysis. He said while ConocoPhillips “did not affirmatively demonstrate that HDD is too costly when given the opportunity, the District must still sufficiently document its consideration of the cost information available at the time of its decision.”

Another issue remanded concerned HDD design: “Although it is CPAI’s burden to demonstrate that alternatives are not logistically practicable, the District Engineer’s determination whether the project is logistically practicable is insufficiently supported and must be better documented,” Gesl said.

Issues denied

Examples of ConocoPhillips arguments which Gesl rejected include:

• Gesl agreed that the district engineer “acted well within reason in rejecting CPAI’s argument an HDD alternative was not practicable on the basis of technology. This reason for appeal does not have merit.”

• ConocoPhillips argued in its appeal that the district engineer did not demonstrate that an HDD alternative could be permitted, but Gesl said this issue “is raised for the first time on appeal — CPAI did not dispute the permitability of HDD to the District — so this issue cannot be considered and is denied.”

• ConocoPhillips argued that the district engineer relied on gravel footprint size alone in his decision, and said that was “arbitrary and unsupported by the record.”

“CPAI’s argument is misdirected,” Gesl said. “As previously discussed, the District Engineer’s denial was based largely upon CPAI’s proposal to construct several miles of road within the delta, perpendicular to the natural flow path of the delta, that would impact water levels, overland sheet flow, and circulation/fluctuation patterns within the CRD.”

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