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Vol. 18, No. 22 Week of June 02, 2013
Providing coverage of Alaska and northern Canada's oil and gas industry

Shadura gas in jeopardy?

FWS options for road access give pause to firm proposing project in Kenai refuge

Wesley Loy

For Petroleum News

Federal land managers have released a final environmental impact statement for the proposed Shadura natural gas development on Alaska’s Kenai Peninsula. And the company pursuing the project apparently is uneasy with some of the alternatives still on the table.

The U.S. Fish and Wildlife Service is taking public comments on the EIS until June 23.

The 538-page document analyzes NordAq Energy Inc.’s proposed gas development in the northwestern section of the Kenai National Wildlife Refuge.

NordAq is assured of the right to tap the gas. The main question is how the company may access its drilling and production pad. The EIS looks at five alternatives.

Under NordAq’s proposal (Alternative 2), the company would put in a 4.3-mile gravel road from the north, off the Kenai Spur Highway. Buried gas gathering lines, and a communications cable, would run along the access road.

Two other options (Alternatives 4 and 5) would have the access road approach from the south or east, out of the Hilcorp-operated Swanson River field and its existing road system. The gathering lines and communication cable still would run to the north, but cross-country for the most part rather than along a road.

These two options aren’t to NordAq’s liking.

‘Problematic for numerous reasons’

In comments the company submitted to the Fish and Wildlife Service on a preliminary version of the EIS, NordAq said the alternatives that would have the access road coming in from the Swanson River unit did not meet federal criteria for what is reasonable, practical and feasible.

A route from Swanson River is “problematic for numerous reasons,” NordAq said, according to a summation of public comments included in the final EIS.

“NordAq is unwilling to accept the financial costs and complications associated with the SRU access route, and would not move forward with its project were the SRU route imposed,” the company said.

NordAq said adopting Alternative 4 or 5 would interfere with its right to develop its leases, in violation of ANILCA, the Alaska National Interest Lands Conservation Act.

Although the federal government owns the land surface in the Shadura project area, Cook Inlet Region Inc. owns the subsurface estate. CIRI has entered into a lease with NordAq to develop the gas resource. NordAq’s application to the Fish and Wildlife Service for a right of way was made subject to an ANILCA section that allows for access to inholdings.

All options remain in play

NordAq asked the Fish and Wildlife Service to drop Alternatives 4 and 5.

The final EIS doesn’t elaborate further on NordAq’s objection to an access road out of the Swanson River field.

The Fish and Wildlife Service answered NordAq comment:

“Although Alternatives 4 and 5 are not ideal from NordAq’s perspective, the Service believes that both alternatives remain feasible,” the agency said.

NEPA, the National Environmental Policy Act, requires the service to “evaluate the alternatives based on the resource,” the agency continued. “It does not require that we evaluate the economic viability of alternatives. Consequently, the Service has not eliminated either alternative from detailed consideration.”

The Fish and Wildlife Service has not yet chosen a final, or preferred, alternative. The agency said it anticipates a decision in June.

NordAq’s two-stage project

NordAq is a small, Anchorage-based independent. Its president and co-founder, Bob Warthen, is a geologist and veteran of the Cook Inlet oil and gas scene, having worked as a Unocal manager and as a consultant.

NordAq in early 2011 drilled a wildcat exploratory well, the Shadura No. 1. The company has not made clear the size of its apparent gas discovery.

The proposed Shadura development pad is more than a mile due east of the wildcat.

The EIS describes a two-stage development plan.

The first stage would include construction of a “minimal” drilling and processing pad. One gas well would be drilled and tested.

“If the results of this testing were unfavorable, all equipment and gravel would be removed and the affected areas would be restored to approximate preconstruction conditions,” the EIS says. “If the results of testing were favorable, the second stage would be constructed.”

The second stage would involve expanding the pad to its final size, and drilling five more gas wells, plus an industrial water well and a disposal well. Production facilities also would be installed on the pad.

Buried gathering lines would connect the pad to a metering pad, located on state land to the north.

“From the metering pad, a short pipeline would tie into the ConocoPhillips Alaska natural gas pipeline,” the EIS says. “The overall construction phase would occur over about 16 months. Once constructed, the project would operate for about 30 years.”

NordAq is one of a number of companies trying to establish new gas supplies around Cook Inlet, where legacy fields are depleting and peak winter deliverability has become strained.

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