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Vol. 18, No. 40 Week of October 06, 2013
Providing coverage of Alaska and northern Canada's oil and gas industry

BP’s Liberty island

Regulators reveal company’s thinking on how to proceed with stalled Alaska project

Wesley Loy

For Petroleum News

In June 2012, BP Exploration (Alaska) Inc. made the startling announcement that it was dropping its ambitious plan to develop the offshore Liberty field using ultra extended-reach drilling from shore.

In the 15 months since, it has been less than clear what alternate approach, if any, BP might take on Liberty.

But now, the company’s direction is becoming evident.

On the U.S. Bureau of Ocean Energy Management website devoted to Liberty, this statement has appeared:

“BP Exploration (Alaska) is now proposing a stand-alone drilling and production processing island as the safest and most environmentally responsible course of development for the Liberty Prospect.”

Suspension of production granted

Dawn Patience, spokeswoman for BP Alaska, told Petroleum News on Oct. 2 she had no reason to doubt the accuracy of the statement on the BOEM website.

BP has been working with government officials on how to proceed with Liberty, located on federal leases in shallow water, about 20 feet deep, in the Beaufort Sea about six miles offshore and 15 miles east of Prudhoe Bay.

In December 2012, the BOEM’s sister agency, the Bureau of Safety and Environmental Enforcement, granted BP a two-year “suspension of production” for Liberty unit leases OCS Y-1585 and Y-1650.

The agency gave the company until Dec. 31, 2014, to submit a new development and production plan for the unit, and cited the end of 2020 as the goal for first oil.

Back to initial idea

BP originally had hoped to put Liberty into production in 2011.

Those plans, however, crumbled amid technical problems with the custom rig Parker Drilling Co. built for the project, as well as federal regulatory complications apparently stemming from the Deepwater Horizon disaster in the Gulf of Mexico in April 2010.

Today, the gigantic rig remains idle on a pad at BP’s Endicott field. The pad was where BP had planned to drill what it said would be the longest extended-reach holes ever attempted to tap the offshore Liberty reservoir.

BP had said drilling these superwells from land was the best approach.

But now, the company has returned to its initial idea of constructing a gravel island at Liberty with production facilities and a buried subsea pipeline to carry oil to shore.

That’s what BP did for its Northstar field, which sits in federal and state waters northwest of Prudhoe Bay.

150 million barrels

BP drilled and tested Liberty No. 1, the discovery well, in early 1997.

The company’s most recent publicly stated resource estimate for the Liberty field is “approximately 150 million barrels of recoverable, high-quality light oil.”

Proceeding with an artificial production island offers some difficult challenges. Questions will be raised about the potential impact to bowhead whales, which Native hunters pursue for food. Also, a unique kelp bed known as the Boulder Patch is in the vicinity of Liberty.

The fate of the Liberty drilling rig remains undecided, Patience said.

In its June 2012 announcement, BP said it decided against extended-reach drilling after doing “a detailed 18-month review of the rig systems, an analysis of the project’s risk and economics, and an assessment of the evolving regulatory framework.”

The rig needed substantial modifications to its mud, hydraulics, pipe handling, heating and other systems, BP said.

Retrofitting the rig is now seen as too costly, Patience said.

In a Nov. 20, 2012, letter to the BSEE, the company said recovery from the Liberty leases could be as much as 15 percent higher using “development concepts” other than ultra extended-reach drilling.

That letter said BP already had spent in excess of $1 billion toward development of the Liberty unit.



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