While federal permits may move slowly these days, news about them travels fast.
When the Institute of Social and Economic Research at the University of Alaska Anchorage released its annual construction forecast on Feb. 2, the oil and gas sector offered a big question mark. The forecast estimated that $2.91 billion in oil and gas industry spending would account for 41 percent of all construction spending this year.
That would be a 3 percent jump from 2010, despite a slow exploration season.
But the next day, Shell pushed off its 2011 exploration program in the Beaufort Sea until 2012, saying it didn’t expect to get an air quality permit in time to drill this summer.
At the same time, BP released year-end financial information that moved the startup date for its Liberty project out to at least 2013, from an earlier target start-up date of 2012.
Those delays shave about $300 million from the $2.91 billion estimate, according to Scott Goldsmith, a UAA economics professor and one of the minds behinds the forecast.
ConocoPhillips also presents uncertainty for the forecast, because its largest development effort — Alpine West, the Alpine satellite also known as CD-5 — is at a standstill while the company tries to get key permits from the U.S. Army Corps of Engineers.
Even with those delays, though, the oil and gas sector continues to dominate construction spending because of projects on state lands and waters in northern and southern Alaska.
Pioneer is expanding its development at the nearshore Oooguruk unit. Its partner, Italian major Eni Petroleum, is just recently brought the neighboring Nikaitchuq unit online.
Onshore, Denver-based independent Savant Alaska continues to work on the BP-operated Badami unit, the eastern North Slope field recently brought back online, while Brooks Range Petroleum Corp. and its partners will drill the North Slope’s only exploration well.
In the Cook Inlet, the forecast expects work from majors ConocoPhillips, Marathon and Chevron (although Chevron wants to sell its Cook Inlet assets) and from independents. A team led by Armstrong Oil and Gas is about to bring the North Fork unit online, and Cook Inlet Energy continues to develop the assets of bankrupted Pacific Energy.
The forecast also assumes Enstar Natural Gas will begin construction this year on its new storage facility in Cook Inlet, a way to help meet winter gas demand in Southcentral.
However, the forecast does not shine favorably on Escopeta Oil or Buccaneer Alaska, the two independents separately trying to bring jack-up rigs to upper Cook Inlet. Despite renewed momentum on the efforts in recent months, the forecast says the projects “are challenged by cost and logistical problems. We assume they will not succeed this year.”
On the bright side, that could mean even more spending for 2012. Perhaps.