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Vol. 15, No. 24 Week of June 13, 2010
Providing coverage of Alaska and northern Canada's oil and gas industry

Budget funds road studies

Roads to Resources program gets $13 million to prepare impact statements for 2 roads, to Umiat and Nome, and to make geologic models of the Foothills

Eric Lidji

For Petroleum News

After several years of activity in the foothills of the Brooks Range, the past six months have been rather quiet for exploration, but somewhat active for promoting infrastructure.

The fiscal year 2011 capital budget Gov. Sean Parnell recently signed includes $13 million for the Roads to Resources program, a long-standing effort to expand infrastructure to parts of the state with oil, natural gas, coal and other natural resources.

The money will go toward studying roads to Umiat and Nome.

The appropriation includes $8 million allocated for environmental studies for a 75-mile road connecting the Dalton Highway to Umiat, a staging area on the Colville River. The so called Foothills West Transportation Access project would create a ground route to known fossil fuel accumulations in the region, like the Gubik natural gas field being explored by Anadarko and the Umiat oil field leased by Renaissance, as well as bridging the transportation gap to remote corners of the National Petroleum Reserve-Alaska.

The work planned this year would most likely go toward creating an environmental impact statement for the project and preparing for permit application. During a 2009 field season, the state established survey points throughout the region that will become fixed markers for future work, but still needs to conduct many additional studies related to wetlands, wildlife and fisheries, subsistence resources and other environmental issues.

State to model foothills

As a resource province, the foothills covers more than 40,000 square miles from the southern edge of the Arctic National Wildlife Refuge 1002 Area, also called the coastal plain, through state and Native lands, to the southern half of the federally managed NPR-A. This broad area is relatively underexplored, with only 61 exploration wells drilled over the past 70 years, less than one well for every 650 square miles, according to the state. Much of that drilling dates to post-World War II exploration conducted by the U.S. Geologic Survey and the U.S. Navy. Only seven wells have been drilled in the past 25 years.

That minimal drilling, though, uncovered nine natural gas fields and one oil field. The state blames the limited delineation and complete lack of commercial production in the region on limited infrastructure, which drives up the cost of development, meaning fields either need to be very big or commodity prices need to be very high to justify a project.

The capital budget also includes $370,000 for the Department of Natural Resources to create better geologic models of the foothills area to promote development of known reserves, prompt exploration of prospective areas and guide infrastructure decisions.

DNR plans to combine subsurface information from old well logs and seismic shoots with surface information gleaned from geologic mapping in the region. The models would shed more light on underexplored and unexplored areas, looking not only at reservoir characteristics and the reserves potential, but also potential geologic hazards.

The project is designed to help state and federal policymakers decide where and how to allocate public money on infrastructure projects in the region, but DNR plans to make its findings public as well in the hopes of spurring industry interest in the region.

The state sees the project as important not only for a potential “bullet” line from northern Alaska to population centers in Fairbanks and Anchorage, but also for proving up additional resources to prolong the life of a natural gas pipeline from the North Slope to markets in Canada and the Lower 48, should it eventually be built.

Route chosen for road to Nome

Being farther north, a road to Umiat wouldn’t bridge the gap on a road to Nome.

The capital budget also includes a $1 million allocation to finalize environmental studies needed to conduct an environmental impact statement on a proposed 500-mile route from the Elliot Highway in Manley Hot Springs to the Nome Council Road generally following the Yukon River. That project would cost some $2.5 billion to build and nearly $40 million would be needed annually for road maintenance and resurfacing.

A report released in January shows alternate routes that would provide access to more mineral wealth or cost less to build, but the state is leaning toward the Yukon River route because it serves more people, avoids federal conservation areas and uses existing highways. As the most direct route from Fairbanks to Nome, it also allows for future expansion to the mining districts to the north and south like Ambler and Donlin Creek.

This most recent push by Parnell picks up legacy projects to build western roads.

Former Gov. Frank Murkowski created Roads to Resources in 2005, and former Gov. Wally Hickel also proposed major road projects to spur economic development.

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