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Vol. 12, No. 3 Week of January 15, 2006
Providing coverage of Alaska and northern Canada's oil and gas industry

Borough OKs rezone

Pioneer’s proposed Oooguruk oil project rezoned for resource development

Kay Cashman

Petroleum News

On Jan. 10 the North Slope Borough Assembly unanimously passed ordinance 75-06-50, approving Pioneer Natural Resources’ request to change the zoning of the proposed Oooguruk oil project area from conservation to resource development.

According to NSB land management specialist Gordon Brower there were a number of industry people in Barrow for the Assembly meeting, including people from Pioneer, BP and ConocoPhillips.

“I think they’re just interested in what the borough’s policy will be with these near shore developments,” Brower told Petroleum News Jan. 11.

This is the second rezoning application that has been approved by the borough for a near shore development. Last year Kerr-McGee was able to rezone its proposed Nikaitchuq oil development which is about 9 miles east of Oooguruk.

“The NSB maintains its position in opposition to offshore development, but citing policy and the area proposed, the planning department was able to balance this opposition using the North Slope Borough Coastal Management Plan and the policies of Title 19,” Brower said, noting that “the design for the development was based on” Kerr-McGee’s Nikaitchuq development.

According to Brower, Pioneer said it needed a decision on the rezoning by Jan. 15 in order to start construction of the Oooguruk gravel island this winter.

Pioneer told borough officials that it intends to immediately apply for its NSB permits, which Brower said are expected to move quickly through the process. “Now that the assembly has made its decision … all that’s needed for the permits is administrative approval,” he said.

He said it is his understanding that Pioneer expects to have all the gravel in place for the island “before the tundra travel closure date for this year. … Pioneer will monitor the island to make sure it holds. Next winter they want to do the placement of the subsea pipeline.” (See sidebar to this story.)

A few days before the Assembly vote the NSB Planning Commission passed a resolution recommending approval for rezoning to the Assembly on the condition that Pioneer be asked to “mitigate for subsistence and Native allotment impacts, with additional mitigation to implement an Economic Opportunity plan approved by the Land Management Administrator that would provide a vehicle for training and other opportunities for North Slope residents,” Brower said.

Those conditions were part of the modifications attached to the approval by the Assembly.

The Oooguruk oil field development has not yet been sanctioned by Pioneer.

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Pioneer’s Oooguruk project one step closer

Last month Pioneer Natural Resources said it needed two things before it could submit its North Slope Oooguruk oil development for sanction to its board – approval from the North Slope Borough to rezone the Oooguruk area for resource development and permit approval from the U.S. Army Corps of Engineers.

On Jan. 11 Oooguruk Pioneer got one of the two things it needed when the project area was rezoned by the North Slope Borough Assembly (see adjacent article).

A source at the Corps said agency personnel are in the process of writing the decision document/Environmental Assessment now, which contains their recommendation and justification for that recommendation, and expect to have it complete before the end of the month for review by their superiors. And while the Corps won’t say if its staff is recommending Oooguruk permit approval, Corps spokeswoman Pat Richardson told Petroleum News Jan. 12 that the agency is “very close to a decision.”

Pioneer officials told the borough they needed rezoning wrapped up by Jan. 15 if project construction was to begin during the current winter season.

Can still happen this year

On Jan. 12 Petroleum News asked Pioneer Vice President of Corporate Affairs Susan Spratlen what would happen if the Corps permit was not approved until the end of January? Could Pioneer still get the project sanctioned to start construction this year or would Oooguruk work have to be postponed until next year?

Spratlen said Pioneer could “make it happen this month.” The company’s board of directors has “all the basic information. It’s just a matter of tying up these loose ends” before voting on whether or not to approve the project, which she said can be done telephonically.

In early 2007 Pioneer would then “install the subsea flowline and get the drill site hardware on the gravel island,” Ken Sheffield told Petroleum News in December. Sheffield is president of Pioneer’s Alaska subsidiary.

Pioneer does not yet have a “definitive” facility sharing agreement with Kuparuk River unit operator ConocoPhillips, where Oooguruk oil will be processed, but Sheffield said it does have a “Memorandum of Agreement with Kuparuk unit owners that lays the foundation for that future facility access agreement. … The KRU ballot 255 and 255A (backout portion) will be the foundation of the future agreement.”

Spratlen or Sheffield would not comment on whether the project would be sanctioned by Pioneer.

Pioneer’s permit application with the Corps calls for a 10.85 acre offshore gravel island in the Colville River Delta halfway between Barrow and Deadhorse, involving almost 1.2 million cubic yards of fill and backfill from Mine Site E, 8 miles east and northeast from the onshore production tie-in pad, which is DS-3H in the ConocoPhillips-operated Kuparuk River field.

Fill will consist mainly of gravel; backfill will come primarily from in-situ material excavated from the Beaufort Sea floor or tundra. Total fill will impact 91.2 acres of the shallow waters of the Beaufort Sea and tidelands.

Erosion proof bags will be placed around the edges of the island, Richardson said.

“There will be a gravel access ramp on one side of the island and a sheet pile dock on the other,” she said.

“A bundled flowline 5.7 miles long … buried six feet under the seafloor will take crude oil, natural gas and produced water to shore. … Onshore 300 feet will be buried,” and then the final 2.7 miles of flowlines will be above ground on vertical support members, running in a straight line to the onshore pad,” Richardson said.

In its Corps application Pioneer said “The produced fluids would be transported to the on-shore pad for processing through an approximate 12-inch three phase (oil, gas and water) pipe-in-pipe pipeline. Also buried within the same trench would be an approximate 8-inch single pipe water injection line, 6-inch single pipe gas line, 2-inch single pipe Arctic heating fuel line and a power and communication cable.”

The power and communication cable was the only line that won’t be bundled with all the other lines, the company said.

In its Corps application Pioneer said if the Oooguruk project moved forward it would construct temporary ice roads and pads to access the work sites.

A temporary winter work camp would be set up for 200-225 people at Oliktok Point.

In the second quarter 2007 Pioneer hopes to install the drilling rig and begin drilling 40 to 60 wells on 7-foot centers, approximately half of which would be production wells and half injector wells.

The island would be manned during development drilling, which is expected to take four years, with housing provided on-site.“During production—post-drilling—the island would be remotely operated with personnel quartered on-site as needed for operations and/or maintenance. Transportation would be by ice road, barge, hovercraft and/or helicopter. … The island would have one ClassI/II underground injection well and grind and inject equipment for disposal of drilling wastes. A barge may be moored at the island dock to store drilling supplies and equipment,” Pioneer said in its application.

At peak production Oooguruk is expected to produce 18,000 to 20,000 barrels per day from the Nuiqsut and Kuparuk formations.

—Kay Cashman