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Vol. 15, No. 3 Week of January 17, 2010
Providing coverage of Alaska and northern Canada's oil and gas industry

West Alpine on hold

Without corps permit, ConocoPhillips can’t start work in 2010-11 winter season

Kristen Nelson

Petroleum News

Work on ConocoPhillips Alaska’s Alpine West or CD-5 satellite — the first satellite planned for development in the National Petroleum Reserve-Alaska — has been delayed by at least a year. The company had planned to begin construction in the winter of 2010-11, with two winter construction seasons required.

While the company received permits it needs from the North Slope Borough and the State of Alaska, it has not received its 404 permit from the U.S. Army Corps of Engineers, Helene Harding, vice president of North Slope operations and development, told Petroleum News Jan. 14.

She said they’ve been getting a lot of questions on when the project will go ahead, and felt they needed to make the delay public. The corps has known since mid-December that lack of the permit would delay the project, she said.

Harding said the corps has said it is trying to do a diligent review.

“It seems for us it’s a little difficult to understand, given that they’ve had this since 2005 — basically the same permit that they’ve been able to work on since 2005. And there is an approved EIS with this development scenario so it’s quite disconcerting,” she said.

A spokeswoman for the Corps of Engineers told Petroleum News that the corps had no comment.

Alpine West, also called CD-5, is included in a 2004 Environmental Impact Statement which includes now-developed drill sites at CD-3 and CD-4 (Fiord and Nanuq), and other NPR-A drill sites at CD-6 and CD-7 (now called Greater Mooses Tooth 1 and 2), Harding said.

The preferred alternative for CD-5 in the EIS was a development with a bridge across the Nigliq Channel and a road connecting CD-5 with the main facilities at Alpine, she said.

Alpine is not connected to the North Slope road system but is accessed by ice road in the winter and by air.

The bridge issue

ConocoPhillips submitted a 404 permit to the corps in 2005 and “spent the next few years working on that,” Harding said.

But there were issues on the bridge location with Nuiqsut and Kuukpik, the village corporation for Nuiqsut, and while ConocoPhillips worked those issues in parallel with work on the corps permit, the project was put on hold and the permit withdrawn in 2008.

Harding arrived in Alaska in January 2008 and began working with Kuukpik and the Village of Nuiqsut on the bridge location. Local concerns were with fishing in the area originally proposed for the bridge and also with erosion, she said.

Agreement was reached to move the bridge to the south and the corps permit was basically re-submitted in December 2008.

With the exception of the bridge and pad locations, “it was pretty much the exact same permit,” Harding said.

The pad was moved because over the years ConocoPhillips had done “some more extended reach drilling into some of the area that we called Alpine West,” which led to the pad relocation.

The corps holdup

ConocoPhillips has “had extremely strong support” from Nuiqsut — the village corporation, the city and the Native village.

“All three had done resolutions in support of this,” she said. The project also received support from the Alaska Department of Natural Resources, the North Slope Borough and the Arctic Slope Regional Corp., Harding said.

By September, however, ConocoPhillips realized “that things were not going as quickly as we’d hoped, so we really put on a pretty big push with the corps.”

Harding said ConocoPhillips told the corps it had to have the permit by the end of the year.

In fact the original deadline was early November because of long-lead items, but because of changes in the steel market and lowered demand, “we were able to push that out another two months.”

But without the corps permit — and a permit from the U.S. Coast Guard which can only be issued following the corps permit — the company lost its construction window for next year.

“We won’t be able to get prepared for that construction season without the approval to be able to go forward,” Harding said.

And it’s not just CD-5 because there are three other projects stacked up behind it: Fiord West, Greater Mooses Tooth 1 and Greater Mooses Tooth 2.

CD-5 has been pegged at about half a billion dollars, Harding said, and the others at a similar cost, so some $2 billion in work is on hold.

At least a year

The delay will be at least a year, Harding said, because ConocoPhillips doesn’t have a permit and if a permit is issued, the company doesn’t know what stipulations it will contain. “There’s always the chance that we don’t get what we’ve asked for in the permit,” she said.

The EPA opposes the project, she said, and both EPA and Fish and Wildlife are opposed to taking oil across the Nigliq Channel on a bridge, and are asking for horizontal directional drilling under the channel.

Harding said that is what was done at the Colville River for Alpine, “except that’s sales oil and this would be three-phase fluid,” because CD-5 oil will be processed at Alpine.

It’s not the same as the Oooguruk field, where three-phase oil comes to shore in a pipeline, she said. The Oooguruk line is in a trench, “a very flat profile.” HDD under the Nigliq Channel would involve a pipeline with “very deep bends” to go under the channel, “so you have a lot more corrosion-erosion issues.”

And without a bridge there would have to be another airport across the Nigliq Channel. Harding said one thing ConocoPhillips has heard continuously from Nuiqsut “is they don’t like planes flying in this area.” Another runway increases the air traffic.

ConocoPhillips also has an agreement with Nuiqsut to fund up to $8 million for a road from the Alpine road system to Nuiqsut. The road would allow year-round access from Nuiqsut to Alpine, opening up employment opportunities, and would also give road access for Nuiqsut residents to some key hunting areas to the west.

A roadless development would also require larger pads, Harding said, because you wouldn’t have year-round access to Alpine, and would require, among other things, emergency response capability, “something we are definitely not comfortable with,” Harding said.

It could be done, she said, but it’s “a different level of capability due to the weather conditions out there. It’s much easier if you have a road to access it.”

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