The Alaska Department of Natural Resources has applied for two pipeline rights of way that would link future oil and gas developments on the eastern North Slope with the Prudhoe Bay complex to the west — a function normally undertaken by unit operators.
DNR’s Office of Project Management and Permitting filed the applications with the State Pipeline Coordinator’s Office on Sept. 20 as part of Gov. Frank Murkowski’s effort to provide “key infrastructure to accelerate oil and gas development on the eastern North Slope,” DNR’s Division of Oil and Gas Director Mark Myers told Petroleum News.
The two adjacent pipeline rights of way would begin inside the ExxonMobil-operated Point Thomson unit, which is not yet in production and borders the 1002 area (coastal plain) of ANWR on the east.
DNR’s pipelines would terminate at “the trans-Alaska oil pipeline (which starts in the Prudhoe Bay unit) and/or a future gas processing facility and proposed gas transportation pipeline. The proposed rights of way, one for liquids and the other for gas, are approximately 45 miles long and located on state-owned lands,” DNR said (see map).
State wants to be ready
Although the state has not decided if it will actually build the two pipelines, DNR Deputy Commissioner Dick LeFebvre told Petroleum News “we want to be ready if we do have an opportunity for development out there — future explorers working offshore or onshore will know they will have a pipeline they can tap into.”
“We’ve been looking at a lot of things to help spur North Slope development,” Myers said, “such as staging areas and roads. … Development at Alpine spurred a lot of activity on the western North Slope and into NPR-A.” The state, he said, is hoping potential explorers on the eastern North Slope will be encouraged by DNR’s rights-of-way applications.
A company interested in building one or both of the lines could take over DNR’s rights of way to “build a regulated pipeline (common carrier line), one any company could use, which is what this pipeline would have to be,” LeFebvre said.
There are two types of rights of way, he said, “a conditional rights of way and a straight rights-of-way lease.” The state’s applications are for conditional rights of way, which are for lines in which the “financing arrangements have not yet been made.”
Myers said the state was “not looking at filing other pipeline permits at this time, such as with DEC (Alaska Department of Environmental Conservation) or the Corps (of Engineers).”
Exxon application on hold
Exxon, LeFebvre said, has a rights-of-way application on file for a 22-mile line connecting the Point Thomson unit to the Badami unit, which is between Point Thomson and Prudhoe Bay, but Exxon has that application on hold.
“Our routes are pretty similar,” Myers said. (Although the state’s application proposes to build a new pipeline from Badami to Prudhoe, its line parallels the existing Badami oil line.)
The July 2002 application submitted by Exxon was for a pipeline rights-of-way lease to tap the unit’s 329 million barrels of recoverable condensate, something unit owners Exxon and BP, focused on commercializing North Slope gas, now say is less preferable than first producing the unit’s 8 trillion cubic feet of natural gas and tying field development to a natural gas pipeline from the North Slope. (See Sept. 11 issue of Petroleum News for latest story on the clash between the state and Exxon about Point Thomson development.)
In 2002 pipeline materials were pegged by Exxon at $15 million and construction at $25 million. Initial plans were to deliver materials to Prudhoe in 2005, build the line this coming winter, and start operations in the fourth quarter 2006. (See July 28, 2002, article in Petroleum News.) Annual operating and maintenance costs were estimated at $5 million.
After reviewing DNR’s applications to ensure they meet requirements and are complete, the pipeline coordinator’s office will make the applications available to the public for comment.
—Kay Cashman
