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Vol. 15, No. 27 Week of July 04, 2010
Providing coverage of Alaska and northern Canada's oil and gas industry

Liberty rumblings

Senators vent their concern about BP’s Beaufort Sea OCS oilfield project

Alan Bailey

Petroleum News

As work continues apace to deal with the disastrous Gulf of Mexico oil spill, the words “BP,” “drilling” and “offshore” appearing in close proximity to each other in any context have become a potent mix. And when BP’s Liberty oilfield development, currently in progress in Alaska’s Beaufort Sea, appeared on the radar screen of Washington, D.C., lawmakers on June 24, the reaction was immediate, given lawmakers’ legitimate concerns about offshore drilling safety.

“Recent events show that when the Department of Interior approves novel and risky approaches to drilling in the absence of proven technologies to stop a spill, tragedy ensues,” said Sen. Frank Lautenberg, D-NJ, questioning the Liberty project in a letter to Michael Bromwich, the newly appointed director of the Department of the Interior’s Bureau of Ocean Energy Management, Regulation and Enforcement, questioning the Liberty project.

For Liberty, BP has assembled what it says is the world’s largest onshore rig for drilling ultra-extended reach wells from an expanded artificial island at the Endicott field, in the shallow waters of the Beaufort Sea coast. The wells will extend up to eight miles horizontally, to penetrate the Liberty reservoir under the Beaufort Sea outer continental shelf.

Although the Department of the Interior has imposed a six-month moratorium on oil drilling in the Arctic outer continental shelf, Interior has exempted planned drilling at Liberty from that moratorium because the drilling will take place from a manmade island close to shore — in fact both the Endicott satellite island and the adjacent island housing the Endicott production facilities are connected to the mainland by a short causeway that allows vehicle access to the field facilities.

NYT article

The sudden congressional interest in Liberty stemmed from an article that the New York Times published on June 23, characterizing the Liberty development as “controversial” and saying that federal regulators had allowed BP to write its own environmental review for the project. Experts have said that extended reach drilling is more prone than conventional drilling to the types of gas kick that triggered the Deepwater Horizon explosion, the article said.

“But BP’s project, called Liberty, has been exempted as regulators have granted it status as an ‘onshore’ project even though it is about three miles off the coast in the Beaufort Sea. The reason: It sits on an artificial island — a 31-acre pile of gravel in about 22 feet of water — built by BP,” the article said.

“In the Liberty project BP has set a new standard for impudence and demonstrated its continued commitment to profits over safety and the environment. In an attempt to escape federal regulation of offshore drilling, BP has built an artificial island in the Beaufort Sea and claimed its project is therefore being carried out ‘onshore,’” said Lautenberg, presumably reflecting the statement in the New York Times article.

At a Senate Energy and Natural Resources Committee hearing on June 24 Sen. Robert Menendez, D-NJ, referenced the New York Times article when questioning Bromwich and Interior Secretary Salazar about the Liberty project.

“When BP is going to drill under the Arctic Ocean it will do so using a risky drilling technique that MMS itself says is more prone to blowouts,” Menendez said. “… But then we learn that MMS regulators back in 2007 … allowed BP to write its own environmental review, which looks almost identical to the federal environmental review. Isn’t this something we should be looking at? Isn’t this the very essence of what we want to change at MMS?”

Interior investigating

“We are looking at that issue right now,” Bromwich replied. “… I was first made aware of this issue when I looked at the (New York Times) article at five o’clock this morning. … I can tell you that we have already called out to our regional office in Alaska and we’ll get to the bottom of it very quickly.”

Bromwich also commented that companies such as BP normally do submit their own environmental analyses of their projects, but the Department of the Interior is responsible for doing an independent National Environmental Policy Act review of what is proposed, forming its own independent judgments.

“I’m troubled by the suggestion that that was not what was done here,” Bromwich said. “That is what I’m going to get to the bottom of it, but right now I don’t have the answers for you.”

When this issue went to press Interior had not responded to questions from Petroleum News on the status of its enquiry into the Liberty project, but on June 24 an Interior spokesperson told Bloomberg Businessweek that the agency would be “carefully evaluating the project’s proposal for oil spill response, blowout prevention and other safety requirements.”

Begich letter

On June 28, Sen. Mark Begich, D-Alaska, sent a letter to Sen. Lautenberg, criticizing the New York Times article as “incomplete at best and seriously exaggerated at worst.”

“Although I very much share your frustration with the Deepwater Horizon oil spill, halting a project important to my constituents which is still in the permitting process is premature and inappropriate,” Begich told Lautenberg.

Begich said that Liberty will use existing Endicott gravel pads and causeways, built in four to 10 feet of water and used for oil production from Endicott since 1987.

“The Liberty project has been the subject of some of the most intense government and public scrutiny of any oil project in America,” Begich said. “It requires permitting by the North Slope Borough, the State of Alaska and the federal government, with whom BP has worked on its development plans. These plans have been modified to accommodate the recommendations of public and private sector experts, including the Eskimo Whaling Commission. The development is broadly supported by the Inupiat Eskimo residents of the North Slope Borough who depend on the region’s wildlife for their subsistence needs.”

Misconception, BP says

BP spokesman Steve Rinehart told Petroleum News June 28 that the concerns about possible gas kicks in the Liberty wells are based on a misconception that the wells will penetrate the Liberty oil reservoir at relatively shallow angles. In fact, the wells will traverse the territory between the wellheads and the field at shallow angles but will bend into steep trajectories before entering the reservoir formation.

“Liberty wells by design will penetrate the reservoir at an acute angle, making kick detection no more difficult than in most traditional wells,” Rinehart said. “… The technologies we plan to use in our Liberty wells and rig are proven — they are not ‘untested’ as uninformed critics say. Extended reach drilling has been advancing throughout the industry for about 15 years, including in Alaska, and is being used in numerous locations worldwide.”

BP has previous experience of ultra-extended reach drilling, including the record-breaking wells with 35,000- to 36,000-foot horizontal departures at the company’s operational oil field at Wytch Farm on the south coast of England. However, the Liberty wells, with horizontal departures of 40,000 to 45,000 feet, will set new world records, requiring the massive Liberty rig, new drill-pipe alloys and the ability to meet the challenges of steering the Liberty drill bit accurately through six to eight miles of rock.

In April ExxonMobil claimed to have set a new world record for an offshore extended reach well when it drilled a well with a horizontal departure of more than six miles into an existing oil field from an oil platform offshore southern California.

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The story of BP’s Liberty development

A browse through the U.S. Minerals Management Service archives shows that Shell originally drilled two wells in 1982 and one well in 1987 in the area of BP’s Liberty field, testing a prospect that Shell called “Tern” and finding evidence of producible hydrocarbons in the 1987 well. The company subsequently dropped the leases.

BP picked up the leases in a 1996 MMS Beaufort Sea sale and in 1997 discovered the 100 million barrel Liberty field when drilling an exploration well from the Tern gravel island. The company found that the Liberty oil reservoir is closely analogous in geology and production characteristics to that of the nearby BP-operated Endicott field.

In the late 1990s BP started moving forward with plans to develop Liberty, with MMS preparing an environmental impact statement for the project. The initial field design involved an offshore gravel island over the field, with an oil pipeline to shore, in a similar concept to the BP-operated Northstar field, in the Beaufort Sea northwest of Prudhoe Bay.

Morphed to extended reach

By 2006 the original development concept had morphed into the current field design, involving the drilling of ultra-extended reach wells from the Endicott satellite island. BP said that, with the Liberty wellheads located at Endicott, the Liberty field could share production facilities with the Endicott field, as well as sharing the Endicott oil export pipeline — production from the aging Endicott field was by then far below its early peak.

“In developing Liberty in this way we eliminated the need for new offshore islands; … we eliminated the need to put new processing facilities in place; and we eliminated the need for new buried pipelines to bring processed crude back to shore,” Darryl Luoma, BP’s general manager for the Liberty project, told the Alaska Support Industry Alliance in April 2009.

In December 2007 MMS released its environmental assessment of the Liberty project, essentially saying that because Liberty would use an existing industrial complex the project would have no significant adverse environmental impacts.

Using data from Shell’s original Tern wells, from the Liberty discovery well and from 3-D seismic data, and using its knowledge of the production characteristics of the Endicott field, BP has prepared a production plan for Liberty. That plan involves the drilling of up to four production wells and up to two injection wells, with the injection wells used to flood water through the field reservoir to help push oil out through the production wells, a technique commonly used in the relatively low-pressure oil fields of Alaska’s North Slope.

—Alan Bailey