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Providing coverage of Alaska and northern Canada's oil and gas industry
October 2018

Vol. 23, No.43 Week of October 28, 2018

BOEM issues ROD for Hilcorp’s Liberty project in federal waters

Kristen Nelson

Petroleum News

It’s been decades coming, but development of the Liberty discovery in federal waters off the North Slope now has a record of decision from the U.S. Department of Interior’s Bureau of Ocean Energy Management.

Oil was discovered by Shell in the area between 1982 and 1987, and BP confirmed the existence of the field with its Liberty No. 1 exploration well in 1997.

But development has been a challenge.

BP proposed development from an artificial gravel island in 1998, then changed the plan to one using ultra-extended reach drilling, but technical issues - and the Deepwater Horizon disaster - resulted in cancellation of the project in 2012.

When Hilcorp took over a number of BP’s North Slope properties in 2014, that acquisition included a 50 percent interest in Liberty and Hilcorp moved ahead with a plan similar to BP’s original concept.

Final EIS

BOEM issued a final environmental impact statement for Hilcorp Alaska’s Liberty project in late August, confirming a preferred alternative of Hilcorp’s proposed gravel island development.

Hilcorp has previously said it hoped to start building the 9.3-acre gravel island in late 2019, followed by a subsea pipeline in the winter of 2020 and first oil perhaps by 2022. There will be 16 wells at the field, with production likely starting at 10,000 to 15,000 barrels per day, and peaking at 60,000-70,000 bpd after about two years, with peak gas production at some 120 million cubic feet per day.

Hilcorp has said it thinks the field holds some 120 million barrels of recoverable oil and field life is anticipated at 15 to 20 years.

Conditional approval

In what the department called in an Oct. 24 press release a conditional approval, Interior Secretary Ryan Zinke said that if developed, Hilcorp Alaska’s Liberty project “would be the first oil and gas production facility in federal waters off Alaska.”

Interior said Liberty would be “similar to the four oil-and-gas-producing artificial islands currently operating in the area’s state waters: Spy Island, Northstar Island, Endicott Island and Oooguruk Island.”

“There are already four other gravel-island facilities off the North Slope, and we consider Hilcorp’s plan to represent a relatively conservative, time-tested approach toward offshore oil and gas development,” Joe Balash, Interior’s assistant secretary for land and minerals management, said in Interior’s statement. “Using input from North Slope communities, tribal organizations, and the public, we have developed a robust set of environmental mitigation measures and safety practices that will be applied to this project,” he said.

Hilcorp pleased

“We are pleased with today’s announcement,” Hilcorp Alaska Senior Vice President David Wilkins said in a statement. “The Record of Decision is the result of years of study and due diligence by multiple federal, state and local agencies and the project team. If granted final approvals, the Liberty Project will provide decades of responsible resource development and strengthen the energy future of Alaska and the United States.”

The company’s plans for Liberty development include a small artificial gravel island in 19 feet of water in the Beaufort Sea, some five miles offshore, about 15 miles east of Prudhoe Bay, with a buried subsea pipeline to carry sales grade crude oil to shore, connecting with the existing Badami pipeline.

Liberty oil is relatively light, which will benefit overall North Slope oil production and operation of the trans-Alaska oil pipeline, given the recent tendency for North Slope oil to become heavier, Wilkins said in describing the project in a Resource Development Council presentation on Sept. 20.

He characterized the reservoir rock, in the Kekiktuk formation, as excellent. The reservoir is equivalent to the Endicott field, and will enable high production rates, peaking at 60,000 barrels per day. The field has proven reserves of 80 million to 130 million barrels of oil, with an anticipated operational life in excess of 20 years, Wilkins said. Hilcorp’s Liberty project manager Mike Dunn said at the RDC presentation that following the ROD, the federal Pipeline and Hazardous Materials Safety Administration permit for the pipeline system should come by the end of the year or early next year. Approval of the oil spill response plan is expected to come in the first or second quarter of 2019.

At that point Hilcorp and its partners will take another look at the economics of the development and decide whether to move forward.

Dunn said the design for Liberty involves the use of modules small enough to be trucked to the North Slope and delivered to the island by barge. Most of the modules would be fabricated in Alaska, he said, with the exception of the power generation units and separation trains.

Construction of the island would take place in the winter of 2020-21, with subsea pipeline construction in the winter of 2021-22. Modules would be moved to the island the following summer, along with the drilling rig.

Drilling would begin that fall with a disposal well, followed by a gas injector and then a production well.

Facilities startup is planned for May 2023.

Approval conditions

Interior said BOEM used a rigorous evaluation process and conditionally approved the project “only after incorporating input from the public, and from North Slope communities and tribal organizations.”

Approval conditions include drilling into the hydrocarbon-bearing zone only during solid ice conditions, defined as at least 18 inches of ice within 500 feet of the Liberty development island and no pipe-driving or pile-driving activities at the island and no marine vessel traffic seaward of the barrier islands from Aug. 1 through the end of the Cross Island subsistence whale hunt.

Hilcorp also is required to complete development on numerous work plans including wildlife interaction, bird lighting and others.

- KRISTEN NELSON






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