|
Upping efficiency
Feige tells Alliance that DNR is reviewing its regulations and procedures
Alan Bailey Petroleum News
In support of Gov. Mike Dunleavy’s priority of maximizing resource development in Alaska, the Department of Natural Resources is seeking ways of improving the efficiency of its operations, DNR Commissioner Corri Feige told the Alaska Support Industry Alliance on Jan. 10.
“We are right now undertaking a bottoms-up review of all of our regulations, all of our procedures, all of our programs, to make sure things are running as smoothly, as timely and as efficiently as they possibly can,” Feige said.
DNR needs to figure out how to minimize its operating costs, along the lines of a business, while also fulfilling its role of de-risking resource development investments in Alaska and ensuring resource protection for multiple uses, she said.
“This all has to be done under the umbrella of still offering significant oversight that ensures that our operators have a science-based permitting program that ends in legally defensible authorizations and permits,” Feige said.
On the one hand the state administration has to operate within its means, with a budget that matches its revenues. On the other hand, DNR has a role in growing those revenues, she said.
Resource development life cycle The department is involved in resource development through a life cycle process that begins with taking title to state lands from the federal government and preparing best interest findings for the uses of those lands. Those best interest findings form the basis for, among other things, conducting state oil and gas lease sales; permitting exploration and development activities; oversight of those activities; and approval of reclamation and closure programs, once activities come to an end.
Examples of areas where efficiencies may be made in DNR’s regulatory procedures include the digitization of archaic paper-based procedures, consolidating the department’s organization and re-arrangement of work locations, to enable DNR staff to work as efficiently as possible, Feige suggested.
With a federal administration that looks favorably on resource development, and with people from Alaska in key positions in the U.S. Department of the Interior, Alaska has a unique window of opportunity to promote resource development, Feige said. In particular, the state is pushing to move forward on remaining state entitlements to federal lands emanating from the Alaska Statehood Act, she said.
Optimism over development Feige struck an optimistic tone in reviewing the resource development situation in Alaska, a state which she said has a surface area twice the size of Texas and is larger than all but 18 sovereign nations worldwide. Things are looking up, both for oil and gas, and for mining, she said.
“We are starting to see a re-invigoration of exploration and activity, and I think that is driven largely by the incredible potential Alaska has for both minerals and oil and gas,” Feige said.
The state’s December 2018 North Slope oil and gas lease sale was the third highest since 1998, in terms of winning bids, with more than $29 million in bonus bids going to the state. In the central North Slope, more than 50 percent of available land is now under lease, a pretty exciting statistic, Feige said.
From an oil and gas perspective, Alaska remains relatively unexplored compared with the Lower 48 and other petroleum provinces - the North Slope has a little more than 500 exploration wells, compared with, say, Wyoming, which has more than 19,000 exploration wells in a much smaller area, Feige said.
Current North Slope activity Feige also reviewed current exploration and development activity on the North Slope.
Oil Search is drilling two appraisal wells in the Pikka unit, as a lead up to a final investment decision for a Pikka oil development - that decision is expected by mid-2020, with first oil from the field potentially in 2023, Feige said.
Hilcorp Alaska is busy with its Moose Pad development project in the Milne Point unit. The company anticipates drilling 50 to 70 wells from the pad, with peak production of about 16,000 barrels per day by 2020. And in the fall the federal Bureau of Ocean Energy Management issued the final environmental impact statement for Hilcorp’s Liberty oil field development in the Beaufort Sea.
BP is “going great guns” in the Prudhoe Bay unit and is bringing back two full-time drilling rigs to work in the unit, Feige said. The company is also conducting a multi-year seismic survey across the field, to enable the targeting of small, discrete oil pools that have yet to be developed, she said.
ConocoPhillips, by far the most active company on the Slope, has several projects underway. In the Kuparuk River unit, the northeast West Sak expansion is moving into its second phase of development, and the company has expanded its drilling operations in the Colville River unit. The company is also active within the National Petroleum Reserve-Alaska, with, among other things, first oil from the Greater Mooses Tooth 1 development in October and appraisal drilling planned for the Willow prospect.
This winter Great Bear and partners will be drilling the Winx No. 1 exploration well, just to the east of the Horseshoe oil discovery from a couple of years ago. And Eni has now acquired about 350,000 exploration acres between Prudhoe Bay and Point Thomson.
Cook Inlet In the Cook Inlet region Hilcorp is going strong, with lots of onshore drilling on the east side of the inlet and new drilling from the monopod platform in the Trading Bay unit, to re-establish production in that unit. Furie Operating Alaska is actively conducting drilling in the offshore Kitchen Lights unit, while BlueCrest Alaska Operating is continuing to use extended reach drilling to develop the offshore Cosmopolitan unit from the onshore Hansen pad. Amaroq Resources continues to operate the Nicolai Creek gas field and is going to purchase some acquired seismic data, to evaluate new exploration and expansion targets, Feige said.
“2019 is expected to be the busiest year in the past at least 10 years for exploration and production rig activity in the state,” Feige said.
Feige also commented on the manner in which companies new to Alaska have been engaged in exploration in the state in recent years. New companies, such as Oil Search, validate industry recognition of the potential of new oil plays in the Brookian rocks of the North Slope. And the state is seeing a resurgence of interest in the North Slope and Alaska by large global players such as Shell and Occidental, she added.
| 