|
First northwest NPR-A drilling this winter If changes to BLM’s northeast NPR-A plan approved by Secretary of Interior Gale Norton, lease sale there could occur next summer Kristen Nelson Petroleum News Editor-in-Chief
If Secretary of the Interior Gale Norton approves the Bureau of Land Management’s proposed changes in the National Petroleum Reserve-Alaska northeast area plan, BLM would hold a lease sale there this summer, BLM Alaska State Director Henri Bisson told the Alaska Support Industry Alliance Oct. 27.
The proposal to expand leasing north of Teshekpuk Lake in the northeast NPR-A has gone through a series of discussions with the North Slope Borough. “We have made changes, not significant, but changes which I think are mutually acceptable,” he said.
The record of decision is being reviewed now by senior staff and attorneys in Washington. “I can’t tell you when it’s going to come out. I hope it will come out soon,” Bisson said.
When that decision does come out, if it comes out soon and is favorable to leasing north of Teshekpuk Lake, “then I would expect we would propose to have a lease sale there next summer,” he said.
Going forward, BLM plans annual combined sales in both the northeast and northwest NPR-A, he said.
“On an annual basis we’ll continue to offer whatever hasn’t been leased; we’ll offer it every year.” That way, he said, companies “will be able to build an inventory of leased acreage…”
This winter the first two wells will be drilled in northwest NPR-A. “This will further define the Barrow Arch potential to the west of existing developments,” he said.
Although there is a lawsuit pending challenging the plan for the northwest area, the company has staged equipment for the work.
Bisson said BLM prevailed in district court in January on the northwest plan; an appeal was filed and oral arguments were presented at the 9th Circuit Court of Appeals in Seattle in September. He said he didn’t know how soon a decision would be handed down, but the agency is hopeful it will come in November. Energy Policy Act applies to Alaska Bisson reviewed sections of the Energy Policy Act of 2005 which apply to Alaska, including Section 347 which allows BLM “to extend leases in NPR-A which contain a well certified as capable of producing and to renew leases for an additional 10 years at a cost of $100 an acre if lessees can demonstrate due diligence” in exploration, he said. The difficulty with the 10-year leases in NPR-A is that a 10-year lease gives a lessee “roughly three years to explore” because it takes so long to get a prospect there into production.
That section also amends unitization requirements. “The final language on unitization represents a compromise that was reached between BLM, the state, ASRC and industry,” he said. Regulations are currently being developed to incorporate changes from the energy act into the agency’s current program.
Section 348 authorizes creation of the North Slope Science Initiative, “aimed at developing a unified and coordinated approach across the North Slope to inform the decision and permitting processes for oil and gas exploration and development,” he said. Gas hydrates incentives Section 353 provides incentives for gas hydrates production, allowing “the secretary to grant royalty relief for natural gas produced from gas hydrate resources under an eligible lease.” Gas hydrate production is not currently commercially viable, Bisson said, and the intent is to “provide some incentive to companies to spend the necessary research and development dollars.” The potential for Alaska is huge he said, comparing known reserves of conventional natural gas of 35 trillion cubic feet to an estimated resource of 590 tcf of gas hydrates onshore, and even more offshore.
Section 349 allows the secretary to reimburse companies through royalty relief or directly for remediation work on orphaned, abandoned wells on federal lands. There are more than 100 such wells in NPR-A, Bisson said, and while the reserve pits have been capped other work remains to be done.
Last fall BLM determined that the J.W. Dalton well on the coast just east of Point Lonely was in danger of being washed out because of coastal erosion. Bisson said he got Washington to ante up $7 million and BLM spent $5.5 million in a month cleaning up the reserve pit and removing some 10,000 gallons of diesel from the well bore. Some 300 feet of coastline had been lost in the area last summer, he said, and water was already lapping against pilings at the site.
This summer BLM cut off the well pipe and sealed it and cleaned up the site. After storms in early September the site was basically washed away: the sealed in well head is now underwater, Bisson said, with only some of the pilings left, standing in water.
BLM began work on the south half of NPR-A planning area this summer, 9.2 million acres that the agency believes has gas potential. It also contains 40 percent of the nation’s coal reserves and is currently off limits to coal leasing and mineral entry. Based on the known coal resource, Bisson said he predicts “it’s probably going to be the most controversial plan we’ve been involved in up in the petroleum reserve.”
| 