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Extending the Spine State of Alaska scraps Foothills road for shorter route to NPR-A Larry Persily Petroleum News Government Affairs Editor
State planners have decided the best way to connect National Petroleum Reserve-Alaska oil and gas leases with the North Slope road system is to extend the Spine Road that runs through the Prudhoe Bay and Kuparuk River fields straight west across the Colville River.
The decision is a change from earlier plans to build a much longer year-round gravel road from Pump Station No. 2 on the North Slope Haul Road, south of North Slope operations at Deadhorse, then running west through the Foothills before looping back north to the Colville River crossing and NPR-A.
That route, measuring 102 miles, was estimated at $350 million to $400 million, which included the cost of the river bridge, but it avoided the problem of turning the Spine Road into a route for through traffic. It also could have brought road access to the Foothills region, southwest of Prudhoe Bay.
The new plan, at just 18 miles for the straight route, is projected at no more than $150 million, said Mike McKinnon, project manager for the Alaska Department of Transportation. That estimate includes limited improvements to the existing Spine Road, including more gravel and adjusting some turns in the road, he said. Through traffic presents problems Looking at the cost differential, McKinnon said, it became clear to state officials the shorter route is the better way to go, although it presents its own problems. North Slope producers are nervous and cautious about opening the Spine Road to through traffic.
“While we see benefits of a limited-access road, we have serious concerns regarding the safety of our employees and the security of 15 percent of America’s domestic oil supply that must be addressed,” said ConocoPhillips spokeswoman Dawn Patience.
BP spokesman Daren Beaudo offered a similar comment. “As field operator, we have expressed our concern to state officials regarding connecting the Spine Road westward if it suggests the Prudhoe Bay oil fields be opened uncontrollably to anyone who wants access.
“From a safety and energy security standpoint, we must remember we’re living in a post-9/11 world, and terrorism is a very real concern.” State will need to negotiate with North Slope producers Now that the state has decided on the route, it will have to negotiate with the producers for use of the Spine Road — addressing security issues and answering who will pay for maintenance and operations of the road and the extension.
“The state must be prepared to assume the expense of maintaining the road, providing emergency response to incidents as well as law enforcement support,” Beaudo said. The cost and operation of gates, barriers, fences and labor to staff access points also should fall to the state, he said.
The producers currently pick up the entire check for maintenance along the year-round, gravel Spine Road, which generally is closed to all but their own vehicles and contractors.
The Spine Road, actually a series of roadway extensions built over the past 30 years of North Slope development, extends westward 57 miles from the North Slope Haul Road (Dalton Highway) at Deadhorse, passing drilling pads and production facilities along the way. Extension would start at Tarn Road McKinnon said the state’s latest proposal is to extend the road from its junction at the Tarn/Meltwater Road, at the western end of its reach. From there, it is 15 miles to the Colville River, where a 3,300-foot-long bridge would cross the river into NPR-A.
A final 2.3 miles of road would be built on Native corporation-owned land across the river to avoid the federal prohibition on year-round gravel roads linking NPR-A to the North Slope road system.
The Department of Transportation last month submitted permit applications to the U.S. Army Corps of Engineers, with jurisdiction over wetlands crossings, and the Alaska Department of Natural Resources, which must approve gravel sites and rights of way. The new design is called the Colville River Road, McKinnon said.
In addition to saving a couple hundred million dollars by choosing the shorter, more direct route, the new plan acknowledges there is not an immediate need for the longer, southerly route. There just isn’t as strong an opportunity for oil production along that corridor as there is in NPR-A.
“We recognize that in the future the Foothills Road West will have merit,” McKinnon said. A road extension south and west into the Foothills region would stay on the list of potential projects to serve more North Slope acreage, followed later by a north-south route heading back to the Colville River Road.
But that latter piece is still a ways off, he said. “We recognize that for the foreseeable future the north-south segment is not on the books … not even on the radar screen.” NPR-A key to state production On the screen, however, is Conoco-Phillips’ preliminary success in finding oil in NPR-A, where the company has been exploring since 1999. The state’s intent is that year-round road access into the area would help make development of the discoveries more attractive to the company while also prompting ConocoPhillips and others to undertake more exploratory drilling.
The company is cautious, however, in counting the potential benefits from the road project.
“It seems premature to assess the long-term economic savings without understanding the funding mechanism. In addition, we need to understand the costs associated with mitigating any safety and security concerns,” Patience said.
NPR-A is essential if the state is to reach its latest projections for long-term North Slope production, on which Gov. Frank Murkowski has pegged Alaska’s future fiscal health. The Department of Revenue in its forecast issued last month estimated 114,000 barrels a day of NPR-A production by 2014, about 13 percent of the slope’s total production that year.
“The need for North Slope road connectors to improve access to the NPR-A was found to be the most important investment the state could make in furtherance of resource development opportunities for Alaska’s economy,” the Department of Transportation said in its project description. Ice road use more limited “Recent reductions in the ice road season on the North Slope and a new generation of oil and gas exploration opportunities combine to make all-season access important to continued development.”
Warming arctic temperatures have shortened the window for construction and use of ice roads to reach drilling sites, cutting the season from 220 days in 1970 to just 103 days in 2002, the department said. Average North Slope winter temperatures have warmed up by more than 4 degrees since 1971, according to University of Alaska statistics.
“There is a practical limit to how far exploration can reach without the aid of all-season roads,” the department said.
The proposed Colville River Road would be built up with eight feet of gravel to protect the permafrost, at a width of 32 feet, according to the permit application. The bridge crossing would be about 11 miles south of ConocoPhillips’ operations at Alpine and three miles south of the village of Nuiqsut.
The timetable for the project assumes the Army Corps’ environmental review is completed in 18 to 24 months, McKinnon said, either as an environmental assessment or as a full environmental impact statement. While the review is under way, the state plans to work on preparing bid-ready designs for the construction work. Construction starting in 2006 The Department of Transportation already has advertised for engineering services, he said, and will work with North Slope producers and North Slope Borough officials on security and access issues so that all of the pieces are ready to go when the permits are granted.
“The design and permits should conclude at roughly the same time,” McKinnon said.
Construction would start in 2006, with completion projected for 2009. Perhaps three-quarters of the total cost will go toward the Colville River bridge, he said.
There have been no decisions on how to pay for the project, said McKinnon and Brad Pierce of the governor’s budget office. The state most likely would look for federal dollars, Pierce said, possibly looking to the North Slope Borough to also help with financing.
Federal and borough assistance makes sense, Pierce said, looking at Department of Revenue estimates — based on oil at $22 a barrel — that show the federal treasury would take about 32 percent of the wellhead value of NPR-A production through corporate income taxes and royalties, with the North Slope Borough in line for about 11 percent of the wellhead value through property taxes. Nuiqsut access could be part of funding And although federal funding rules usually prohibit financial assistance for roads closed to public use, McKinnon said the anticipated access for Nuiqsut residents could overcome that potential problem. The all-season road link for residents would provide access to the jet airport at Deadhorse and could reduce freight costs for food and fuel, in addition to giving villagers a way to get to oil field jobs.
Part of the project plan also includes working with the federal Bureau of Indian Affairs, which is looking at building a three-mile gravel road to connect the village of 450 residents with the new state road.
“There is a potential for the state to take construction responsibility for the proposed BIA road to accelerate Nuiqsut’s connection to the Colville River Road,” according to the state’s project description.
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