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Hilcorp hopes for oil from Liberty field in Beaufort Sea in 2022
Hilcorp Alaska hopes to start building the offshore gravel island for its planned Beaufort Sea Liberty oil field in late 2019, with the laying of the field’s subsea pipeline taking place in the following winter and first oil from the field perhaps flowing in 2022, Mike Dunn, Hilcorp’s Liberty project manager, told the Alaska Support Industry Alliance on Oct. 26. Currently, the draft environmental impact statement for the field development is moving through its public comment period, with that period scheduled to end in mid-November, Dunn said.
The final EIS for the project is likely to be published in about a year’s time, with a record of decision by the Bureau of Ocean Energy Management or the Department of the Interior being issued in the fall of 2018. The working interest owners would then need to run the economics of the project, to make a decision on whether to sanction the development.
“We think we can get the cost such that this will attract capital, provided the oil price gets some legs, something north of $50 per barrel,” Dunn said, emphasizing that, with cost estimates for the project still being approximate, Hilcorp cannot currently say what the project’s breakeven oil price would be.
Field construction would likely generate 200 to 300 jobs over around a five-year period. And there would be a 2.5 to three year drilling cycle, given the need for seasonal drilling restrictions, Dunn said. Once in operation, the field will require 20 to 30 full-time operations staff on the production island, with additional staff supporting the field logistics. Direct employment for the field will in turn drive indirect employment in Alaska.
Small but advantaged With some 100 million barrels of recoverable oil, the field is relatively small.
“The reason this reservoir’s been sitting there for 30 years is it’s a marginal field,” Dunn said.
However, the field does enjoy some advantages that swing the economics in its favor. In particular, the oil in the field’s reservoir is light and the reservoir rocks have good properties, similar to those in the Endicott field to the west. Consequently, Hilcorp anticipates being able to develop the field with relatively few wells: around four or five injectors and four or five producers, Dunn said. In addition, Hilcorp plans to develop the field using relatively small, truckable modules and equipment that can be built in Alaska, rather than the more expensive large, barged units have tended to be used in other Arctic Alaska field developments.
The concept of producing light oil from Liberty is especially appealing as a means of diluting the heavier oils that are coming from some of the North Slope fields. And, although the anticipated peak output of about 60,000 barrels would be only around 15 percent of the current trans-Alaska oil pipeline throughput, bringing on a field like Liberty helps extend the pipeline’s life and, hence, the lives of other fields.
“This field will probably get all of the oil out of the ground in somewhere between 15 and 20 years,” Dunn said.
Dunn said that the field does not appear to have a significant gas cap. However, Hilcorp anticipates injecting produced gas into the crest of the reservoir structure, with that gas then becoming available as a source of fuel gas towards the end of the field’s life.
Artificial island As previously reported in Petroleum News, Hilcorp plans to develop the field from an artificial gravel island, about five miles offshore in Foggy Bay, about 15 miles east of Prudhoe Bay. The island would have a surface area of about nine acres in 19 feet of water. Dunn said that the island would be larger than BP’s Beaufort Sea Northstar field, to allow more space for operations. The field lies entirely in federal land on the Beaufort Sea outer continental shelf.
Reflecting on the fact that Hilcorp normally buys older fields for revitalization rather than developing new fields, Dunn commented that the Liberty development will use well established technologies and will involve the excellent workforce that Hilcorp inherited when it took over the operatorship of the Northstar, Endicott and Milne Point fields a few years ago. There are four existing artificial islands, similar to that planned for Liberty that support offshore oil fields in the Beaufort Sea. And more than 20 exploration islands have been built in the last 40 years, Dunn said.
“We are very confident we can do a project like this,” he said.
The subsea pipeline that will bring the Liberty oil to shore will be of a pipe-in-pipe design first implemented at the Oooguruk field offshore the central North Slope. The Liberty pipeline system will have a 12-inch oil pipeline inside a 16-inch outer pipe and will include a fiber optic line for monitoring temperatures. The pipeline system will employ state-of-the-art technologies for leak detection, Dunn said.
Subsistence hunting Dunn commented that Hilcorp is very sensitive to the proximity of subsistence hunting grounds to the Liberty project - Cross Island, a focus of subsistence whale hunting, lies to the north of the planned Liberty Island.
“We’ve had lots of discussions with the whaling captains,” Dunn said.
Hilcorp now operates a communications center at Endicott in support of the hunting - bilingual operators talk to the captains and plot where whale strikes occur. In return for formalizing this support and providing assurance over protection of the community subsistence lifestyle, the communities are helping Hilcorp figure out how to achieve that protection.
“They’ve given us a lot of feedback on how to manage noise, for example,” Dunn said. “We’re not going to do any sheet pile work in August, September, when whales are in the area. So construction is done in the winter time.”
- ALAN BAILEY
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