A recent decision from the U.S. Fish and Wildlife Service could usher in a new natural gas development on Alaska’s Kenai Peninsula.
An agency official on June 28 signed a “record of decision” that gives NordAq Energy Inc. the access it wanted to the proposed Shadura development.
The site is northeast of the Nikiski community, inside the Kenai National Wildlife Refuge. The Fish and Wildlife Service manages the refuge.
More than a year ago, in May 2012, the service received a right-of-way application from NordAq to develop the Shadura site. The agency then proceeded with writing an environmental impact statement.
The service considered a number of alternatives for road and pipeline access to the site, including a couple that would’ve had the road come out of the Swanson River oil field to the east. NordAq objected to these alternatives, saying they posed “financial costs and complications” that could kill the project.
In the end, the Fish and Wildlife Service granted NordAq’s favored alternative, with the 4.3-mile access road coming in from the northwest off the Kenai Spur Highway at Captain Cook State Recreation Area. Buried gas lines and a communications cable will parallel the road.
What now?
NordAq is a small, Anchorage-based independent. It is among a number of companies looking to prove up new supplies of natural gas to replace declining reserves in the Cook Inlet region.
A company executive did not respond to requests for comment on the agency decision.
In early 2011, NordAq laid a temporary ice road to its Shadura prospect and drilled a wildcat exploratory well, the Shadura No. 1.
The company hasn’t made clear the size of its apparent discovery. But the tentative development plans suggest a find worthy of some excitement.
The proposed Shadura development pad is more than a mile due east of the wildcat. For the EIS analysis, NordAq offered a two-stage development plan.
The first stage would include construction of a “minimal” drilling and processing pad. One gas well would be drilled and tested.
If the test results were unfavorable, all equipment and gravel would be removed and the affected areas would be restored to a preconstruction state, the EIS said.
If the testing results were favorable, a second stage would be built. This would involve expanding the pad and drilling five more gas wells, plus an industrial water well and a disposal well. Production facilities also would be installed on the pad.
The gas would tie into a ConocoPhillips Alaska natural gas pipeline to the northwest.
Overall, construction would take about 16 months, and the project would operate for 30 years, the EIS said.
Lease with CIRI
The Shadura project is in the northwestern section of the Kenai National Wildlife Refuge.
While the federal government owns the surface estate, Cook Inlet Region Inc. owns the subsurface estate of oil, gas and coal in the project area. NordAq has a lease with CIRI to develop the gas resource.
That NordAq would have access to the gas was never in question. Access to inholdings is provided for under ANILCA, the Alaska National Interest Lands Conservation Act.
The question was whether NordAq would get the kind of access it wanted.
At one point, the company told the Fish and Wildlife Service it would not move forward with the project if the access route had to come out of the Swanson River unit. Another company, Hilcorp, operates that unit, which has an existing road system.
In deciding to grant NordAq’s wish (Alternative 2), Geoffrey L. Haskett, Alaska regional director for the Fish and Wildlife Service, wrote in the record of decision: “Alternative 2 reflects the Service’s intent to manage Kenai Refuge to achieve the mission of the National Wildlife Refuge System, meet the purposes for which the Refuge was established, and meet our legal obligations.”
