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Vol. 25, No.02 Week of January 12, 2020
Providing coverage of Alaska and northern Canada's oil and gas industry

Early Pikka approvals

Entry authorizations issued for Nanushuk road, pads; BRPC has Mustang Road issues

Kristen Nelson

Petroleum News

The Alaska Division of Oil and Gas has issued entry authorizations to Oil Search Alaska for pad and road work on its Nanushuk development at the Pikka unit on the North Slope. An entry authorization, EA, is a step in obtaining an easement, which is issued after terms and conditions of the EA have been met and construction and survey activities are complete.

Two of Oil Search’s easement applications, for its operations pad and production pad, drew no comments, but its application to extend and expand the Mustang Road to accommodate the Nanushuk project drew heated comments from Southern Miluveach unit operator Brooks Range Petroleum Corp., which built the Mustang Road for the development at the Mustang field, which began production late last year.

Nanushuk access road

Oil Search, operator of the Pikka unit, applied for an easement to construct the Nanushuk access road in June, including making improvements to 4.3 miles of the existing Mustang Road and 0.4 miles of the existing Gravel Pit Access Road, as well as constructing new road infrastructure. Improvements include an expansion of the existing road base width and addition of high-quality material to improve load capacity.

The new segments include the 9.1-mile Nanushuk Access Road, the 0.1-mile ND-A Infield Road, the 3.2-mile ND-C Infield Road and the 0.1-mile water source access road and pump house pad.

The division said total proposed easement length for the road is some 17.8 miles.

“Based on the facts in the record and the Division’s knowledge of oil and gas construction activities, the Division concludes the Mustang Road easement is compatible with OSA’s proposed Road construction, operation, and maintenance activities and will not unreasonably interfere with BRPC’s development and production activities,” the decision says.

BRPC comments

BRPC made extensive comments on the OSA road easement application, basically arguing that it had a prior easement.

Among other things, BRPC told the state it spent more than $15 million on the Mustang Road to support its operations in the Southern Miluveach unit. On that issue the division said it was its understanding that the Alaska Industrial Development and Export Authority contributed some $20 million to the road with the current working interest owners contributing $10 million toward a total road cost of $30 million.

BRPC said it had contacted Oil Search about a commercial agreement “covering OSA’s proposed use of BRPC’s easement roadbed, and lands in the SMU. But to date, OSA has not meaningfully engaged with BRPC to resolve the issues … arising from the conflict between BRPC’s existing easement and improvements and OSA’s application.”

The division said it encouraged BRPC and OSA to reach agreement for compatible use of the road by both parties “but does not consider it necessary to condition OSA’s use on first entering into an agreement with BRPC.”

The division noted that the BRPC’s Mustang Road easement is a private non-exclusive easement in which the state “reserved the right to grant overlapping easements.”

BRPC argued that the division “cannot authorize a use that would unreasonably interfere with the use of a prior easement.” The division said OSA’s plan for the road “will improve the use of the road for both parties and is a compatible use that would not unreasonably interfere with current operation activities by BRPC.”

There is a 20-calendar day window for appeal.

Pad entry authorizations

OSA applied for a private exclusive easement for the Nanushuk Operations Pad, which will support operations with facilities including a 200-bed operations camp, office, warehouse, maintenance buildings, warm and cold storage buildings, wastewater treatment plants and temporary waste storage areas, communications structures, diesel-fired standby power generators and a helicopter landing pad. The operations pad will also house a diesel and gasoline tank farm.

The construction area for the pad is 21.8 acres and the estimated operational area is 20.3 acres.

The entry authorization, dated Jan. 3, has a term of 5 years; the easement will have a term of 35 years. The easement will be issued once terms and conditions of the EA are met.

A $1 million bond is required to partially cover DR&R cost of the road, operations pad and facilities pad, and on or before May 30 OSA is required to deliver to DNR a DR&R cost estimate completed by a third-party engineering firm agreed to by DNR, with the remainder of the bond before Sept. 30 that equals 100% of the DR&R cost estimate.

There is a separate private exclusive easement application for the Nanushuk Processing Facility, which will house processing and utility modules for three-phase separation, heating and cooling, pumping, gas treatment and compression for gas lift and injection and water treatment for injection. The facilities pad will also house metering and pigging facilities, power generation facilities, a truck fill station, construction material and equipment staging area, a central control room, an equipment receiving module and a communications tower. The construction area for the facility pad is 21.4 acres; the estimated operational area is 20.7 acres.

This EA also has a term of 5 years; the easement will have a term of 35 years and will be issued once terms and conditions of the EA are met.

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