Feds select Hilcorp’s plan for offshore oil prospect

  • A proposed Arctic offshore oil development project by Hilcorp Energy would entail building a 24-acre island in 19 feet of water to access a field of oil containing 330 million barrels of oil that could reach peak production of 70,000 barrels per day. (Rendering/Bureau of Ocean Energy Management)

Hilcorp Energy mostly got what it asked for in the Bureau of Ocean Energy Management’s environmental review of the company’s proposed Liberty offshore oil development released Thursday.

The federal agency picked Hilcorp’s plan to construct a 24-acre gravel island in the federally-controlled shallow waters about six miles offshore and just east of Deadhorse in the Beaufort Sea as its preferred option for developing the estimated 330 million barrels of light crude oil at the heart of the project in its final environmental impact statement.

Hilcorp Alaska leaders have said the project could produce between 60,000 and 70,000 barrels of oil at its peak. It is planned for a 15 to 20-year production life.

The island, in 19 feet of water, would have a working surface area 9.3 acres, enough for 16 wells, with up to half of those being production wells and the rest reserved for injection and disposal purposes, according to the EIS.

A 12-inch, roughly seven-mile, mostly subsea oil pipeline would connect the Liberty Island to onshore oil infrastructure near Deadhorse. Specifically, the pipeline would tie into the Badami oil line, which feeds the Trans-Alaska Pipeline System.

The project would add oil to TAPS, but the majority of revenue from the production would go to federal coffers because the project would be in federal waters.

Liberty is expected to cost about $1.5 billion overall, according to federal regulators.

BOEM Acting Director Walter Cruickshank said the agency held meetings in the North Slope communities of Nuiqsut and Utqiagvik, as well as Fairbanks and Anchorage after the draft EIS was released about a year ago.

“The final EIS incorporates input from those communities and the comments we received from other stakeholders, partner agencies and the general public. With that input, our scientists have produced a robust analysis that thoroughly analyzes the potential impacts of Hilcorp’s proposal,” Cruickshank said in a formal statement.

Hilcorp Alaska spokeswoman Lori Nelson wrote in an emailed statement that the company is reviewing the EIS and is encouraged the project has taken another step forward.

“The Liberty project will incorporate proven technologies already utilized in the shallow waters of Alaska’s Beaufort Sea, and would help generate new jobs, revenue and domestic energy,” Nelson wrote.

She could not specify when the company hopes to begin constructing the project.

Hilcorp Alaska officials have pointed to the four large existing North Slope oil development islands — Endicott, Spy, Oooguruk and Northstar — as strong evidence that Liberty can be done safely. The company is the majority owner and operator of the Northstar and Endicott fields, after purchasing BP’s interests in them in a 2014 deal that also gave it a 50 percent interest in Liberty. BP subsequently sold 10 percent of its stake in Liberty to ASRC Exploration.

BP purchased Liberty from Shell in 1996 after Shell discovered the prospect with four exploration wells in the mid-1980s. BP first planned to build an island to develop Liberty but put those plans on hold in 2001 to further study the project, according to the EIS.

In 2005 the London-based oil major proposed drilling ultra-extended-reach wells from onshore to eliminate the need for an island and minimize the project’s impacts on Alaska Native subsistence whaling hunts in the area. That plan was scrapped in 2012 and Hilcorp subsequently took over the project in 2014.

Drilling from onshore would require drilling wells nearly a mile longer than the world record wellbore of 40,602 feet, according to BOEM.

Alternative development options considered in the EIS considered included moving the man-made island up to 1.5 miles to keep the project away from the densest area of what is known as the “boulder patch,” an area of the seabed with small boulder substrate that “supports the richest and most diverse biological communities in the Beaufort Sea,” the EIS states.

However, moving it about a mile east would require pipeline design changes to limit the risk of pipeline buckling or wear and moving it closer to shore — into state waters — would increase the average wellbore from about 13,900 feet to 17,200 feet, according to BOEM.

Moving processing facilities off the manmade island was also considered as a means of reducing equipment noise and vibrations with the potential to impact marine mammals relied on for subsistence harvests.

Leaders of Kuukpik Corp., the Alaska Native village corporation for Nuiqsut, wrote in earlier comments during the EIS process that the company doesn’t have a stance on the project, but urged BOEM officials to closely examine the impacts of abandoning the Liberty Island once production has ceased.

Leaving the gravel island to wash away once all production and erosion protection equipment has been removed could at a minimum cause navigation hazards in a travel corridor frequently used by Native subsistence hunters, according to Kuukpik President Isaac Nukapigak. Doing so could also expose the Boulder Patch to artificial debris, Nukapigak also noted.

Decommissioning the project through removing facilities and equipment, stripping the island of its erosion protection and letting the ocean reclaim the area was the procedure used for Tern Island and other gravel exploration islands built in the area during the 1980s and 1990s, according to the EIS.

Elwood Brehmer can be reached at [email protected].

Updated: 
08/24/2018 - 9:27am

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