BLM releases decision on Greater Moose's Tooth-1 road

The U.S. Bureau of Land Management has approved construction of the first oilfield access road into the National Petroleum Reserve-Alaska, the agency announced Feb. 13.

But part of the deal involves ConocoPhillips Alaska Inc. paying $8 million into a mitigation fund for oil impacts in the petroleum reserve, although it is not clear that the impacts are related to ConocoPhillips’ activities.

BLM’s Alaska spokeswoman Lesli Ellis-Wouters said the agency signed a Record of Decision for its supplemental environmental impact statement, or SEIS, on ConocoPhillips Alaska Inc.’s development of the Greater Moose’s Tooth No. 1 project.

The action clears the way for federal permits to be issued for the project, which is in the northeast NPR-A.

NPR-A is a 23 million-acre federal reserve in northwestern Alaska. It was created in 1923 for its oil and gas potential but despite exploration over several years no commercial-scale discovery was made until ConocoPhillips and its minority partner, Anadarko Petroleum Corp., explored the northeast part of the reserve in recent years and made discoveries.

GMT-1 is expected to produce 30,000 barrels per day when it is completed. ConocoPhillips hoped to begin construction this winter but said recently that it would not start work because of delays in the final SEIS and the Record of Decision, as well as low oil prices.

On the North Slope, construction involving road or pads built with gravel is typically done during winter, when the land surface is frozen, because of summer restrictions in working on thawed tundra.

One cause for the delay were differing opinions between the BLM and the U.S. Army Corps of Engineers over which of two roads routes were the least environmentally disruptive. The Corps favored one route because it was slightly shorter and would thus require less gravel placement on wetlands.

BLM initially favored another, slightly longer route, Alternative B in the SEIS document, because it avoided an environmentally sensitive area identified in the agency’s long-range protection plan for the reserve.

BLM switched its position, however, to side with the Corps on its route selection, Alternative A, which prompted criticisms from conservation organizations.

Conservation groups had sided with BLM originally in its choice for Alternative B because the sensitive areas would be avoided.

Approval of the road is important because it will provide access for additional exploration and development farther west. ConocoPhillips and Anadarko Petroleum have already explored to the west and have tentatively identified a second project dubbed Greater Moose’s Tooth No. 2 that could be developed after GMT-1 is in production.

Conservation groups criticized the BLM’s decision to switch to the Corps-favored route because it infringed on protected areas.

“We are disappointed that BLM’s final decision encroaches on a buffer zone that exists to protect the Fish Creek area” and its valuable habitat for wildlife,” said Nicole Whittington-Evans, Alaska regional director for the Wilderness Society.

The Fish Creek area had been set side for protection in BLM’s 2013 land management plan, she said.

Kevin Harun, Alaska director for Pacific Environment, said the decision sets a terrible precedent.

“This landscape should be managed to protect wildlife and their movements,” he said.

U.S. Interior Department officials praised the agreement, however. In a statement, Assistant Interior Secretary Janice Schneider said, “The department looks forward to continuing to work with ConocoPhillips as it moves forward with safe and responsible development of the North Slope.”

“The strategic planning and mitigation measures agreed to by ConocoPhillips are important as we continue to support thoughtful and balanced development in this region and are critical to compensating for the impacts of this project.”

Although the GMT-1 project in within the NPR-A, the royalties from oil and gas production will be paid to Arctic Slope Regional Corp., or ASRC, the Alaska Native development corporation for the North Slope. ASRC owns the mineral title under the ConocoPhillips leases under terms of the Alaska Native Claims Settlement Act passed by Congress in 1971.

Ordinarily, 50 percent of the federal royalties would have been shared with the state of Alaska. However, the state’s oil and gas production tax does apply to production from federal and privately-owned lands, so some revenue from GMT-1 will come to the state.

What may be more important is the additional oil provided to the Trans Alaska Pipeline System, which is moving just more than 500,000 barrels per day, and operating at about one fourth its original capacity of 2 million barrels per day.

More oil moving through TAPS not only helps keep the pipeline economically viable but also lowers the tariff, or transportation charge, for all oil in the pipeline. A lower transportation charge raises the tax and royalty value of oil from other North Slope fields on state lands and increases state revenue.

02/16/2015 - 12:15pm