Friday, July 27, 2012

BLM plans cleanup of one NPR-A legacy well

Tim Bradner
Alaska Journal of Commerce

The U.S. Bureau of Land Management plans to plug and clean debris at one abandoned old exploration well drilled by the government in the National Petroleum Reserve-Alaska and may be able to include several other nearby abandoned wells in the project, Alaska BLM officials say.

“We are working on cost estimates for the project, at the Iko Bay No. 1 well, and also on a three-year plan we are putting together to work on other abandoned wells,” said Bud Cribley, Alaska Director for the BLM.

BLM is being criticized by Alaska U.S. Sen. Lisa Murkowski and Alaska state officials over a lax record in cleaning up old wells, many of which are leaking.

“This is an embarrassment to the federal government. It is a crime for which the government would fine a private company millions of dollars,” Murkowski said in a statement.

Murkowski spoke following a Senate Energy and Natural Resources Committee hearing on the legacy well problem. She is the ranking member on the committee.

Of 135 old exploration wells drilled in the NPR-A over several decades by the U.S. Navy and the U.S. Geological Survey, only 16 have been plugged in accordance with state regulations, Murkowski said.

Alaska Rep. Charisse Millet, R-Anchorage, testified at the Senate hearings. Millet sponsored a resolution passed by the Legislature this spring asking BLM to address the problem.

Cathy Foerster, chair of the Alaska Oil and Gas Conservation Commission, also testified at the Senate hearing, saying that the BLM wells are out of compliance with state law and very likely federal law.

The Iko Bay No. 1 well, BLM’s current priority, is leaking gas from a crack in the wellhead, BLM officials have acknowledged. Foerster said the well has been leaking for years.

“We call it the whistling well because of the sounds it makes,” she said.

BLM officials said they have been hampered by budget constraints. Costs per well for plugging and abandoning have ranged from $2 million to $4 million per well and BLM’s entire annual budget for managing all of NPR-A, which covers 23 million acres of northern Alaska, is about $10 million per year.

However, industry officials said the agency’s cleanup operations have been poorly organized and inefficient.

“Once mobilization is done and a rig and crew and transported it would make sense to close out several wells in an area. Instead they do one well, usually in response to some emergency. It is terribly expensive to do it that way,” said Richard Gerrard, a consulting geologist who manages NPR-A operations for FEX LLC, an independent that has explored in the reserve.

Officials with the North Slope Borough, the regional municipality, said they offered to pool resources with the BLM in a program to plug and abandon several old government wells on lands transferred to the borough. The BLM turned down the offer, according to Jason Bergerson, state and federal government affairs manager for the borough.

The Iko Bay well abandonment will involve setting plugs to meet state regulations set by the state conservation commission Foerster heads, and remove the wellhead. The operation will likely require a workover rig, BLM’s acting chief of communications, K.J. Mushovic, wrote in an email.

Once a rig is brought into the area, other nearby wells may also be closed out. The Iko Bay well is about 20 miles southeast of Barrow in the northern part of NPR-A.

The government explored in NPR-A extensively beginning after World War II but no commercial-scale discoveries were made. It was only in the 1980s that a decision was made to have oil and gas lease sales in the reserve and allow private companies to do exploration.

It is only in recent years that companies have made discoveries, however, and all of them are modest and are in the northeast part of the NPR-A.

The first commercial production from NPR-A will take place in three years when the CD-5 drill site and bridge across the Colville River are completed by ConocoPhillips and Anadarko Petroleum.

Once that infrastructure is complete, two other small discoveries further west in NPR-A are likely to be developed.


Tim Bradner can be reached at tim.bradner@alaskajournal.com.

Read more: http://www.alaskajournal.com/Alaska-Journal-of-Commerce/July-Issue-5-2012/BLM-plans-cleanup-of-one-NPR-A-legacy-well/#ixzz21qjF05cu