Sunday, August 11, 2013

ConocoPhillips applies for new NPR-A permits

Tim Bradner

CononoPhillips has applied for permits to develop a new production site in the National Petroleum Reserve–Alaska, the 23-million-acre federal reserve in the western North Slope. The company also has a second project on the drawing boards.

The application to develop the first project, GMT-1, was made in late July to the U.S. Bureau of Land Management, which administers the NPR-A. ConocoPhillips submitted the permits on behalf of itself and Anadarko Petroleum Corp., a minority partner, BLM spokeswoman Erin Curtis said.

GMT-1 was one of several projects ConocoPhillips announced it would pursue in the days following the state Legislature’s action April 14 to reduce the state production tax. Although NPR-A is federal land the state tax applies to oil and gas produced there.

The company also said it is evaluating a new production site in the Kuparuk River field and will accelerate drilling and well “workover,” or major maintenance, work.

In the NPR-A, ConocoPhillips owns 78 percent interest in federal leases in the Moose’s Tooth Unit with Anadarko holding the remaining 22 percent.

ConocoPhillips spokeswoman Natalie Lowman said her company will seek corporate approval to develop the GMT-1 project in the Greater Moose’s Tooth Unit of NPR-A in the second half of 2014, assuming the permits are issued by BLM.

If all goes as planned, construction would begin in early 2016 and first production in late 2017. No estimates of cost or production were included in the BLM application.

“We are still doing the preliminary engineering and design to determine cost and the estimated production,” of GMT-1, Lowman said.

The application also said the company also plans the second project, GMT-2, that would be 8 miles west of GMT-1.

“Upon the successful permitting and construction of GMT-1, ConocoPhillips intends to submit permit applications for development of GMT-2. The exact dates for these applications is unknown,” ConocoPhillips said in its filing with BLM.

GMT-1 is approximately 17 miles west of the producing Alpine field, which is on State of Alaska lands and is also owned by ConocoPhillips and Anadarko in the same 78 percent-22 percent shares as the NPR-A leases.

The two companies are also now developing CD-5, an Alpine field satellite unit a few miles west of the field but which is within the NPR-A because it is west of the Colville River channels that forms the boundary between and federal lands.

Construction of CD-5 is scheduled to begin in late 2014 and continue through 2015, with first production in 2015.

An issue that could complicate the CD-5 schedule and possibly GMT-1 are two lawsuits challenging the CD-5 permits. A lawsuit brought in federal court last February against the U.S. Army Corps of Engineers was filed by six residents of Nuiqsut, a nearby Inupiat village.

In June, the Center for Biological Diversity, an environmental group, filed a second lawsuit challenging the CD-5 permit, also in the U.S. Alaska District Court.

The villagers’ lawsuit claims a Colville River bridge and related roads planned for CD-5 will adversely affect wetlands that support subsistence hunting and fishing, and that the Corps did not properly consider tunneling under the river for a pipeline and air-supported access as a reasonable alternatives to the bridge and roads.

In its intervention in the case, ConocoPhillips claimed an underground tunnel for the pipeline creates environmental risks because corrosion and oil leaks are more difficult to detect and repair in a buried pipeline than a surface pipeline. In its separate lawsuit, the Center for Biological Diversity claims that threatened and endangered species are affected.

The State of Alaska, Arctic Slope Regional Corp., and Kuupik Corp. have intervened in the villagers’ lawsuit on the side of the Corps, but a motion to intervene by the North Slope Borough is being opposed by the village plaintiffs represented by Trustees for Alaska, an environmental law firm.

ConocoPhillips has also been granted intervenor status on behalf of the Corps in the Center for Biological Diversity lawsuit.

The case presents a new uncertainty over the CD-5 bridge permit, which was held up by an extended Corps of Engineers review before a corps permit for the bridge and roads was finally issued. If the permit is overturned the schedule for CD-5 could be disrupted, which could also affect the NPR-A site developments because they will depend on the bridge and roads built for CD-5.

The schedule for GMT-1 outlined in the permit application calls for the ordering of long lead-time materials for the project, such as steel, in the fourth quarter of 2014. One year later, in fourth quarter of 2015, the first ice roads would be built to support construction.

Gravel mining and construction of gravel roads, pads and bridges would occur in the first quarter of 2015. Pipeline vertical support members, the pipeline, production facility and power and telecommunications cables would be installed in first quarter, 2017. The first production would be in late 2017.

The project would include 7.8 miles of road to the project from the CD-5 drillsite now in construction; 8.4 miles of pipelines to connect GMT-1 to CD-5, and 8.4 miles of power and telecommunication lines built on horizontal supports from the pipeline.

There would be an 11.8-acre gravel pad at the project site with sufficient space to support 33 production wells.

Several pipelines would be built to support the project including a 20-inch produced fluids pipeline that would move a mixture of crude oil, natural gas and water from GMT-1 to the Alpine field oil and gas processing facilities.

There would also be a 14-inch pipeline to carry seawater or produced water (water produced from the oilfields) from Alpine to GMT-1 for reservoir pressure support, and two separate 6-inch pipelines, one to carry gas from Alpine to GMT-1 to support “artificial lift,” or below-surface pumps, to help bring oil to the surface, and a second 6-inch line to carry a miscible injectant fluids from Alpine that can be used for enhanced oil recovery.

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