Monday, January 12, 2015

Hilcorp files plan for Liberty field development

Alaska Contract Staffing
Tim Bradner
Alaska Journal of Commerce

Hilcorp Energy has filed a plan for developing the Liberty offshore field after closing its deal to acquire 50 percent of the unit from BP. Hilcorp also acquired 100 percent of the Northstar and Endicott fields from BP, and 50 percent of Milne Point. The company plans for an offshore gravel island similar to Northstar to develop Liberty.

The project would involve an artificial gravel island and a subsea pipeline to shore, company officials said. Hilcorp recently closed on the purchase of 50 percent of Liberty from BP along with three small producing North Slope fields. Hilcorp is the operator at Liberty with BP remaining as a 50 percent partner.

Liberty is a long-known but undeveloped deposit in shallow waters five miles off the Beaufort Sea coast and east of the Endicott field, which is also now owned and operated by Hilcorp as a part of the acquisition of BP properties.

The production island would be connected to shore with a subsea pipeline, and with a short overland pipeline segment to a tie-in with the existing Badami Pipe Line.

Hilcorp’s North Slope Operations Manager Mike Dunn said the deposit has estimated recoverable oil reserves that range from 80 million to 150 million barrels. Based on what is now known, Hilcorp expects Liberty to produce about 60,000 barrels per day at peak, Dunn said.

The company expects regulatory reviews and permitting to require about two years, which means that construction of the artificial island could be started in 2017. Construction is expected to take about two years, which would mean first oil in 2019 if everything stays on schedule, Dunn said.

Hilcorp also purchased 100 percent of the offshore Northstar field in the deal with BP, which is similar to Liberty in size, along with 50 percent of the Milne Point field BP also developed with an artificial gravel island and subsea pipeline.

Early on, BP had planned to develop Liberty with an offshore gravel production island and subsea pipeline, like it had done at Northstar, but switched to an alternative of drilling extended-reach, high-angle production wells from shore partly out of concerns for the permitting issues of building another artificial production island. Technical obstacles prevented that from happening, and BP switched back to the offshore island concept prior to the sale to Hilcorp.

Dunn said his company will be able take advantage of BP’s experience in building and successfully operating at Northstar for 14 years as well as the experience of Pioneer Natural Resources and Eni Oil and Gas in constructing and producing the small Oooguruk and Nikaitchuq offshore fields west of Northstar.

Liberty is in more benign offshore environment than Northstar. The area where the artificial island would be built is covered by stable “shore-fast” sea ice in winter, meaning ice that is fixed to the shore and has little movement. Liberty is within a belt of offshore barrier islands, which offers protection from the heavy, moving polar icepack.

Northstar, in contrast, is in a location that has no barrier island protection and is exposed to moving winter ice. Northstar is west of Liberty and six miles north of Prudhoe Bay. Although it is more exposed the moving ice has never presented an operational or safety issue at Northstar in its 14 years of production.

The filing of the development plan with BOEM is the start of an extended regulatory proceeding.

“BOEM now has 25 working days to conduct a preliminary review to assess whether the application includes all required components,” BOEM spokesman John Callahan said in a statement. “By the end of that period BOEM must either formally deem the development plan submitted, which triggers further regulatory review and a review under the National Environmental Policy Act, or let Hilcorp know what additional information would be required in order to deem the plan submitted.”

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