Texas company wants to build gravel island to produce oil in Beaufort Sea

ANCHORAGE, Alaska -- Arctic offshore drilling by Royal Dutch Shell PLC drew protests on two continents this year, but a more modest proposal for extracting petroleum where polar bears roam has moved forward with much less attention.

See Full Article

While Shell proposed exploratory wells in the Chukchi Sea about 80 miles off Alaska's northwest coast, a Texas oil company wants to build a gravel island as a platform for five or more extraction wells that could tap oil 6 miles from shore in the Beaufort Sea.

The U.S. Bureau of Ocean Energy Management is deciding how to assess the environmental effect of a production plan for the Liberty Project by Hilcorp Alaska LLC, a subsidiary of Houston-based Hilcorp Energy Co.

A successful well would mean the first petroleum production in federal Arctic waters.

Hilcorp's plan for a 23-acre gravel island, about the size of 17.4 football fields, has drawn mixed reviews from conservationists and outright condemnation from environmentalists who believe the oil should stay in the ground.

Global warming is melting sea ice habitat beneath polar bears, walrus and ice seals, said Kristen Monsell, an attorney for the Center for Biological Development.

"The impacts of an oil spill on top of that could be devastating and would be nearly impossible to clean up," she said.

Earlier this year, Shell met with protests in the U.S. and in London, England, over proposed exploration wells in Arctic waters far from deep-water ports and onshore services that could respond to an oil spill.

Greenpeace activists in April boarded a Shell drill rig as it crossed the Pacific Ocean from Asia. Demonstrators in kayaks protested Shell's use of the Port of Seattle to stage vessels. In Portland, Oregon, activists dangled from a bridge to delay a support vessel departing for Alaska.

Shell drilled one Chukchi Sea exploratory well. However, on Sept. 28, citing disappointing results and an uncertain federal regulatory process, Shell announced that it was pulling out of Arctic waters "for the foreseeable future."

Meanwhile, the Liberty Project quietly moved forward and is closer to production with the blessing of drilling advocates, including the state.

"With the recent announcement by Royal Dutch Shell regarding its Outer Continental Shelf development, the importance of Liberty Reservoir project has only increased," Alaska Gov. Bill Walker said in an Oct. 14 letter to the Bureau of Ocean Energy Management.

Hilcorp would create the island in Foggy Island Bay, 15 miles east of Prudhoe Bay, the largest oil field in North America. Last year, Hilcorp purchased 50 per cent of Liberty assets from BP Exploration Alaska, which drilled at the site in 1997 and discovered an estimated 120 million barrels of recoverable oil.

BP considered building a gravel island and also "ultra-extended reach drilling" from shore. The drilling type was deemed technically unfeasible, Hilcorp spokeswoman Lori Nelson said.

Hilcorp would place conventional wells on the island, positioning them over the oil bearing rock sitting under the ocean floor.

"It's proven to be a safe and effective means for oil and gas development in the Arctic," Nelson said by email. "Alaska has a 30-year record of safely operating offshore in the Arctic."

Endicott, the first development off the shore of Alaska's North Slope, has operated from an artificial gravel island in state waters for almost three decades, she said. Three other fields are in production from offshore gravel islands in state waters.

For the Liberty project, trucks carrying gravel would travel by ice road to a hole cut in sea ice. The trucks would deposit 83,000 cubic yards of gravel into 19 feet of water. The work surface would be 9.3 acres surrounded by a wall, providing a barrier to ice, waves and wildlife.

Standard rotary drills would extract oil. Hilcorp would move oil by a 5.6-mile undersea pipeline to shore and overland to the trans-Alaska pipeline.

Hilcorp projects a peak production rate of up to 70,000 barrels of oil per day within two years of initial production. Over 15 to 20 years, the company predicts it would yield 80 to 150 million barrels of oil.

Lois Epstein of The Wilderness Society said her group has concerns but has not submitted formal comments.

Residents, Epstein said, worry that islands will affect the migration patterns of bowhead whales harvested by subsistence hunters. Because the oil would come from federal waters, residents would not see revenues, but would be the ones most harmed by any spill.

The project is near the Beaufort Boulder Patch, an area of undersea boulders where kelp and algae grow in contrast to the otherwise soft ocean bottom.

The environmental review won't be completed until at least 2017, and production could be several more years off.

At the end of production, Hilcorp says it would plug the wells and remove slope protection, allowing ice and waves to erode the island.



Advertisements

Latest Economic News

  • Global trade more important than ever, Chrystia Freeland tells Toronto audience

    Economic CBC News
    Ottawa is more in favour than ever of global trade and signing free trade amendments, despite recent moves toward protectionism in other countries, International Trade Minister Chrystia Freeland told a Toronto business audience on Monday. Speaking to the Toronto Board of Trade at a luncheon, Freeland said is "so proud" to be representing Canada on the world stage, because it is "the country that is most clearly bucking the trend" toward protectionism and closed borders. Source
  • Trump not saying what he'll do about Dakota Access pipeline

    Economic CTV News
    CANNON BALL, N.D. -- Protesters who celebrated a major victory in their push to reroute the Dakota Access oil pipeline vowed to remain camped on federal land as they wait to find out whether President-elect Donald Trump might seek to overturn a decision that delayed the $3.8 billion project. Source
  • Electric vehicle charging stations coming to 25 Ontario Canadian Tire locations

    Economic CTV News
    ETOBICOKE, Ont. - Electric vehicle charging stations are being added to 25 Canadian Tire Gas+ locations across Ontario. AddEnergie Technologies says the stations, which start rolling out early next year, join the 2,500 stations along its FLO Canadian charging network. Source
  • International trade minister's announcement and news conference LIVE

    Economic CBC News
    Trevor Noah on race, comedy and politics 12:14 Daily Show host talks to CBC's Wendy Mesley about U.S. race relations, his childhood under apartheid and his controversial interview with pundit Tomi Lahren Source
  • StatCan study highlights drop in wage, job quality for young workers

    Economic CTV News
    OTTAWA - A new study from Statistics Canada says young people have seen their job quality decline over the last four decades, even as the unemployment rate has remained virtually unchanged. In a report released today, the national statistics office says fewer young Canadians, who are not full-time students, are working in full-time jobs today than in 1976, a result driven mainly by the rise of part-time work rather than increases in unemployment rates or decreases in labour force…
  • Second Cup signs $8M loan deal

    Economic CBC News
    The Second Cup Ltd. has signed a deal for a four-year, $8-million secured term loan from an affiliate of Serruya Private Equity following a review of its strategic options. The company says proceeds from the loan will be used to repay its existing $6-million credit facility and for general corporate purposes. Source
  • Amazon Go store is checkout free

    Economic CTV News
    NEW YORK -- Amazon is testing a grocery store model in Seattle that works without checkout lines. Called Amazon Go, shoppers scan their Amazon app when they enter the store, and then sensors register items that shoppers pick up and automatically charge them to the Amazon app. Source
  • Can't buy love? Drug price hikes put sex beyond reach

    Economic CTV News
    TRENTON, N.J. -- Imagine not being able to afford one of life's great pleasures -- sex. That's true for many older couples, doctors say. Soaring prices for prescription medicines for impotence and other problems have put the remedies out of reach for some. Source
  • Second Cup signs deal for $8-million loan following review of strategic options

    Economic CTV News
    MISSISSAUGA, Ont. -- The Second Cup Ltd. (TSX:SCU) has signed a deal for a four-year, $8-million secured term loan from an affiliate of Serruya Private Equity following a review of its strategic options. The company says proceeds from the loan will be used to repay its existing $6-million credit facility and for general corporate purposes. Source
  • Competition Bureau ups bid-rigging work to protect federal infrastructure cash

    Economic CTV News
    OTTAWA -- The Competition Bureau of Canada says its efforts to identify and prevent bid rigging in construction contracts this year has already turned up potential criminal activity -- just as new federal infrastructure money begins to flow. Source