l EXPLORATION & PRODUCTION ANWR seismic planned · Letter of agreement ... Petronas lead LNG...

Balash says Interior will work withstate, others, on O&G development

l N A T U R A L G A S

l U T I L I T I E S

l E X P L O R A T I O N & P R O D U C T I O N

Vol. 23, No. 23 • www.PetroleumNews.com A weekly oil & gas newspaper based in Anchorage, Alaska Week of June 10, 2018 • $2.50

page3

Conoco purchase of Anadarko’swest North Slope interests closes

ConocoPhillips said June 4 that it has obtained approvals

for the acquisition of Anadarko Petroleum Corp.’s 22 percent

lease interests in the western North Slope of Alaska.

ConocoPhillips announced the acquisition Feb. 1, saying at

that time that it had signed a definitive agreement with

Anadarko for that company’s 22 percent nonoperated interest

in the western North Slope of Alaska, as well as Anadarko’s

interest in the Alpine pipeline, for $400 million in cash,

“before customary adjustments,” and subject to regulatory

approval. The transaction had an effective date of Oct. 1,

2017.

In addition to producing assets, ConocoPhillips’ interest in

exploration and development lands, including the Willow dis-

Washington, BC echo same concernsabout oil shipments in Pacific waters

An informal Pacific Coast cross-border alliance is taking

shape in opposition to the movement of crude oil to export ter-

minals connecting North America with energy hungry Asian

markets.

And the loose partnership of British Columbia,

Washington, Oregon and California has gathered momentum

now that Canadian Prime Minister Justin Trudeau, once

viewed as a fast-emerging global leader in climate change

measures, is within a few weeks of becoming the owner of

Kinder Morgan’s Trans Mountain pipeline to deliver 890,000

barrels per day of diluted bitumen from the Alberta oil sands

to a tanker port in Vancouver.

AIDEA converts its Mustang ownership interest to loan financing

During its May 31 meeting the board of the Alaska

Industrial Development and Export Authority passed a resolu-

tion converting its ownership interests in the Mustang oil field

on the North Slope to a loan to CaraCol Petroleum LLC, one

of the field’s working interest owners. The deal involves

AIDEA selling its ownership interest in Mustang Operations

Center 1 LLC to CaraCol for $52.5 million, and its interest in

Mustang Road LLC for $8.5 million. CaraCol will fund its

purchases through an AIDEA loan of $64 million plus any

associated AIDEA costs. MOC1 and Mustang Road 1 are

vehicles though which AIDEA has provided financial support

for the field development and are minority working interest

owners in the field.

Alyeska sets summer maintenanceIt’s planned maintenance season in Alaska, with Alyeska

Pipeline Service Co. announcing several pipeline shutdowns

this summer. The company said May 31 that the line-wide

shutdowns, from 12 to 18 hours, allow for maintenance work

along the line and at the Valdez Marine Terminal “while the

pipeline is not in its regular operating state.”

The company said there will be three planned maintenance

shutdowns between June 15 and July 6.

Alyeska operates the pipeline and terminal on behalf of

owners BP Pipelines (Alaska), ConocoPhillips Transportation

Alaska, ExxonMobil Pipeline Co. and Unocal Pipeline Co.

The company said Alyeska employees and contractors will

complete projects at various locations along the line from

Pump Station No. 1 in Prudhoe Bay to the Valdez Marine

see CONOCO PURCHASE page 11

see OIL SHIPMENTS page 11

see MUSTANG INTEREST page 9

see SUMMER MAINTENANCE page 11

ANWR seismic plannedSAExploration, ASRC, KIC proposed to survey 1002 area over two winter seasons

By ALAN BAILEYPetroleum News

SAExploration Inc., Arctic Slope Regional

Corp. and Kaktovik Inupiat Corp. have filed

with the federal Bureau of Land Management a

plan for a proposed 3-D seismic survey program in

the 1002 area of the Arctic National Wildlife

Refuge. The program, referred to as the Marsh

Creek 3-D, would encompass the entire 1002 area,

an area of some 2,600 square miles in the ANWR

coast plain. SAExploration, the proposed operator

for the survey, anticipates the survey program tak-

ing two winter seasons to complete.

BLM is in the process of developing an envi-

ronmental impact statement for the conducting of

oil and gas lease sales in the 1002 area. However,

existing seismic data for the refuge is old, is wide-

ly spaced and is 2-D rather than 3-D. Companies

interested in bidding in a lease sale would presum-

ably want modern seismic data, to evaluate tracts

to bid on. Geologists have indicated that, especial-

ly in the relatively undeformed western part of the

LNG giants teaming upShell, Petronas now lead partners in LNG Canada, nudging project closer to FID

By GARY PARKFor Petroleum News

One more building block has fallen into place

to secure the future of LNG Canada, putting

the C$40 billion project in sight for a final invest-

ment decision before year’s end.

Petronas, Malaysia’s state-owned energy giant,

announced it is taking an equity position — with-

out disclosing the investment amount — in the

Shell Canada-led project, meaning the venture

now has the backing of two LNG powerhouses.

As a result of the transaction, the ownership

interests are now Shell at 40 percent (down from

its earlier 50 percent), Petronas 25 percent,

PetroChina 15 percent (previously 20 percent),

Japan’s Mitsubishi 15 percent (unchanged) and

South Korea’s Kogas 5 percent (previously 15 per-

cent).

The partnership said the timing and outcome of

the FID will be based on global energy markets

and the overall competitiveness and affordability

of the project.

Pacific NorthWest abandonedPetronas, which abandoned its own C$36 bil-

Pentex sale close deferredIGU requests 2 changes to sale agreement; AIDEA board accepts one, rejects other


In the latest twist in the Alaska Industrial

Development and Export Authority’s Interior

Energy Project, the AIDEA board has extended to

June 14 the timeframe for closing the sale of Pentex

Natural Gas Co. to the Interior Gas Utility. The intent

had been to close the sale by the end of May.

The concept behind the sale is the consolidation of

gas utilities IGU and Fairbanks Natural Gas, a Pentex

subsidiary, to enable the development of a fully inte-

grated gas distribution system in the Fairbanks region

and to achieve economies of scale in the gas supply

arrangements. FNG supplies gas to some consumers

in central Fairbanks. IGU is owned by the Fairbanks

North Star Borough — it has started building a gas

distribution infrastructure but does not currently have

a gas supply. AIDEA purchased Pentex in 2015 with

the aim of eventual Fairbanks utility consolidation.

Letter of agreementThe IGU board had approved the completion of

the sale, subject to two changes to the sale agreement.

On May 22 IGU drafted a letter of agreement speci-

fying the requested changes, asking that the AIDEA

see ANWR SEISMIC page 10

see LNG GIANTS page 10

see PENTEX SALE page 12

The survey plan says that SAE anticipatessupporting two seismic crews for thesurvey operations during each of the

winter seasons that the survey programtakes to complete.

The project has considerable buy-in fromaboriginal communities, led by the HaislaNation Council, although the council hasyet to sign a final commercial agreement.

The IEP has state funding in the form ofSustainable Energy Transmission and

Supply, or SETS, loans, AIDEA bonds anda state capital appropriation.

http://www.petroleumnews.com

2 PETROLEUM NEWS • WEEK OF JUNE 10, 2018

Petroleum News Alaska’s source for oil and gas newscontents

Alaska’sOil and GasConsultants

GeoscienceEngineeringProject ManagementSeismic and Well Data

3601 C Street, Suite 1424Anchorage, AK 99503

(907) 272-1232(907) 272-1344

[email protected]


ANS production down marginally in AprilAverage 513,257 bpd, compared to 516,869 bpd in March, drop of less than 1%, but down 5.5% from April 2017 average of 543,252 bpd

By KRISTEN NELSONPetroleum News

Alaska North Slope crude oil production averaged

513,257 barrels per day in April, down 0.7 percent,

3,612 bpd, from a March average of 516,869 bpd, and

down 5.5 percent from an April 2017 average of 543,252

bpd.

Production data is from the Alaska Oil and Gas

Conservation Commission, which provides volumes by

well on a month-delay basis, making April the most

recent data available.

The largest month-over-month per-barrel decline was

at the ConocoPhillips Alaska-operated Kuparuk River

field, which averaged 113,047 bpd in April, down 5.8

percent, 6,917 bpd, from a March average of 119,964,

but down only 0.4 percent from an April 2017 average of

113,458 bpd.

In addition to the main Kuparuk pool, Kuparuk pro-

duces from satellites at Meltwater, Tabasco and Tarn,

and from West Sak.

The Caelus Alaska-operated Oooguruk field had the

largest month-over-month percentage drop in produc-

tion, down 12.3 percent, 1,135 bpd, averaging 8,083 bpd

in April compared to 9,218 bpd in March, and down 47.1

percent from an April 2017 average of 15,280 bpd.

Point ThomsonPoint Thomson, operated by ExxonMobil Production

Co., averaged 5,291 bpd in April for those days when

there was production, down 5.5 percent, 305 bpd, from a

March average of 5,596, and down 31.3 percent from an

April 2017 average of 7,699 bpd. The company told the

Alaska Division of Oil and Gas last year that production

was impacted by “difficulties with its gas injection com-

pressor,” and said, “it was conducting maintenance or

repairs on the compressor during periods when produc-

tion ceased or decreased.”

Facilities at Point Thomson are designed to produce

10,000 bpd. In April, the field had production — from its

single well — for 18 days, with the production on those

18 days making the well the third most productive in the

state, behind only two wells at ConocoPhillips’ CD5 pad

at the Colville River unit, which averaged 7,762 bpd and

5,378 bpd.

Endicott, NikaitchuqEndicott, operated by Hilcorp Alaska, averaged 6,295

bpd in April, down 4.6 percent, 306 bpd, from a March

average of 6,601 bpd, and down 16.3 percent from an

April 2017 average of 7,519 bpd.

The Eni-operated Nikaitchuq field averaged 13,652

bpd in April, down 1.4 percent, 192 bpd, from a March

average of 13,844 bpd, and down 22.3 percent from an


Other fields saw increasesThe largest per-barrel month-over-month increase

see ANS PRODUCTION page 3

ANWR seismic plannedCompanies proposed to survey 1002 area over two winter seasons

LNG giants teaming upShell, Petronas lead LNG Canada, nudging project closer to FID

Pentex sale close deferredChanges to sale agreement; AIDEA board accepts one, rejects other

ON THE COVER

Conoco purchase of Anadarko’swest North Slope interests closesWashington, BC echo same concernsabout oil shipments in Pacific watersAIDEA converts its Mustangownership interest to loan financingAlyeska sets summer maintenance

EXPLORATION & PRODUCTION2 ANS production down marginally in April

Average 513,257 bpd, compared to 516,869 bpd in March,drop of less than 1%, but down 5.5% from April 2017average of 543,252 bpd

6 National rig count rises by 1 to 1,060

7 Contraction planned for Redoubt unit

Mandatory unit contraction would eliminate all acreage except existing Hemlock participating area and proposed South Stepout PA

3 Balash promotes more federal cooperation

Says Interior is going to work in partnership with state, other North Slope landowners to encourage Alaska oil and gas development

6 Hilcorp seeks RCA Drift River approval

Wants to discontinue use of terminal and associatedinfrastructure following startup of pipeline oil transportation under Cook Inlet

FINANCE & ECONOMY9 Exxon aims to boost earnings, production

8 Hilcorp buying Exxon out of Endicott line

4 Final protesters removed from perches

GOVERNMENT

SIDEBAR, Page 4: BLM retains ANWR public comment deadline

PIPELINES & DOWNSTREAM

http://www.petroak.com


During a speech at the Alaska Oil and Gas

Association’s annual conference on May 31

Joe Balash, assistant secretary for lands and min-

erals management in the U.S. Department of the

Interior, said that the federal administration is

intent on taking more of a partnership approach

when working with the state and other land own-

ers for the development of oil and gas in Alaska.

“We are about to turn a major corner and things north of

the Brooks Range are about to change in some pretty

astounding ways, in ways that I personally find to be very

positive for the future of our nation and for our great state,”

Balash said.

Interior manages 72 million surface acres and 220 mil-

lion subsurface acres onshore Alaska, and more than 1 bil-

lion acres of lands offshore the state, he said.

NPR-A developmentsOf particular interest at present is the National Petroleum

Reserve-Alaska, where ConocoPhillips is pursuing an oil

development strategy in the Greater Mooses Tooth unit, and

where the company is assessing a major oil find in its

Willow prospect.

“Taking a look at the onshore, we’re jump starting

Alaska energy production from the federal land base on the

North Slope, specifically in the NPR-A,” Balash said.

The GMT-1 development will result in the first produc-

tion entirely from federal land in the NPR-A, and in March

Interior released the draft environmental impact statement

for the GMT-2 development.

“This is a huge opportunity for the federal government,”

Balash said. “The sharing of that royalty revenue with the

state will help with the fiscal conditions and in turn will pro-

vide additional, critical throughput into TAPS

(the trans-Alaska pipeline).”

Once Interior has completed its review of the

GMT-2 development, it will turn its attention to

Willow, where ConocoPhillips has conducted

drilling that yielded very promising results,

Balash said.

Challenges and rewardsThe challenge in Alaska does not so much

revolve around finding oil as around making

money from an oil discovery, Balash commented. But the

benefits from successful development come, not just in

terms of financial reward, but also in terms of impacts on

the social fabric of communities, the impacts of stable jobs

and income on people’s wellbeing. And, for rural commu-

nities, development enables people to continue their tradi-

tional way of life while also receiving a cash income,

Balash said.

“That’s something that, I think, sometimes gets lost in

the arguments around whether or not to develop our

resources,” he said.

Balash cited the example of the Red Dog mine where, he

said, data have provided evidence for the manner in which

the mine development and operation have improved peo-

ple’s health in the local community.

ANWR coastal plainAt the eastern end of the North Slope the federal tax bill

passed in November has opened the coastal plain of the

Arctic National Wildlife Refuge for oil and gas activities.

Currently the Bureau of Land Management, an agency

within Interior, is conducting a 50-day public comment

period for the scoping of an environmental impact state-

ment for oil and gas lease sales in the refuge. Balash said he

has been made responsible by Interior Secretary Ryan Zinke

for the completion of the EIS and the conducting of a suc-

cessful lease sale. Under the terms of the National

Environmental Policy Act, the development of an EIS is a

necessary step towards a lease sale.

The Gwich’in people from the Yukon Flats region of

Interior Alaska and the nearby region of western Canada are

vehemently opposed to oil and gas development in the

ANWR coastal plain because of concerns about potential

impacts on the Porcupine caribou herd that forms a key sub-

sistence resource for the Interior communities — the cari-

bou calve on the coastal plain during the summer. But peo-

ple in the industry, and the federal and state regulators, also

care about the continued success of the caribou, Balash said.

“So the real challenge to us is to find the balance in craft-

ing the stipulations and best management practices that will

allow exploration and development to take place in a way

that does not do harm to that herd and to people that depend

upon it,” he said.

Balash commented that he had just spent a couple of

days in Arctic Village, home to some of the Gwich’in, and

had enjoyed caribou meat prepared in a variety of ways. He

was about to travel to other North Slope communities,

including the village of Kaktovik, on the northern edge of

ANWR.

EIS efficiencyIn more general terms, when it comes to the preparation

l G O V E R N M E N T

Balash promotes more federal cooperationSays Interior is going to work in partnership with state, other North Slope landowners to encourage Alaska oil and gas development

was at the BP-operated Prudhoe Bay

field, which averaged 267,915 bpd in

April, up 1.5 percent, 3,932 bpd, from a

March average of 263,983 bpd, but down

7.8 percent from an April 2017 average of

282,769 bpd.

In addition to Prudhoe oil, production

from the Prudhoe Bay field includes other

pools: Aurora, Borealis, Lisburne,

Midnight Sun, Niakuk, Polaris, Point

McIntyre, Put River, Raven and Schrader

Bluff.

The largest percentage month-over-

month increase was at the Hilcorp

Alaska-operated Northstar field, which

averaged 9,257 bpd in April, up 3.8 per-

cent, 339 bpd, from a March average of

8,918 bpd, and up 18.4 percent from an


The ConocoPhillips-operated Colville

River unit averaged 67,249 bpd in April,

up 1.2 percent, 802 bpd, from a March

average of 66,447 bpd, and down 2.5 per-

cent from an April 2017 average of

68,958 bpd.

In addition to oil from the main Alpine

pool, Colville production includes satel-

lite production from Fiord, Nanuq and

Qannik.

The Hilcorp Alaska-operated Milne

Point field averaged 21,770 bpd in April,

up 0.8 percent, 168 bpd, from a March

average of 21,602, and up 2.2 percent

from an April 2017 average of 21,304

bpd.

Badami, operated by Savant Alaska, a

Glacier Oil & Gas company, averaged

698 bpd in April, up 0.3 percent, 2 bpd,

from a March average of 696 bpd, and

down 20.3 percent from an April 2017

average of 876 bpd.

Cook InletCook Inlet production averaged

16,095 bpd in April, up 2.2 percent, 347

bpd, from a March average of 15,748.

Hilcorp’s Beaver Creek field averaged

90 bpd, down 6.3 percent from a March

average of 96 bpd.

Granite Point, also operated by

Hilcorp, averaged 2,848 bpd in April,

down 3.2 percent from a March average

of 2,942 bpd.

BlueCrest’s Hansen field, the

Cosmopolitan project, averaged 765 bpd

in April, down 4.3 percent from a March

average of 799 bpd.

The Hilcrest-operated McArthur River

field, Cook Inlet’s largest, averaged 5,283

bpd in April, up 10.6 percent from an

April average of 4,776 bpd.

Hilcrest’s Middle Ground Shoal field

averaged 1,483 bpd in April, down 4 per-

cent from an April average of 1,544 bpd.

Redoubt Shoal, operated by Cook Inlet

Energy, a Glacier Oil & Gas company,

averaged 1,367 bpd in April, up 4 percent

from a March average of 1,314 bpd.

Hilcorp’s Swanson River field aver-

aged 1,505 bpd in April, up 2.7 percent


Trading Bay, also a Hilcorp field, aver-

aged 1,754 bpd in April, down 3.2 percent


West McArthur River, operated by

Glacier Oil & Gas company Cook Inlet

Energy, averaged 1,000 bpd in April,

down 0.1 percent from a March average

of 1,001 bpd.

ANS crude oil production peaked in

1988 at 2.1 million bpd; Cook Inlet crude

oil production peaked in 1970 at more

than 227,000 bpd. l

PETROLEUM NEWS • WEEK OF JUNE 10, 2018 3

COMPANIES

37 yearsBUILDING ALASKAF O R M O R E T H A N

Experts in Resource Development and Heavy Civil Construction

Cruz Construction | Alaska Interstate Construction

Cruz Energy Services | Cruz MarineA CIRI Company A CIRI Company

continued from page 2

ANS PRODUCTION

“Taking a look at the onshore, we’re jumpstarting Alaska energy production from the

federal land base on the North Slope,specifically in the NPR-A.” —Joe Balash,

Department of the Interior

JOE BALASH

see BALASH SPEECH page 4

http://www.cruzconstruct.com


ADDRESS

P.O. Box 231647

Anchorage, AK 99523-1647

NEWS

907.522.9469

[email protected]

CIRCULATION

907.522.9469

[email protected]

ADVERTISING

Susan Crane • 907.770.5592

[email protected]

FAX FOR ALL DEPARTMENTS

907.522.9583

OWNER: Petroleum Newspapers of Alaska LLC (PNA)Petroleum News (ISSN 1544-3612) • Vol. 23, No. 23 • Week of June 10, 2018

Published weekly. Address: 5441 Old Seward, #3, Anchorage, AK 99518(Please mail ALL correspondence to:

P.O. Box 231647 Anchorage, AK 99523-1647)Subscription prices in U.S. — $118.00 1 year, $216.00 2 years

Canada — $206.00 1 year, $375.00 2 years Overseas (sent air mail) — $240.00 1 year, $436.00 2 years“Periodicals postage paid at Anchorage, AK 99502-9986.”

POSTMASTER: Send address changes to Petroleum News, P.O. Box 231647 Anchorage, AK 99523-1647.

www.PetroleumNews.com

Petroleum News and its supple-ment, Petroleum Directory, are

owned by Petroleum Newspapers ofAlaska LLC. The newspaper is pub-

lished weekly. Several of the individ-uals listed above work for inde-

pendent companies that contractservices to Petroleum Newspapers

of Alaska LLC or are freelance writers.

Kay Cashman PUBLISHER & FOUNDER

Mary Mack CEO & GENERAL MANAGER

Kristen Nelson EDITOR-IN-CHIEF

Susan Crane ADVERTISING DIRECTOR

Heather Yates BOOKKEEPER

Marti Reeve SPECIAL PUBLICATIONS DIRECTOR

Steven Merritt PRODUCTION DIRECTOR

Alan Bailey SENIOR STAFF WRITER

Eric Lidji CONTRIBUTING WRITER

Gary Park CONTRIBUTING WRITER (CANADA)

Judy Patrick Photography CONTRACT PHOTOGRAPHER

Forrest Crane CONTRACT PHOTOGRAPHER

Renee Garbutt CIRCULATION MANAGER

expect more for your project deliveryWe provide project-focused professional, technical, and strategic services to Alaska and international clients, in six key practice areas: Buildings, Earth & Environment, Energy, Industrial, and Infrastructure.From large projects like Alaska LNG to blast-proof facility design on the North Slope, exp can provide a team that meets your needs.

+1.907.868.1185

of environmental impact statements,

Interior is figuring out how to simplify the

process, to reduce the timeframe involved

and the size of the resulting documentation.

The process, as it stands, takes too long,

costs too much and is too complicated,

Balash said. Moreover, the resulting docu-

ments are too large to be of practical value.

Having a 2,400-page EIS does nothing to

advance the interests of transparency and

the understanding by the public and the reg-

ulators of the issues involved, Balash sug-

gested.

A group of expert witnesses and stake-

holders, convened at the direction of

Interior Secretary Ryan Zinke, has made

recommendations for the improvement of

the EIS process. And Deputy Secretary of

the Interior David Bernhardt has issued an

order, placing a limit on the time taken for

EIS preparation and on the number of pages

in an EIS document.

“I’m pleased to report that just two

weeks ago we moved our first draft EIS for

a coal project in the Colorado region

through the process in a manner that not

only met those requirements but actually

beat them,” Balash said, adding that

improved ways of conducting internal

reviews would lead to the greatest time sav-

ings.

Reducing the time taken for the EIS

development would reduce the long project

lead time that erodes into the net present

value of a project, Balash said.

North Slope roadsBalash also commented on the Arctic

Strategic Transportation and Resources, or

ASTAR, program, a program to develop an

all-season road network connecting North

Slope communities. As previously reported

in Petroleum News, the Alaska Department

of Natural Resources has been working

with the North Slope Borough on this pro-

gram, carrying out stakeholder outreach and

assessing project economics.

“I could not overstate how big this is,”

Balash said, commenting on the shrinking

length of the winter off-road travel season

on the North Slope and the potential for a

road network to reduce operational costs for

the oil industry.

Offshore lease salesIn the federal offshore, the federal

administration is re-examining the five-year

lease sale program and issued a new draft

plan in January. Interior received more than

1.86 million comments on that draft plan,

Balash said. The Outer Continental Shelf

Lands Act requires the government to take

into account the view of local communities

and the state governors — Alaskans and the

Alaska regional Native corporations have

indicated that their views have previously

been disregarded, Balash said.

For this new iteration of the five-year

plan, Interior has heard, for example, from

the North Slope whaling captains and from

the state. At this stage, the intent is to have

another version of the plan published later

this year, to include a lease sale for the

Beaufort Sea, Balash said.

Balash also commented that past federal

challenges to Alaska resource development

came from personnel and policies in

Washington DC, and not from federal per-

sonnel in Alaska.

“It is my sincere hope that we can

institute some changes here in the way we

do our business on the federal side of the

table,” Balash said. “And I ask that all of

you take that with a new view too.” l

BLM retains ANWR public comment deadlineThe federal Bureau of Land Management announced on June 4 that it will not

extend the public comment period for the scoping of an environmental impact

statement for an oil and gas lease sale program for the coastal plain of the Arctic

National Wildlife Refuge. As previously determined, the comment period will end

on June 19, the agency said.

The question of opening the ANWR coastal plain for oil and gas activities is

highly contentious, being strongly opposed by environmental organizations while

strongly supported by Alaska lawmakers and proponents of oil and gas develop-

ment. While some people from North Slope communities have expressed support

for the opening, the Gwich’in people from the Yukon Flats region of Interior

Alaska and the nearby region of western Canada remain opposed because of con-

cerns about potential impacts on the Porcupine caribou, a vital subsistence

resource for Interior communities.

The purpose of the EIS is to analyze the potential environmental impacts of

different leasing alternatives. The EIS may also consider any exploration, devel-

opment and production activities that may result from the leasing.

“I have heard diverse and extensive messages across the state regarding

thoughts, interests and concerns of a broad range of stakeholders, and these con-

sistent messages will inform the development of the EIS,” said Joe Balash, U.S.

Department of Interior assistant secretary for land and minerals. “The heartfelt

and quality comments we have received to date are what we have come to expect

from Alaskans. I sincerely appreciate the interest shown in the coastal plain EIS.”

Interior Secretary Ryan Zinke has made Balash responsible for the completion

of the EIS and for the ANWR lease sale program.

—ALAN BAILEY


BALASH SPEECH

PIPELINES & DOWNSTREAMFinal protesters removed from perches

The final two protesters who had perched themselves on trees and poles to

block construction of a natural gas pipeline through Appalachia have come down.

The Roanoke Times reports one protester was forcibly removed June 1 and

another came down voluntarily as authorities approached.

The June 1 actions end three months of aerial blockades in Virginia and West

Virginia to protest construction of the Mountain Valley Pipeline.

Authorities removed 30-year-old Catherine “Fern” McDougal the morning of

June 1 from an elevated platform in Giles County where she had been camped out

since May 21. She was charged with four misdemeanors in federal court.

A few hours later, a man known only as Deckard came down from a tree stand

on Peters Mountain in West Virginia. That stand had been occupied since Feb. 26.

—ASSOCIATED PRESS

http://www.exp.com



http://www.geotemps.com


Source: Symantec Internet Security Threat Report, Volume 20

Because you run a business security is not an option.

communication and security paramount. At AT&T, it’s our

layers of security across applications, devices, networks and platforms, we help reduce your risk of exposure from malicious attacks, so that companies like yours can stay Connected & Secure. Discover the Power of & with AT&T.

Speak with an AT&T representative about Network Security solutions today.

907-264-73871-800-955-9556


Cook Inlet Pipe Line Co., a subsidiary of Hilcorp Alaska,

has asked the Regulatory Commission of Alaska to

authorize the permanent decommissioning of the Drift River

Terminal and its associated infrastructure on the west side of

Cook Inlet. Hilcorp is engaged in a project to reconfigure its

Cook Inlet pipeline system to enable the transportation of oil

by pipeline west to east under the inlet. Currently, oil from

the fields on the west side of the inlet is transported by the

onshore Cook Inlet pipeline south to Drift River, from where

it is carried by tanker to Nikiski on the east side of the inlet.

Close to volcanoThe Drift River terminal lies at the foot of Redoubt

Volcano. In particular because of the risk of the terminal

being impacted by an eruption of the volcano, Hilcorp wants

to eliminate the terminal’s use. In 2009 an eruption of

Redoubt forced an evacuation of the terminal and an emer-

gency drawdown of oil stored at the terminal site.

In addition to the decommissioning of the terminal and its

tank farm, CIPL has asked RCA to approve the decommis-

sioning of the terminal’s Christy Lee tanker loading plat-

form, and the portion of the Cook Inlet pipeline that runs

south from the Trading Bay pipeline junction to the terminal

and the loading platform.

CIPL told the commission that there is no evidence of

any plans for oil development in the Drift River area that

might need the terminal facilities. Moreover, the facilities

would require significant investment to remain compliant

with agency requirements, CIPL said.

DecommissioningThe company envisions that decommissioning would

begin on Jan. 1 and will involve oil removal and cleaning for

the pipeline and terminal facilities, and the dismantlement

and removal of all above ground components of the disused

section of the Cook Inlet pipeline. The Christy Lee platform

would be placed in lighthouse mode, in anticipation of being

removed in conjunction with the eventual removal of Cook

Inlet oil platforms. CIPL would also arrange remediation of

any contaminated soil.

The company anticipates the cost of decommissioning,

excluding the cost of removing the Christy Lee platform, to

be $21 million.

Currently CIPL provides oil transportation services

through the Drift River Terminal and its associated pipeline

and loading platform under an RCA certificate of public

convenience and necessity — hence the need for RCA

approval of the decommissioning.

Converting a CIGGS lineHilcorp’s oil transportation project involves switching

over one of the existing twin Cook Inlet Gas Gathering

System pipelines to the transportation of oil rather than gas.

That would provide the means of shipping oil west to east

under the inlet. The western end of the CIGGS line will be

hooked up to the northern end of the Cook Inlet pipeline sys-

tem via a new short length of onshore oil pipeline. To main-

tain an adequate capacity for the carriage of natural gas

under the inlet, following the conversion of the CIGGS line,

Hilcorp is laying a new subsea gas line from the Tyonek gas

platform to the west side of the inlet, and is upgrading part

of the existing gas pipeline that runs from the Tyonek plat-

form to Nikiski. l

l P I P E L I N E S & D O W N S T R E A M

Hilcorp seeks RCA Drift River approvalWants to discontinue use of terminal and associated infrastructure following startup of pipeline oil transportation under Cook Inlet


Safer. Smarter.

Our CDR2-AC rig reflects the latest innovations in Arctic drilling to provide our customers with incident free performance and operational and technical excellence.

CDR2-AC is the first Arctic rig designed and built by Nabors specifically for Coil Tubing Drilling operations. The rig was built to optimize CTD managed pressure drilling to provide precise control

of wellbore pressures for improved safety, decreased costs, and increased wellbore lengths.

Combining safety and environmental excellence with greater efficiency means CDR2-AC can deliver the high value results customers have come to expect from Alaska’s premier drilling contractor.

Learn more about Nabors’ new drilling technologies at Nabors.com.

nabors.com

Better.

E&PNational rigcount rises by 1 to 1,060

The number of rigs drilling for oil

and natural gas in the U.S. increased by

one the week ending June 1 to 1,060.

At this time a year ago there were

916 active rigs.

Houston oilfield services company

Baker Hughes reported that 861 rigs

drilled for oil (up two from the previ-

ous week) and 197 for gas (down one).

Two were listed as miscellaneous

(unchanged).

Among major oil- and gas-produc-

ing states, Oklahoma added two rigs,

and Colorado, Texas, and Wyoming

each added one.

Louisiana lost two rigs. New

Mexico and North Dakota each lost

one.

Alaska, Arkansas, California, Ohio,

Pennsylvania, Utah, and West Virginia

were unchanged.

The U.S. rig count peaked at 4,530

in 1981. It bottomed out in May of

2016 at 404.

—ASSOCIATED PRESS

http://www.nabors.com


By ERIC LIDJIFor Petroleum News

I n a reflection that the revival of the Redoubt unit has arrived at a

new phase, Glacier Oil & Gas Corp. has asked the state to contract

the unit and to form a new participating area.

Through its subsidiary Cook Inlet Energy LLC, the company made

the application in November 2017 to comply with a state regulation

requiring companies to contract a unit to participating areas and any

facilitating acreage after 10 years of sustained production.

The contraction would reduce the size of the five-lease Redoubt

unit to some 3,117 acres, down from approximately 23,526 acres now,

by removing ADL 381201 in its entirety and removing large portions

of ADL 378114, ADL 374002, ADL 381203, ADL 381003.

The remaining unit would cover the existing Hemlock participat-

ing area in the northern half of the unit and the proposed South

Stepout participating area in the southern half.

Change in ownershipForcenergy Inc. formed the Redoubt unit in 1997 and reached sus-

tained production in 2002. Through its predecessor Miller Energy

Resources Ltd., Glacier acquired the Redoubt unit in late 2009 and

undertook a redevelopment effort between 2010 and 2013.

The Alaska Department of Natural Resources agreed to defer the

mandatory contraction while Cook Inlet Energy redeveloped the unit.

With production currently above its 2009 levels, Glacier now believes

deferrals are no longer needed and applied for contraction.

The efforts to date focused mostly on the existing Hemlock partic-

ipating area through sidetracks and workovers of existing wells and

waterflood injections to enhance recovery.

But the company also targeted a previously undeveloped accumu-

lation with the Redoubt Unit No. 9 well. Although an electric sub-

mersible pump failed at the well soon after installation, the company

said it was “encouraged by early production” and planned to fix the

pump and restart production. The well forms the basis of the applica-

tion for the South Stepout participating area, which would cover some


Contraction planned for Redoubt unitMandatory unit contraction would eliminate all acreage except existing Hemlock participating area and proposed South Stepout PA


Only pay for the speed you need...Dynamic Routing!

On time and on budget. At Lynden, we understand that plans change but deadlines don’t. That’s why we proudly

speed you need!

lynden.com | 1-888-596-3361

pSuSupS pSupdd SuudoouPrrroPPro ll aOiOilO lOilehhetthff toofsrrstetert rterrrtoorppoppp ytrryttrysstdudusd sdusnndIInsaasGGadd Gnndaanll a

W9339223

Add Arrd33rnoonybbybbbLoLobL bLobniinaiMMa((M5555555555-33-993779-77-007990eggeaagrraoorhhocchnncAAneuuennueenAvveAAveh4t4th4 h4thWW.

)ee)uuennueenAvveAAve5

10015509959akkassklalasAll slasAAla,ee,

��

��

��

��

��

��

��

��

�� !

�� "�� "��!

��#��$��%&'�

��()��*��&#(+,

%&'��*��&#(+,

�(+�'�'�(�'&-��+�(�*��&#(+,

��+(��*��&#(+,

./ 0*0��(+�'�'�(�'&-��+�(�*��&#(+,

�

�

�

�

�

��

� � � �

� � � �

�

�

�

� �

�

�

�

�

�

�

��

� � � �

� � � �

�

�

�

� �

�

�

�

�

�

�

��

� � � �

� � � �

�

�

�

� �

�

�

�

�

�

�

��

� � � �

� � � �

�

�

�

� �

�

�

�

�

�

�

��

� � � �

� � � �

�

�

�

� �

�

�

�

�

�

�

��

� � � �

� � � �

�

�

�

� �

�

�

�

�

�

�

��

� � � �

� � � �

�

�

�

� �

�

�

�

�

�

�

��

� � � �

� � � �

�

�

�

� �

�

�

�

�

�

�

��

� � � �

� � � �

�

�

�

� �

�

�

�

�

�

�

��

� � � �

� � � �

�

�

�

� �

�

�

�

�

�

�

��

� � � �

� � � �

�

�

�

� �

�

�

�

�

�

�

��

� � � �

� � � �

�

�

�

� �

�

�

�

�

�

�

��

� � � �

� � � �

�

�

�

� �

�

�

�

�

�

�

��

� � � �

� � � �

�

�

�

� �

�

�

�

�

�

�

��

� � � �

� � � �

�

�

�

� �

�

�

�

�

�

�

��

� � � �

� � � �

�

�

�

� �

�

�

�

�

�

�

��

� � � �

� � � �

�

�

�

� �

�

�

�

�

�

�

��

� � � �

� � � �

�

�

�

� �

�

�

�

�

�

�

��

� � � �

� � � �

�

�

�

� �

�

�

�

�

�

�

��

� � � �

� � � �

�

�

�

� �

�

�

�

�

�

�

��

� � � �

� � � �

�

�

�

� �

�

�

�

�

�

�

��

� � � �

� � � �

�

�

�

� �

�

�

�

�

�

�

��

� � � �

� � � �

�

�

�

� �

�

�

�

�

�

�

��

� � � �

� � � �

�

�

�

� �

�

%�$��#��

(#&��*�)(��

,+,+,(#&��*�'&%

+(#&��*��(+�

�

�

�

�

�

��

� � � �

� � � �

�

�

�

� �

�

�'&%

,+,+,(

,

,++,

�

�

�

�

�

��

� � � �

� � � �

�

�

�

� �

�

�

�

�

�

�

��

� � � �

� � � �

�

�

�

� �

�

�

�

�

�

�

��

� � � �

� � � �

�

�

�

� �

�

�

�

�

�

�

��

� � � �

� � � �

�

�

�

� �

�

,++,(#&��*�'&%

�-&'�(�'�'�++�(�

�

�

�

�

�

��

� � � �

� � � �

�

�

�

� �

�

,

,++,(#&��*(�+�+��

see REDOUBT UNIT page 8

GLA

CIE

R O

IL &

GA

S C

OR

P.

http://www.aviatorhotelanchorage.com

http://www.lynden.com

By KRISTEN NELSONPetroleum News

Hilcorp Alaska acquired certain of

BP’s North Slope assets in early

2014, including all of BP’s interests in the

Endicott and Northstar oil fields and a 50

percent interest in Liberty and Milne

Point. BP’s interests in oil and gas

pipelines associated with those fields

were also included.

Hilcorp and ExxonMobil Pipeline Co.

are now applying to the Regulatory

Commission of Alaska for approval of a

transfer of ExxonMobil’s share of the

Endicott Pipeline Co. to Hilcorp sub-

sidiary Harvest Alaska LLC.

In a request received by RCA June 5,

Harvest Alaska and ExxonMobil Pipeline

applied jointly for commission approval

of the transfer of ExxonMobil’s share of

the Endicott Pipeline Co., slightly more

than 21 percent, to Harvest Alaska, which

already owns some 68.5 percent of the

line. The remaining almost 10.5 percent

is held by Unocal Pipeline Co.

Following approval of the application,

Harvest Alaska would own some 89.5

percent of the line.

The application notes that the Endicott

Pipeline was built in 1987 and certificat-

ed by the commission in 1989 to transport

crude oil from the Endicott main produc-

tion island to the trans-Alaska oil pipeline

at Pump Station No. 1 via a connection

with the Northstar Pipeline near PS-1.

Endicott also moves crude oil from the

Badami Oil Pipeline, which connects to

the Endicott line at approximately its

midpoint and moves natural gas conden-

sate originating at ExxonMobil’s Point

Thomson field via the Badami Oil

Pipeline. The Endicott line has a capacity

of some 100,000 barrels per day and a

currently estimated remaining economic

life of six years, “which could be extend-

ed if new or additional oil production is

developed in the area that it serves, or if

natural gas condensate produced from the

Point Thomson Field requires transport to

TAPS Pump Station No. 1 beyond 2024,”

the companies said in their application to

RCA.

The Endicott Pipeline is operated by

Harvest Alaska, which was formed in

2014 as a wholly owned subsidiary of

Hilcorp Alaska. Hilcorp Alaska owns

interests in and operates 30 oil and gas

field production facilities in Cook Inlet

and on the North Slope and employs 472

people in Alaska. Hilcorp began acquir-

ing Cook Inlet properties in 2011 and

began operating in 2012.

Hilcorp Alaska and provides opera-

tional support to Harvest Alaska for the

subsidiary’s North Slope and Cook Inlet

oil and gas pipelines, including the

Endicott Pipeline.

Harvest Alaska employs 28 people in

Alaska and operates and manages several

oil and gas pipeline systems in Cook Inlet

l P I P E L I N E S & D O W N S T R E A M

Hilcorp buying Exxon out of Endicott line


WHATEVER

WHENEVER

WHEREVERjudypatrickphotography.com

Creative photography for the oil & gas industry.

907. 258.4704

1,280 acres at two leases.

As of June 2018, the state had yet to

rule on either the proposed unit con-

traction or the proposed participating

area but had approved a new plan of

development for the unit.

Small projects this yearIn that 18th plan of development for

the coming year, Glacier announced a

long-term goal of delineating and

developing the Central, Southern and

Northern fault blocks at the unit, but

said that its immediate plans mostly

involve sidetracks and workovers.

The company undertook a similar

range of projects in its 17th develop-

ment year, running through the end of

April 2018. The company drilled the

Redoubt Unit No. 3A sidetrack as a

waterflood injection well. The compa-

ny also replaced electric submersible

pumps in the Redoubt Unit No. 1A and

Redoubt Unit No. 5B wells, although a

related project to hydraulically fracture

those two sidetracks was cancelled fol-

lowing pump failures. l


REDOUBT UNIT

see ENDICOTT LINE page 10

Anchorage Honolulu Los Angeles

• Commercial Diving• Marine Construction Services• Platform Installation, Maintenance and Repair• Pipeline Installation, Maintenance and Repair• Underwater Certified Welding• NDT Services• Salvage Operations• Vessel Support and Operations

• Environmental Services• Oil-Spill Response, Containment and Clean-Up• Hazardous Wastes and Contaminated Site Clean-

Up and Remediation• Petroleum Vessel Services, e.g. Fuel Transfer• Bulk Fuel Oil Facility and Storage Tank

Maintenance, Management, and Operations

American MarineServices Group

6000 A Street, Anchorage, AK 99518

907-562-5420Deadhorse, AK

907-659-9010www.amarinecorp.com • www.penco.org

[email protected]

http://www.amarinecorp.com

http://www.judypatrickphotography.com

AAfognak Leasing LLCAir LiquideAlaska Energy Services, LLCAlaska DreamsAlaska Frac Consulting LLCAlaska Frontier Constructors (AFC)Alaska Marine Lines . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7Alaska MaterialsAlaska RailroadAlaska Rubber & Rigging Supply Inc.Alaska Steel Co.Alaska TextilesAlaska West Express . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7Alpha Seismic CompressorsAmerican Marine . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .8Arctic Catering & Support ServicesArctic ControlsArctic Fox EnvironmentalArctic Wire Rope & SupplyARCTOS Alaska, Division of NORTECHArmstrongASRC Energy ServicesAT&T . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5Avalon DevelopmentAviator Hotel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7

B-FBombay DeluxeBPBrooks Range SupplyCalista Corp.Chosen ConstructionColville Inc.

Computing AlternativesCONAM ConstructionCruz Construction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .10Dowland-Bach Corp.Doyon AnvilDoyon AssociatedDoyon DrillingDoyon, Limitedexp Energy Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4F. R. Bell & Associates, Inc. . . . . . . . . . . . . . . . . . . . . . . . . . .10FairweatherFlowline AlaskaFluorFoss MaritimeFugro

G-MGeotemps . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4GMW Fire ProtectionGreer Tank & Welding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .10Guess & Rudd, PCInspirationsJudy Patrick Photography . . . . . . . . . . . . . . . . . . . . . . . . . . . .8Kuukpik Arctic ServicesLast Frontier Air VenturesLittle Red Services, Inc. (LRS)Lounsbury & AssociatesLynden Air Cargo . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7Lynden Air Freight . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7Lynden Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7Lynden International . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7Lynden Logistics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7Lynden Transport . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7Mapmakers of Alaska

MAPPA Testlab

Maritime Helicopters

Motion & Flow Control Products

N-PNabors Alaska Drilling . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6

Nalco Champion

NANA WorleyParsons

Nature Conservancy, The . . . . . . . . . . . . . . . . . . . . . . . . . . .12

NEI Fluid Technology

Nordic Calista

North Slope Telecom

Northern Air Cargo

NRC Alaska

Opti Staffing

PENCO . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .8

Petro Star Lubricants

PRA (Petrotechnical Resources of Alaska) . . . . . . . . . . . . . . .2

Price Gregory International

Q-ZResource Development Council

SAExploration

Security Aviation

Sourdough Express

Tanks-A-Lot

The Local Pages

Unique Machine

Volant Products

Waste Management


ADVERTISER PAGE AD APPEARS ADVERTISER PAGE AD APPEARS ADVERTISER PAGE AD APPEARS

Companies involved in Alaska’s oil and gas industryAdvertiser Index

All of the companies listed above advertise on a regular basis with Petroleum News

l F I N A N C E & E C O N O M Y

Exxon aims to boost earnings, productionBy DAVID KOENIG

Associated Press Business Writer

Exxon’s CEO says the company can more than double

its earnings by 2025 and will invest in new oil and gas

production even if policymakers adopt rules to combat cli-

mate change.

Darren Woods told shareholders May 30 that technolo-

gy like biofuels will allow the company to produce energy

with lower carbon emissions.

Environmentalists say Woods is offering political spin

instead of solutions.

The oil giant’s annual meeting in a symphony hall was

a tame affair, lacking the usual number of protesters. For

the first time in years, there were no environmental reso-

lutions from activist shareholders and no fiery speeches

during the open-comment period.

Woods, like his predecessor and former Secretary of

State Rex Tillerson, said the world will need oil and gas

for decades. Exxon, Woods said, is responding to that

demand while investing in technology such as carbon cap-

ture and biofuels to reduce heat-trapping carbon emis-

sions. Earlier in May, the company promised to cut its

own emissions of methane, a powerful greenhouse gas, by

15 percent by 2020 largely by reducing leakage from nat-

ural gas wells.

“We see our role as helping close the gap between what

people want and what can be responsibly done,” Woods

said.

Environmentalists counter that Exxon’s technology

investments, some in partnership with leading universi-

ties, will not produce enough reductions to avoid the worst

effects of climate change, including more bouts of severe

weather.

Kathy Mulvey, a climate activist at the Union of

Concerned Scientists, called Woods’ comments “all PR”

— public relations. She said Exxon’s investments in alter-

see EXXON BOOST page 11

Working interest ownersBrooks Range Petroleum LLC operates

the field on behalf of its working interest

owners, which also include TP North

Slope Development LLC, MEP Alaska

LLC, Nabors Drilling Technologies USA

Inc. and AVCG LLC.

As collateral for its loan to CaraCol

AIDEA is retaining its security interests in

Brooks Range’s North Slope assets and in

the assets of MOC 1 LLC. And, in addition

to the repayment of principal and interest

for the loan to CaraCol, AIDEA will

receive options in CaraCol’s parent com-

pany, Alpha Energy Holdings Ltd.

Although Mustang is a modest sized oil

field, the field lies at a convenient location

close to the existing North Slope infra-

structure, in particular the Alpine oil

pipeline. Brooks Range has been following

a strategy of developing field facilities that

can act as hub facilities in the future for

other developments nearby, as well as sup-

porting the Mustang field itself. AIDEA

sees providing financial support for the

field as consistent with the agency’s mis-

sion of facilitating commercial activity in

Alaska.

Purchase of field assetsIn 2012 AIDEA purchased an 80 per-

cent stake in Mustang Road LLC, the com-

pany that would build the gravel road and

pad for the Mustang development. And in

2014 the agency invested in MOC 1, the

company that would develop the Mustang

processing center.

John Springsteen, AIDEA CEO and

executive director, told the AIDEA board

that, subsequent to the investment in MOC

1, the downturn in the oil industry caused

financing problems for the Mustang devel-

opment — in February 2016 AIDEA and

Brooks Range agreed on a “warm stand-

by” plan for the development. And,

although that plan expired at the end of

November 2016, Brooks Range and

AIDEA continued to seek financing for the

project.

In June 2017 AIDEA approved an addi-

tional investment of $2.5 million into the

development. That investment, designed to

protect the investment in equipment

already developed for the field, enabled

the successful drilling and testing of the

North Tarn 1A well in the field in

November 2017. This successful test

demonstrated a well that could be commer-

cially supportable.

Revised development planIn parallel with this new drilling and

testing, Brooks Range has prepared a

revised development plan involving the

installation of a rented modular production

facility that would enable early production

from the field but would be replaced by

permanent production facilities, once those

are completed. The new plan envisions

Mustang oil production of some 2,000 bar-

rels per day by the beginning of 2019, ris-

ing to 5,000 barrels per day by the end of

that year.

The resulting reduced capital needs of

this new development plan are causing a

shift in AIDEA’s role in the project from

being an owner to a lender in the project,

Springsteen explained. Hence the switch

from ownership interests in MOC 1 and

Mustang Road 1 to a loan to CaraCol.

During its May 31 meeting the AIDEA

board also approved a line of credit of up

to $1 million for MOC 1, to act as bridging

finance for costs associated with MOC 1.

—ALAN BAILEY


MUSTANG INTEREST

1002 area, high resolution seismic data

would be beneficial in identifying subtle

oil and gas traps in the subsurface.

Two crews over two wintersThe survey plan says that SAE antici-

pates supporting two seismic crews for the

survey operations during each of the win-

ter seasons that the survey program takes

to complete. During each season, survey-

ing would start about Dec. 1 and end on

May 31, or at the time when winter off-

road tundra operations must end. On state

land on the coastal plain of the central

North Slope, seismic survey operations

are commonly conducted during the win-

ter off-road tundra travel season, when the

snow cover and frozen ground protect the

tundra from damage. Vehicles and equip-

ment used are of designs that can avoid

impacting the tundra.

The Marsh Creek survey plan says that

the survey program will minimize any

impacts on the environment by using tech-

nology that can minimize the number of

vehicles deployed on the tundra; the use

of articulated, rubber tracked, low ground

pressure vehicles; reducing vehicle sizes;

and using systems that minimize the risks

of hydrocarbon spills from the vehicles.

Vibrator equipmentA modern seismic survey of this type

typically uses surface vibrator equipment

to generate the subsurface sounds that will

echo off subsurface structures. The Marsh

Creek plan anticipates the use of rubber

tracked or buggy vibrator equipment,

together with wireless, autonomous nodes

for recording the seismic signals. Vibrator

source points would be located at 41.25-

foot intervals on source lines, with geo-

phone nodes located at 165-foot intervals

on receiver lines running perpendicular to

the source lines. The source and receiver

lines would be spaced about 660 feet

apart. And up to 20 receiver lines could be

place on the ground at any one time.

Vibrators will only operate on snow

covered tundra or grounded sea ice. And a

vibrator will only have to traverse each

source line once.

Crews will lay out the wireless record-

ing nodes either by foot or through the use

of rubber tracked, tundra-approved vehi-

cles, the March Creek survey plan says.

Recording operations will be conducted

24 hours per day, using two 12-hour

shifts, the plan says. SAE has a wildlife

interaction plan that includes protocols

such as reporting the sightings of polar

bears to the U.S Fish and Wildlife Service,

the plan says.

A specialized vehicle or snow

machines will use technology including

ground penetrating radar to check for the

integrity of ice in the area of a seismic

operation. And the plan includes a proto-

col for avoiding damage to areas with wil-

lows. SAE plans to use temporary

airstrips on frozen lakes or appropriate

tundra for conducting crew changes, to

save several hours of ground travel.

Environmental organizations opposedEnvironmental organizations are

adamantly opposed to any oil and gas

related activity in the 1002 area. The

Alaska Wilderness League slammed the

proposed seismic operations, citing still

visible scars from surveying conducted in

1984 and 1985 and claiming that the sur-

veying activities will involve “convoys of

30-ton thumper trucks and bulldozers

traveling over extensive areas of fragile

tundra.”

“This is the polar opposite of what was

promised by drilling proponents,” said

Adam Kolton, executive director of the

Alaska Wilderness League. “Instead of a

small footprint and a careful process, they

want to deploy a small army of industrial

vehicles and equipment with a mandate to

crisscross every square inch of the

refuge’s biological heart.”

There have been press reports that the

U.S. Fish and Wildlife Service is dissatis-

fied with the seismic survey plan, saying

that the plan does not contain sufficient

specific detail for an adequate agency

review. Apparently the Washington Post

obtained a copy of the Fish & Wildlife

response. Although BLM is administering

oil and gas related activity in the 1002

area, Fish and Wildlife manages ANWR

as a whole and maintains a conservation

plan for the refuge. SAE will require an

incidental harassment authorization from

Fish and Wildlife for the unintended dis-

turbance of polar bears. An IHA normally

spells out mitigation measures required to

minimize wildlife impacts. l


3D laser scanningengineering

surveying

801 West Fireweed Lane, Suite 201 Anchorage, AK 99503 | www.bellalaska.com

Call for a FREE scanning demo today!907.274.5257

over4years0

onthe slope

and on the North Slope. Cook Inlet

pipelines operated and owned, in whole

or in part, by Harvest Alaska include the

Swanson River Oil Pipeline, the Cook

Inlet Pipeline Co.’s oil pipeline and

Kenai Beluga Pipeline. On the North

Slope, Harvest Alaska operates the

Northstar Oil Pipeline, the Northstar Gas

Pipeline, the Endicott Pipeline, the Milne

Point Oil Pipeline and the Milne Point

Natural Gas Liquids Pipeline. Harvest

Alaska also owns, in part or in whole,

those North Slope pipelines. l


ENDICOTT LINE

lion Pacific NorthWest LNG project 10

months ago, blaming a weak global

market outlook and the “extremely

challenging environment” in Canada,

said it is keen to join LNG Canada to

take advantage of the export outlet for

its vast natural gas reserves in northeast

British Columbia’s North Montney

resource which is operated by its sub-

sidiary Progress Energy Canada.

Petronas said its role in LNG

Canada includes the design, construc-

tion and operation of a gas liquefaction

plant, facilities for the storage and

export of LNG and marine facilities.

The estimated costs include

TransCanada’s proposed C$4.7 billion

Coastal GasLink pipeline from the

Montney region to Kitimat on the

northern B.C. coast.

Shell has argued that LNG Canada

would help reduce greenhouse gas

emissions by replacing more carbon-

intensive commodities such as coal

with LNG.

Federal tariffs unresolvedStill to be resolved is an issue for fed-

eral tariffs as Shell awaits a response

from Canada’s Finance Department to

exempt the project from anti-dumping

duties of up to 45.8 percent on imports of

fabricated industrial steel components,

notably from China and South Korea.

LNG Canada Chief Executive Officer

Andy Caditz said in early May he is con-

fident the consortium will be ready to

start construction this year. Initial ship-

ments have been targeted for the 2022-24

period.

British Columbia’s New Democratic

Party, at odds with its own resistance to

Kinder Morgan’s Trans Mountain

pipeline expansion, has offered signifi-

cant tax relief to LNG Canada totaling

C$6 billion over 40 years, although it still

estimates revenues to the province will

reach C$22 billion over the same period.

The project has considerable buy-in

from aboriginal communities, led by the

Haisla Nation Council, although the

council has yet to sign a final commercial

agreement. l


ANWR SEISMICThe Alaska Wilderness Leagueslammed the proposed seismic

operations, citing still visible scarsfrom surveying conducted in 1984and 1985 and claiming that thesurveying activities will involve

“convoys of 30-ton thumper trucksand bulldozers traveling over

extensive areas of fragile tundra.”


LNG GIANTS

To advertise in Petroleum News, contact Susan Crane

at 907.770.5592petroleumnews.com

http://www.bellalaska.com

http://www.greertank.com


Growing Alaska Through Responsible Resource DevelopmentRESOURCE DEVELOPMENT COUNCIL

Resource Development Council @alaskardc

RESOURCE DEVELOPMENT COUNCIRESOUR LCE DEVELOPMENT COUNCIRESOURGrowing

43gy TEner

Embr

CE DEVELOPMENT COUNCIRESOURThrough Responsible Resource DevelopmentAlaska

ansitionrgy Theacing tEmbr

LCE DEVELOPMENT COUNCIThrough Responsible Resource Development

Sponsorship opportunities still available!

gy TEner

Sponsorship opportunities still available!

ansitionrgy T

Sponsorship opportunities still available!ednesdaW 81, June 20, 20yy,ednesda

akrdc.orgvisit For additional information and registrationSponsorship opportunities still available!

Resource Development

or call 907-276-0700akrdc.orgFor additional information and registrationSponsorship opportunities still available!

CouncilResource Development

or call 907-276-0700For additional information and registrationSponsorship opportunities still available!

@alaskardc

native fuels and other technological break-

throughs are a pittance compared with its

spending on finding more oil and gas.

The Irving, Texas-based company

earned $19.7 billion last year, as rising oil

prices reversed a slide in profit. Yet the

shares fell 7 percent last year and are

down so far in 2018. Woods said the stock

will rise as earnings improve.

Earlier this year, one of Exxon’s most

prominent critics, New York Attorney

General Eric Schneiderman, was forced

from office by charges that he physically

abused several women. Schneiderman, a

Democrat, was investigating whether

Exxon misled the public and investors by

hiding what it knew about the link

between climate change and burning oil

and gas.

Schneiderman’s interim replacement,

Barbara Underwood, is continuing the

investigation, an aide said. Voters will pick

the next attorney general in November in a

state where registered Democrats outnum-

ber Republicans about 2-to-1.l


EXXON BOOST

covery, totaled some 1.2 million acres,

a combination of state and federal

acreage.

In the company’s transcript of a Feb.

1 analysts’ call, ConocoPhillips execu-

tive vice president of production,

drilling and projects, Al Hirshberg, said

of the acreage acquisition, “We now

own 100 percent of these assets con-

taining about 200 million barrels of

gross reserves and about 900 million

barrels of risked gross resource, with

gross production of about 63,000 bar-

rels per day in 2017.”

Hirshberg described the acquisition

from Anadarko as “an opportunistic

bolt-on opportunity.”

ConocoPhillips Chairman and CEO

Ryan Lance said in the Feb. 1 call that

Anadarko had “expressed a desire to

sell some assets, and Alpine was one of

those. I think we’re the natural buyer

because we operate and we have the

majority interest in the area.” Lance

also said it made a lot of sense for

ConocoPhillips “to pick up that interest

and be in complete control … of the

capital pace and destiny over there.”

In its June 4 press release

ConocoPhillips said in the first quarter

of 2018 the production associated with

the acquired 22 percent lease interests

was 11,000 barrels of oil equivalent

per day. The company currently has

western North Slope production from

the Colville River unit, with produc-

tion expected to begin from Greater

Mooses Tooth in NPR-A by the end of

the year.

The Alaska Department of Natural

Resources’ May monthly lease admin-

istration activity report reflects the

transfer of acreage from Anadarko to

ConocoPhillips Alaska, with an effec-

tive date of March 1. Anadarko cur-

rently has no state lease acreage in

Alaska.

The federal Bureau of Land

Management, which leases in the

National Petroleum Reserve-Alaska,

shows no current leases for Anadarko

in a list of NPR-A acreage dated May

17.

ConocoPhillips Alaska and

Anadarko had partnered in both state

and NPR-A acreage.

—KRISTEN NELSON

Washington-BC connectionWashington Gov. Jay Inslee and British

Columbia Premier John Horgan have estab-

lished a two-way flow of information over

the past year under the Pacific Coast

Collaborative, established in 2008 to pro-

mote joint action on climate change and the

environment and protect their shared waters

from tanker spills.

In the process, Inslee, seizing advantage

of the November 2017 election when his

Democrats won full control of the state gov-

ernment, has become a rare supporter of

Horgan’s battle to scrap the Trans Mountain

expansion by setting an example that is

widely admired among environmentalists

and aboriginal communities in British

Columbia.

His administration has tightened regula-

tions around the transportation of oil in

Puget Sound, including a tax on pipelines to

help finance safety measures, battled the

Trump administration’s efforts to expand

offshore oil drilling, and refused to issue a

permit for what would have been the largest

crude-by-rail terminal in the United States.

Inslee and Horgan used an almost identi-

cal language in arguing that the environ-

mental and public-health risks outweigh the

benefits of increase tanker shipments.

BC lacks Canadian backingBut Horgan has had trouble finding

friends within Canada. Only one of nine

other provincial and three territorial pre-

miers has offered him clear-cut backing.

When Alberta threatened to cut off fuel

shipments to British Columbia in response

to Horgan’s opposition to Kinder Morgan’s

plans and the Trudeau government

announced it would spend C$4.5 billion to

take over the existing Trans Mountain sys-

tem and likely pay another C$7.4 billion for

the expansion project, Inslee reportedly

consulted closely with Horgan about an

opinion piece he wrote for the Seattle

Times.

In that article he said the project “runs

counter to everything our state is doing to

fight climate change, protect our endan-

gered southern resident killer whales and

protect communities from the risks associ-

ated with increased fossil-fuel transporta-

tion — by rail and by sea.”

That stance was scorned by the

Canadian Association of Petroleum

Producers, which described Inslee’s posi-

tion as “hypocritical,” noting that Alberta

has imposed a price on carbon emissions

that is double his proposed tax that died in

the state legislature this spring.

Four years ago, Washington’s

Department of Ecology took an even harder

line against the Trans Mountain plan, telling

Canada’s National Energy Board that

Canada and B.C. spill response measures

“are less stringent than U.S. and

Washington standards” and would not ade-

quately protect the shared waters and aquat-

ic life.

Since 2016, the state has provided quar-

terly reports of crude-oil shipments to emer-

gency responders, local governments,

indigenous groups and members of the pub-

lic, while the B.C. Ministry of the

Environment is unable to do more than esti-

mate the volumes of crude being transport-

ed across the province by rail or pipeline,

although it has promised more information

by this fall.

Matt Krogh, an activist with

Stand.earth’s Extreme Oil organization, told

Toronto’s Globe and Mail that Inslee’s

administration has advanced the state’s

most “progressive policies” in five years

and is now “able to play catch up, in partic-

ular, with things like the movement of fossil

fuels and spills preparedness” at a time

when Washington and B.C. are under

tremendous pressure to build more infra-

structure for coal, natural gas and oil

exports.

—GARY PARK

Terminal. Planned work includes:

enhancing the safety integrity pressure

protection system; preparing for inline

inspection of the line beginning in the

fall; replacing 6-inch bypass valves and

spool of a mainline check valve; and con-

ducting annual inspection and mainte-

nance of the Pump Station No. 9 power

substation.

“Planned major maintenance plays a

critical role in sustaining TAPS for

decades to come,” said Alyeska President

Tom Barrett. “Alyeska maintains the

pipeline as our commitment to the

integrity of the system and people of

Alaska.”

Slope turnaroundsOperators on the North Slope take

advantage of the Alyeska shutdown and

summer weather to schedule turnarounds.

BP spokeswoman Dawn Patience told

Petroleum News in a June 1 email that

several temporary brief outages are

planned for the summer, along with other

maintenance.

“BP has normal planned summer

maintenance at Prudhoe Bay this sum-

mer,” she said, with work “focused on

piping replacements, facility mainte-

nance, vessel repairs and other improve-

ment projects.” Patience said summer

maintenance and temporary facility shut-

downs take advantage of temporary

pipeline shutdowns and the milder sum-

mer weather in the Arctic.

ConocoPhillips Alaska also has turn-

arounds planned, spokeswoman Natalie

Lowman said in a June 6 email, including

“major maintenance work and a shut-

down in mid-June at the Kuparuk CPF2

facility.” She said the company’s western

operations staff has “a major maintenance

shutdown” planned for Alpine in mid-

July.

—KRISTEN NELSON


OIL SHIPMENTS


CONOCO PURCHASE


SUMMER MAINTENANCEPlanned work includes: enhancing

the safety integrity pressureprotection system; preparing for

inline inspection of the linebeginning in the fall; replacing 6-inch bypass valves and spool of a

mainline check valve; andconducting annual inspection andmaintenance of the Pump Station

No. 9 power substation.

http://www.akrdc.org

board sign off on the changes as part of the

AIDEA authorization for the sale comple-

tion. During its May 31 meeting the AIDEA

board passed a resolution agreeing to one of

IGU’s requested changes but rejecting the

other change. AIDEA extended the deadline

for sale closure by two weeks, to enable the

IGU board to decide whether to agree to

AIDEA’s terms.

The objective of the IEP is to bring an

expanded, affordable natural gas supply to

Fairbanks and the surrounding Alaska

Interior, to reduce the cost of energy for

consumers while also alleviating air pollu-

tion primarily resulting from the use of

wood burning stoves to heat buildings. In

addition to FNG, Pentex owns the Titan liq-

uefied natural gas plant near Point

Mackenzie and a trucking operation for

transporting LNG to Fairbanks.

Requested changesThe change to which AIDEA has agreed

relates to improvements to a North Slope

gravel pad that IGU is purchasing as part of

the Pentex deal. But AIDEA has rejected a

change that would consider the possibility

of developing a new LNG plant adjacent the

Alaska Railroad near Houston, as an alter-

native to a plan in the sales document to

expand Pentex’s existing Titan LNG plant

— the AIDEA board said that the sale doc-

umentation already includes language

accommodating potential changes to the

development of expanded LNG supplies for

Fairbanks and that IGU’s proposed change

to the documentation could have ramifica-

tions elsewhere in the purchase and sales

agreements.

AIDEA board members also expressed

concern about a request for changes to the

documentation less than two weeks before

the sale was due to close, given that the doc-

umentation had been completed and agreed

in December.

“We have a good development process.

We have language within that development

process that ensures that the parties work

together. And we have a dispute resolution

that requires mediation and further allows

the parties to work together,” said AIDEA

board member Fred Parady, in reference to

the documented development plan for

increased LNG production.

State fundingThe IEP has state funding in the form of

Sustainable Energy Transmission and

Supply, or SETS, loans, AIDEA bonds and

a state capital appropriation. In 2015 some

SETS funding enabled FNG to begin an

expansion of its gas distribution network,

while also enabling IGU to start building its

network. The network build-outs came to a

halt after that year, following changes in the

plans for furthering the IEP.

The IEP plan now involves IGU using a

SETS loan to purchase Pentex, with IEP

funding also enabling the construction of a

new, expanded LNG storage facility in

Fairbanks. The expanded storage, by

enabling the increased stockpiling of sum-

mer produced LNG, will enable the estab-

lishment of expanded gas supplies for

Fairbanks consumers through the distribu-

tion system expansions that were achieved

in 2015.

Increased LNG supplyHowever, the eventual aim is to increase

the LNG supply, thus enabling the gas dis-

tribution system in Fairbanks to be further

built out. The plan outlined in the Pentex

purchase and sale agreement envisages the

expansion of the existing Titan LNG plant,

using further IEP financing. However, at

this stage no final decision has been made

on that plant expansion — the expansion

would require IGU to issue a request for

proposal for the development, with

AIDEA, as financier for the project, having

oversight of any development decision.

Manufacturing company Siemens, in

conjunction with Knikatnu Corp., the

Native village corporation for the Knik and

Wasilla area, has proposed the construction

of a new LNG plant near Houston, as an

alternative to expanding the Titan plant.

The proponents of the Houston proposal

argue that this concept would offer the

advantages of having a new modular and

easily expandable plant, with the possibili-

ty of conveniently shipping LNG to

Fairbanks by rail rather than by road.

Siemens and Knikatnu conducted pre-

sentations on their concept to the AIDEA

board during the agency’s Oct. 26 board

meeting and, apparently, have more recent-

ly been discussing their proposal with the

IGU board. During the October AIDEA

board meeting Jerry Juday, assistant attor-

ney general, Alaska Department of Law,

commented that, although the Pentex sale

documentation specifically references the

expansion of the Titan plant as the means of

expanding the Fairbanks LNG supply, the

document does not preclude the possibility

of the Houston group submitting its alterna-

tive LNG plant proposal, in response to the

anticipated RFP for Titan plant expansion.

In its May 22 draft letter of agreement

IGU requested modifications to the docu-

mented development process for LNG sup-

ply expansion in the Pentex sale agreement,

to include an evaluation of the Siemens

proposal, as an alternative to the Titan plant

expansion, with a procedure for reconciling

any difference of opinion between AIDEA

and IGU over the preferred solution. The

AIDEA board’s rejection of this proposal

reflected the board’s view that the Pentex

sale and financing agreements already

accommodate the possibility of an alterna-

tive to the Titan expansion.

Storage tank constructionMeanwhile, the construction of the new

LNG storage facility in Fairbanks has been

proceeding to plan. Dan Britton, president

and CEO of Pentex, told the AIDEA board

that, with the concrete foundation for the

tank already having been laid, the first of

the panels for the tank was due to be deliv-

ered on June 6; all of the tank’s 44 panels

should be installed by mid-July. The expec-

tation is to have the new facility ready for

commissioning at the end of June 2019.

One significant concern for the IEP is

the rate at which Fairbanks consumers will

switch to the use of natural gas for the heat-

ing of buildings: The project economics

hinge on having an adequate demand for

natural gas as a result of heating conver-

sions. Gene Therriault, IEP team leader,

told the AIDEA board that the recent pas-

sage by the state Legislature of a bill

enabling the on-bill financing of conver-

sions should help push up the conversion

rate. An on-bill financing arrangement

enables the payment of the conversion

costs though installments added to a con-

sumer’s monthly gas bills.

The Legislature had previously passed

legislation enabling the implementation of

Property Assessed Clean Energy, or PACE,

arrangements that can bring low cost

financing to businesses wishing to convert

to natural gas use.

In addition, the Environmental

Protection Agency has awarded a $4 mil-

lion grant to Fairbanks North Star Borough

for assistance in addressing air pollution

issues: The EPA has indicated that the

funds will be used in a program for replac-

ing wood burning stoves with cleaner burn-

ing appliances. l


We thank these companies for sharing our vision of a healthy environment

and a vibrant economy for many generations to come.

Nature is Alaska’s business

Corporate Catalysts | $50,000+ConocoPhillips Alaska, Inc.Spawn Ideas

Corporate Leaders | $25,000+Alaska Airlines and Horizon AirBPPetroleum News

Corporate Partners | $10,000+The Chariot Group

Corporate Members | $1,000+49th State Brewing Co.ABR Inc.Alaska Wildland Adventures Inc.Allen MarineBristol Bay Native Corp.Chugach Alaska Corp.Denali National Park Wilderness Centers Ltd.Icy Strait PointPacific Star EnergyPrice Gregory International Inc.

Corporate Council on the Environment

715 L Street, Suite 100

Anchorage, Alaska 99501

907-865-5700

Photo: © Lance Nesbitt

© Ami Vitale

natureconservancyalaska

nature_ak

To join us visit nature.org/alaska


PENTEX SALE

http://www.nature.org/alaska

l EXPLORATION & PRODUCTION ANWR seismic planned · Letter of agreement ... Petronas lead LNG...

Documents

Transcript of l EXPLORATION & PRODUCTION ANWR seismic planned · Letter of agreement ... Petronas lead LNG...