l EXPLORATION & PRODUCTION is week’s ini s Conoco … · l EXPLORATION & PRODUCTION l GOVERNMENT...
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l EXPLORATION & PRODUCTION l GOVERNMENT l EXPLORATION & PRODUCTION Vol. 20, No. 13 • www.PetroleumNews.com A weekly oil & gas newspaper based in Anchorage, Alaska Week of March 29, 2015 • $2.50 page 10 Goldrich NyacAu Placer eyes Chandalar Mine start in 2015 www.MiningNewsNorth.com The weekly mining newspaper for Alaska and Canada's North Week of March 29, 2015 NEWS NUGGETS Compiled by Shane Lasley l EXPLORATION Cohen to review EPA fairness in AK Former U.S. Defense Secretary William S. Cohen March 24 said he and his firm, The Cohen Group, assisted by law firm DLA Piper, will conduct an independent review of whether the U.S. Environmental Protection Agency acted fairly in connec- tion with its evaluation of potential mining in the Bristol Bay watershed in Southwest Alaska. “An investigation being con- ducted by the EPA’s Office of Inspector General; inquiries and hearings into EPA actions by the House Committee on Oversight and Government Reform; and, more recently, an inquiry by the Senate Environment and Public Works Committee, as well as documents produced in response to Freedom of Information Act requests, have each raised ques- tions as to whether the EPA proceeded fairly in its activities sur- rounding potential mining in the Bristol Bay watershed,” said Cohen. The former secretary of defense has been retained by the Pebble Limited Partnership, owner of the Pebble copper- gold-molybdenum project located on state of Alaska mining claims in this area. Secretary Cohen said he will evaluate the fairness of EPA’s actions and decisions in this matter based upon a thorough assessment of the facts and informed by his experience as secretary of defense as well as his 24 years as a member of the U.S. House of Representatives and Senate. “Our review will focus on the fairness of the EPA’s actions. We are not evaluating and will not express an opinion as to whether the Pebble Limited Partnership ultimately should be granted per- mission to mine the Pebble deposit. And, as was well docu- mented during my years in public service, I have been a strong supporter of the EPA’s mandate to protect the environment and keep our nation’s waterways safe for human health as well as fish and wildlife,” Cohen explained. He said he has taken steps to ensure the review is thorough and unbiased. “A condition of accepting this assignment is that I have complete independence and discretion as to how this work will be conducted. I will follow the evidence wherever it might lead, and I will conduct this independent review as fairly and thoroughly as possible. see NEWS NUGGETS page 16 For more than a century Foss has successfully navigated Alaska’s most extreme environments. www.foss.com Today, as new opportunities appear on the Arctic horizon, Foss is ready to grow with Alaska. Fighting headwinds Alaska mineral explorers work to retain their footing on slippery slope By SHANE LASLEY Mining News S lipping metals prices and investors’ ongoing reluctance to risk venture capital in the junior mining sector is hitting Alaska’s mineral explo- ration sector hard; and the Far North state is not the only mining jurisdiction reeling from this one-two punch. “After another year of strong headwinds in 2014, and with lower demand and overproduction continuing to depress metals prices, the mining industry’s outlook for 2015 is unpromising at best,” SNL Metals & Mining wrote recently in “World Exploration Trends,” its annual report. According to the research firm’s estimates, glob- al mineral exploration spending during 2014 totaled US$10.7 billion, about half of the US$20.5 billion in comparable expenditures tallied just two years earlier, and SNL does not foresee the sector recovering any time soon. “Most metals prices are expected to fall further in 2015, albeit perhaps not by as much as over the past two years. As a result, SNL does not expect a rebound in the industry’s total exploration budgets in the near-to-medium term,” the research firm pre- dicts. Magnified by the Donlin Gold project transi- tioning from permitting to development and the lack of funding at the contentious Pebble project, the drop in Alaska’s mineral exploration sector has been steeper than the global average. Since reach- ing an apex of US$365 million in 2011, exploration spending in the state fell to US$175 million by 2013 and last year tumbled another 47 percent to about US$92 million. Though money still needs to be raised, explo- ration plans ironed out and budgets finalized, Alaska’s mineral exploration sector is attempting to hold its footing in 2015 on the slippery downward slope of world exploration trends. Major exploration The owners of Alaska’s five large mines accounted for nearly half the exploration spending see FIGHTING HEADWINDS page 13 MILLROCK RESOURCES INC. A First QuantumMinerals geologist pauses alongside a copper-stained outcrop during an initial US$600,000 exploration programcompleted at Millrock Resources Inc.’s Alaska Peninsula project in 2014. This year, First Quantum and Millrock plan to complete roughly 2,400 meters of drilling at three of the most advanced prospects on the project. This week’ s Mining News Falling metals prices and investor reluctance is hitting the explo- ration sector hard. Read more in North of 60 Mining, page 9. page 3 Q&A: McGuire pushes Alaska’s role in Arctic, cooperation within state Conoco OKs NEWS 9.3-acre add to Kuparuk drill site last project announced after tax reform By ERIC LIDJI For Petroleum News C onocoPhillips Alaska Inc. will expand Drill Site 1H at the Kuparuk River unit. The operator and its fellow working interest owners have approved an approximately $460 mil- lion project to add a 9.3-acre extension to the exist- ing North Slope drill site and to install surface facilities to support four production wells and 15 injection wells. The project will develop viscous oil in the Northeast West Sak area, also known as NEWS. The company expects construction to begin later this year and continue through 2016, employ- ing as many as 150 people at the height of activi- ties. The expanded drill site should come online in early 2017 and produce 8,000 gross barrels per day at its peak. The 1H NEWS project is the largest investment in viscous oil at Kuparuk since 2004, according to ConocoPhillips. The working interest owners at the unit include BP Exploration (Alaska) Inc., Chevron USA Inc. and ExxonMobil Alaska Production Inc. Repsol asks for new unit Pikka proposed for western North Slope between Colville River, Oooguruk units By KRISTEN NELSON Petroleum News R epsol E&P USA Inc. has applied for a 63,304-acre unit on the North Slope. The Department of Natural Resources Division of Oil and Gas said March 23 that Repsol applied to form the Pikka unit between the Colville River unit to the west, the Oooguruk unit to the east and the Placer and Tofkat units to the south. The majority of the area in the proposal is a sub- set of the larger 98,852-acre Qugruk unit proposal which Repsol submitted in the fall of 2011. The division only approved a much smaller 12,065- acre Qugruk unit at the northwest corner of the Colville River unit (see map page 23.) Repsol described the area in its initial Pikka plan of development as “within the Colville Delta area and shallow waters of Harrison Bay,” and a map submitted with the application shows that the proposed unit runs southward from offshore leases in the Beaufort Sea to east of Nuiqsut on the south- ern end. New DOI fracking rules Agency issues well integrity, reporting requirements for wells on federal land By ALAN BAILEY Petroleum News T he Department of the Interior has issued a final version of new regulations for the drilling of hydraulically fractured wells on federal land. The regulations will go into effect after a mandatory 90-day waiting period. “Current federal well-drilling regulations are more than 30 years old and they simply have not kept pace with the technical complexities of today’s hydraulic fracturing operations,” said Interior Secretary Sally Jewell when announcing the release of the new regulations on March 20. “This updated and strengthened rule provides a framework of safeguards and disclosure protocols that will allow for the continued responsible devel- opment of our federal oil and gas resources.” New techniques Drilling techniques involving the use of hori- zontal wells and hydraulic fracturing have upend- ed the U.S. oil and gas industry in recent years by enabling the production of hydrocarbons from rel- atively impervious rocks such as shales. But the new techniques have also generated concerns about environmental impacts and the potential for groundwater contamination. Of more than 100,000 oil and gas wells on fed- The expanded drill site should come online in early 2017 and produce 8,000 gross barrels per day at its peak. see DRILL SITE ADDITION page 22 Repsol has been exploring in the proposed Pikka unit area since 2012, when it drilled the Qugruk No. 2. see PIKKA UNIT page 23 In Alaska, the Alaska Oil and Gas Conservation Commission has recently developed regulations for hydraulically fractured wells within the state. see NEW FRACKING RULES page 22 Poi nt Hope out of Chukchi appeal; l i ti gati on was i mpedi ng discussi on The Native Village of Point Hope has withdrawn from a long- standing appeal against the validity of the 2008 Chukchi Sea lease sale in which Shell, ConocoPhillips, Statoil and other com- panies purchased oil and gas leases. Point Hope, concerned about the potential impacts of offshore oil and gas activities on subsis- tence hunting, had joined with 12 environmental organizations in challenging the environmental impact statement for the sale. The appeal has resulted in delays in Chukchi Sea exploration activi- ties. Apparently, in a unanimous vote on March 17 the Native Village of Point Hope decided to withdraw from the appeal. “This move is an important one for our community,” said Jack Schaefer, Native Village of Point Hope president. “After careful Canada cuts go deeper, wi der Not that there was any doubt, but March 18 and 19 provided ample proof of deepening woes in the Canadian oil patch. Big players Nexen (owned by state-owned China National Offshore Oil Corp.), ConocoPhillips and Talisman Energy (recently taken over by Spain’s Repsol) laid off hundreds of employees. ConocoPhillips said it was reducing its Canadian headcount by 200, or 7 percent of its payroll, because of the “challenging economic environment.” Nexen announced that 600 of its employees in Canada and 60 at its North Sea unit in the United Kingdom would lose their jobs, while Talisman said its head office staff in Calgary would be reduced by 150 to 200. Canadian industry layoffs since low crude prices started tak- ing a bite in February now number in the thousands, mostly in see CHUKCHI APPEAL page 24 see CANADA CUTS page 24
Transcript of l EXPLORATION & PRODUCTION is week’s ini s Conoco … · l EXPLORATION & PRODUCTION l GOVERNMENT...
l E X P L O R A T I O N & P R O D U C T I O N
l G O V E R N M E N T
l E X P L O R A T I O N & P R O D U C T I O N
Vol. 20, No. 13 • www.PetroleumNews.com A weekly oil & gas newspaper based in Anchorage, Alaska Week of March 29, 2015 • $2.50
page10
Goldrich NyacAu Placer eyesChandalar Mine start in 2015www.MiningNewsNorth.com The weekly mining newspaper for Alaska and Canada's North Week of March 29, 2015
NEWS NUGGETSCompiled by Shane Lasley
l E X P L O R A T I O N
Cohen to review EPA fairness in AKFormer U.S. Defense Secretary William S. Cohen March 24said he and his firm, The Cohen Group, assisted by law firmDLA Piper, will conduct an independent review of whether theU.S. Environmental Protection Agency acted fairly in connec-tion with its evaluation of potential mining in the Bristol Baywatershed in Southwest Alaska. “An investigation being con-ducted by the EPA’s Office of Inspector General; inquiries andhearings into EPA actions by the House Committee onOversight and Government Reform; and, more recently, aninquiry by the Senate Environment and Public WorksCommittee, as well as documents produced in response toFreedom of Information Act requests, have each raised ques-tions as to whether the EPA proceeded fairly in its activities sur-rounding potential mining in the Bristol Bay watershed,” saidCohen. The former secretary of defense has been retained bythe Pebble Limited Partnership, owner of the Pebble copper-gold-molybdenum project located on state of Alaska miningclaims in this area. Secretary Cohen said he will evaluate thefairness of EPA’s actions and decisions in this matter basedupon a thorough assessment of the facts and informed by hisexperience as secretary of defense as well as his 24 years as amember of the U.S. House of Representatives and Senate. “Ourreview will focus on the fairness of the EPA’s actions. We arenot evaluating and will not express an opinion as to whether thePebble Limited Partnership ultimately should be granted per-mission to mine the Pebble deposit. And, as was well docu-mented during my years in public service, I have been a strongsupporter of the EPA’s mandate to protect the environment andkeep our nation’s waterways safe for human health as well asfish and wildlife,” Cohen explained. He said he has taken stepsto ensure the review is thorough and unbiased. “A condition ofaccepting this assignment is that I have complete independenceand discretion as to how this work will be conducted. I willfollow the evidence wherever it might lead, and I will conductthis independent review as fairly and thoroughly as possible.
see NEWS NUGGETS page 16
For more than a century Foss has successfully navigated Alaska’s most extreme environments.
www.foss.com
Today, as new opportunities appear on the Arctic horizon, Foss is ready to grow with Alaska.
Fighting headwindsAlaska mineral explorers work to retain their footing on slippery slope
By SHANE LASLEYMining News
S lipping metals prices and investors’ ongoingreluctance to risk venture capital in the juniormining sector is hitting Alaska’s mineral explo-ration sector hard; and the Far North state is not theonly mining jurisdiction reeling from this one-twopunch.“After another year of strong headwinds in2014, and with lower demand and overproductioncontinuing to depress metals prices, the miningindustry’s outlook for 2015 is unpromising at best,”SNL Metals & Mining wrote recently in “WorldExploration Trends,” its annual report.According to the research firm’s estimates, glob-al mineral exploration spending during 2014totaled US$10.7 billion, about half of the US$20.5billion in comparable expenditures tallied just twoyears earlier, and SNL does not foresee the sectorrecovering any time soon.“Most metals prices are expected to fall furtherin 2015, albeit perhaps not by as much as over thepast two years. As a result, SNL does not expect arebound in the industry’s total exploration budgetsin the near-to-medium term,” the research firm pre-dicts.Magnified by the Donlin Gold project transi-tioning from permitting to development and thelack of funding at the contentious Pebble project,the drop in Alaska’s mineral exploration sector hasbeen steeper than the global average. Since reach-ing an apex of US$365 million in 2011, explorationspending in the state fell to US$175 million by2013 and last year tumbled another 47 percent to
about US$92 million.Though money still needs to be raised, explo-ration plans ironed out and budgets finalized,Alaska’s mineral exploration sector is attempting tohold its footing in 2015 on the slippery downwardslope of world exploration trends.
Major explorationThe owners of Alaska’s five large minesaccounted for nearly half the exploration spending
see FIGHTING HEADWINDS page 13
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A First Quantum Minerals geologist pauses alongsidea copper-stained outcrop during an initial US$600,000exploration program completed at Millrock ResourcesInc.’s Alaska Peninsula project in 2014. This year, FirstQuantum and Millrock plan to complete roughly2,400 meters of drilling at three of the most advancedprospects on the project.
This week’s Mining News
Falling metals prices and investor reluctance is hitting the explo-ration sector hard. Read more in North of 60 Mining, page 9.
page3
Q&A: McGuire pushes Alaska’s rolein Arctic, cooperation within state
Conoco OKs NEWS9.3-acre add to Kuparuk drill site last project announced after tax reform
By ERIC LIDJIFor Petroleum News
ConocoPhillips Alaska Inc. will expand DrillSite 1H at the Kuparuk River unit.
The operator and its fellow working interestowners have approved an approximately $460 mil-lion project to add a 9.3-acre extension to the exist-ing North Slope drill site and to install surfacefacilities to support four production wells and 15injection wells. The project will develop viscousoil in the Northeast West Sak area, also known asNEWS.
The company expects construction to beginlater this year and continue through 2016, employ-ing as many as 150 people at the height of activi-
ties. The expanded drill site should come online inearly 2017 and produce 8,000 gross barrels per dayat its peak.
The 1H NEWS project is the largest investmentin viscous oil at Kuparuk since 2004, according toConocoPhillips. The working interest owners atthe unit include BP Exploration (Alaska) Inc.,Chevron USA Inc. and ExxonMobil AlaskaProduction Inc.
Repsol asks for new unitPikka proposed for western North Slope between Colville River, Oooguruk units
By KRISTEN NELSONPetroleum News
R epsol E&P USA Inc. has applied for a63,304-acre unit on the North Slope. The
Department of Natural Resources Division of Oiland Gas said March 23 that Repsol applied to formthe Pikka unit between the Colville River unit tothe west, the Oooguruk unit to the east and thePlacer and Tofkat units to the south.
The majority of the area in the proposal is a sub-set of the larger 98,852-acre Qugruk unit proposalwhich Repsol submitted in the fall of 2011. Thedivision only approved a much smaller 12,065-acre Qugruk unit at the northwest corner of the
Colville River unit (see map page 23.)Repsol described the area in its initial Pikka
plan of development as “within the Colville Deltaarea and shallow waters of Harrison Bay,” and amap submitted with the application shows that theproposed unit runs southward from offshore leasesin the Beaufort Sea to east of Nuiqsut on the south-ern end.
New DOI fracking rulesAgency issues well integrity, reporting requirements for wells on federal land
By ALAN BAILEYPetroleum News
T he Department of the Interior has issued afinal version of new regulations for the
drilling of hydraulically fractured wells on federalland. The regulations will go into effect after amandatory 90-day waiting period.
“Current federal well-drilling regulations aremore than 30 years old and they simply have notkept pace with the technical complexities oftoday’s hydraulic fracturing operations,” saidInterior Secretary Sally Jewell when announcingthe release of the new regulations on March 20.“This updated and strengthened rule provides aframework of safeguards and disclosure protocolsthat will allow for the continued responsible devel-opment of our federal oil and gas resources.”
New techniquesDrilling techniques involving the use of hori-
zontal wells and hydraulic fracturing have upend-ed the U.S. oil and gas industry in recent years byenabling the production of hydrocarbons from rel-atively impervious rocks such as shales. But thenew techniques have also generated concernsabout environmental impacts and the potential forgroundwater contamination.
Of more than 100,000 oil and gas wells on fed-
The expanded drill site should comeonline in early 2017 and produce 8,000
gross barrels per day at its peak.
see DRILL SITE ADDITION page 22
Repsol has been exploring in the proposedPikka unit area since 2012, when it
drilled the Qugruk No. 2.
see PIKKA UNIT page 23
In Alaska, the Alaska Oil and GasConservation Commission has recentlydeveloped regulations for hydraulically
fractured wells within the state.
see NEW FRACKING RULES page 22
Point Hope out of Chukchi appeal;litigation was impeding discussion
The Native Village of Point Hope has withdrawn from a long-standing appeal against the validity of the 2008 Chukchi Sealease sale in which Shell, ConocoPhillips, Statoil and other com-panies purchased oil and gas leases. Point Hope, concerned aboutthe potential impacts of offshore oil and gas activities on subsis-tence hunting, had joined with 12 environmental organizations inchallenging the environmental impact statement for the sale. Theappeal has resulted in delays in Chukchi Sea exploration activi-ties.
Apparently, in a unanimous vote on March 17 the NativeVillage of Point Hope decided to withdraw from the appeal.
“This move is an important one for our community,” said JackSchaefer, Native Village of Point Hope president. “After careful
Canada cuts go deeper, widerNot that there was any doubt, but March 18 and 19 provided
ample proof of deepening woes in the Canadian oil patch.Big players Nexen (owned by state-owned China National
Offshore Oil Corp.), ConocoPhillips and Talisman Energy(recently taken over by Spain’s Repsol) laid off hundreds ofemployees.
ConocoPhillips said it was reducing its Canadian headcountby 200, or 7 percent of its payroll, because of the “challengingeconomic environment.”
Nexen announced that 600 of its employees in Canada and 60at its North Sea unit in the United Kingdom would lose theirjobs, while Talisman said its head office staff in Calgary wouldbe reduced by 150 to 200.
Canadian industry layoffs since low crude prices started tak-ing a bite in February now number in the thousands, mostly in
see CHUKCHI APPEAL page 24
see CANADA CUTS page 24
2 PETROLEUM NEWS • WEEK OF MARCH 29, 2015
Petroleum News North America’s source for oil and gas newscontents
19 Hopes build for BC refinery
17 State approves Hooligan PA
17 HB 132 moves to Senate on 24-14 vote
Bill restricting what AGDC can do in competing with AKLNG project got minor cleanup in twoHouse committees, now in Senate Resources
NATURAL GAS
PIPELINES & DOWNSTREAM
7 Legislators work to increase spill fund
House, Senate hearing separate bills which wouldprovide adequate funding to DEC’s Division of Spill Prevention and Response
FINANCE & ECONOMY
3 McGuire pushes Alaska’s role in Arctic
Senator has pitched state’s interests in DC, concernedabout agenda for Arctic Council; wants to see state leaders work together
5 Jewell argues for more focused leasing
Says that targeted approach, recognizing areas where it makes sense to develop oil and gas, improvespredictability for industry
GOVERNMENT
6 State OKs S. Granite Point expansion
Cook Inlet unit will be consolidated with Granite Pointfield; originally different owners, Hilcorp now 100% working interest owner
LAND & LEASING
6 Call for new info for state fall sales
8 ASRC meets conditions at Placer unit
5 Cleanup continues at Milne Point spill
7 Arctic sea ice extent lowest on record
18 Some big programs start small but grow
CIRCAC has pioneered ways of gathering environmentaldata and making that data available to industry,regulators and the public
19 State approves Cook Inlet seismic survey
Plans call for offshore 3-D survey, west of northern KenaiPeninsula using wireless nodes for seismic signals
ENVIRONMENT & SAFETY
8 CIE still pursuing west side investment
Plans of development for Redoubt unit and WestMcArthur River unit show limited activity but plans for growth
EXPLORATION & PRODUCTION4 BlueCrest seeking Cosmo unit
Independent wants to unitize its acreage off AnchorPoint to better coordinate development and exploration activities
Conoco OKs NEWS
9.3-acre add to Kuparuk drill site last projectannounced after tax reform
Repsol asks for new unit
Pikka proposed for western North Slope between Colville River, Oooguruk units
New DOI fracking rules
Agency issues well integrity, reporting requirements for wells on federal land
ON THE COVER
Point Hope out of Chukchi appeal;litigation was impeding discussion
Canada cuts go deeper, wider
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Dimension LumberTimbers & Piling
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By STEVE QUINNFor Petroleum News
In less than a month, the United Statestakes over as chair for the Arctic
Council, a consortium of eight Arcticnations trying to work together with pol-icy decisions.
Sen. Lesil McGuire has been on thefront lines of Arctic policy issues andco-chaired the state’s Arctic PolicyCommission.
McGuire, an Anchorage Republican,sat down with Petroleum News to giveher views on what this change means forthe country and Alaska.
Petroleum News: The U.S. takes overas chair for the Arctic Council nextmonth, what should this mean forAlaska?
McGuire: It should mean for the statean opportunity to highlight our bestpractices, our local and traditionalknowledge, our regulatory system, ouruniversity, our people who are resilientand innovative. Alaska is an Arctic state.Fundamentally because of our geogra-phy we could be our own nation.Because of that we have aspects of ourculture, our economy and our destinythat are wholly distinct from the contigu-ous 48 states in a way that Hawaii doesas well.
This opportunity for us to align our-selves with the seven other Arcticnations, to chair the subcommittees, tochair the Arctic economic council, to beon the world stage is a chance thatAlaska has been looking for and achance it really needs. When you thinkabout the fact that the trans-Alaskapipeline is in a decline stage volumetri-cally, it couldn’t come at a better timefor us.
We are reinventing ourselves as astate. As an economy, we are only 55years old as a state. The majority of thetime, the trans-Alaska pipeline’s rev-enues have led to a boom or bust econo-my.
The Arctic Council post is a chancefor us to learn from other Arctic nations.How have they created a robust econo-my with good paying jobs and a healthysociety at those higher latitudes?
Petroleum News: That’s what isshould be. What do you fear it could be?
McGuire: WhenDan Sullivan was inthe Bush adminis-tration, he was oneof the assistant sec-retaries of State; hewas the primaryarchitect of the orig-inal Arctic policy ofthe United states, arobust Arctic policy.It hasn’t been touched until the Obamaadministration came along and arguablyin preparation for the second time wewould ever chair the Arctic Council.
The State Department has come for-ward with a strategic plan that makes mevery nervous for the future of our state.The number one and number two priori-ties are mapping of the Arctic Ocean andaccordingly handing out uses, which willmake it more difficult for Alaskans toaccess their resources.
The second was to address globalwarming. In of itself that priority would-n’t concern me. But when it’s in the con-text of an Arctic policy, it concerns megreatly. The premise is that if we lock updevelopment in Alaska’s Arctic, it willgo a long way toward reducing globalwarming. There are people who trulybelieve global warming is strictly man-made. They do not believe the earth hasbeen hotter or colder and that it’s acyclical process at all. They think it’sexclusively a manmade issue.
At its worst, I think this ArcticCouncil chairmanship can be used as aplatform for environmentalists to gain afurther toehold into the state of Alaska.
Petroleum News: Speaking of localvoices what are your thoughts on CraigFleener being appointed as the gover-nor’s Arctic liaison?
McGuire: I like him. Fundamentally,he agrees with Rep. Herron and me:Arctic development for the people of theArctic. Having an indigenous personspeaking on behalf of the cabinet isimportant. He was an early appointeeand that was not lost on the StateDepartment and Congress. It’s a team.It’s a nice going back to D.C. andyou’ve got the Alaska House, Senate andadministration saying the same thing. Heunderstands that Canada has done anexceptional job leading North Americaand North American values over the last
two years.
Petroleum News: You recentlyaddressed the U.S. Senate EnergyCommittee, chaired by Lisa Murkowski.What was your message to the commit-tee?
McGuire: My message is that Arcticdevelopment for the people of the northof the Arctic is the goal for the ArcticCouncil chairmanship, and it benefitsAmerica from a variety of points. Italked about the fact that America is anArctic nation because of Alaska but fun-damentally we all benefitfrom that status and havealready been benefitting.And the number one issueis energy.
The major Arctic infra-structure project that hasbeen built and been a tremendous suc-cess has been the trans-Alaska pipeline.But that’s not Alaska’s pipeline; it’sAmerica’s. At one point it provided 20percent of the domestic energy goinginto the Lower 48.
All of that is American jobs and ener-gy and revenue that come directly intoour free democratic nation as opposed tothe policy that came out by virtue ofdemand in 2012 where 40 percent ofAmerica’s domestic energy supplieswere still based on importation fromcountries like Venezuela, Nigeria and theMiddle East, where dollars are goinginto value systems that are fundamental-ly antithetical to American values.
There is discrimination againstwomen; there is violence and mutilationagainst women. There is kidnapping anddirect violations of human rights. Not to
mention some of those countries opposeAmerica in a much more threateningway. My first message was the Chukchiand the Beaufort hold trillions of cubicfeet of gas and millions of barrels ofcrude oil
When Sens. (Bernie) Sanders and(Al) Franken were questioning us aboutglobal warming, my response was youhave to look at the consumers not theproducers. Alaska is a place where weonly have 735,000 people so we are notthe contributors to global warming. Youwill still have the demand on the earth
from India and China andother growing nations asthey seek to improve theirquality of life. They will belooking to energy to dothat pursuing air condition-ing and fuel for their cars.
It is a goal for all of us to think abouta day when renewable energy is a realitybecause they can be more sustainable atlower prices. We are not there yet. Thetechnology is not there and the pricepoint is not there.
So while the world is dependent onhydrocarbons, we ought to be a supplierof that. Why would we hamstring Alaskaas a potential supplier of hydrocarbonenergy for the world when places outthere will continue to produce to meetthat demand in more environmentallyunfriendly ways, in ways that exploitworkers and in ways that, again, thatfund systems that are fundamentallyantithetical to American values?
The other point that I made is thatAlaskans should be able to address the
l G O V E R N M E N T
McGuire pushes Alaska’s role in ArcticSenator has pitched state’s interests in DC, concerned about agenda for Arctic Council; wants to see state leaders work together
PETROLEUM NEWS • WEEK OF MARCH 29, 2015 3
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SEN. LESIL MCGUIRE
see MCGUIRE Q&A page 21
By ERIC LIDJIFor Petroleum News
BlueCrest Alaska Operating LLCwants to form a new Cosmopolitan
unit.The local subsidiary of the Texas-
based independent is asking the state toform a seven-lease unit over 22,535 acresoff Anchor Point. The unit would includeADL 18790, ADL 384403, ADL 391899,ADL 391900, ADL 391902, ADL 391903and ADL 391904.
BlueCrest is in the early stages ofdeveloping oil from the Hemlock andStarichkof formations at the prospect.But, as the company wrote in its applica-tion, the leases also contain shallower oilaccumulations, natural gas accumulationsand exploration prospects, all of whichmust wait for the current developmentprogram to get under way.
Unitization is most commonly used toefficiently divide royalties among various
working interest owners, although thestate has formed units over leases ownedby a single company, as is the case atCosmopolitan, to prevent waste andavoid duplication. By unitizing the leases,BlueCrest believes it can balance its cur-rent and future plans in a more efficientway. Unitization holds leases, whichgives operators a chance to conduct activ-ities on a broader scale, without having toworry about individual leases expiring.
The infrastructure planned for the cur-rent development program wouldimprove the economics of future plans,according to the company. The companyis developing the deeper oil accumulation
using directional wells from an existingonshore drilling pad and associatedonshore facilities to be built soon. Thefuture prospects would largely requireoffshore facilities, such as one or moreplatforms to target prospects farther off-shore.
The request is unusual — although notunprecedented — because a good portionof the land under discussion was previ-ously included in a “Cosmopolitan unit.”The unit was terminated when operatorPioneer Natural Resources Alaska Inc.sold the prospect.
The state is taking comments on theproposal through April 27.
One-year PODThe request included a proposed plan
of development from August 2014.The plan proposes a five-year sched-
ule for starting production from theonshore facilities by early 2016 and sub-sequently constructing the offshore facil-ities. The 44-well program would include20 onshore oil production wells, 10onshore injection wells and two onshoredisposal wells and 12 offshore wellsdivided between two monopod platforms.
The plan divides work between thecurrent oil campaign and a future gascampaign. The oil development in prima-rily focused in the center of the proposedunit, with exploration activates primarilylocated on leases the north and the south,according to the company.
The prior exploration activities atCosmopolitan have discovered potential-ly commercial hydrocarbons within 10Tyonek formation intervals. Thoseinclude oil in the Hemlock, the Starichkofand the Lower Tyonek and gas in theLower Tyonek and Upper Tyonek.
A gas development program on leasesADL 391899, ADL 391900 and ADL391902 would be evaluated in 2015 and2016, according to the company, whichhas previously expressed caution aboutadvancing an expensive gas developmentin the region without more certaintyabout the market opportunities. The com-pany has been in talks with WesPacMidstream LLC to partner on a develop-ment and marketing plan for the gas.
The August 2014 plan also calls fordrilling the offshore Cosmopolitan StateB1 exploration will this year on ADL384403 to test oil and gas zones. The oilzones would be plugged and the gas
zones suspended for future development,according to the plan.
BlueCrest has asked for the plan to gointo effect for a one-year term, whichwould allow the company to amend theplan easily based on information gleanedthis year. Such amendments wouldinclude more detailed plans for delin-eation and exploration activities.
In February 2015, the state approvedthe basics of a plan to expand an existinggravel pad on private land north ofAnchor Point to support as many as 33development wells.
A long historyThe current program builds upon a dis-
covery Pennzoil made in 1967 but neverpursued.
ARCO Alaska began sniffing aroundthe prospect in the 1990s and handed overthe reins to Phillips Inc. as part of a largersale of assets. Phillips formed a state-fed-eral Cosmopolitan unit in 2001 anddrilled the Hansen No. 1 well from anonshore pad.
Through a merger, ConocoPhillipstook over the project in 2002. The compa-ny drilled and tested the Hansen No. 1Asidetrack in 2003. Pioneer NaturalResources Inc. came on as a minoritypartner in 2005 and helped fund a 3-Dseismic program over the leases.
After drilling the Hansen No. 1A-L1lateral sidetrack in 2007 and stimulatingthe well in 2010, Pioneer launched a pilotproject to truck Cosmopolitan oil to mar-ket. Over several months, Pioneer truckedsome 33,000 barrels of oil to the Tesororefinery in Nikiski.
(BlueCrest is also currently planningto truck Cosmopolitan oil to market.)
Eventually, Pioneer decided againstcontinuing the project and sold the leasesto the Australian independent BuccaneerEnergy Ltd., which partnered withBlueCrest.
Those companies drilled the offshoreCosmopolitan No. 1 well using theEndeavour jack-up drilling rig andannounced various shallower oil and gasdiscoveries in addition to the knownaccumulations. They intended to drill asecond well to appraise the discoveries,but Buccaneer later sold its stake toBlueCrest in a failed attempt to avoidbankruptcy. l
l E X P L O R A T I O N & P R O D U C T I O N
BlueCrest seeking Cosmo unitIndependent wants to unitize its acreage off Anchor Point to better coordinate development and exploration activities
4 PETROLEUM NEWS • WEEK OF MARCH 29, 2015
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In February 2015, the stateapproved the basics of a plan to
expand an existing gravel pad onprivate land north of Anchor
Point to support as many as 33development wells.
By ALAN BAILEYPetroleum News
During a March 17 speech at the Centerfor Strategic and International
Studies, Secretary of the Interior SallyJewell said that Interior is reforming its oiland gas lease sale programs, to engage withthe public in figuring out where it does ordoesn’t make sense to develop oil and gasresources.
“We saw how a ‘drill everywhere’ plandoesn’t work very well if nearly half of thelease sales are challenged or later over-turned in court,” Jewell said, according toprepared notes for her speech. “Throughsmarter planning, we’re seeing reducedconflict and litigation and more certainty forindustry.”
BLM’s plan for the National PetroleumReserve-Alaska provides an illustration ofthis targeted “landscape level” approach toleasing, with the agency making nearly 12million acres available for leasing whilealso protecting sensitive habitat, Jewellsaid. And it is important to recognize areassuch as Utah’s national parks and the ArcticNational Wildlife Refuge that are too spe-cial to drill, she said.
New standardsJewell also commented that her agency
had “raised the bar” on safe oil and gasdevelopment through new drilling stan-dards and an overhaul of the federal over-sight program. Interior’s reform agenda hasthree goals: safe and responsible develop-ment, good government and encourage-ment for innovation, she said.
In terms of safety “if we don’t have theright measures in place to protect the com-munities in which we live, the air webreathe and the water we drink, we all lose,”Jewell said.
Recent and continuing initiatives includenew regulations for the hydraulic fracturingof wells; updated standards for the reduc-tion of methane emissions; pending newregulations for oil well blowout preventers;and proposed regulations for Arctic off-shore drilling.
“I strongly believe that these reforms arenot only achievable with modern technolo-gy and science, but are also absolutely crit-ical to upholding public trust, enablingindustry to responsibly develop our naturalresources,” Jewell said.
Better governmentIn terms of good government, the federal
government must improve the way it doesbusiness, giving the American taxpayer afair return for the use of natural resourceson public lands, Jewell said. Reforms underconsideration include modernization of thefederal coal program and consideration ofmore flexible royalty rates for oil and gasfrom federal lands, she said.
To counter shortfalls in governmentfunding for permitting and inspection pro-grams, President Obama’s budget proposespartial funding through user fees, Jewellsaid. And the landscape level, targetedapproach to oil and gas leasing will improvepredictability for industry, she said.
Similarly, a planned landscape-levelapproach to the permitting of solar and
wind projects is speeding up permittingtimes for these types of energy develop-ment, Jewell said.
When it comes to technical innovation,the Department of Energy has been a keyplayer in research and development for thedirectional drilling tools that have spurred arecent revolution in energy production.Today the government needs to be provid-ing incentives for new energy industriessuch as wind and solar power, Jewell said.
Tectonic shiftsJewell said that “tectonic shifts” in the
energy industry are forcing governments atevery level to face questions around how toadapt to the rapidly changing environmentand how to modernize energy programs,helping the United States lead the worldwhen it comes to energy.
Since 2008 U.S. oil production hassurged from 5 million to 9 million barrelsper day, reducing the country’s dependenceon foreign oil. Use of solar energy hasincreased 10-fold, and wind energy usagehas tripled in that same time period. At thesame time, automobiles have become morefuel efficient, Jewell said.
Jewell said that, with her responsibilitytowards her grandchildren at the top of hermind, she is determined to make energydevelopment safer and more environmen-tally sound, with new protections for landand water, and with more done to reducegreenhouse gas emissions — PresidentObama has singled out climate change asthe world’s most pressing energy and envi-ronmental challenge, she said.
“I share the president’s belief thatAmerica should lead the world on energy,climate and conservation,” Jewell said.“And to accomplish this, we need toencourage innovation, provide clear rules ofthe road and make balanced decisions.” l
PETROLEUM NEWS • WEEK OF MARCH 29, 2015 5
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ENVIRONMENT & SAFETYCleanup continues at Milne Point spill
Cleanup continues at the site of the Feb. 28 Milne Point tract 14 productionline spill.
The Alaska Department of Environmental Conservation, Division of SpillPrevention and Response, said in a March 18 situation report that engineering cal-culations by field operator Hilcorp Alaska show an estimated release of 339 bar-rels of produced water to the pad and tundra, estimated at 35 percent crude oil and65 percent produced water.
SPAR said the cause of the production line rupture is under investigation. Fluidescaped from an estimated one-quarter inch diameter hole in the six o’clock posi-tion on the 10-inch pipeline.
Tract 14 wells were initially shut in, but production began again within 24hours after installation of a temporary bypass line restoring flow to production.
Cleanup down to down to one shiftHilcorp ran 24-hour operations to recover released product, operations which
were adjusted to one shift on March 17. Work included segregating clean snow,removing contaminated snow, defining the spill impact on the tundra plant com-munity, establishing ice treatment cells for the waterflood/flush recovery tacticand maintaining waste management and staging resources.
Cleanup workers recovered some 2,000 cubic yards of snow impacted by theproduced fluids and stockpiled it in ice cells capped with lake water and surround-ed by exclusion fence. SPAR said the snow would be melted on site in a snowmelter and the fluids injected for enhanced oil recovery through an approvedinjection well. Some eight cubic yards of contaminated gravel were removed fromthe edge of the gravel pad.
Field operations will continue using the flood/flush and recovery tactic remov-ing produced fluids north and south of the pipeline road crossing at the Tract 14intersection.
—PETROLEUM NEWS
l G O V E R N M E N T
Jewell argues for more
focused leasingSays that targeted approach, recognizing areas where it makessense to develop oil and gas, improves predictability for industry
6 PETROLEUM NEWS • WEEK OF MARCH 29, 2015
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Reclaiming the North
August 31—September 3, 2015
Juneau, Alaska
The Northern Latitudes Mining Reclamation Workshop (NLMRW) is a collaborative effort between Alaska and Northern Canada aimed at shedding light on the unique issues facing reclamationists in the North.
This years Conference is located in Juneau—one of the most beautiful areas of Southeast Alaska. Come see the massive mountains, scenic glaciers and pristine coast of the Last Frontier. The conference will include field tours of local mines, short courses, technical sessions, and various social events. We look forward to seeing you there!
CALL FOR PRESENTATIONS
NLMRW is in need of presentations on the subject of reclamation, remediation and related topics that affect the unique climate and ecosystem of northern locations Abstracts (up to 500 words) should be submitted by March 31, 2015 to Justin Ireys ([email protected]). Authors of accepted papers will be notified by May 1, 2015. Full papers (up to 10 pages) are required for all accepted abstracts by June 26, 2015. Accepted presentations of papers (presentation and pdf version) should be provid-ed to Justin Ireys no later than August 15, 2015. These technical sessions will be presented September 1st & 2nd, 2015.
Questions? Contact [email protected]
LAND & LEASINGCall for new info for state fall sales
The Alaska Department of Natural Resources, Division of Oil and Gas, has a callout for new information for its 2015 fall areawide oil and gas lease sales: Beaufort Sea,North Slope and North Slope Foothills.
The division is requesting “substantial new information concerning these areas thathas become available over the past year” and said that based on the information itreceives it will either issue supplements to final best interest findings or decisions ofno substantial new information.
The most recent best interest findings were issued in 2009 for the Beaufort Seaareawide and in 2008 for the North Slope, with the latest supplement to both findingsin 2011. The most recent North Slope Foothills finding was issued in 2011 and no sup-plements have been issued.
Best interest findings are good for 10 years; new information is solicited each yearprior to the sales.
Information is due by 5 p.m., April 20.—PETROLEUM NEWS
l L A N D & L E A S I N G
State OKs S. GranitePoint expansionCook Inlet unit will be consolidated with Granite Point field; originallydifferent owners, Hilcorp now 100% working interest owner
By KRISTEN NELSONPetroleum News
The Alaska Division of Oil and Gas hasapproved an application from Hilcorp
Alaska to expand the 4,689-acre SouthGranite Point unit in Cook Inlet to includethe adjacent 10,722-acre Granite Point fieldand rename it the Granite Point unit.
Granite Point produces from the GranitePoint, Anna and Bruce platforms.
The SGPU was approved in 1998 andoperated by Union Oil Company ofCalifornia until Hilcorp purchased its work-ing interests in 2011 and was approved asunit operator in early 2012. Hilcorpacquired the remaining 75 percent workinginterests in the unit from ExxonMobilAlaska Production in mid 2012. The SGPUproduces from the Granite Point platform.
The Granite Point field leases wereissued by the state in 1962 and have beenheld by production since the end of theirprimary five-year terms. The leases, ADL18742, ADL 17586 and ADL 17587 areproduced from the Anna and Bruce plat-forms.
Oil production from both the SGPU andthe Granite Point field is processed and soldat the Granite Point Production Facility. Thestate is the only royalty owner and Hilcorpthe only working interest owner in theSCPU or the Granite Point field.
1965 discoveryThe division said the Granite Point oil
field was discovered in 1965 by the MobilGranite Point No. 1 well in the Tyonek andHemlock formations and the three plat-forms — from south to north Granite Point,Anna and Bruce — were installed in 1966.Sustained production began in 1967 andwaterflood in 1971.
Primary production on all three plat-forms is from the Middle Kenai “C” sandsof the Tyonek formation, with the Hemlockformation currently producing from onewell on the Granite Point platform.
The division said some 112 wells havebeen drilled in the field. Production inOctober of 2014 was 1,397 barrels per dayfrom the Granite Point platform, 1,022 bpd
from the Anna platform and 380 bpd fromthe Bruce platform.
South Granite Point unitizedProduction from the Granite Point plat-
form was unitized in 1998 by Unocal as theSouth Granite Point unit. Amoco operatedthe Bruce and Anna platforms to the north.The division said a row of injectors “iso-lates production from the Granite PointPlatform to the south from the Anna andBruce platforms to the north.”
Hilcorp is now the sole operator of allthe Granite Point platforms, and productionis continuing to decline, the division said,with only the Bruce platform producing gasfor operations. The Alaska Oil and GasConservation Commission authorized com-mingling of Hemlock production with theas-yet unproduced Middle Kenai reservoirin the GPS 11-13RD well in order to maxi-mize production from the platform.
The division said that given those factors“it is in the best interest of all parties to con-solidate operations into one unit. Expandingthe current SGPU to include the (GranitePoint field) creates efficiencies regardingadministration, operations, and conserva-tion of resources. Unitization maximizesthe opportunities for Hilcorp to effectivelyproduce the remaining dwindling reservesin the area.”
A SGPU plan of development effectivethrough May of this year indicates Hilcorpplans to execute additional well work anddrilling as opportunities arise. The GP-45well was worked over in early March pro-ducing some 450 bpd. The division saidHilcorp anticipates a 10-year inspection andrepair of two oil storage tanks, and “willcontinue to pursue efficiencies through var-ious well, infrastructure, and facility repairsincluding evaluation of shut-in wells forpotential return to service.”
The division said integrating the SGPUand Granite Point field “infrastructure andfacilities eliminates the need to constructadditional metering facilities and will elim-inate redundant expenditures for future pro-duction.” l
By KRISTEN NELSONPetroleum News
H ouse Bill 158 and Senate Bill 86, bothmoving through the Alaska
Legislature, address the same issue — fund-ing for the Alaska Department ofEnvironmental Conservation’s Division ofSpill Prevention and Response is running adeficit as crude oil production declines,reducing income to the Oil and HazardousSubstance Release Prevention and ResponseFund. The fund was created to provide a reli-able source of funding for SPAR’s activitiesand has been financed with a 5 cent per bar-rel surcharge on oil produced, with 4 centsgoing to the prevention account.
Sen. Peter Micciche, R-Soldotna, spon-sor of SB 86, said in a statement that a vari-ety of industries and individuals spill oil andhazardous substances and a majority ofspills to which the state responds are refinedoil spills. Micciche said SB 86 “distributesprevention and response costs across allusers of refined fuel.” The surcharge in SB86 is 0.8 cent per gallon on refined fuels dis-tributed in the state.
HB 158, sponsored by Rep. CathyMunoz, R-Juneau, “establishes an environ-mental fee of one cent a gallon on refinedfuel sold, transferred, or used in the state,”she said in a sponsor statement. Munoz saidfuel distributors are already filing and pay-ing taxes on motor fuels each month and thissurcharge would be collected from the samedistributors.
Munoz said there is a $1.9 million pro-jected shortfall in SPAR funding in fiscalyear 2016, assuming receipt of a $5 millionfederal settlement related to a site in Aniakand budget reductions including deletion offour positions and consolidation of pro-grams.
After FY2016, Munoz said, the estimat-ed budget shortfall without additional fund-ing is $7 million annually.
Munoz said in a March 25 HouseFinance Committee presentation that shehas been aware of the problem through herwork on DEC’s operating budget, but saidlegislation introduced three years ago toincrease the crude oil per barrel surcharge to7 cents met a lot of resistance. The argu-ment, she said, was that the oil industry hasfunded a majority of SPAR’s activities since1989, but spills tied to crude oil only repre-sent a small percentage.
Micciche said in a March 24 SenateLabor and Commerce Committee hearingthat the oil industry not only takes care of itsown spills, but literally takes care of every-one else’s spills in addition. SPAR goes afterresponsible parties, he said, but the state ison the hook where folks don’t have the abil-ity to pay or are long gone.
DEC Commissioner Larry Hartigthanked the sponsors of both bills in theSenate hearing for coming forward. This hasbeen a need for some time, Hartig said, andwithout additional funding the divisionwould have to cut back on assistance it pro-vides to Alaska’s rural villages.
SPAR Director Kristin Ryan told theSenate committee that there would be nochange in cost to the division to implementthe surcharge.
On the cost recovery issue, she saidSPAR has done everything it can to improve
recovery from responsible parties includingautomating billing and sending out billsevery month. She said the division doesrecover all of its costs related to oil incidentsand insurance is required for industriesSPAR regulates. The issue, she said, is smallspills where the division doesn’t regulate.
Ken Alper, director of the Department ofRevenue’s Tax Division, said in a fiscal notethat there would be an implementation costof $50,000 in FY15 to cover costs of updat-ing the system and form the division uses, aswell as to draft regulations for the new sur-charge. l
l F I N A N C E & E C O N O M Y
Legislators work to increase spill fundHouse, Senate hearing separate bills which would provide adequatefunding to DEC’s Division of Spill Prevention and Response
PETROLEUM NEWS • WEEK OF MARCH 29, 2015 7
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ENVIRONMENT & SAFETYArctic sea ice extent lowest on record
The Arctic sea ice appears to have reached its maximum extent for the winter,but that maximum is the lowest on record, the National Snow and Ice Data Centerhas reported. The annual ice melt got under way on Feb. 25, an earlier date thannormal, with the ice extent at 5.61 million miles. That was 50,200 square milesbelow the previous lowest extent, recorded in 2011. Satellite observation of thepolar sea ice began in 1979.
The 1981 to 2010 average for the maximum sea-ice extent was 6.04 millionsquare miles, NSIDC said.
This year there are below-average ice conditions everywhere except in theLabrador Sea and Davis Strait, NSIDC said. However, since Feb. 25 the sea-iceextent trend has flattened, with recent ice growth in the Bering Sea partly offsetby continuing ice retreat in the Barents and Kara seas. And a late-season surge insea-ice growth is still possible, NSIDC said.
NSIDC attributes relatively low ice growth this winter to weather patterns inwhich an unusual configuration of the jet stream caused abnormally warm condi-tions on the Pacific side of the Arctic. This warm weather resulted in abnormallylow ice extents in the Bering Sea and the Sea of Okhotsk.
During the first half of March a positive “Arctic oscillation” pattern, a situationin which air pressure over the Arctic is lower than normal, led to a pattern ofstrong southerly surface winds over the Barents and Kara seas, with temperaturesthroughout the eastern Arctic being several degrees Celsius above average,NSIDC said. And, while weather forecasts indicate a continuing pattern of warmweather in the east, colder than average conditions are expected over the BeringSea, NSIDC said.
—ALAN BAILEY
By ERIC LIDJIFor Petroleum News
Through its subsidiary Cook InletEnergy LLC, Miller Energy Resources
Inc. started its tenure in Alaska by revivingthe Redoubt unit and West McArthur Riverunit.
With the company having since acquiredthe North Fork unit in the southern KenaiPeninsula and the North Slope operatorSavant Alaska LLC, and with oil prices hav-ing dropped considerably and stayed at theirlower levels, the company is now dividingits efforts among numerous regions and twocommodities: oil and natural gas. But thecompany is continuing its work at its origi-nal properties on the west side of Cook Inlet,according to plans of development filedwith state officials at the end of January2015.
Redoubt unit sidetracksUnder its proposed 15th plan of develop-
ment for the Redoubt unit, Cook InletEnergy would drill as many as four side-tracks to improve production from variousfault blocks.
The plan prioritizes a sidetrack of RU
No. 7A. The company would complete thesidetrack with hydraulic fracturing, whichexecutives believe would double or triplerecovery rates, according to recent companystatements. Given the uncertainty of oilprices and the attractiveness of gas develop-ment at North Fork, the company has said itwould wait for summer before decidingwhether to sanction the sidetrack this year.
The sidetrack will likely be the only wellat Redoubt this year, according to the com-pany, and the results will determine whetherand how the company proceeds in the nearterm.
The proposed plan of development callsfor drilling as many as two other sidetracksstarting April 2017. The RU No. 3A and RUNo. 3B sidetracks would target the Centralfault block to produce oil in the Hemlockparticipating area. The company had origi-nally planned to sidetrack the existing RUNo. 3 well or RU No. 4A sidetrack (both ofwhich have been depleted) last year butdelayed those plans in favor of sidetrackingRU No. 7.
The plan also proposes an RU No. 7Bsidetrack for the near term.
Cook Inlet Energy has identified twoother oil-bearing fault blocks at the unit,although plans for delineating thoseNorthern and Southern blocks are vague anddependent on economics, according to thecompany, which hopes to start drilling byApril 2017.
Work on the Southern block depends onthe results of the RU No. 9 well. The com-pany plans to conduct rigged maintenanceto change out a pump on the well in the nearterm.
The company recently described theNovember 2014 well as a disappointment,saying that it only produced about 100 bar-rels of oil per day before an electrical failure.
West McArthur River unitAt the West McArthur River unit, Cook
Inlet Energy also has “determined that side-tracking holds the best opportunity to restoreand increase production.”
The company is considering sidetracksof the shut-in WMRU No. 1A and No. 7Asidetracks and is evaluating the producingWMRU No. 8 well as a sidetrack candidate.
The West McArthur River unit also con-tains two exploration prospects, which CookInlet Energy calls Sword and Sabre. Thecompany is still evaluating informationfrom the Sabre No. 1 exploration well andmay drill a Sword No. 2 appraisal well inApril 2017.
The company said it is “still evaluating”drilling plans at Sabre, although, as anextended reach exploration well, theprospect conflicts with the current strategyof “developing lower risk targets,” accord-ing to the company. The company expects todelay any work until after it has finisheddeveloping proven prospects and may seekout a partner. l
8 PETROLEUM NEWS • WEEK OF MARCH 29, 2015
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LAND & LEASINGASRC meets conditions at Placer unit
The state has officially expanded the Placer unit.ASRC Exploration LLC has satisfied the first two conditions of a November
2014 ruling, which required the company to file an amended plan of explorationfor the North Slope unit and to post a $2.5 million performance bond by January2015 to backstop a series of work commitments culminating in the drilling of anexploration well by May 2016.
With the bond, the Alaska Department of Natural Resources has officiallyadded some 7,288 acres from four leases, bringing the total size of the unit tosome 8,768 acres.
The expansion ends deliberations between the Arctic Slope Regional Corp.subsidiary and the state. The company had originally sought an 8,768-acre unit,but the state formed a 1,480-acre unit around the existing Placer No. 1 well. Thesmaller unit, according to the company, made exploration irrelevant, as any wellwould merely copy the existing well.
Efforts to solve the problem were delayed by failed attempts to merge Placerwith other exploration efforts in the region between the Colville River andKuparuk River units.
The current plan of exploration for the Placer unit expires Sept. 7, 2016. Withthe ruling, the company now must file a plan of development with the state byJune 10, 2016.
—ERIC LIDJI
l E X P L O R A T I O N & P R O D U C T I O N
CIE still pursuingwest side investmentPlans of development for Redoubt unit and West McArthurRiver unit show limited activity but plans for growth
The West McArthur River unitalso contains two explorationprospects, which Cook Inlet
Energy calls Sword and Sabre.
page10
Goldrich NyacAu Placer eyesChandalar Mine start in 2015
www.MiningNewsNorth.com The weekly mining newspaper for Alaska and Canada's North Week of March 29, 2015
NEWS NUGGETSCompiled by Shane Lasley
l E X P L O R A T I O N
Cohen to review EPA fairness in AKFormer U.S. Defense Secretary William S. Cohen March 24
said he and his firm, The Cohen Group, assisted by law firmDLA Piper, will conduct an independent review of whether theU.S. Environmental Protection Agency acted fairly in connec-tion with its evaluation of potential mining in the Bristol Baywatershed in Southwest Alaska. “An investigation being con-ducted by the EPA’s Office of Inspector General; inquiries andhearings into EPA actions by the House Committee onOversight and Government Reform; and, more recently, aninquiry by the Senate Environment and Public WorksCommittee, as well as documents produced in response toFreedom of Information Act requests, have each raised ques-tions as to whether the EPA proceeded fairly in its activities sur-rounding potential mining in the Bristol Bay watershed,” saidCohen. The former secretary of defense has been retained bythe Pebble Limited Partnership, owner of the Pebble copper-gold-molybdenum project located on state of Alaska miningclaims in this area. Secretary Cohen said he will evaluate thefairness of EPA’s actions and decisions in this matter basedupon a thorough assessment of the facts and informed by hisexperience as secretary of defense as well as his 24 years as amember of the U.S. House of Representatives and Senate. “Ourreview will focus on the fairness of the EPA’s actions. We arenot evaluating and will not express an opinion as to whether thePebble Limited Partnership ultimately should be granted per-mission to mine the Pebble deposit. And, as was well docu-mented during my years in public service, I have been a strongsupporter of the EPA’s mandate to protect the environment andkeep our nation’s waterways safe for human health as well asfish and wildlife,” Cohen explained. He said he has taken stepsto ensure the review is thorough and unbiased. “A condition ofaccepting this assignment is that I have complete independenceand discretion as to how this work will be conducted. I willfollow the evidence wherever it might lead, and I will conductthis independent review as fairly and thoroughly as possible.
see NEWS NUGGETS page 16
For more than a century Foss has successfully navigated Alaska’s most extreme environments.
www.foss.com
Today, as new opportunities appear on the Arctic horizon, Foss is ready to grow with Alaska.
Fighting headwindsAlaska mineral explorers work to retain their footing on slippery slope
By SHANE LASLEYMining News
Slipping metals prices and investors’ ongoingreluctance to risk venture capital in the junior
mining sector is hitting Alaska’s mineral explo-ration sector hard; and the Far North state is not theonly mining jurisdiction reeling from this one-twopunch.
“After another year of strong headwinds in2014, and with lower demand and overproductioncontinuing to depress metals prices, the miningindustry’s outlook for 2015 is unpromising at best,”SNL Metals & Mining wrote recently in “WorldExploration Trends,” its annual report.
According to the research firm’s estimates, glob-al mineral exploration spending during 2014totaled US$10.7 billion, about half of the US$20.5billion in comparable expenditures tallied just twoyears earlier, and SNL does not foresee the sectorrecovering any time soon.
“Most metals prices are expected to fall furtherin 2015, albeit perhaps not by as much as over thepast two years. As a result, SNL does not expect arebound in the industry’s total exploration budgetsin the near-to-medium term,” the research firm pre-dicts.
Magnified by the Donlin Gold project transi-tioning from permitting to development and thelack of funding at the contentious Pebble project,the drop in Alaska’s mineral exploration sector hasbeen steeper than the global average. Since reach-ing an apex of US$365 million in 2011, explorationspending in the state fell to US$175 million by2013 and last year tumbled another 47 percent to
about US$92 million.Though money still needs to be raised, explo-
ration plans ironed out and budgets finalized,Alaska’s mineral exploration sector is attempting tohold its footing in 2015 on the slippery downwardslope of world exploration trends.
Major explorationThe owners of Alaska’s five large mines
accounted for nearly half the exploration spending
see FIGHTING HEADWINDS page 13
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A First Quantum Minerals geologist pauses alongsidea copper-stained outcrop during an initial US$600,000exploration program completed at Millrock ResourcesInc.’s Alaska Peninsula project in 2014. This year, FirstQuantum and Millrock plan to complete roughly2,400 meters of drilling at three of the most advancedprospects on the project.
10NORTH OF 60 MINING PETROLEUM NEWS • WEEK OF MARCH 29, 2015
l P R O D U C T I O N
Chandalar remains on pace for 2015 startAt a projected 30,000 ounces a year by 2017, this northernoperation is set to move the dial of placer gold production in Alaska
By SHANE LASLEYMining News
The Chandalar Mine in Alaska’s Arcticis on track to begin commercial pro-
duction this summer, a milestone that isexpected to significantly move the dial ofplacer gold production in Alaska.
Goldrich Mining Co., which owns 50percent of a venture to mine gold in theChandalar district, provided a forecast ofanticipated gold recoveries from the mineover the next five years that includes 16,500ounces of the precious metal this summer.
Considering that the 300 or so placermining operations across the 49th state col-lectively produced roughly 75,000 oz ofgold in 2014, this mine will be a significantcontributor to Alaska’s alluvial aurum pro-duction in 2015 and the operation is slatedfor upgrades that will nearly double its out-put in the coming years.
Gold-rich depositLocated on the southern slopes of the
Brooks Range roughly 200 miles north ofFairbanks, the Chandalar property has longbeen known to host rich gold deposits.Since 1906, sporadic mining operations inthe district have recovered roughly 85,000oz of gold from placer and high-grade lodedeposits.
Most of the placer mining in the districtwas carried out in areas where frozen over-burden and gravels provided stability forunderground mining.
In 2007, Goldrich set out to quantify theplacer deposit for commercial production.An exploration program that included 107holes of drilling outlined 10.5 million cubicyards of pay gravels in Little Squaw Creekaveraging 0.025 oz/per cubic yard (258,000oz) gold.
This US$300 million placer deposit, atUS$1,160 per ounce gold, is divided intotwo distinctive zones. A narrow canyon sec-tion of upper Little Squaw Creek containsnearly 3.2 million cubic yards of materialaveraging more than 0.025 oz of gold peryard, or roughly 87,600 oz of gold. Wherethe creek valley widens into a fluvial fanlies another 7.3 million yards of pay materi-al averaging about 0.024 oz of gold peryard, or about 170,750 oz of the preciousmetal.
Aside from being slightly higher grade,the canyon section has the advantages ofnot being permanently frozen and havingless overburden material to strip off of athick pay-streak.
The pay-zone in the canyon averagesabout 86.7 feet (26.4 meters) thick and lieunder about 41 feet (12.5 meters) of over-burden.
Following up on the deposit outlined bydrilling, the company opened up a small pitat the mouth of the canyon for test miningin 2009. This trial run produced a total of593.5 oz of gold.
The narrow canyon area provided littleroom to establish the size of ponds neededto settle sediments out of the productionwater before being used again, which was alimiting factor for the trial run.
Water circulated back to the productionplant caused the spray jets to plug andincreased the density of the water, decreas-
ing the effectiveness of the gravity plant’srecovery.
A second run in 2010 produced another1,522 oz of gold and 259 oz of silver.
Enter NyacTo further the development of Chandalar
placers, Goldrich forged a partnership withNyacAU LLC in 2012. The resulting com-pany, Goldrich NyacAu Placer LLC, is a50-50 joint-venture to operate theChandalar placer mines, with NyacAU act-ing as managing partner.
The agreement covers production fromall placers on Goldrich’s 22,850-acreChandalar property including: Little SquawCreek, Big Squaw Creek, Big Creek andTobin Creek. The partnership also coversplacer production from future propertieswithin two miles of the Chandalar propertyor any creeks draining the claim block.
A private mining company owned byAnchorage-based physician and fourth gen-eration Alaskan Dr. J. Michael James, Nyacoffers the partnership more than twodecades of placer mining experience andthe financial wherewithal to potentiallydevelop the largest placer gold operation inthe United States.
In 2013, the U.S. Bureau of land man-agement awarded Nyac Mining Co., a plac-er mining venture also owned by James, the“BLM Hardrock Mineral Small OperatorAward” for the high standards it executes atits placer mine in Southwest Alaska.
BLM said the systematic approach Nyactakes to mining and reclamation is moretypical of much larger companies.
“The sustainable manner in which Nyacoperates helps it shine amongst its peers,”said the land management bureau. “Thecompany has perfected a reclamationprocess that ensures soils are stabilized andre-vegetation takes place as early as possi-ble. Nyac employs a holistic water manage-ment and reclamation system that recyclesits process water and recovers fine sedimentfor use in reclamation. The system ensuresno unsettled waters leave the mine site, andresults in high-quality reclamation of dis-turbed lands.”
It was this attention to detail that prompt-ed Goldrich to choose this Alaska-basedcompany as a placer mining partner.
“After spending almost a year interview-ing and evaluating various major placerminers, we believe the managers ofNyacAU are the partners of choice for theirproduction ability, attention to the environ-ment, and sincere concern for community
see CHANDALAR page 16
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The placer gold recovery plant at Chandalaris expected to process 600 cubic yards ofgravel per hour, which will be realized asgravel screens and gold recovery tables areadded in stages through 2016.
By CURT FREEMANFor Mining News
The state of the world’s explorationindustry was recently summarized
in SNL Metal & Mining’s annual “WorldExploration Trends” publication,released at the Prospectors andDevelopers Association of Canada con-vention in Toronto. Not surprisingly, itpainted a grim picture of 2014, a yearwe are all glad to have behind us.
The statistics indicate that worldwideexploration expenditures declined a fur-ther 26 percent to $11.4 billion, com-pared with $15.2 billion in 2013 andrecord expenditures of $21.5 billion in2012. The combined double whammy ofdecreasing commodity prices and lack-luster investor confidence that continuedinto 2015 forced further reductions inexploration budgets worldwide. Thedecline in Alaska’s exploration spendingwas nearly identical in scale to that ofthe worldwide scene. As in years past,Latin America was the dominant explo-ration destination of choice, pulling in27 percent of the exploration funds spentaround the globe. Africa was a distantsecond at 16 percent, followed byCanada at 14 percent, Eurasia at 13 per-cent and Australia at 12 percent.Exploration in the United States amount-ed to only 6 percent of the global spend,with three states, Nevada, Arizona andAlaska accounting for 71 percent of thecountry’s spending in the sector. As aresult of this dessication of explorationbudgets, the number of new discoveriesand the volume and value of newresources announced have declinedsteadily in the past three years. Forexample, only 50 new resource estimateswere released in 2014, compared with 68in 2013 and 168 in 2012, and the valueof these resources totaled $130.6 billion,$87.1 billion and $366.5 billion for2014, 2013 and 2012, respectively.SNL’s forecast for 2015 was not encour-aging: more of the same. But gloom anddoom does not appear to be the onlyitems on Alaska’s plate for 2015.Compared to this point in 2014, signifi-cantly more and larger exploration budg-ets have been approved and more explo-ration programs are moving forwardwhen compared to 2014. Like the soundof that!
Western AlaskaGRAPHITE ONE RESOURCES INC.
reported final 2014 drill results and anew resource estimate for its 100 per-cent-owned Graphite Creek projectlocated near Nome. The results of thefinal 10 diamond core holes from 2014include 42.81 meters of 6.27 percentgraphite carbon, including 6.78 metersof 9.14 percent graphite carbon and 9.86meters of 12.46 percent graphite carbonin hole 14GCH102, 24.56 meters of 6.76percent graphite carbon including 18.31meters of 8.11 percent graphite carbon inhole 14GCH120 and 38.80 meters of7.80 percent graphite carbon, including17.92 meters of 13.37 percent graphitecarbon in hole 14GCH016. All 10 holesintercepted significant widths of near-surface graphite mineralization along700 meters strike and drilling continuedto show good continuity along strike anddown dip. The company also updated itsresources at the project which now
include indicated mineral resource of17.95 million metric tons at 6.3 percentgraphite carbon and an inferred resourceof 154.36 million metric tons of 5.7 per-cent graphite carbon, both at 3 percentcutoff grade. This resource is 14 percenthigher grade than the previouslyannounced resource and makes theGraphite Creek deposit the largest pub-lished graphite resource in the UnitedStates. Geological interpretation andestimation utilized 48 drill holes, totaling7,494.35 meters of drilling and constrainthe resources to a block measuring 730meters long strike, 185 meters acrossstrike and 200 meters below surface. Thedeposit remains open along strike inboth the east and west directions, as wellas down dip. The company will utilizethis mineral resource estimate to preparean initial preliminary economic assess-ment for the project, expected to bereleased in the second quarter of 2015.
Interior AlaskaAlaska newcomers NORTHERN
EMPIRE RESOURCES CORP. andSONORO METALS CORP. said they hadsigned an option agreement on theHilltop prospect on the western end ofEmpire’s Richardson gold project south-east of Fairbanks. Under terms of theagreement, Sonoro can earn a 60 percentinterest in the 31,720-acre Hilltop proj-ect by spending C$3 million on explo-ration activities and issuing to NorthernEmpire 1 million Sonoro shares prior toDec. 31, 2019. Immediate plans for theproject were not released. Welcome toAlaska Northern Empire ResourcesCorp. and Sonoro Metals Corp.!
Alaska RangeSTRONGBOW EXPLORATION INC.
said it has entered into an agreement toacquire all the outstanding shares ofTHOR GOLD ALASKA, INC. and, there-by, a 100 percent interest in each of theSleitat and Coal Creek tin properties.Under terms of the deal, Strongbow willacquire Thor in exchange for a total of6,500,000 common shares of Strongbowand a 2 percent NSR royalty on theproperties. The Sleitat property consistsof 1,425 hectares of State mining claimslocated about 137 kilometers northeastof Dillingham. Past evaluation of theproperty was conducted by COMINCOAMERICA INC. in the mid-1980s andSOLOMON RESOURCES in the mid-2000s. Exploration work has consistedof mapping, sampling, geophysical sur-veys, 4,680 feet of drilling (14 holes)and initial metallurgical studies. In 1989,
The United States Bureau of Mines esti-mated the Sleitat prospect to contain an“inferred resource” of 25.9 million met-ric tons at an average grade of 0.224 per-cent to 0.37 percent tin. The Coal Creekproperty consists of 971 hectares of stateclaims in the Chulitna District north ofAnchorage. Past evaluation of the CoalCreek property was conducted byHOUSTON OIL AND MINERALS in theearly 1980s and BRETT RESOURCES inthe late 2000s. Exploration work consist-ed of mapping, sampling, geophysicalsurveys, 19,520 feet of drilling (46holes) and initial metallurgical studies.In 1982, Houston Oil and Minerals esti-mated a “preliminary geologic resource”of 4.77 million metric tons grading 0.27percent tin.
MIRANDA GOLD CORP. provided anupdate on its activities in the WillowCreek project near Anchorage. Projectoperator GOLD TORRENT plans tomove the Coleman deposit to the pro-duction stage in 24 to 30 months. Initialproduction estimates are for 21,000ounces of gold annually from the miningand milling of 150 tons per day. Thecompany anticipates achieving +80 per-cent gold recovery through use of gravi-ty tables and spiral concentrators, there-by avoiding the use of chemicals toexpedite permitting. The partners hopeto complete an update mineral resourceestimate and utilize it to complete a pre-liminary feasibility study by mid-2015.In addition, the companies are conduct-ing mine planning, mill scoping and per-mit planning exercises. No drilling isplanned for 2015 however the compa-nies are modeling the old undergroundworkings, drill holes and undergroundsamples to provide targets for 2016.Both companies agree that with the reha-bilitation of the Enserch tunnel, targetscan be best drilled from undergrounddrill stations.
MILLROCK RESOURCES INC.
announced that it has entered a collabo-ration agreement with a major gold min-ing company to explore for high-gradegold deposits in Alaska. Under the termsof the agreement the major will fundresearch and reconnaissance explorationefforts designed to focus on specific tar-get areas in Alaska which the major andMillrock consider have the potential forhigh-grade gold deposits. Projectsapproved by the technical committeewill each be subject to separate farm-inand joint venture agreements. Suchagreements will provide for the major toacquire up to 80 percent of each project,after meeting minimum expenditureobligations, payments and certain otherconditions.
Alaska’s only operating coal mine,USIBELLI COAL MINE, recentlyreleased updated economic impact num-bers for its Healy mine operations. Theprivately-owned mine, in its 72nd con-secutive year of operations, employs 140full-time direct employees and creates278 indirect jobs, along with 222 down-stream coal-fired power plant jobs. Itpays $14.7 million in direct wages and isresponsible for $48.7 million in com-bined direct, indirect and down-streamwages. An impressive 100 percent of itsemployees are Alaska residents! Theoperation pays $3 million per year instate rents and royalties, contributes$618,000 per year to the AlaskaPermanent Fund, and pays $130,000 peryear to seven local and borough govern-ments. Its operations provide coal to sixcoal-fired power plants and its rail ship-ments generate about 20 percent of theAlaska Railroad’s freight revenue. Themine produces about 2 million tons peryear of low-sulfur, low-ash, low-mercurycoal, with about half of this productionconsumed in Alaska and the other halfexported through the Seward export
l C O L U M N
Exploration expenditures drop in 2014Combined double whammy of decreasing commodity prices and lackluster investor confidence has forced further reductions in 2015
11NORTH OF 60 MINING
PETROLEUM NEWS • WEEK OF MARCH 29, 2015
Shane Lasley PUBLISHER & NEWS EDITOR
Rose Ragsdale EDITOR-IN-CHIEF (contractor)
Mary Mack CEO & GENERAL MANAGER
Susan Crane ADVERTISING DIRECTOR
Heather Yates BOOKKEEPER
Bonnie Yonker AK / INTERNATIONAL ADVERTISING
Marti Reeve SPECIAL PUBLICATIONS DIRECTOR
Steven Merritt PRODUCTION DIRECTOR
Curt Freeman COLUMNIST
J.P. Tangen COLUMNIST
Judy Patrick Photography CONTRACT PHOTOGRAPHER
Forrest Crane CONTRACT PHOTOGRAPHER
Tom Kearney ADVERTISING DESIGN MANAGER
Renee Garbutt CIRCULATION MANAGER
Mapmakers Alaska CARTOGRAPHY
ADDRESS • P.O. Box 231647Anchorage, AK 99523-1647
NEWS • [email protected]
CIRCULATION • 907.522.9469 [email protected]
ADVERTISING Susan Crane • [email protected] Yonker • [email protected]
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NORTH OF 60 MINING NEWS is a weekly supplement of Petroleum News,a weekly newspaper. To subscribe to North of 60 Mining News,
call (907) 522-9469 or sign-up online at www.miningnewsnorth.com.
Several of the individualslisted above are
independent contractors
North of 60 Mining News is a weekly supplement of the weeklynewspaper, Petroleum News.
Contact North of 60 Mining News:Publisher: Shane Lasley • e-mail: [email protected]
Phone: 907.229.6289 • Fax: 907.522.9583
TheauthorThe author
Curt Freeman,CPG #6901, is awell-known geol-ogist who lives inFairbanks. He pre-pared this column CURT FREEMANMarch 23. Freeman can be reached bymail at P.O. Box 80268, Fairbanks, AK99708. His work phone number atAvalon Development is (907) 457-5159and his fax is (907) 455-8069. His emailis [email protected] and his website iswww.avalonalaska.com.
see FREEMAN page 12
facility. PACRIM COAL recently presented an
update on its Chuitna coal project insouth central Alaska. The project is look-ing to recover an estimated 300 milliontons of sub-bituminous ultra-low-sulfur,low-ash, low-mercury coal. The marketfor this coal is the Pacific Rim where itwill be used to blend with other sourcesof coal to improve air quality and com-bustion aspects. The project, located onthe state’s Mental Health Trust land, isexpected to provide up to 500 direct jobsduring construction, up to 350 direct,full-time, year-round jobs during a 25-year operating life of the mine and up toan estimated 1,200 indirect jobs.Production is expected to average 12million metric tons per year from a sur-face mining operation linked to a loadingport on Cook Inlet by an innovative,low-impact overland conveyor system.This new design will result in a reduc-tion of affected wetlands from 103 acresdown to 29 acres, a 72 percent reduction.One of the most impressive segments of
the presentation is related to a wetlandsurvey recently undertaken by the com-pany. The professional wetlands surveyteam identified a pond within the projectfootprint as a high-priority wetland area,not realizing that the pond and nearbyenvironment was a reclaimed coal testpit from a 1980s testing program. Theproject is currently in the advanced per-mitting stages.
Northern AlaskaGOLDRICH MINING CO. announced
that its 50 percent-owned subsidiary,GOLDRICH NYACAU PLACER LLC,will commence mining this month at theChandalar gold project. The companyalso released estimated production guid-ance information through 2018. GoldrichNyacAU will begin removing overbur-den this month and plans to transportseven additional 40-ton rock trucks tothe mine in the next few weeks withmining of pay gravel expected in May.The company has completed about15,000 feet of drilling to date on theupper half of the Little Squaw Creekplacer deposit and outlined 10.5 millioncubic yards of mineralized material, atan average head grade of 0.025 ounces
of gold per cubic yard for an estimatedtotal of roughly 250,000 containedounces. The company also released pro-jected gold production and cost informa-tion for 2015 through 2018. Estimatedper-ounce production costs using a flat$1,200 per ounce gold price were $713,$623, $489, $451 and $450 for annualproduction of 16,500, 23,100, 30,200,32,000 and 32,000 ounces, respectively.Expected annual before-tax profits rangefrom $12.9 million to $33.5 million, and,as is the case with every gold mine,operating profits are highly sensitive tothe price of gold.
Southeast AlaskaHECLA MINING CO. reported year-
end 2014 operating results for its GreensCreek mine on Admiralty Island. The totalcash cost per ounce of silver produced forthe year was $2.89 per ounce versus $4.42per ounce in 2013. The average grade ofore mined during the year was 13.24ounces per ton of silver, up slightly fromthe average grade of 13.04 ounces per tonin the year previous. For the year, themine produced 7,826,341 ounces of silver,58,753 ounces of gold, 20,151 tons of leadand 59,810 tons of zinc. The mill operated
at an average of 2,236 tons per day in2014, which is the highest daily averagesince the mine began operations in 1989.Improved economics were the result oflower milling costs and higher by-productcredits and silver production. Milling costsdecreased in 2014 compared to 2013 dueto increased availability of less expensivehydroelectric power. The value of by-product metals produced increased as aresult of higher zinc and gold productionand higher zinc prices, partially offset bylower gold prices. The mine is forecasting2015 production of 7.3 million ounces ofsilver and 55,000 ounces of gold at a sil-ver equivalent cash cost of $4.50 perounce.
COEUR MINING INC. reported year-end 2014 reserves and resources at itsKensington mine near Juneau. The minereported proven reserves of 400,000 tonsgrading 0.180 ounces of gold per ton(72,000 ounces) at the Kensington depositand an additional 17,000 tons grading0.412 ounces of gold per ton (7,000ounces) at its newly defined Ravendeposit. Probable reserves at Kensingtoncame in at 2,824,000 tons grading 0.181ounces of gold per ton (512,000 ounces),while Raven came in at 162,000 tonsgrading 0.241 ounces of gold per ton(39,000 ounces). Total combined meas-ured and indicated resources atKensington and Raven were of 1,566,000tons grading 0.244 ounces of gold per ton(382,000 ounces), while total combinedinferred resources at Kensington andRaven were 1,622,000 tons grading 0.351ounces of gold per ton (570,000 ounces).
CONSTANTINE METALRESOURCES LTD. announced that jointventure partner DOWA METALS &MINING CO. LTD., has approved a $5million 2015 budget for the Palmer vol-canogenic massive sulfide project. Thisyear’s drill program will focus on exten-sions of the encouraging drill resultsencountered in last year’s drilling pro-gram. Drill hole CMR14-65, which inter-sected 89 meters grading 0.8 percent cop-per and 5.0 percent zinc, the most signifi-cant intersection to date, is on the extremi-ty of known South Wall mineralization.The company is also working on an updat-ed mineral resource estimate due out soon.
UCORE RARE METALS INC. report-ed that it has entered into an agreementwith IBC ADVANCED TECHNOLOGIESINC. to acquire the exclusive rights toIBC’s SuperLigTM MolecularRecognition Technology for rare earthmetal separation, recycling and tailingsprocessing applications at its Bokan-Dotson Ridge rare earth project. Under theterms of the license agreement, Ucore hasagreed to pay a one-time licensing fee toIBC in the amount of $2.9 million subjectto the delivery by IBC of a fully opera-tional rare earth SuperLig pilot plant anddue diligence review by Ucore. The PilotPlant will be constructed at IBC’s whollyowned subsidiary in Houston, Texas.Following completion of the above terms,the companies will form a joint venture,with Ucore having a controlling interest(60 percent) in the joint venture, whileIBC will retain a 40 percent beneficialinterest. IBC’s SuperLig MolecularRecognition Technology is designed torecover 99 percent of rare earth elementsin a clean separation from other metalswhile using far fewer steps than standardsolvent extraction processes. The environ-mentally friendly process has been used atcommercial scales in other sectors of themining industry and should reduce bothcapital and operating costs at Bokan-Dotson Ridge. For those interested inlearning more about molecular recogni-tion technology, seehttp://mrt.ucore.com/#mrt-summary. l
12NORTH OF 60 MINING PETROLEUM NEWS • WEEK OF MARCH 29, 2015
Corporate Partners $1k+ABR Inc.Alaska Rubber & Supply Inc.Alaska Wildland AdventuresBristol Bay Native CorporationFairweather LLCFlint Hills Resources AlaskaFred Meyers
715 L Street . Suite 100 . Anchorage, AK 99501 . [email protected] . 907-276-3133 . nature.org/alaska
Conserving the lands and waters on which all life depends
In Alaska,the environment is the economy
Corporate Catalysts $50k+ ConocoPhillips Alaska Inc.
Corporate Leaders $25k+ Alaska Airlines & Horizon Air . BP . Petroleum News
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The business leaders supporting our Corporate Council on the Environment value innovative science, creative solutions and a sustainable future for Alaska’s natural wealth of fish and wildlife.
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We thank these businesses for sharing our vision of a healthy environment and a vibrant economy for many generations to come.
Photo: Volunteers from ConocoPhillips help to restore a salmon stream in the Mat-Su. © Clark James Mishler
continued from page 11
FREEMAN
in the state during 2014 and continuedinvestments by these companies will bekey to holding the sector steady this year.
Sumitomo Metal Mining Pogo LLC – ajoint venture between Japanese firmsSumitomo Metal Mining Company (85percent) and Sumitomo Corp. (15 percent)– accounted for US$17 million or about20 percent of the exploration spending inAlaska during 2014.
The Japan-based owners of Pogoinvested this money primarily on definingand expanding East Deep, North andSouth Pogo, three zones of high-gradegold mineralization adjacent to the currentunderground workings at their high-gradeunderground gold mine located some 60miles east of Fairbanks.
Building on its recent success in find-ing zones of high-grade gold at Pogo,SMM Pogo has budgeted roughly US$15million for a 2015 exploration programthat includes roughly 168,000 feet (51,200meters) of drilling.
“This funding shows the tremendousconfidence that Sumitomo has in the Pogodeposit and our ability to find additionalresources for many years to come,” saidLorna Shaw, external affairs manager,SMM Pogo.
A roughly 140,000-foot (42,650meters) surface drill program started earli-er this month; the balance of drilling willbe from underground stations.
The 82 surface and 19 undergroundholes planned will focus on near-mine tar-gets and expansion of the South Pogo,North Zone, and north East Deep areas.
In Southeast Alaska, Hecla Mining Co.is planning to invest US$8.2 million insome 172,700 feet (52,600 meters) ofdrilling at its Greens Creek silver mineduring 2015. Much of this work will focuson definition drilling at the Lower NWW,Deep 200 South, East Ore, DeepSouthwest and 9a zones of the under-ground mine.
The company is particularly excitedabout the potential of Deep 200 Southwhere drilling has recently cut 49.8 oz/tonsilver, 0.08 oz/ton gold, 3.4 percent zincand 1.6 percent lead over 11.1 feet (3.4meters and 30.5 oz/ton silver, 0.05 oz/tongold, 15.5 percent zinc and eight percentlead over 13.9 feet (4.2 meters).
Underground exploration drilling willtest for extensions of this and a number ofother zones at Greens Creek.
A 10,000-foot (3,000 meters) surfacedrilling program is planned to exploreKiller Creek, a zone about a mile west-northwest of the mine where drilling hasintersected broad mineralized zones up to120 meters with stringer veins locallygrading as high as 10 percent copper and10.4 percent combined lead-zinc.
At US$9.1 million, Kensingtonaccounted for a large percentage of theexploration funds allocated by CoeurMining Inc. in 2014. This healthy portionof Coeur’s exploration dollars doled to theSoutheast Alaska gold mine is the result ofa strategy that rewards exploration suc-cess with a boost in funds.
The company is particularly excitedabout the high-grade gold tapped atJualin, a historic mine adjacent toKensington. At the end of 2014, Coeurreported 289,000 tons of inferred resourceat Jualin averaging 0.619 oz/t (179,000ozs) gold. This is roughly double the aver-age resource grade at Kensington.
While Coeur has cut its overall explo-ration budget in 2015, Kensington isexpected to again get a healthy share ofwhat is allotted.
“Our 2015 drilling efforts will keep thefocus on expanding the size and quality of
higher-grade zones at existing operationssuch as the Jualin deposit at Kensingtonand the Guadalupe/Independencia corri-dor at Palmarejo,” said Coeur Presidentand CEO Mitchell Krebs.
Kinross Gold (Fort Knox) and TeckResources (Red Dog) also continue explo-ration at and around their respectivemines.
Optimistic juniors2015 is shaping up to be another tough
year for junior mineral explorers inAlaska, and around the world.
“More than two years of investor cau-tion has created an unenviable position formany junior explorers, forcing them toslash spending, renegotiate agreements,settle for unfavorable terms or leave theindustry altogether. Although the amountof funding raised by the juniors is upslightly in 2014 as those with more prom-ising projects are able to attract somefunding, it is insufficient to reverse thetrend towards further reductions in explo-ration spending by the sector,” accordingto SNL.
Despite this dour outlook, a handful ofjunior explorers are expecting multi-mil-lion-dollar exploration programs on theirAlaska projects this year.
This positive outlook is reflected in aletter Millrock Resources Inc. Presidentand CEO Greg Beischer recently sent toshareholders.
“While we will not under-estimate thepotential difficulties that the market willbring throughout the remainder of 2015,we head into the rest of the year with aspirit of optimism,” he wrote.
Millrock anticipates roughly US$2.5million of exploration in Alaska this year,including a US$2 million program fundedby First Quantum Minerals to furtherexploration at the aptly named AlaskaPeninsula project.
Millrock came by this 500,000-acrehighly prospective land package on theAlaska Peninsula through an explorationand option-lease agreement signed withthe Bristol Bay Native Corp. in 2012.
After funding a US$600,000 recon-naissance program in 2014, FirstQuantum entered into an option to earn upto an 80 percent joint venture interest inthe property.
The 2014 program identified drill tar-gets at three prospects – Mallard Duck
13NORTH OF 60 MINING
PETROLEUM NEWS • WEEK OF MARCH 29, 2015
Usibelli Coal Mine has an all-Alaskan workforce—and that’s one big reason why we’re committedto protecting our environment. You see, most of our employees and their family members livejust a few miles away from our coal mine in Healy. So when we talk about clean air and cleanwater—it’s personal. The mine is in our back yard, so protecting the air we breathe, the waterwe drink, and the land we recreate on is essential to our way of life.
Faces of Coal Mining
www.Usibelli.com
continued from page 9
FIGHTING HEADWINDS NORTHERN NEIGHBORSCompiled by Shane Lasley
Seabridge swells Deep Kerr at KSMSeabridge Gold March 23 reported significant growth of the mineral
resource for the Deep Kerr copper-gold deposit at its KSM Project in north-western British Columbia. Based on roughly 50,000 meters of drilling in 45holes drilled since 2012, Deep Kerr has an inferred resource of 782 millionmetric tons grading 0.54 percent (9.3 billion pounds) copper and 0.33 gramsper metric tons (8.2 million ounces) gold. Deep Kerr was treated as a blockcave (bulk underground) mining target and a net smelter return cutoff value of$20 was used to calculate the resource. Seabridge said the lateral and verticalcontinuity of the zone provides a geometric configuration that is likely to beamenable to block cave mining. The company has retained Golder Associates,a leading industry expert in underground mining, to undertake bulk under-ground mining studies for Deep Kerr. Seabridge Chairman and CEO RudiFronk said the company has “every confidence that Deep Kerr represents anoutstanding opportunity for a large, high-margin operation attractive to majorbase metal miners and gold producers.” Seabridge says the limits of Deep Kerrhave yet to be identified, and the company plans to continue exploration atKSM this year using the proceeds of a C$14.2 million bought-deal flow-through equity financing announced earlier this month. The company expectsto report an inaugural resource estimate for the new Iron Cap Lower zoneshortly.
$3M program slated for Rackla GoldAtac Resources Ltd. March 24 reported plans for the initial phase of the
2015 exploration and drill program at its Rackla Gold project in the YukonTerritory. The majority of this C$3-million program will be conducted withinthe Nadaleen Trend and will focus on expanding the Conrad zone and advanc-ing the Carlin-type gold discoveries within the Anubis Cluster. The objectivesof the phase-1 exploration include: shallow diamond drilling to continue test-ing the eastern portion of the Conrad Upper zone; drilling target at the untestedarea between the Conrad Upper and Middle zones; step-out drilling from holeOS-14-230 which intersected 42.67 meters of 3.03 grams per metric ton gold atthe newly discovered Conrad Lower Zone; and rotary air blast drilling target-ing the more than 20 geochemical anomalies and structures that lie beneath athin cover of overburden within the Anubis Cluster. The Rackla Gold Project,which covers roughly 1,700 square kilometers (656,400 square miles, hostsCanada’s first Carlin-type gold discoveries. The property is divided into twodistinct trends: the Nadaleen trend, which hosts drill-confirmed Carlin-typegold mineralization at the Conrad, Osiris, Ibis, Sunrise and Anubis zones’ andthe Rau trend, which hosts the Tiger Gold deposit and Ocelot silver-lead-zinc-tin discovery.
Al-Joundi named Agnico presidentAgnico Eagle Mines Ltd. March 20 announced several senior management
changes, including the appointment of Ammar Al-Joundi as the company’s newpresident. Al-Joundi, a former chief financial officer of Agnico Eagle, mostrecently served as CFO and senior executive vice-president of Barrick GoldCorp. from July 2012 until February of this year. With Al-Joundi serving as
see NORTHERN NEIGHBORS page 15
see FIGHTING HEADWINDS page 16
Mining Companies
Kinross Fort Knox/Fairbanks Gold Mining Inc.Fairbanks, AK 99707Contact: Anna Atchison, Manager, Community and Government RelationsPhone: (907) 490-2218 Fax: (907) 490-2290E-mail: [email protected]: www.kinross.comLocated 25 miles northeast of Fairbanks, Fort Knox isAlaska’s largest producing gold mine; during 2011,Fort Knox achieved 5 million ounces of gold pro-duced, a modern record in Alaska mining.
Usibelli Coal MineFairbanks, AK 99701Contact: Bill Brophy, VP Customer RelationsPhone: (907) 452-2625 • Fax: (907) 451-6543Email: [email protected]: www.usibelli.comOther OfficePO Box 1000Healy, AK 99743Phone: (907) 683-2226Usibelli Coal Mine is headquartered in Healy, Alaskaand has 700 million tons of coal reserves. UCM pro-duces an average of 2 million tons of sub-bituminouscoal each year.
Service, Supply & Equipment
Alaska Analytical Laboratory1956 Richardson HighwayNorth Pole, AK 99705Phone: (907) 488-1266 • Fax: (907) 488-077E-mail: [email protected] analytical soil testing for GRO, DRO,RRO, and UTEX. Field screening and phase 1 and 2site assessments also available.
Alaska Rubber & Rigging Supply5811 Old Seward Hwy.Anchorage, AK 99518Contact: Mike Mortensen, General ManagerPhone: (907) 562-2200Fax: (907) 561-7600E-mail: [email protected]: www.alaskarubber.com.Alaska’s largest supplier of hydraulic and industrialhose sold in bulk or assembled to spec. We alsostock a large selection or wire rope, crane rope, lift-ing and transportation chain, sold in bulk or assem-bled to spec. We fabricate synthetic lifting slings,and supply shackles & rigging hardware. We sell andperform field installs of conveyor belting. We areArctic Grade product specialists. We sell and servicea wide variety of hydraulic, lubrication, fueling andpressure washing equipment. We sell high pressure
stainless instrumentation fittings and tube, sheetrubber, v-belts, pumps, Enerpac equipment,Kamlocks, plumbing fittings, and much more. Weperform hydro testing up to thirty thousand psi, &pull testing up to 350 thousand pounds. All testingcomes standard with certification & RFID certificationtracking capabilities.
Alaska Steel Co.6180 Electron DriveAnchorage, AK 99518Contact: Joe Pavlas, outside sales managerPhone: (907) 561-1188Toll free: (800) 770-0969 (AK only)Fax: (907) 561-2935E-mail: [email protected] Full-line steel and aluminum distributor. Completeprocessing capabilities, statewide service. Specializingin low temperature steel and wear plate.
Arctic Wire Rope & Supply6407 Arctic Spur Rd. Anchorage, AK 99518Contact: Mark LamoureuxPhone: (907) 562-0707Fax: (907) 562-2426Email: [email protected]: www.arcticwirerope.comArctic Wire Rope & Supply is Alaska largest and mostcomplete rigging supply source. Our fabrication facil-ity is located in Anchorage with distributionFairbanks. We specialize in custom fabrication ofslings in wire rope, synthetic webbing/yarn , chainand rope. Radio-Frequency Identification (RFID) isavailable for all of our fabricated products. In addi-tion, we offer on-site inspection and splicing services.We carry a large inventory of tire chains for trucksand heavy equipment.
Austin Powder CompanyP.O. Box 8236Ketchikan, AK 99901Contact: Tony Barajas, Alaska managerPhone: (907) 225-8236 • Fax: (907) 225-8237E-mail: [email protected] site: www.austinpowder.comIn business since 1833, Austin Powder providesstatewide prepackaged and onsite manufacturedexplosives and drilling supplies with a commitment tosafety and unmatched customer service.
Calista Corp.5015 Business Park BlvdSuite 3000Anchorage, AK 99503Phone: (907) 275-2800Fax: (907) 275-2919Website: www.calistacorp.com
Construction Machinery Industrial, LLC 5400 Homer Dr.
Anchorage, AK 99518Contact: Dale Carlson, Sales Manager Phone: (907) 563-3822Fax: (907) 563-1381E-mail: [email protected]: www.cmiak.comFairbanks officePhone: 907-455-9600 Juneau officePhone: 907-780-4030 Ketchikan officePhone: 907-247-2228 Sales and service for heavy equipment for construc-tion, logging, aggregate, mining, oilfield and agricul-tural industries throughout Alaska. CMI representsmore than 40 vendors, including Volvo, Hitachi, AtlasCopco, and Ingersoll-Rand.
GCI Industrial Telecom Anchorage:11260 Old Seward Highway Ste. 105Anchorage, AK 99515Phone: (907) 868-0400Fax: (907) 868-9528Toll free: (877) 411-1484Web site: www.gci.com/industrialtelecomRick Hansen, [email protected] Johnson, Business Development [email protected]:Aurora Hotel #205Deadhorse, Alaska 99734Phone: (907) 771-1090Mike Stanford, Senior Manager North [email protected], Texas:8588 Katy Freeway, Suite 226Houston, Texas 77024Phone: (713) 589-4456Hillary McIntosh, Account [email protected] Industrial Telecom provides innovative solutions tothe most complex communication issues facing indus-trial clientele. We deliver competitive services, rep-utable expertise and safely operate under the mostsevere working conditions for the oil, gas and naturalresource industries. GCI-your best choice for full lifecycle, expert, proven, industrial communications.
Greer Tank and Welding Inc. 3140 Lakeview DrivePO Box 71193Fairbanks, AK 99707Contact: Mark Greer, General ManagerPhone: (907) 452-1711Fax: (907) 456-5808Email: [email protected] offices: Anchorage, AK; Lakewood, WA
D I R E C T O R YCompanies involved in Alaska andnorthwestern Canada’s mining industry
Website: www.greertank.comGreer Tank & Welding are the premiertank and welding specialists of Alaskaand Washington. In business for over57 years, they have a long history ofproviding an array of products andservices for all contracting and customfabrication needs – all from their high-ly trained and experienced staff.
HDR Alaska Inc. 2525 C St., Ste 305Anchorage, AK 99503Contact: Jaci Mellott, MarketingCoordinatorPhone: (907) 644-2091Fax: (907) 644-2022Email: [email protected]: www.hdrinc.comHDR Alaska provides engineering, envi-ronmental, planning, and consultationservices for mining and mineral explo-ration clients. Services include: biologi-cal studies; cultural resources; projectpermitting; NEPA; stakeholder outreach;agency consultation; and environmental,civil, transportation, energy, and heavystructural engineering.
Judy Patrick Photography511 W. 41st Ave, Suite 101Anchorage, AK 99503Contact: Judy PatrickPhone: (907) 258-4704Fax: (907) 258-4706E-mail: [email protected]:www.judypatrickphotography.comCreative images for the resource devel-opment industry.
Last Frontier Air Ventures39901 N. Glenn Hwy. Sutton, AK 99674Contact: Dave King, ownerPhone: (907) 745-5701Fax: (907) 745-5711E-mail: [email protected] Base (907) 272-8300Web site: www.LFAV.comHelicopter support statewide for miner-al exploration, survey research anddevelopment, slung cargo, video/filmprojects, telecom support, tours, crewtransport, heli skiing. Short and longterm contracts.
LyndenAlaska Marine LinesAlaska West ExpressBering Marine CorporationLynden Air CargoLynden InternationalLynden LogisticsLynden Transport
Anchorage, AK 99502Contact: Jeanine St. JohnPhone: (907) 245-1544 Fax: (907)245-1744 Toll Free: 1-888-596-3361E-mail: [email protected] is a family of transportationcompanies with the combined capabili-ties of truckload and less-than-truck-load transportation, scheduled andcharter barges, rail barges, intermodalbulk chemical hauls, scheduled andchartered air freighters, domestic andinternational air forwarding, interna-tional ocean forwarding, customs bro-kerage, sanitary bulk commoditieshauling, and multi-modal logistics.
Pacific Rim Geological ConsultingFairbanks, AK 99708Contact: Thomas Bundtzen, presidentPhone: (907) 458-8951Fax: (907) 458-8511Email: [email protected] mapping, metallic mineralsexploration and industrial mineralsanalysis or assessment.
TTT Environmental LLC 4201 “B” St.Anchorage, AK 99503Contact: Tom Tompkins, general managerPhone: 907-770-9041 • Fax: 907-770-
9046Email: [email protected]: www.tttenviro.comAlaska’s preferred source for instru-ment rentals, sales, service and supplies.We supply equipment for air monitor-ing, water sampling, field screening,PPE and more.
Taiga Ventures2700 S. CushmanFairbanks, AK 99701Mike Tolbert - presidentPhone: 907-452-6631 • Fax: 907-451-8632Other offices:Airport Business Park2000 W. International Airport Rd, #D-2Anchorage, AK 99502Phone: 907-245-3123
Email: [email protected] site: www.taigaventures.comRemote site logistics firm specializing inturnkey portable shelter camps – allseasons.
Usibelli Coal Mine100 Cushman St., Ste. 210Fairbanks, AK 99701Contact: Bill Brophy, VP CustomerRelationsPhone: (907) 452-2625Fax: (907) 451-6543E-mail: [email protected]: www.usibelli.comUsibelli Coal Mine is headquartered inHealy, Alaska and has 700 million tonsof coal reserves. UCM produces 1 to 2million tons of sub-bituminous coaleach year.
15NORTH OF 60 MINING
PETROLEUM NEWS • WEEK OF MARCH 29, 2015
Advertiser IndexAlaska Dreams
Alaska Steel Co.
Arctic Wire Rope
Austin Powder Co.
Calista Corp............................................9
Constantine Metal Resources
Construction Machinery
Fort Knox Gold Mine
GCI Industrial Telecom
Greer Tank Inc.
IFR Workwear Inc.
Judy Patrick Photography
Last Frontier Air Ventures
Lynden
Nature Conservancy, The.....................12
Pacific Rim Geological Consulting
Salt+Light Creative
Sourdough Express Inc.
Taiga Ventures/PacWest Drilling Supply
Usibelli Coal Mine................................13
Granite wins ethical leadership honorsGranite Construction Inc. said it has been recognized by Ethisphere Institute as a
2015 World’s Most Ethical Company®. Ethisphere is a global leader in defining and advancing the standards of ethical busi-
ness practices. The World’s Most Ethical Companies designation recognizes those organi-zations that have had a material impact on the way business is conducted by fostering aculture of ethics and transparency at every level of the company. The World’s MostEthical Company assessment is based upon the institute’s Ethics Quotient™ frameworkdeveloped over years of research to provide a means to assess an organization’s per-formance in an objective, consistent and standardized way. The information collectedprovides a comprehensive sampling of definitive criteria of core competencies, ratherthan all aspects of corporate governance, risk, sustainability, compliance and ethics.Granite is one of only two companies in the construction and building materials catego-ry honored this year.
“We are extremely proud to be once again named as one of the World’s Most EthicalCompanies,” said James H. Roberts, president and chief executive officer of GraniteConstruction. “This recognition exemplifies the strength of Granite’s team. I applaud andcongratulate our employees. Our people are living the Granite code of conduct each andevery day, and it is our continuing commitment to foster a strong culture of ethics andintegrity for generations to come.”
For the full list of 2015 World’s Most Ethical Companies, visithttp://ethisphere.com/worlds-most-ethical/wme-honorees/.
Mining Spotlight
president, Sean Boyd’s title will change
to vice-chairman and CEO. Al-Joundi
will report to Boyd and assist him and
the senior management team in setting
and executing on Agnico Eagle’s corpo-
rate strategy, optimizing the corporate
structure and management processes,
developing the next generation of senior
management and building asset value
through effective capital allocation and
risk management. Other appointments
include: Dominique Girard as vice-presi-
dent, technical services and Nunavut
operations; Nancy Guay as senior corpo-
rate director, technical services, report-
ing to Dominique; Michael Timmins as
vice-president, corporate development;
Carol Plummer as vice-president, project
development, USA and Latin America;
and Michel Julien as vice-president envi-
ronment. “As our gold mining business
continues to grow and the number of
opportunities to improve the quality of
our business expands we have strength-
ened our senior management team with
several new additions. These appoint-
ments add to our current bench strength
and will allow us to improve and grow
our business in a very measured and
steady manner, while we continue to
develop our leadership team,” said Boyd
Copper North bolsterstreasury
Copper North Mining Corp. March
19 reported the completion of a
C$318,000 financing. The non-brokered
private placement consists of 5.3 million
units priced at C6 cents per unit. Each
unit consists of one Copper North com-
mon share and one half of a warrant.
Each whole warrant is redeemable for
the purchase of an additional share at for
C9 cents until March 19, 2017. Copper
North Chairman Dale Corman bought
1.7 million of the units. The company
intends to use the proceeds from the
financing for resource expansion and
engineering of its Carmacks copper-
gold-silver project in the Yukon
Territory; exploration at the Thor cop-
per-gold property in northern British
Columbia; and for working capital and
general corporate purposes. In connec-
tion with the financing, Copper North
paid finders’ fees of C$7,140 in cash and
issued 170,000 finders’ warrants with the
same terms as the private placement
warrants. l
continued from page 13
NORTHERN NEIGHBORS
Bay, Kawisgag and Bee Creek – and thisyear’s program is expected to include atleast 2,400 meters in drilling in six to eightholes.
Millrock is currently working withlocal Native village corporations to secureaccess and the company hopes to startdrilling in June.
Constantine Metal Resources Ltd. isanother company with plenty of reasons tobe optimistic.
Earlier in March, this exploration com-pany reported that Dowa Metals &Mining Co. Ltd. allocated US$5 million tocontinue exploration at Constantine’sPalmer volcanogenic massive sulfideproject in Southeast Alaska.
Dowa, which has an option to earn 49percent in Palmer by investing US$22million over four years, had spent roughlyUS$10 million at the project through theend of 2014, the second year of its earn-inagreement.
This year’s drilling will focus on con-tinued expansion of Palmer’s South Wallzone, where one hole drilled last year cutthe widest intersection of VMS mineral-ization encountered at the project to date.
This hole, CMR14-65, cut 89 metersgrading 0.8 percent copper, 5.0 percentzinc, 21.1 grams per metric ton silver and0.32 g/t gold. The center of this intersec-tion is located roughly 50 meters east and50 meters above where CMR14-54 cut
22.1 meters grading 2.48 percent copper,4.05 percent zinc, 24 g/t silver and 0.39 g/tgold.
A resource update that incorporates theresults from drilling completed in 2010,2013 and 2014 is currently being calculat-ed for Palmer.
Constantine President and CEOGarfield MacVeigh said, “2015 is poisedto be a promising year for Constantine andthe advancement of the Palmer project.With an updated resource estimate under-way, and our thickest mineralized inter-sections open to expansion, the opportuni-ty has never been more compelling.”
At the opposite end of the state,NovaCopper Inc. plans to carry out anUS$8- to US$10-million program at theUpper Kobuk Mineral Projects in 2015.This work, slated to begin by June, willfocus primarily on infill drilling aimed atupgrading inferred resources at its ArcticVMS deposit to the measured and indicat-ed categories.
In addition to roughly 4,400 meters ofdrilling needed to upgrade the resource,about 4,000 meters is necessary to gatherthe geotechnical, hydrological and metal-lurgical data needed to complete a feasi-bility study scheduled for completion asearly as 2016.
NovaCopper, which ended its 2014 fis-cal year (Nov. 30) with US$4.8 million inworking capital, has enough funds to startthis program but will need to raise addi-tional capital to complete all of the drillingand other programs on the docket for
2015.In August, First Quantum increased its
exploration profile in Alaska by cuttinganother tentative deal on Kiska MetalsCorp.’s Copper Joe property locatedroughly 110 miles (175 kilometers) north-west of Anchorage.
Situated roughly 20 miles (30 kilome-ters) southwest of both Kiska’s Whistlerand Millrock’s Estelle projects, CopperJoe is in a region of Southcentral Alaskaknown for its copper-gold potential.
If the copper miner chooses to pursuean option at Copper Joe, it can earn an ini-tial 51 percent interest by investing US$5million in the project by 2017, a stake thatwould increase to 80 percent if Copper Joewas advanced to a production decision.
First Quantum has until the end ofMarch to notify Kiska of its intentionsregarding the option to enter a joint ven-ture on the Copper Joe project.
New playersOne of the more promising signs for
mineral exploration in Alaska this year isthat a number of new companies have cutdeals on projects in recent months.
Among the most notable of these newarrivals is Royal Gold, which has inked ajoint venture agreement with ContangoOre for the continued exploration of theTetlin gold properties near the crossroadscommunity of Tok in eastern Alaska.
Royal Gold has the opportunity to earnup to 40 percent interest in the JV byinvesting US$30 million in the Tetlin
properties by October 2018 – an averageseasonal investment of about US$7.5 mil-lion. To get the ball rolling in 2015, RoyalGold has agreed to invest an initial US$5million in Peak Gold, a limited liabilityJV that holds the extensive package ofTetlin properties.
Royal Gold Vice President ofCorporate Development BillHeissenbuttel told shareholders that theTetlin JV agreement is reminiscent of thecompany’s original focus and pairs withthe royalties the company purchased sep-arately on the project.
Royal Gold lists near-surface mineral-ization, attractive grade, numerousundrilled targets and great accessibilityamong a list of unique attributes thatattracted the royalty company to Tetlin.
Despite the continued shortage ofexploration funds, Millrock Resourcessaid it is collaborating with a major min-ing company to explore for high-gradegold deposits in Alaska.
“We plan to do a lot of field exams thissummer, and are actively soliciting otherclaim holders that may wish to presenttheir project for consideration byMillrock and its strategic collaborationpartner. Additionally, we will likely carryout reconnaissance work on gold targetsthat Millrock has developed on openground,” Beishcher explained in a recentemail to Mining News.
This early stage work will likely runabout US$300,000.
While the name of its strategic partneris currently being withheld, Millrock saidthe gold miner is new to the state, furthershrinking the field of candidates.
Other new exploration companiesexpanding into Alaska in 2015 include:Strongbow Exploration Inc., which isfinalizing a deal on two tin projects in thestate; and Sonoro Metals Corp., whichhas signed an option agreement to earn a60 percent interest in Northern EmpireResources Corp.’s Hilltop Gold projectlocated some 70 miles south ofFairbanks. l
16NORTH OF 60 MINING PETROLEUM NEWS • WEEK OF MARCH 29, 2015
continued from page 13
FIGHTING HEADWINDS
matters,” Goldrich President and CEO BillSchara said at the time of the deal.
Return on investmentNyacAU also is fronting all the capital
needed to get a commercial operationgoing at Chandalar. Through the end of2014, the company had invested roughlyUS$17.3 million into developing the oper-ation and another US$5 million of capitalexpenditures have been budgeted for thisyear. Nyac is to be repaid this initial invest-ment from the gold produced at the comingplacer operation.
According to Goldrich’s production pro-jections, the return on Nyac’s investment is
coming soon. The company forecasts thatthe Chandalar Mine will produce 16,500 ozof placer gold in 2015, worth US$19.8 mil-lion at US$1,200/oz gold. With this year’sproduction costs expected to averageUS$713/oz, this results in a pre-tax netprofit of roughly US$8 million.
The JV expects production to rise andcosts to fall as it expands operations overthe next three years.
During the past two years, the partnershave expanded the recovery plant, moved itto a lower and broader part of the valley;and built new water recycling ponds.
“Commercial production at Chandalarin 2015 is the culmination of three years ofwork by GNP,” said Schara. “GNP com-pleted initial construction and a successfultest plant in 2012, acquired a significantmining permit for expanded operations in
2013, and relocated and expanded facilitiesin 2014. All this was accomplished duringone of the most difficult periods in theindustry over the past 30 years.”
The expanded facility includes a newgrizzly feeder with an expected capacity ofabout 600 cubic yards per hour, which willbe realized as gravel screens and goldrecovery tables are added in stages through2016.
To keep up with the needs of theexpanded operation, Goldrich NyacAUPlacer is transporting seven 40-ton rocktrucks to the northern Alaska placer goldmine in the next few weeks, increasing itsfleet to 13 such vehicles.
As a result, alluvial gold recoveries areexpected to jump to 23,000 oz in 2016;30,000 oz in 2017; and reach 32,000 oz by2018. As production rises, the costs are
expected to decrease to about US$450 peroz.
At $1,200 gold, pre-tax net profits areanticipated to soar to US$13.2 million in2016; US$21.5 million in 2017; peaking atroughly US$24 million by 2017. EveryUS$100 per oz swing in the gold priceequates to about a US$3 million change innet profits once the operation reaches fullcapacity.
To be ready for the upcoming inauguralseason of commercial mining of theChandalar placers, stripping the overbur-den from gold-rich gravels is now under-way.
Mining of pay gravel is expected to startin May and initial gold processing isplanned for late June. Weather permitting,the plant is expected to run through mid-September. l
continued from page 10
CHANDALAR
Any conclusions that I draw from thisreview will be based upon the facts that Ifind and my judgment based on years ofexperience in government,” SecretaryCohen explained. “To ensure a compre-hensive and unbiased evaluation, I wel-come hearing from, and will be reachingout to, interested stakeholders, and I willcarefully consider all points of view. Iinvite those who have information relatingto the issues under review to meet withmy team so that we might receive all rele-vant information for consideration.” l
continued from page 9
NEWS NUGGETS
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By KRISTEN NELSONPetroleum News
House Bill 132, sponsored by HouseSpeaker Mike Chenault, R-Nikiski,
moved through two House committees,Energy and Resources, with minor changesand passed the House 24-14 March 23.
The bill restricts the Alaska GaslineDevelopment Corp. from competing withthe Alaska LNG project until the earliest ofthe state or another party with natural gasleases dropping out of AKLNG; theAKLNG parties entering into contractualagreements to undertake Front-EndEngineering and Design; or July 1, 2017.
The bill was introduced after Gov. BillWalker said earlier in the year that he want-ed to see the in-state line AGDC has beenworking on as a backup to AKLNG, theAlaska Stand Alone Pipeline, expanded tocompete with AKLNG.
In introducing HB 132 in the SenateResources Committee March 25, Chenaultsaid it affirms the policy direction forAGDC set by the Legislature in 2013 whenAGDC was created and in 2014 whenAGDC’s involvement with AKLNG wasapproved in Senate Bill 138.
The bill also recognizes that AGDC isalready engaged on behalf of the state as apartner in AKLNG, Chenault said, callingAKLNG the project likely to deliver thegreatest benefit to Alaskans.
The backupThe smaller project AGDC has been
working on, ASAP, is a backup, Chenaultsaid.
Originally established when the AlaskaGasline Inducement Act was in place,ASAP was limited to 500 million cubic feeta day under the terms of AGIA. That limi-tation has been eliminated, he noted, andASAP can be upsized when needed.
AGDC’s board, with new Walkeradministration commissioners and threenew members appointed by Walker, hasasked staff to provide an estimate of thecost to design two larger volume projects.Chenault said if ASAP needed to be acti-
vated due to failure of AKLNG, we don’tknow today what the right size of pipe forASAP would be, what pressure or whatvolume of gas would be right.
He said his concern is that ASAP hasbeen proposed since the beginning of thesession not as a backup but as a competi-tive line, and said it doesn’t make sense toget into competition with ourselves andspend money on both projects.
On the issue of finding agreement withthe governor, rather than staging a battle,Chenault said that is “exactly what we’relooking for.” He said the last thing he want-ed was a fight with the governor, but hesaid there is a strong feeling among manymembers against giving up the opportunitybefore us today, when the state is furtheralong on a gas project than it has ever been.
Chenault said he is willing to work withthe administration to see about coming toan agreement that would meet some ofwhat the governor wants while meeting
some of what the Legislature wants, butsaid that hasn’t happened yet.
Competing planWalker has called for competition
between AKLNG and an expanded ASAPline which would go to tidewater and con-nect with a liquefied natural gas facilitybuilt by parties other than the state.
In an opinion piece published in mid-February the governor said that while hewas pleased with progress to date onAKLNG, he wants the state to “increasethe viability” of ASAP, calling it “market-driven, with Alaska in control.” He saidexisting funding would be used to “exploremarket opportunities and financingarrangements with potential buyers ofAlaska’s gas,” with the project designed forboth in-state and export markets. l
PETROLEUM NEWS • WEEK OF MARCH 29, 2015 17
E&PState approvesHooligan PA
The state has formed a Hooliganparticipating area at the Northstar unit.
The participating area changes theadministrative status of productionfrom the Kuparuk formation at theNorth Slope unit. The formation beganproducing on a tract basis in 2006 andhad been in sustained production since2010, according to the state. The par-ticipating area includes four state andtwo federal leases covering some7,656 acres.
The participating area wasapproved retroactive to January 2006.
The application took several yearsto process. During that time, operatorBP Exploration (Alaska) Inc. sold theNorthstar unit to Hilcorp Alaska LLC,which is now the operator.
Northstar straddles the boundarybetween state and federal waters northof Point Storkerson, which means thatthe Alaska Department of NaturalResources and the U.S. Bureau ofSafety and EnvironmentalEnforcement both have oversight overthe unit.
BP applied to form the Hooliganparticipating area in late June 2012 onleases currently within the unit andleases the company proposed to add tothe unit. The BSEE approved the par-ticipating area in February 2014. Thestate approved the unit expansion inOctober 2014. BP and its minoritypartner Murphy Exploration (Alaska)Inc. transferred their interests in theleases to Hilcorp in November andDecember 2014, respectively.
The Hooligan participating areajoins the Northstar participating area,which state and federal officialsformed in 2002 and the federal Fidoparticipating area, formed in 2012.
—ERIC LIDJI
l N A T U R A L G A S
HB 132 moves to Senate on 24-14 voteBill restricting what AGDC can do in competing with AKLNG project got minor cleanup in two House committees, now in Senate Resources
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By ALAN BAILEYPetroleum News
Formed under the terms of the OilPollution Act of 1990, in the wake of
the Exxon Valdez oil spill, the Cook InletRegional Citizens Advisory Council has forthe past 25 years been furthering a series ofprojects, triggered by the council’s mandateto monitor the environmental impacts of oilin the Cook Inlet region. But these projectsoften end up achieving much more that wasoriginally envisaged, Susan Saupe, directorof CIRCAC’s science and research pro-gram, told Petroleum News on March 23.
“I think that has been some of ourbiggest successes, taking goals that we haveunder OPA 90 and developing,” Saupe said.OPA 90 is the abbreviated name of the OilPollution Act.
Often, CIRCAC has initiated relativelysmall but innovative pilot projects in CookInlet and, then, having achieved success,
worked with other organizations to expandthe projects to a more regional scale, Saupesaid. And that has often resulted in makingvaluable data available to a wide range ofstakeholders, including industry, govern-ment regulators and the general public, shesaid.
For example, in 2001 CIRCAC ledefforts to develop what are referred to as“geographic response strategies” around theCook Inlet coast, Saupe said. A geographicresponse strategy is a plan for protectingsome sensitive environmental resource at aparticular location in the event of an oilspill. A plan typically spells out require-ments for equipment such as protectiveboom and forms a building block of a moreregional oil spill contingency plan.Following success in Cook Inlet, the use ofgeographic response strategies has expand-ed to a statewide program administered bythe Alaska Department of EnvironmentalConservation.
Measurement of pollutantsAs part of its OPA 90 mandate, CIRCAC
has been conducting a research program,measuring and documenting levels of anumber of pollutants in Cook Inlet, both inmixing zones where discharges from off-shore oil platforms enter the waters of theinlet, and throughout the inlet. The idea is tounderstand the background levels of con-taminants and to gain insights into wherethe contaminants have come from. Then, ifthere is, for example, an oil spill, it becomespossible to objectively measure the impactof the spill, Saupe explained.
“One point that we have really focusedour effort on is that the regional citizensadvisory councils should be partners amongcitizens, agencies and industry,” Saupe said.“We’ve actually taken that to heart quite abit in that we can do the best work if we arereally trying to do the best science to answerthese questions.”
A major focus of the research has been
the types of hydrocarbon that form some ofthe more toxic components of crude oil.However, there are many potential sourcesfor these materials, including oil platformdischarges, natural oil seeps, forest fires andvolcanic eruptions, Saupe said. In fact, par-ticulates in vehicle exhaust form a signifi-cant source, she said. Similarly, heavymetal contamination can originate from nat-ural sources as well as potentially fromdrilling waste.
But some of these contaminants, such ascertain classes of hydrocarbons, have dis-tinctive chemical signatures, characterizedby the precise mix of chemicals that comesfrom that origin. By establishing the partic-ular signature of each particular source,CIRCAC wants to construct a picture ofbackground contaminant levels in the CookInlet and the sources of each contaminant.
“One of our biggest goals was to have areally good understanding of what is thebackground, what are the other sources,”Saupe said.
The evolution of this monitoring pro-gram into what is referred to as the integrat-ed Cook Inlet environmental monitoringand assessment program provides an exam-ple of a modest CIRCAC program expand-ing through partnerships with other organi-zations. In this case, CIRCAC wanted toadopt the methods used in a national coastalassessment program that had been appliedfor environmental monitoring in the Gulf ofAlaska, and adapt these methods to theCook Inlet region by adding some forms ofmonitoring that did not feature in thenational scheme.
CIRCAC obtained federal funding forits initiative through the support of theAlaska congressional delegation, Saupesaid. And at around the time that CIRCACwas developing its project, theEnvironmental Protection Agency wasstarting to develop a new general permit foroil industry discharges into Cook Inlet, shesaid. CIRCAC suggested merging its proj-ect with the sampling program that the EPAwas requiring of industry dischargers, anarrangement that would enable both CIR-CAC and the EPA to each obtain more datathan would otherwise have been possiblehad they operated independently. The twooil companies involved in the oil platformdischarges issue, Chevron and XTO, agreedto participate in the scheme. The result wasa much larger assessment than had original-ly been thought possible, and a highly suc-cessful project, Saupe said.
The Alaska ShoreZone programIn another project that has grown far
beyond an original CIRCAC initiative, it isnow possible to click into the NationalOceanic and Atmospheric Administration’swebsite and engage in a virtual tour of largesections of the Alaska coastline. Called theAlaska ShoreZone program, the online sys-tem enables anyone to view high resolutionvideo of the shoreline and intertidal zone,and to retrieve data about features of thecoastline and the natural habitat. This sys-tem can prove invaluable when figuring outhow to deal with a disaster such as an oilspill and was used, for example, during theresponse to the grounding of Shell’s Kullukfloating drilling platform in 2012, Saupesaid.
This ShoreZone initiative began in 2001,after CIRCAC had picked up the idea offilming the Cook Inlet coastline from aShoreZone program that had been applied
l E N V I R O N M E N T & S A F E T Y
Some big programs start small but growCIRCAC has pioneered ways of gathering environmental data and making that data available to industry, regulators and the public
18 PETROLEUM NEWS • WEEK OF MARCH 29, 2015
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see CIRCAC page 23
By ALAN BAILEYPetroleum News
On March 18 Alaska’s Division of Oiland Gas approved a land use permit
for SAExploration to conduct a 3-D seismicsurvey in the upper Cook Inlet. Accordingto the approval notice the survey will takeplace in state waters west of the northernKenai Peninsula. The survey area, encom-passing about 821 square miles, will extendfrom the peninsula coast, between MoosePoint and Nikiski, to the western coast ofthe inlet between West Foreland and theChuitna River. The permit is effective fromMarch 18, 2015, to March 18, 2016.
According to the decision documentSAE plans to use wireless nodes placed onthe seafloor for recording the seismic data,rather than towing hydrophone recordersbehind a seismic vessel. Lines of receivers,parallel to the shoreline, will be spaced at1,650-foot intervals. Two seismic sourcevessels will tow airguns along source linesperpendicular to the lines of receivers.Operations will take place over a series of7.5-mile by 10-mile patches, with eachpatch taking three to five days to set up andshoot.
As each patch is recorded, the nodesfrom the previous patch will be retrievedand the data from the nodes downloadedinto a computer system.
On March 20 the National MarineFisheries Service issued a notice in theFederal Register, proposing the issuance ofa marine mammal incidental harassmentauthorization for seismic surveying bySAExploration across a broad area of theupper and lower Cook Inlet between April1, 2015, and March 31, 2016. The authori-zation proposal does not reference any spe-cific surveys, merely stating that the compa-ny proposes to conduct 3-D surveys in theCook Inlet over a period of 160 days duringthe specified time period.
“The exact location of where the 2015survey will be conducted is not known atthis time, and probably will not be knownuntil spring 2015 when SAE’s clients havefinalized their data needs,” the authorizationsays.
The authorization includes a description
of SAE’s proposed operational techniquealmost identical to that in the Division ofOil and Gas permit document.
A company conducting an offshore seis-mic survey requires an incidental harass-ment authorization, to ensure that there isno infringement of the Marine MammalsProtection Act if a marine mammal is inad-vertently disturbed during seismic opera-tions. The closing date for public commentson the proposed authorization for SAE isApril 20. l
PETROLEUM NEWS • WEEK OF MARCH 29, 2015 19
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PIPELINES & DOWNSTREAMHopes build for BC refinery
There is a ready-made market in Asia for products, especially diesel, from a refineryplanned for the British Columbia coast, says a consultant for the proponent PacificFuture Energy.
The facility could be profitable if it can produce “highly sought after” diesel, RonLoborec, Canadian energy leader for Deloitte & Touche, told the Globe and Mail onhis return from a trip to Asia with two leading company officials.
He said prices for Western Canadian Select heavy crude would be below those forWest Texas Intermediate light crude, thus ensuring cheaper costs for refinery feedstock.
Loborec said the cost of the raw bitumen from the Alberta oil sands is estimated tobe sharply lower than the revenue from exporting refined petroleum products.
Preliminary designs for the planned US$11.4 billion operation are incorporating thelatest technology, notably carbon capture and storage that would lower greenhouse gasemissions from the production of 216,000 barrels per day of diesel, gasoline, propaneand jet fuel.
Loborec was accompanied on his Asian visit by Pacific Future Chief ExecutiveOfficer Robert Delamar and senior adviser Stockwell Day, a former cabinet minister inCanadian and Alberta governments.
The company is also pressing ahead with an evaluation of the costs of transportingthe crude bitumen by rail to Prince Rupert, although it is not ruling out a pipeline optionby Enbridge or TransCanada.
Day said Enbridge, after a difficult start, is making some headway in dealing withthe concerns of First Nations and environmentalists over its proposed NorthernGateway pipeline to Kitimat.
A Northern Gateway spokesman said his company’s top current priority is to build-ing lasting partnerships with aboriginal communities and incorporating their views andtraditional lifestyle concerns into the project.
Assuming it secures financial backing and sales contracts, Pacific Future hopes tostart operations in 2023, one year behind the targeted startup of the Kitimat Clean refin-ery being led by newspaper owner David Black.
—GARY PARK
l E X P L O R A T I O N & P R O D U C T I O N
State approves CookInlet seismic surveySAExploration plans offshore 3-D survey, west of the northernKenai Peninsula using wireless nodes for recording seismic signals
“The exact location of where the2015 survey will be conducted is
not known at this time, andprobably will not be known untilspring 2015 when SAE’s clients
have finalized their data needs,”the authorization says.
20 PETROLEUM NEWS • WEEK OF MARCH 29, 2015
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Companies involved in Alaska and northern Canada’s oil and gas industry
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Air Liquide
Aircaft Rubber Mfg. (ARM-USA)
Alaska Clean Seas (ACS)
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American Marine . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .22
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Canrig Drilling Technology
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ClearSpan Fabric Structures
CN Rail
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Anchorage company solves construction challengesAnchorage steel fabrication company
STEELFAB is finding solutions to the chal-lenges of creating large shop buildings fornew projects on the North Slope. Thesebuildings are quite large — 30 feet wideby 50 feet long by 26 feet high — makingtransportation of the fully constructedstructures difficult and costly. A fully inte-grated steel fabrication plant, STEELFAButilizes an innovative design to constructthe buildings in sections, which allowsthem to be stacked and transported moreefficiently. Once they are on site, sections can be assembled into a completed building injust four days.
As STEELFAB President Richard Faulkner explains, “We do work that others can’t orwon’t and we do it fast. Janet and I have owned the business for more than 25 years andwe provide every aspect of steel work, from fabrication to painting to maintaining thelargest inventory of steel in the state. We’re proud to be an Alaska company that can pro-vide an excellent product with our experienced employees and small-business flexibility.”
STEELFAB has been busy this winter with a slate of projects that for Alaska’s oil andgas producers, including ConocoPhillips and Doyon Drilling, thanks to the passage ofSenate Bill 21.
Owned by husband-and-wife team Richard and Janet Faulkner since 1989, STEELFAB isfully certified for steel work in the Arctic. STEELFAB specializes in projects like these andothers needed on short turnaround.
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Cindy Shake joins AECOM teamCindy Shake has joined AECOM as a public affairs specialist.
Shake is a versatile, award-winning communication professionaland was named 2014 Marketer of the Year by the AmericanMarketing Association, Alaska Chapter. She was principal of a suc-cessful graphic design firm for more than 25 years and has years ofcombined professional experience in marketing, business develop-ment, management, communications, and graphic design. Asidefrom being the director of the AECOM internship program, Shake’sresponsibilities at AECOM include supporting the environmental, engineering, planning,and permitting projects in Alaska.
see OIL PATCH BITS page 21
CINDY SHAKE
CO
URT
ESY
STEE
LFA
B
issue of global warming that has beenpresented to us by ourselves using oursovereignty. One concern that I have isthe idea that we are not supposed to havean economy, not develop our ownresources, not build our own ports, notfund the movement of our own villagesin places where there has been erosion.
As I said to Sen. Sanders and othersover the course of a few days, should wesit back and wait and why should wewait for a federal government that hasnot found the ability to fund polar-classice breakers over the last two decades?Russia is ebbing toward 40 and China isebbing toward 11. It makes no sense forAlaska to sit on its hands and wait for thefederal government to help us.
That’s another message that I had.Developing Alaska’s Arctic, America’sArctic, is an important part of improvingthe quality of life for Alaskans. We triedin our Alaska Arctic Policy Commissionto think about social issues as well. Whenyou look at suicide rates and drug andalcohol addiction, much of that is linkedto people who feel they have no hope. Alot of what drives hope is a job and asense of self worth. When you get northof Fairbanks, the job opportunitieschange; there is no question about it.With the opening of the NorthwestPassage, both lanes for the first time in2007, there is a chance for the upper partof Alaska to change in an unprecedentedway. Now a child in Barrow may havemore opportunities than a child inAnchorage and that’s purely with theopening of the Northwest Passage.
So that is part of what I wanted to say.Alaska produces less than 1 percent ofthe U.S. greenhouse gas emission. I felt itwas important in that hearing to say weare not the issue when it comes to globalwarming to the extent that it is manmade.It’s not the producing. It’s the consump-tion.
So that’s not us. Sen. Sanders said itwas ironic that we want to develop ourresources when it was global warmingthat opened up the Arctic.
I flip it around. You in the Lower 48have been the consumers of energy andto the extent that that’s the cause let’stalk about your reduction. There willalways be demand, there will be globaldemand. Let Alaska be an environmental-ly friendly good steward of the environ-ment and produce our resources.
Petroleum News: You also mentionedin your speech that the U.S. is behind,especially with ports and spill response.Meanwhile the federal treasury took in$4 billion from lease sales. Talk aboutthat.
McGuire: from my perspective I lookat the Gulf of Mexico as a comparisonzone. The idea of offshore drilling andrevenues is unique to a few places in theUnited States. The Gulf in 2006, therewas a policy lead by Sen. Mary Landrieuthat allowed for the return of those rev-enues taken in lease sales to contribute tothe Gulf states to help with infrastructure.The other part of it was revenue sharing,so not just direct improvements withinfrastructure but revenue sharing withthe local governments. I think it’s impor-tant that Alaska is treated the same way.The government has taken $4 billion inlease sales yet at the same time has beenunwilling to invest in a single polar-classice breaker, unwilling to invest — oreven partner — in a single port.
These are issues of national securityfrom a variety of standpoints. We havehad cruise ships that have come from all
over the world pulling up in tenders inPoint Hope and Barrow. Think of theissue of how Russians are building uptheir fleet. We don’t have a polar-classicebreaker to respond to search and res-cue situations that are happening.
The very people in this hearing weretalking about protecting the environment.One of the best ways Alaska has protect-ed the environment is through preven-tion. Having polar-class icebreakersready to respond and having Arctic portswith those icebreakers, those boomingsystems and the manpower ready torespond is one of the biggest things wecan do to protect ourselves.
Over 400 new vessels last year alonepassed through the Arctic and downthrough the Bering Sea. The Bering Seais the world’s garden of fish. It’s certainlyAlaska’s garden. My concern as you lookinto the future that a spill will come and,without anybody out there, there isnobody to respond.
Petroleum News: Well, with that inmind, what are your thoughts on Shellreturning to explore? Are they ready togo back out there?
McGuire: I haven’t spent as muchtime the last two months as I did with theinterim. I think they did everything rightat what they do best. Their main weak-ness was shipping. I know they workedto improve their shipping policy. If therewere anybody who is going to exploreoffshore, I would put my money onShell. From the drilling expertise, they’vegot it. Shipping and getting those assetsto the Arctic, those are very challenging.I understand that it’s a unique environ-ment. I think Shell will be ready. Ibelieve they will be excellent stewards ofthe environment. I think ConocoPhillipsand Statoil will follow them and do anexcellent job as well. I think it will be animportant chapter of Alaska’s history.
An analogy I use a lot is that this is arace to the moon and it’s interesting thatit’s a race with the same country: Russia.The Arctic is open. It’s the new silk high-way. It’s the new place for opportunity.There are $100 billion ready to be invest-ed. It will go somewhere. To sit back andsay we are going to be a snow globe andwe are going to resist any of it, is deny-ing Americans a chance at real opportuni-ty.
Petroleum News: So what can bedone, either by lawmakers, members ofthe administration or business leaders?
McGuire: Get involved. The mainpoint that I’ve been making in going toWashington, D.C., while having this teamof Lisa, Dan and Don leading these com-mittees where there is a subject matterover lap in the Arctic. Alaskans are someof the most environmentally consciouspeople I’ve ever met. We don’t want tomuck up the environment that our kidsand grand kids are going to grow up in. Ithink that people are always amazed tohear by what we have done with by wayof environmental protections, permittingprocesses, and spill response plans —
and we need to get that word out. Indigenous people are vital to this dis-
cussion. Their local and traditionalknowledge is vital as we move forward.Talking to friends and relatives in theLower 48 is particularly important. Itreminds of the debate we’ve had over thelast 30 years. The influencing is one per-son at a time.
Harkening back to the trans-Alaskapipeline, if you look back at the testimo-ny in the 1960s, there is testimony ofpeople wondering how can you build an800-mile long, 48-inch pipeline in anArctic environment like that. We did it.We did it well. It was jobs not just forAlaskans but Americans. Think of whatelse is to come?
Petroleum News: A gas line?McGuire: Yes.
Petroleum News: What are yourthoughts of how things are right now?
McGuire: I’m concerned that in thiscycle of the gas line that we are back intoa position where we have people inpower competing on the fundamentaldirection. It’s frustrating to me becausewhen I introduced my bill and Chenaultintroduced his bill to create the AlaskaGasline Development Corp., I thought wecreated the perfect safety net, that wewould have a project to move forward ifthe producers decided to, but we alwayshad this plan B.
My concern is that we have devolvedback into a debate over the order of thosetwo projects. I worry it’s going to end inmore epitaphs saying I tried to build apipeline that would commercialize NorthSlope gas, so I’m concerned.
Petroleum News: What would you liketo see accomplished between now and theend of the year?
McGuire: I would like to see the lead-ers in the House and the leaders in thegovernor’s office spend more time in dia-logues understanding each other’s posi-tion. I know Mike Chenault very well;I’ve served with him for 15 years. I know
his heart is in the right spot and that hewants to get gas to Alaskans. I also hap-pened to believe that Bill Walker wantsto get gas to Alaskans. These issues oftencome down to misperceptions or misun-derstandings about people’s motives.
I’d like to see them get into a roomand break bread together. I know theyhave stated to do that. I’d like to seethem do more of that. I think those twomen have the power to make or breakAlaska’s future right now with respect tothe commercialization of North Slopegas.
I don’t think we have the kind of timepeople think we do. That’s the part thatreally bothers me. I don’t think we didthree years ago. You may recall I said Ithought we were late to the Asian LNGparty. We were late then; we are certainlyvery late now, possibly terminally late. Ithink any filibustering going on betweenthe branches of government puts us in aterminal position to acquire Asian con-tracts at that higher price per mcf.
Petroleum News: So are you at alloptimistic progress can be made, possiblythrough a special session.
McGuire: I’m always optimistic. Ilead through optimism. I’ve seen amaz-ing things happen. I saw Sean Parnellcome from a position opposing MikeChenault and me on a plan B entirely toembracing it. I’ve seen people whooppose LNG entirely to embracing it. Ithink that as a small state when peopletake a chance to get together and recog-nize they don’t have the luxury of oppos-ing one another in a way that you mightbe able to in a larger state with millionsof people. We have to get along like afamily. I liked Dan Sullivan’s speechwhen he said we are in this together insickness or in health. We don’t have theluxury to disagree for too long. We don’twant to be known as someone who killedan opportunity. Alaskans are motivatedby making great things happening. l
PETROLEUM NEWS • WEEK OF MARCH 29, 2015 21
219 E. International Airport Rd., Suite #200, Anchorage, AK 99518
continued from page 3
MCGUIRE Q&A
Calista Corp. sets record shareholder dividend Calista Corp.’s 11th shareholder dividend since inception is the largest in its corporate
history. This 2015 shareholder dividend distribution totals $5.05 million and is the ninthdividend since 2007. The total distribution of Calista’s shareholder dividends is $31.3 mil-lion, with 50 percent of that total declared in the last three years.
Calista has one of the largest populations of shareholders among the Alaska Nativecorporations, with approximately 12,900 individuals. This distribution equates to $3.80per share, with the average shareholder owning 100 shares. This dividend is an 8 percentincrease from 2014.
“Approximately 60 percent of shareholders live in the Yukon-Kuskokwim Delta,” saidCalista Corp. Board Chair Willie Kasayulie. “This estimated $3 million impact for theregion is significant for one of the most economically challenged areas in the nation.”
2014 marked the first year in Calista’s history that two dividends were distributed inone calendar year.
Editor’s note: All of these news items — some in expanded form — will appear in thenext Arctic Oil & Gas Directory, a full color magazine that serves as a marketing tool forPetroleum News’ contracted advertisers. The next edition will be released in September.
continued from page 20
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6000 A Street, Anchorage, AK 99518
907-562-5420Deadhorse, AK
907-659-9010www.amarinecorp.com • www.penco.org
An expensive regionARCO discovered West Sak in 1971,
conducted a 15-well pilot projectbetween June 1983 and December 1986and brought Drill Site 1D online inDecember 1997.
ConocoPhillips has recently beendeveloping the West Sak reservoir fromsix drill sites — 1B, 1C, 1D, 1E, 1J and3K — all of which also produce from theKuparuk reservoir.
In 2000, ConocoPhillips began a mul-tilateral program at West Sak. The pro-gram grew increasingly complex over theyears, including tri-lateral wells andundulating wells designed to target moreof the formation. The company alsoexpanded pad infrastructure.
Altogether, the heavy-oil develop-ment program cost around $500 million.
ConocoPhillips began appraisaldrilling in the Northeast WestSak/NEWS area from Drill Site 1Q, DrillSite 3J and an ice pad north of Drill Site1H in 2005 and 2006. The AlaskaDivision of Oil and Gas approved the for-mation of a NEWS participating area in2009.
At a talk in Anchorage in April 2011,former ConocoPhillips CEO Jim Mulvalisted the 1H NEWS project as one thecompany would pursue if the statechanged the tax code.
All projects accounted forThe 1H NEWS project is one of sev-
eral projects ConocoPhillips announcedafter Alaska lawmakers approved — and
voters upheld — a change to the taxstructure for oil.
Those projects were easier to justify atthe time than they have been since, withAlaska North Slope crude oil currentlytrading for less than $50 per barrel on theWest Coast.
Even so, ConocoPhillips sanctionedconstruction of Kuparuk River unit DrillSite 2S and stayed the course at itsColville River unit CD-5 satellite. Thecompany also commissioned two rigs.Doyon 142 will be the first new rotary rigdeployed at the unit since 2000. NaborsCDR3 is a new coiled-tubing rig, whichis an important part of ConocoPhillips’current technical strategy for the unit.The company also brought Nabors 9ESand Nabors 7ES to the Kuparuk Riverunit for infield drilling. The additionaldrilling activities have already added9,000 gross barrels per day, according tothe company.
The company had also announcedplans to move ahead with the GMT-1 padat the Greater Mooses Tooth unit,although, in late January 2015, the com-pany said it was “deferring the finalinvestment decisions,” citing “permittingdelays and requirements, as well as thecurrent oil price development.” Instead,the company intended to commission a3-D seismic survey over the region andprogress front-end engineering work.
Since that announcement, the U.S.Bureau of Land Management issued arecord of decision for GMT-1, select-ing ConocoPhillips’ preferred alterna-tive for the project. l
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DRILL SITE ADDITIONerally managed lands, more than 90 per-cent use hydraulic fracturing, Interiorsays.
The new rule represents the culmina-tion of four years of extensive publicinvolvement in bringing drilling regula-tions up to date. In developing the rule,the Bureau of Land Management pub-lished both a draft rule and a supplemen-tal draft rule, as well as holding regionalforums and numerous stakeholder meet-ings, and reviewing more than 1.5 millionpublic comments, Interior says.
Supplement existing regulationsExisting drilling regulations, which
continue in place, govern issues such asthe need for adequate steel well casingsfor the protection of water zones and theuse of appropriate cement in wells. Thenew regulations add requirements such asthe mandatory reporting of specifiedinformation relating to drilling opera-tions.
Under the new regulations, an operatormust submit detailed information about aproposed drilling operation, includinginformation about subsurface faulting andfracturing, and information about thedepths of usable subsurface waterresources. The operator must provideestimates of the amount of fluids to beused during fracturing operations andmust disclose to BLM and the public alist of the chemicals to be used in con-junction with the fluids. There are somelimited exceptions to the public disclo-sure requirements, to accommodate tradesecrets.
The casing and cementing program fora well must meet certain performancestandards, and there are requirements forthe monitoring of cementing operationsduring well construction. There is also arequirement for well annulus pressuretesting prior to an hydraulic fracturingoperation. The new regulations requirefluids recovered from an hydraulic frac-turing operation to be stored in enclosed,covered or netted-and-screen, above-ground tanks.
The new regulations also require spec-ified practices to be demonstrated for allwells, and not just for a sample well in adrilling program.
In Alaska, the Alaska Oil and GasConservation Commission has recentlydeveloped regulations for hydraulicallyfractured wells within the state. Theseregulations, which are scheduled for pub-lication in the Alaska AdministrativeCode in April, will presumably operate inparallel with the new federal regulations
for drilling in federal land inside theNational Petroleum Reserve-Alaska.
Mixed responseThe new regulations have met with a
mixed response from environmentalgroups, who welcome regulation ofhydraulic fracturing while also question-ing whether the new regulations are strin-gent enough.
Given the scale of oil and gas welloperations on BLM administered land “itis absolutely critical to bring the agency’srules up to speed to meet today’s chal-lenges,” wrote Mark Brownstein, associ-ate vice president of the EnvironmentalDefense Fund. “With this rule, the agencyis taking important steps to ensure thathydraulic fracturing on public lands isdone according to ambitious new safetyand environmental standards.”
“These rules put the interests of big oiland gas above people’s health, andAmerica’s natural heritage,” wrote AmyMall, senior fracking policy analyst at theNatural Resources Defense Council.“The bottom line is: these rules fail toprotect the nation’s public lands — hometo our last wild places, and sources ofdrinking water for millions of people —from the risks of fracking. More thanever, this underscores the urgent need toget better protections in place around thecountry — at the local, state and federallevels.”
Oil industry groups, on the other hand,have criticized the regulations for beingtoo restrictive and for duplicating stateand local rules.
“Despite the renaissance on state andprivate lands, energy production on feder-al lands has fallen, and this rule is just onemore barrier to growth,” said Erik Milito,American Petroleum Institute director ofupstream and industry operations. “Underthe strong environmental stewardship ofstate regulators, hydraulic fracturing andhorizontal drilling have opened up a newera of energy security, job growth, andeconomic strength. Increased productionand use of natural gas has helped cut U.S.carbon emissions to a nearly 20-year low,and this decision only stands in the wayof further progress, hampering naturalgas development on federal landsonshore, where it has already declined anamazing 21.6 percent since 2009.”
The Independent PetroleumAssociation of America and the WesternEnergy Alliance have filed a lawsuit chal-lenging the new regulations and sayingthat the administrative record lacks thenecessary evidence to sustain theissuance of the regulations. l
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NEW FRACKING RULES
PETROLEUM NEWS • WEEK OF MARCH 29, 2015 23
• SUPPORTING THE NORTH SLOPE & COOK INLET• HEATERS, GENERATORS, VEHICLES, MANLIFTS, LIGHT PLANTS,
ENVIROVACS, RIGMATS & MOBILE BUILDINGS• CAMPS & CAMP SERVICES• FULL PROJECT LOGISTICS SERVICES & STAFFING
Magtec Alaska, LLC(907) 394-6350Roger Wilson, Prudhoe [email protected]
Skeeter Creighton, Kenai(907) [email protected]
TOTAL PROJECT SUPPORTTOTAL PROJECT SUPPORT
The proposed unit covers some63,304.47 acres in 31 state and joint state-Arctic Slope Regional Corp. oil and gasleases. Repsol, which holds 70 percentworking interest in the leases, would bethe unit operator. Remaining interest in30 of the leases is held 22.5 percent by 70&148 LLC and 7.5 percent by GMTExploration Co. LLC. One of the leases isheld 70 percent by Repsol and 30 percentby 70 &148.
Repsol, a Spanish major, partnered onfederal leases in the Beaufort in 2007 andtook 93 tracts in the 2008 Chukchi Seasale.
The company moved onshore in a bigway in early 2011, acquiring a 70 percentworking interest in North Slope leasesheld by Armstrong Oil & Gas subsidiary70 & 148 LLC and GMT Explorationcovering 494,211 acres in the White Hillsregion south of the Kuparuk River unitand near the Oooguruk unit.
Repsol explorationRepsol has been exploring in the pro-
posed Pikka unit area since 2012, when itdrilled the Qugruk No. 2. That well wasdrilled to 2,525 feet, “encountered a gaskick from the Tuluvak Formation and wasabandoned,” the company said.
In 2013 Repsol drilled four wells andtwo sidetrack horizontal wells. TheQugruk No. 1 was drilled to 7,050 in theKingak shale. A horizontal sidetrack wasalso drilled from the Qugruk No. 1 andwas fracture stimulated. The Qugruk No.3 was drilled to 7,500 feet; the QugrukNo. 3A shared the same surface as the No.3, and the Qugruk No. 6 was drilled to
7,809 feet. In 2014 Repsol drilled two wells and
one sidetrack in the proposed unit area,with the Qugruk No. 5 drilled to 7,430feet; the Qugruk No. 5A sidetrack drilled,and the Qugruk No. 7 drilled to 7,176feet.
This year’s workIn its exploration plan Repsol said it
would drill three wells during the nextfive years, including wells it is currentlydrilling, the Qugruk Nos. 8, 301 and 9.
The Qugruk No. 8 in Section 18 oftownship 11 north, range 6 east, UmiatMeridian, has an estimated total depth of5,100 feet and is “being drilled to coreand evaluate a potential pay zone,”Repsol said, noting that a production testwill be done if there is time.
Qugruk No. 301 has a surface locationin section 6, T11N-R6E, UM, and an esti-mated total depth of 4,146. It is also beingdrilled to a potential pay zone.
Qugruk No. 9 has a surface location insection 6, T12N-R6E, UM, and an esti-mated total depth of 7,300 feet. Repsolsaid the well “is being drilled to a depthsufficient to evaluate a potential payzone. If time permits a side track will bedrilled.”
As for plans forward, Repsol’s ChiefExecutive Officer Josu Jon Imaz told ana-lysts in a March 2 earnings call that thecompany will make a decision onwhether to pursue development in Alaskaearly next year. l
—A copyrighted oil and gas lease mapfrom Mapmakers Alaska was a researchtool used in preparing this story.
continued from page 1
PIKKA UNIT
in British Columbia and the state ofWashington, Saupe said. At the time, exist-ing mapping of the Cook Inlet coast wasnot of high enough resolution and the datawas not often collected at high tides, thusexcluding the intertidal zone — CIRCAC’s concept for Cook Inlet involved collectinghabitat data for the coastline, as well asdetailed coastline imagery, and making thedata publicly available online, she said.
After CIRCAC’s initial survey in 2001,the first external funding for the projectcame from a federal coastal assistance pro-gram. But, as the concept gained momen-tum, more and more partners becameinvolved, including the Exxon ValdezTrustee Council and the National ParkService.
“I think that part of the reason it was sosuccessful was that we were demonstratingthat this is something you can look atonline, all of this habitat data and imagery,”Saupe said.
But by around 2003-04 it became evi-dent that the piecemeal funding for theproject was becoming an impractical meansof paying for the project website. At thispoint NOAA stepped in to host the websiteand to coordinate data coming from a vari-ety of sources. And with multiple organiza-tions contributing content to the site, theprogram became designated “the AlaskaShoreZone Partnership.”
“It’s now statewide and more than 80percent of the state has been mapped. It’sall served up on the NOAA website,”Saupe said.
The Cook Inlet Response ToolFor oil spill response support, CIRCAC
continued from page 18
CIRCAC
see CIRCAC page 24
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consideration, we realized this litigationwas preventing us from having meaningfuldiscussions inside our region regardingresponsible resource development. We willcontinue to closely monitor outer continen-tal shelf drilling activities while we pursuetitle and ownership of our ocean as an abo-riginal claim to maintain control of our area— which includes revenue sharing of ouroil.”
Rex Rock Sr., president of Arctic SlopeRegional Corp. and a whaling captain fromPoint Hope, commended the village coun-cil’s decision.
“ASRC welcomes the news from theNative Village of Point Hope,” Rock said.“This recent action demonstrates that whenwe come together as one people — freefrom outside influence — we can progressour region forward in a productive manner.”
Rock said that ASRC, the Native region-al corporation for the North Slope, sharesthe desire of the Village of Point Hope andother whaling communities to ensure pro-tection for subsistence traditions.
“Withdrawing from this lawsuitremoves the barrier that has prevented us
from working together,” Rock said. “Nowwe can sit at the table to have meaningfuldiscussions on how to move our NorthSlope communities forward.”
The lawsuit in question dates back toearly 2008 when, just prior to the lease salebeing held, the plaintiffs appealed in federalDistrict Court in Alaska, claiming severaldeficiencies in the environmental impactstatement for the sale. After changes man-dated by the District Court to the EIS, thecase was elevated to the 9th Circuit Court ofAppeals. In January 2014 the 9th CircuitCourt upheld the appeal and remanded thecase back to District Court. Following aDistrict Court order, the Bureau of OceanEnergy Management made further revi-sions to the EIS and issued a final version ofthe revised document in February of thisyear. The Department of the Interior antici-pates making a new record of decision overholding the lease sale by the end of March.
Meantime, lease related activity in theChukchi Sea, including the processing offederal permits, has been placed on holduntil the new record of decision is issued.
—ALAN BAILEY
upstream field operations, but the additionof white collar staff shows the downturn hasentered a new phase.
Jackie Forrest, an economist at ARCFinancial, said the trend is likely to continueas companies adjust their spending plansand face the prospect of even lower oilprices over the next few months.
Alan Kearns, president of Calgary-basedCareerJoy, told the Financial Post heexpects a gloomy year as engineering, con-struction and service companies join themovement to scale back their operations.
He said his firm has been approached bya number of energy-sector companies seek-ing help in trimming payrolls.
BMO Capital Markets analyst Iain Reidsaid in a research note that fourth-quarterearnings have missed forecasts by about 17percent.
Storage volumesCompanies have also been “spooked” by
the rapid increase in crude storage volumesacross North America, said John Kilduff, apartner in the hedge firm of Again Capital.
He said there has been no let-up in oil
imports, or in domestic production, whilerefineries are operating below 90 percent ofcapacity.
Kilduff said that if storage at Cushing,Oklahoma, hits expected capacity levelsthere will be no market for surplus produc-tion.
But Forrest questions that fear, suggest-ing imports into the United States willdecline as North American crude pricesweaken against international levels.
She said that “even if we were to contin-ue at the current pace” a physical constraintwould not be likely to occur in the UnitedStates until early June.
“I don’t think we’re going to see theinventory builds continue at this pace,”Forrest said.
But she did concede that rapidly fillingstorage tanks will put “pressure on NorthAmerican markets for some time to come.”
“Even if we do see tight oil pull back bymid-year, it’s likely these inflated inventorylevels will stick around for another year,”she said. “And that’s going to weigh onprices.”
—GARY PARK
wanted to be able to layer the ShoreZonedata and fully streamed shoreline videoswith other resource data, which was notpossible either through the NOAAShoreZone website or through anotherNOAA online spill response application. Toachieve its objective CIRCAC worked witha company called Axiom Computing todevelop a way of putting full-resolutionstreaming video on line, and with theAlaska Ocean Observing System, an asso-ciation for overseeing ocean observationaround the state, to develop a tool for inte-grating data for geographic response strate-gies, bird site information and other infor-mation needed during an oil spill response.The result of this partnership has been theCook Inlet Response Tool, a tool that pullsin data from dozens of organizations, withthe Alaska Ocean Observing System actingas data aggregator, Saupe said. The toolnow has several portals served by theAOOS, including a portal for the Gulf ofAlaska, she said.
An offshoot of the concepts behindAlaska ShoreZone has been CoastalImpressions, an exhibit and correspondingpublication with photographs of spectacu-lar scenery around the Cook Inlet and Gulfof Alaska coasts. With many people havinglittle idea of the incredible diversity of theCook Inlet coastline, the idea was to showthat the coast consists of much more thanthe mudflats familiar to many residents ofthe Cook Inlet region, Saupe said. Theselection of about 80 images from a collec-tion of about 60,000 photographs resultedin a traveling exhibit with large-format pho-tographic prints she said. The exhibit hasbeen shown at a number of venues and hasproved so successful that several federalagencies have partnered in developing asimilar exhibition for the Arctic coast ofAlaska.
In yet another example of a CIRCACinitiative being picked up by other organi-zations, CIRCAC established a system ofcameras for the continuous monitoring ofsea ice conditions around Cook Inlet. Mostof the funding for this now comes from thestate Legislature, with the National WeatherService using the system for ice forecast-ing, Saupe said. l
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CIRCAC
continued from page 1
CANADA CUTScontinued from page 1
CHUKCHI APPEAL
