BLM issues drilling permit for ConocoPhillips project within NPR-A

This story was updated with comments on Oct. 23.

The US Bureau of Land Management approved a drilling permit and offered a right-of-way grant for ConocoPhillips Alaska Inc.’s proposed Greater Mooses Tooth Unit within the National Petroleum Reserve-Alaska. The action opens the way for the first production of oil and gas from within the federally administered acreage on Alaska’s North Slope.

“We continue to work extensively with ConocoPhillips Alaska in developing a responsible path forward in the development of oil and gas resources in the NPR-A,” BLM Alaska State Director Bud Cribley said on Oct. 22. “This important milestone lays the groundwork for future development and our commitment to serve America’s energy needs and Alaska’s economic viability.”

“This is good news for ConocoPhillips,” the company said in a statement. “We are pleased that BLM has issued the [drilling permit] and the ROW for Greater Mooses Tooth No. 1, and we are seeking approval for funding.”

He said that the proposed project includes construction of an 11.8-acre drilling pad in the northern portion of the 23 million-acre NPR-A. Along with above-ground elevated pipelines and an electric power line, the GMT1 project will provide access to both federal and Arctic Slope Regional Corp. (ASRC) oil and gas resources.

ASRC was established under the 1971 Alaska Native Claims Settlement Act of 1971. This decision enables it to reasonably develop the petroleum resources from corporation-owned lands, BLM said.

It said that the drilling permit and ROW grant implements the best management practices and lease stipulations required by the 2013 NPR-A Integrated Activity Plan, as well as additional project design features to reduce impacts as required by the Record of Decision (ROD) for the GMT1 which was approved earlier this year (OGJ Online, Feb. 16, 2015).

Mitigation fund established

The ROD also established a compensatory mitigation fund to finance development of a long-term landscape level Regional Mitigation Strategy and mitigation projects identified through the strategy, the US Department of the Interior agency said. The RMS is being developed through a collaborative, multi-stakeholder process that includes representatives from across Alaska, it indicated.

BLM said its 2013 Integrated Activity Plan identified 11 million acres in the NPR-A for protection of natural values, while making close to 12 million acres and 72% of the technically and economically recoverable oil available for development.

It noted that 212 authorized leases cover more than 1.75 million acres in the reserve currently; however, only exploratory drilling has occurred in the reserve to date. The Greater Mooses Tooth project would facilitate the first production and transportation of crude oil to the Trans-Alaska Pipeline from federal lands in the NPR-A, BLM said.

US President Barack Obama directed Interior Sec. Ken Salazar in 2011 to hold lease sales annually in the reserve. Previously, they had been conducted every 2 years, the agency said. Eleven lease sales there since 1999 have garnered more than $261 million, half of which was shared with the State of Alaska. BLM said it will conduct its 12th annual lease sale in the NPR-A, which will include 143 additional tracts covering approximately 1.5 million acres, on Nov. 18.

While market conditions and other factors determine when wells actually will be drilled, an approved drilling permit is valid for 2 years or until the lease expires, whichever occurs first, BLM said.

Alaskans’ responses

Several groups and individuals in Alaska responded immediately to BLM’s announcement. “This is good news for the state and ConocoPhillips,” Gov. Bill Walker (I) said. “The National Petroleum Reserve is estimated to hold more than 800 million bbl of oil. As Alaska grapples with a $3.5-billion deficit due in part to low oil prices and production, we applaud the hard work by ConocoPhillips to obtain this drilling permit and right-of-way grant for the Greater Mooses Tooth Unit.”

Arctic Slope Regional Corp. Chief Executive Rex Rock Sr. said, “After a long and trying permit process, BLM has now lifted the last roadblock to allow ConocoPhillips to move forward to develop ASRC minerals from GMT1. GMT1 is an important next development of ASRC’s oil and gas resources by ConocoPhillips west of the Colville River Unit.”

The state’s senior US senator also approved BLM’s action, but tempered her applause. “Approval to drill the GMT-1 project is good news for Alaska and our Native corporations who will benefit from the 7(i) revenues from this project,” said Lisa Murkowski (R), who chairs the Energy and Natural Resources Committee. “But this announcement marks yet another example of the tortured path Alaskans have been forced to navigate to develop on federal lands in our state.”

She noted that the project originally was proposed in 2002, and has been subject to multiple plans and National Environmental Policy Act processes over the years. “Each one added compounding mitigation requirements and stipulations that have either complicated or delayed the project,” Murkowski said. “Mitigating impacts to subsistence and local communities is critically important to responsible development, but the protracted process and requirements GMT-1 has been subject to must not be a precedent for development in the NPR-A.”

Officials from environmental organizations, meanwhile, called for greater public vigilance in the wake of BLM’s action.

Contact Nick Snow at [email protected].