More oil discovered on North Slope

ConocoPhillips says it found oil in all six test North Slope wells drilled this winter. Three were delineation wells around the company’s Willow discovery in the National Petroleum Reserve-Alaska which reinforced ConocoPhillips’ estimate that Willow holds 300 million barrels of recoverable oil. The other three were exploration wells, one drilled west of Willow in NPR-A and the other two near the Colville River near where Armstrong Oil and Gas made a discovery. ConocoPhillips now says it is planning a robust drilling program next winter to follow up on these. Of significance: If Willow lives up to its expectations it will likely require stand-alone processing facilities at the eld rather than shipping raw produced fluids to the Alpine eld for processing. A facility like that will likely require a multi-billion-dollar investment and will also extend key infrastructure further into NPR-A. Between ConocoPhillips’ projects and developments planned by Oil Search and Repsol, Hilcorp Energy and others, industry officials now see the potential for up to $13 billion in near-term investments on the slope.

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DOI begins fast-track ANWR EIS

The U.S. Department of the Interior has initiated an Environmental Impact Statement process on leasing in the coastal plain of the Arctic National Wildlife Refuge. In the 2017 federal tax law change Congress ordered Interior to hold two lease sales in the area by 2024. ANWR supporters are pushing for a sale in 2019, but that is unlikely given the time needed for regulatory review and the inevitable litigation. Interior plans to do the ANWR draft EIS on its new accelerated one-year schedule. There is concern that this could result in weaknesses in the review, increasing the potential for court setbacks amid the inevitable litigation.

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Eni bullish; plans new investment

Eni US Operating is very bullish on its North Slope prospects but no word has been released on any results of its four-mile extended reach exploration well being drilled into federal acreage north of Eni’s producing Nikaitchuq eld. Petroleum News reported April 22 that the company intends to increase its investment in Alaska and hopes to nearly double its present 14,000 barrels per day from new prospects in “North Nikaitchuq,” the area being tested now. Two things to watch for: If Eni’s drilling results are favorable it plans a “sidetrack,” or second well, this season, and to drill a new well next winter.

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Edison Chouest fleet arriving

New Edison Chouest Offshore tugs are arriving in Prince William Sound as Alyeska Pipeline Service Co. begins a handover of a tanker escort contract held by Crowley Marine since the Trans Alaska Pipeline System began operating in 1977. Two new tugs and a barge arrived in Valdez March 11, the vanguard of a 10-tug fleet. In transition planning this winter Edison captains accompanied Crowley crews in escorting tankers to gain experience in rough weather. The new fleet includes large oil skimmers that will be kept on oil-recovery barges. Alyeska made the decision on the contract changeover because of Edison Chouest’s commitment to build new state-of-the-art equipment, but some Alaskans remain skeptical of the company due to less-than-stellar performance when it supported Shell in its Arctic exploration initiative in 2012 and 2013. A design problem on an Edison Chouest tug towing the Shell drill rig Kulluk contributed to a loss of power by the tug in a Gulf of Alaska storm and the subsequent loss of the drill vessel. Ironically, Crowley tugs from Valdez were mobilized to provide assistance, but it proved too late.

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Steel tariffs won’t hit Ak LNG hard

Tariffs on imported steel ordered by President Donald Trump are not expected to affect the proposed $43 billion Alaska LNG Project substantially, Alaska Gasline Development Corp. says. AGDC estimates that the president’s 25 percent tariff on imported steel would apply only to part of the steel used in the project and would add $250 million to $500 million to its cost. “We have a $9.3 billion contingency in our budget plan so we believe we can handle this,” CEO Keith Meyer said. Last issue we incorrectly reported that the tariffs might increase Alaska LNG’s cost by 25 percent.

Frank Richards, AGDC’s vice president for engineer- ing, said the tariff is applied to only certain types of steel, mainly on pipe and pipe racks. AGDC will need 800 miles of 42-inch pipe for a pipeline and plans a natural gas liquefaction plant in south Alaska. Structural steel used in process modules or the LNG plant should not be affected by the tariffs, Richards said. Most of the needed plant facilities will be built outside Alaska, most likely in China or Korea and moved to Alaska by sea. Despite the U.S. Federal Energy Regulatory Commission starting work on the project EIS later than AGDC had hoped the company still expects to meet a late 2024 target to begin operations.