Celebrating 20 years: 1996-2016

page Q&A: Olson retiring after 12 3 years of off-the-radar service

Vol. 21, No. 50 • www.PetroleumNews.com A weekly oil & gas newspaper based in Anchorage, Alaska Week of December 11, 2016 • $2.50

l This week’s Mining News ANALYSIS Trump on Alaska?

page “Exploration Company of the Year” Unknowns on oil, state, are big with focus on cabinet, industrial policy 11 honor goes to Kennady Diamonds www.Min ingNewsNorth.com The w eekly mining newspaper for Alaska an d Canada's North Week of December 11, 2016 l NEWS NUGGETS M INE SA F E T Y By TIM BRADNER Palin’s name may be crossed out, Compiled by Shane Lasley Dam lessons learned however, after the maverick former . For Petroleum News

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IN After Golder review, ICMM binds members to more stringent TSF management

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U Alaska governor unloaded on Trump

O By S SHANE LASLEY

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R Mining News E “The shortcoming lies n

N ot in the state of

O kno E wledge, but rather in the effica over business cronyism in appointing IT toring the rock leftover aft cy with H er the desired minerals hat effects will Donald Trump’s P which that knowledge is a A are recovered is one of th pplied.” R S e most fundamental parts G of mining. Ty –Golder Associates pically stored behind massive earthen embankments Wall Street high-ups to cabinet positions. , these tailings also pose a threat to election as president have on human life and th need to be flex e environment, if not properly man- ible enough to be tailored to the unique aged. Committed to sus circumstances of an in W tainable mining, the dividual mine but still be International accoun Council on Mining and Metals has table to higher level guidance. policies affecting Alaska’s oil gas indus- Another name floated, at least in adopted new The graph tailings dam management mea ite drilled at the aptly named G sures that wes raphite Creek project in its 23 member Six key eleme tern Alaska has a number o companies must abide by and nts f distinguishing features that hopes make it particularly suitable fo non-member mining r a number of technology app companies adopt similar proce In response to the Gol Alaska newspapers, is local billionaire lic - der tions, including the anode a- report, the top executives try? For starters, don’t expect a lot to materia dure l for lithium-ion batteries. s. of all 23 ICM M member companies endorsed a posi- ICMM decided to take action followin tion statemen g the high- t “that commits members to minimize Graphite Cree profile tailings dam failures at M the k milestone nears ount Polley, a cop- risk of catastrophic failures of tailings Robert Gillam, known best for being an per-gold mine dams by happen soon. G in British Columbia operated by adopting six key elements raphite One Resources Inc. Dec. 7 r I of management and gover- eported that it is mperial Metals, and Samarco, an iron m nance.” nearing the completion of a ine in Brazil preliminary economic assess- operated under a joint ven ment for its G ture between BHP Billiton “I am delighted that as a result of t raphite Creek project near Nome, Ala and Vale. he review, CEOs arch-foe of Pebble mine development. R ska. of the world’s 23 leadi Energy, public lands and the Arctic aising more than C$2.8 million, the ng mining companies commit- company has achieved While the downstream effects of ted to a number of major mile the Mount Polley a new ICMM framework on how to stones in 2016. These milestones failure in 2014 were l further were reac imited due to its remote location enhance the safe management o hed during a comprehensive product upstre f tailings dams,” said development am of a large lake that helped absorb the van Zyl. aren’t on the front burner for the new Whether Trump will warm to a fellow program managed by TRU G impact, roup Inc., a technology metals the Samarco disaster in 20 consultant with 15 was upstream of three These six key elements of the DONALD TRUMP expertise along the entire graphite-g towns and ICMM position s raphene killed 19 people, including 14 min statement are: upply chain. This program produced e purified graphite from employees. •Acc billionaire for the job is unknown. Graphite Creek averagin ountabilities, responsibilities and asso president-elect, who is preoccupied right g 99.98 percent graphitic carbon. “ICMM and its me ciated When TRU mbers are committed to drive competencies are defined to suppo Group first began examining Graphi safety an rt appropriate iden- te Creek d environmental improvements in the i tification and mana material late in 2014, its technician ndus- gement of tailings storage facility s recognized distinguish- try,” said ICMM CEO Tom But risk ing features they des ler. “After the tragic s. Having money hasn’t hurt his other appointees. cribed as spheroidal, thin, aggregate failure of the Sam now with making cabinet picks, industrial policy expand and arco tailings dam, we had to deter- •The financial and human ed. The graphite specializing consult min resources needed to sup- ant postulated e how we could best help to minimize port continued that these distinctive character the risk of tailings storage facility management istics could lend to different the recurrence of such a cata specialized appl strophic event.” and governance are maintained throug ications with minimal processing. Th hout a facility’s and dealing with China. un ese life cycle. ique and naturally occurring properti Golder re es have prompted port •Risk Graphite One to apply fo management associated with tailings sto r the trademark, STAX, an acronym To f rage to describe ind out what can be done to prevent a facilities includes risk identificat Unknown on resources Graphite Creek graphite. Further test nother ion, an appropriate ing found tragic tailing dam failure, ICM control regime and Who Trump chooses as secretary of the Interior that more than 74 percent of the ST M pulled together a the verification of control perform- AX flake graphite could panel of renowne ance. be turned into spheric d tailings specialists and experts al graphite without milling. This is a fro monum m within it membership to review tailin •Risks associated with ental achievement considering that o gs manage- potential changes are nly about 40 ment practices across the b assessed, contr is important, and there haven’t been a lot of names percent of the best-perform readth of the council’s 23 olled and communicated to avoid in What the new president-elect will do, and what ing flake graphite found in any mining co ad- other known d mpanies. vertently compromising tailings eposit can be converted to spherical storage facility graphite, The review panel hired Golder integrity. even using high-end equipment. In la Associates, a trust- ter phases of testing ed consulting and de •Pr completed this year, TR sign company with more than 50 ocesses are in place to recognize and res tossed out since Sarah Palin’s was floated shortly U Group measured the performance years pond to of the sph of experience, to dig further into this p impending failure of tailings sto eroidized graphite produced from ST roblem. rage facilities and mit- AX material While Golder, as well as ot igate the potentia in coin cells typically used in wa her investigations, iden- l impacts arising from a potentially tches and similar devices. tified the struct ca see ANALYSIS page 20 This testing confirm ural issues that ultimately led to the tastrophic failure. ed high performance, repeatability an da after the election. stabilit d m failures at Samarco and Mount Poll •Internal and external y of the spherical graphite produced ey, the con- review and assurance from the western sulting firm said modern en processes are Alaska deposit – all indicator gineering, design and con- in place so that controls for tailings stor s of high-quality graphite for struction pr - lithium-ion bat actices are adequate to prevent such ta age facility risks can be comprehen teries. Graphite One and Tru Group a il- sively assessed i re work- ings impoundment failures. and continually improv ng on the production of exploratory g ed. rade samples of coat- “The shortcoming Unde ed, spherical graphite fo lies not in the state of knowl- r each of these broad elements are mor r testing by potential end-users. edge, b e spe- "Our progr ut rather in the efficacy with which that cific criteria for which the ICMM am indicated the unique characteristi knowl- member companies l cs of our edge is applied,” Golder wrote are bound. EXPLORATION & PRODUCTION STAX natural flake graphite, whic in its report published h more than met our on Dec. 5. “There expectations for perf fore, efforts moving forward should ormance on the key metrics for spher foc cal grap i- us on improved implementation and ver Hope adopted by non-members hite,” said Graphite One CEO Antho ification of ny Huston. controls, rather than restatem "Our goal for Graphite One is ent of them.” ICMM and Golder hope the lesson to become a reliable producer The consu s learned from of high-quality g lting firm concluded that mining comp this review result more raphite for the rapidly evolving ener a- stringent tailings management hi gy and nies and associations need to implem across th gh-tech sectors.” Graphite One said a ent more robust e wider mining community. preliminary econom- governance and assur ic assessment for the Gra ances to ensure that best prac- “We were determined to tak phite Creek project, a milestone tices ar e action at the global originally s e implemented at each and every opera level and all of ou lated for the end of 2016, is now targ tion. r member companies have adopted eted for “The review did not cove this completion by the end of January 2 r how or why the new binding agreement,” said ICM 017. Samarco tailings d M CEO am failed, but takes lessons from Butler. “We hope that non-m the ember companies will Hecla, M tragic event as well as from other tailing also consider a SHA salute our miners dam fail- dopting this framework in order to help ures,” explained Dirk van Zyl, enha a member of the nce the whole industry’s performance.” Hecla Mining Company Dec. 6 r ICMM expert pan BlueCrest drilling ahead ecognizes its miners, el. “It finds that a high Terry Eldri er level of dge, senior project reviewer at Golder governance and assurance is key to Assoc confirming exist- iates, added, “I hope that this report see NEWS NUGGETS ing safety standar will be page 11 ds are implemented consistently.” widely read, not just by ICM G M members, but by the older emphasized that these mining indus standards try as whole so we can continually improve the safety of the industry.” l New rig has spudded well at Cosmopolitan; AIDEA OKs loan modifications

After Golder review, ICMM binds members to more stringent dam By ALAN BAILEY of a $30 million loan from the Alaska Industrial management. Read more in North of 60 Mining News, page 9. Petroleum News Development and Export Authority as part of a cost of some $40 million to acquire and assemble the drilling Ahtna completes its Tolsona well, lueCrest Alaska Operating LLC spudded its first rig. During its Dec. 1 meeting the AIDEA board Bnew development well in the company’s approved some modifications to the terms of that plans flow tests for potential gas Cosmopolitan oil field on Nov. 28, John Martineck, loan, following a delay in the original planned time- On Dec. 5 Ahtna Inc. completed the drilling of its Tolsona president and CEO of BlueCrest Alaska, has told frame for the drilling start, and following the deferral No. 1 gas exploration well 11.5 miles west of the town of Petroleum News. In April the company started pro- in the payment of state tax credits to BlueCrest. Glennallen, the Alaska Native regional corporation for the ducing oil from the field, using a converted explo- Copper River region has announced. The well reached a ver- ration well, but is now using a new powerful rig to Up to five wells tical depth of 5,500 feet; the drilling rig is being demobilized; directionally drill from an onshore pad into the field’s A plan of development that BlueCrest filed recent- and Ahtna plans to begin flow testing for gas in mid- offshore oil reservoir. The well should go into opera- ly for the field indicated an intent to drill up to five December. The testing will involve perforating the well casing tion around the end of March, Martineck said. wells at Cosmopolitan, with two of those wells being in a roughly 220-foot section identified from well logs at The Cosmopolitan field lies under Cook Inlet near laterals from the well bores of other wells. The con- depths between 5,000 and 5,220 feet. The well was drilled to Anchor Point in the southern Kenai Peninsula seek natural gas in the Nelchina sandstone in state land within BlueCrest obtained financial assistance in the form see BLUECREST DRILLING page 15 the area of a state exploration license. If an initial flow test shows positive results, Ahtna expects l PIPELINES & DOWNSTREAM the subsequent data analysis to take about two months, to gain see TOLSONA WELL page 13 Canadian protests planned IEP negotiationscontinue; cost Natural resources minister raises stakes, warns that ‘rule of law’ will apply of natural gas, supply chain critical By GARY PARK “Diversity in tactics is a key strategy. The Alaska Industrial Development and Export Authority’s For Petroleum News Interior Energy Project team continues to feel optimistic about That will mean lawsuits, meeting with its objective to bring affordable natural gas to Fairbanks and he battle lines that are rapidly taking shape in government officials, showing up at the the surrounding Alaska Interior, Gene Therriault, IEP team TCanada over the future of oil pipelines hard- ballot box (in the May 2017 British leader, told the AIDEA board on Dec. 1. ened on Dec. 2 when Natural Resources Minister Columbia election), protests and direct “We still think very much that that is possible,” Therriault Jim Carr said the federal government was ready to action.” —Greenpeace oil sands said. use “defense forces” or police against protesters. campaigner Mike Hudema Gas in modest quantities is currently supplied to Fairbanks In ratcheting up the debate, he was immediately via a small liquefied natural gas plant near Point MacKenzie condemned by political opponents who accused and a trucking operation to ship the LNG to the Interior city. him of “reckless, irresponsible and incendiary lan- government has no authority to use our military The IEP concept involves increasing the gas supply by guage.” against pipeline protests,” said Randall Garrison, a expanding the LNG plant and ramping up the LNG transporta- At the same time, intentionally or not, he raised Member of Parliament from the New Democratic tion operation. the issue to a new level. Party. see IEP NEGOTIATIONS page 19 “If he is truly concerned about the rule of law, Carr, speaking to business leaders in Alberta he should know that in this country the federal see PROTESTS page 18 2 PETROLEUM NEWS • WEEK OF DECEMBER 11, 2016 contents Petroleum News North America’s source for oil and gas news ON THE COVER 6 NETL awards for shale oil, gas research Trump on Alaska? 13 BOEM publishes environmental reports Unknowns on oil, state, are big LAND & LEASING with focus on cabinet, industrial policy 4 Hilcorp seeking Ninilchik expansion BlueCrest drilling ahead Asking state to expand Falls Creek participating area; New rig has spudded well at Cosmopolitan; requests for Grassim Oskoloff, Susan Dionne/Paxton AIDEA OKs loan modifications expansions to come Canadian protests planned PIPELINES & DOWNSTREAM Natural resources minister raises stakes, warns that ‘rule of law’ will apply 5 Mostly decreases for North Slope lines

Ahtna completes its Tolsona well, Increased throughput bringing down tariffs plans flow tests for potential gas for ConocoPhillips lines; shipping rates to increase EP negotiations continue; cost for out of state Hilcorp lines of natural gas, supply chain critical 17 Nutaaq tariff rate of $1.10 starts Jan. 1 SIDEBAR, Page 19: No change to Fairbanks gas price ENVIRONMENT & SAFETY 15 Leaked diesel found in platform leg 15 Record low sea ice cover in November EXPLORATION & PRODUCTION 8 ANS crude output up 4.6% from October

November average 549,263 bpd, compared to 525,033; Cook Inlet production averaged 15,000 bpd in October, down 2% from September FINANCE & ECONOMY 6 Brent to average $43 this year, $52 in ’17

EIA forecasts US crude production at 8.9 million bpd this year, down from 9.4 million in ’15; expected to drop to 8.8 million in ’17 GOVERNMENT 3 Olson: Proud of off-the-radar service To advertise in Petroleum News, Quiet House leader retirement pending after 12 years contact Susan Crane at 907.770.5592 in office, spent mostly on House Resources and chairing Labor and Commerce

Alaska’s Oil and Gas Consultants

Geoscience Engineering 3601 C Street, Suite 1424 Anchorage, AK 99503 Project Management (907) 272-1232 (907) 272-1344 Seismic and Well Data www.petroak.com [email protected] PETROLEUM NEWS • WEEK OF DECEMBER 11, 2016 3

l GOVERNMENT Olson: Proud of off-the-radar service Quiet House leader retirement pending after 12 years in office, spent mostly on House Resources and chairing Labor and Commerce By STEVE QUINN with his position. scrambling for jobs. I know I’ve got stability in all of the leadership. Look at For Petroleum News Most of those peo- neighbors and friends who are looking what’s happening now. In many ways, I ple were involved for jobs who have been let go locally or wish I were sticking around for two ouse Rep. Kurt Olson is closing out one way or another on the North Slope. I’m sure it’s not just more years. I think you’re going to have H12 years of service, most notably as with the Port us. I’m sure it’s being felt in Anchorage, fun these next two years. chair for the Labor and Commerce Authority. I think he Fairbanks and all over the Kenai. Committee. The Soldotna Republican was looking for Petroleum News: So why are you was also called upon to chair the House people who thought Petroleum News: So if you were still thinking another two years wouldn’t Special Committee on Oil and Gas dur- the way he did in office. What would you need to hear have been so bad? ing a time when the Legislature came rather than people REP. KURT OLSON to keep things moving forward? Olson: Part of me thinks I have some under heavy scrutiny during federal cor- may have possibly Olson: You know I can’t even answer institutional knowledge. I guess I’ll be ruption investigations linked to oil taxes. been needed to tell him not what he that right now. The changes that have doing it as letters to the editor and Olson’s committee was hardly on the wanted to hear but what he needed to been made by the current administration emails. periphery. It received referrals for major hear. have pushed us back a number of years. bills such as SB 21, the most recent tax We’ve seen small to medium sized proj- Petroleum News: Well the House los- regime passed in 2013 and SB 138, the Petroleum News: Do you see this as a ects being shelved. We’ve got good- ing a lot of institutional knowledge, current gas line development legislation. situation where the state is moving for- sized finds on the North Slope and I either missing people who were voted His committees didn’t hear all of these ward with a project that is uneconomic? believe the companies are waiting to see out of office or retired, starting with you, bills normally relegated to just the Olson: It’s uneconomic and I don’t what’s being done with Mike Hawker and Craig Resources and Finance committees, but believe it’s going to happen in the fore- the tax credits and the Johnson. How can that hurt “we caught our share of them,” Olson seeable future. I think it’s DOA. I can tax structure before they the House regardless of how said. The outgoing lawmaker reflected give you one slight example. How long are doing anything more. the new caucuses shaped up? with Petroleum News on how the state has it been since TransCanada was We can certainly use the Olson: I know most of the got to its current state with oil taxes and removed from the slate of players? One oil to run through the people except most of the what he hopes may lie ahead. year? Have you looked at their stock pipeline. I don’t think they are looking new ones coming in and I consider most since then? It’s gone up about 25 to 30 for fiscal certainty, which was the catch- of them to be friends. The House has Petroleum News: In 12 years, what percent that period (about $30 a share to all phrase three years ago. I think they been controlled by a Republican majori- do you think the state has been able to $44 a share). What it appears to me is want to know that things aren’t going to ty for almost 20 years or close to it. With accomplish? It’s taken a hit twice from the financial institutions and stock mar- be changed every two or three years. I that comes advantages that have been in huge market changes. kets seem to think that was probably a tend to agree with them. They need to place pretty much going back to state- Olson: It’s not only the market, it’s good move to get out, even though I know what the rules are before they can hood where the majority has extra also the timing. A number of things did- don’t think they left on their own voli- make the investments they are making. staffing during session. They have the n’t fall into place like we had originally tion. I believe this will happen when it ability to give out higher pay ranges. hoped they would. Things got slowed makes economic sense. I don’t see that it Petroleum News: Let’s talk about They get extra staff as a committee down. We saw eight to 10 months lost at will be done at this point. that. It seems like oil taxes and oil tax chair. In many ways, that has spoiled a a crucial time due to a pipeline sizing credits have been fiercely debated almost number of us. I was in the majority for study the governor felt was needed. In Petroleum News: So what do you every year, if not every legislative ses- 12 years and was really never in the addition to slowing us down on any think the state should have done? sion. Why do you believe that is? minority. I was on the other side of a work, we ended up spending $30 mil- Slowed it down so it could be ramped up Olson: It seems like it’s a difficulty in coup, but that lasted only three or four lion. Three of the biggest companies in if the market takes a favorable turn? Or entering into long-term agreements. We days. Having said that and what I was the world and probably the biggest should they have mothballed it altogeth- have a change in the House, Senate or pipeline company in North America felt er? administration. We suffer from a lack of see OLSON Q&A page 17 it wasn’t necessary. Olson: That depends on what day it is could dictate what kind of answer I’d Petroleum News: Do you think that give you. Things change so fast. I think delay hurt the state as far as advancing we missed the boat a while back. the project? Olson: I think it may have slowed it Petroleum News: This hits close to     down a number of years. Six months to a your home. For 18 months to two years year ago, I was cautiously optimistic. there was a lot of excitement on the     !  I’m not optimistic at all that we will see Kenai. We saw land being purchased, it in the foreseeable future. jobs and field work being done. Now      what are you seeing?         Petroleum News: Was it the market’s Olson: We are seeing a lot of people drastic changing, meaning chronically low prices and a glut in supply, or is it the direction the administration is head- ing, or a little of each? Olson: I think it was a perfect storm: Obviously the market changes and the glut of gas not only in North America but all the emerging fields overseas. I think it was also the change in the peo- ple we have running the show. They lost an incredible amount of talent: Mark Myers; Marty Rutherford; (former AGDC board members) Drue (Pearce) who was also at one time the federal pipeline coordinator; Al Bolea who worked for BP and Richard Rabinow SAFETY DRIVEN who worked for Exxon. They ended up with a different crew calling the shots.

Petroleum News: The loss most law- makers cited as the most painful one was Marty Rutherford. How do you see it? Olson: I would say it’s a combination of Marty, Mark and Dan Fauske as far as the depth and talent, Marty for being the most involved.

Petroleum News: So is it a matter that it was too much? Olson: I think it was the governor putting people in who already agreed HOMER • DUTCH HARBOR • FAIRBANKSFAIRBANKS • KENAI • KODIAK • PRUDHOE BAYBAY • MARITIMEHELICOPTERS.COM • [email protected] • 907/907/235-7771235-7771 4 PETROLEUM NEWS • WEEK OF DECEMBER 11, 2016

l LAND & LEASING Hilcorp seeking Ninilchik expansion Asking state to expand Falls Creek participating area; requests for Grassim Oskoloff, Susan Dionne/Paxton expansions to come

By ERIC LIDJI 2003,” the company wrote. For Petroleum News The Ninilchik unit follows the coast- line of the Kenai Peninsula between Clam fter several years of exploration Gulch and Ninilchik. Many of the A delineation drilling at the Ninilchik onshore drilling pads at the unit target unit, Hilcorp Alaska LLC is proposing the offshore accumulations. first in a series of administrative changes Chevron formed the original Falls at the unit. Creek unit after discovering a Tyonek gas The local subsidiary of the Texas- field in the area in June 1961. Marathon based independent is asking to expand the formed the Ninilchik unit in 2001 and dis- Cook Inlet unit by approximately 40 covered two nearby fields in 2001 and acres to accommodate a proposed expan- 2002. In 2003, the state expanded the sion of the Falls Creek participating area. Ninilchik unit to include the former Falls The proposal would expand both the aer- Creek unit. Also in 2003, the state formed ial and vertical extent of the Falls Creek the three participating areas: Falls Creek, participating area to accommodate infor- Grassim Oskoloff and Susan Dionne- mation from recent wells at the unit. Paxton (from north to south). The state Division of Oil and Gas is After acquiring the unit, Hilcorp taking comments through Jan. 4. launched a major exploration and delin- The company expects to submit simi- eation program at Ninilchik. Those activ- lar proposals for modifying the Grassim ities have already led to several new Oskoloff and the Susan Dionne/Paxton drilling pads across the unit, as the com- participating areas sometime in the com- pany targeted accumulations outside of ing year. “After this unit-wide delineation the economic reach of existing pads. process is complete, Hilcorp and (the A three-well program in the Falls Alaska Department of Natural Resources) Creek area in 2014 convinced Hilcorp to can cooperatively address issues related pursue an expansion of the participating *YLH[P]LWOV[VNYHWO`MVY[OLVPS NHZPUK\Z[Y` to mandatory unit contraction,” the com- area. The company drilled the 12,870- Q\K`WH[YPJRWOV[VNYHWO`JVT pany wrote in its filing. The state has held foot Frances No. 1 well in early 2014 to    off contracting undeveloped portions of target oil. The well was non-commercial the Ninilchik unit while Hilcorp has been for oil, but showed a “strong potential” pursing delineation. for natural gas production, according to the company. In August 2014, the compa- 2014 drilling work ny proposed a five-well development pro- www.PetroleumNews.com According to Hilcorp, the aerial gram. While the company permitted the expansion would accommodate recently Frances No. 2 and Frances No. 3 well, Kay Cashman PUBLISHER & EXECUTIVE EDITOR ADDRESS drilled wells currently produced outside neither had been drilled through this year. P.O. Box 231647 the existing Falls Creek participating Also in early 2014, Hilcorp completed Mary Mack CEO & GENERAL MANAGER Anchorage, AK 99523-1647 area. The proposed vertical expansion is the 9,725-foot Falls Creek No. 5 well. The well encountered natural gas in both Kristen Nelson EDITOR-IN-CHIEF needed, according to the company, NEWS because various Tyonek formation wells the Tyonek and Beluga formations. After 907.522.9469 Susan Crane ADVERTISING DIRECTOR in the participating area have been recom- the results of Frances No. 1 and Falls [email protected] pleted into the Beluga formation. The ver- Creek No. 5, the company first suggested Heather Yates BOOKKEEPER tical expansion would align the partici- expanding the Falls Creek participating CIRCULATION pating area with associated Alaska Oil area to accommodate Beluga production. Shane Lasley NORTH OF 60 MINING PUBLISHER 907.522.9469 and Gas Conservation Commission pool Toward the end of 2014, Hilcorp drilled [email protected] the 9,060-foot Falls Creek No. 6 well to Marti Reeve SPECIAL PUBLICATIONS DIRECTOR rules at the Ninilchik unit. Given that this would be the first revi- further appraise the Tyonek and Beluga ADVERTISING Steven Merritt PRODUCTION DIRECTOR sion to the Falls Creek participating area, formations area north of the Falls Creek Susan Crane • 907.770.5592 “Hilcorp anticipates that the revised par- drilling pad. l Alan Bailey SENIOR STAFF WRITER [email protected] ticipating area boundary will also involve the re-allocation of production retroactive Tim Bradner CONTRIBUTING WRITER FAX FOR ALL DEPARTMENTS to first Falls Creek PA production in 907.522.9583 Eric Lidji CONTRIBUTING WRITER

Gary Park CONTRIBUTING WRITER (CANADA) Petroleum News and its supple- ment, Petroleum Directory, are CORRECTIONS owned by Petroleum Newspapers of Steve Quinn CONTRIBUTING WRITER Alaska LLC. The newspaper is pub- lished weekly. Several of the individ- DNR data release announcement Judy Patrick Photography CONTRACT PHOTOGRAPHER uals listed above work for inde- pendent companies that contract The article in the Dec. 4 issue of Petroleum News about the release of explo- Mapmakers Alaska CARTOGRAPHY services to Petroleum Newspapers ration drilling and seismic data by the Alaska Department of Natural Resources of Alaska LLC or are incorrectly indicated that the agency had released the data on the announced freelance writers. Forrest Crane CONTRACT PHOTOGRAPHER dates. In fact, DNR had announced the future release of the data after 30-day pub- lic notice periods. The 30-day periods allow time for people who have concerns Tom Kearney ADVERTISING DESIGN MANAGER about the release of the data to appeal the release. Petroleum News apologizes for any confusion. Renee Garbutt CIRCULATION MANAGER

Ashley Lindly RESEARCH ASSOCIATE KF No. 1 natural gas well An article in the Nov. 20 issue of Petroleum News with the headline, “NordAq OWNER: Petroleum Newspapers of Alaska LLC (PNA) Petroleum News (ISSN 1544-3612) • Vol. 21, No. 50 • Week of December 11, 2016 drops Cook Inlet Tiger Eye unit,” incorrectly listed the infrastructure associated Published weekly. Address: 5441 Old Seward, #3, Anchorage, AK 99518 with ADL 390368. The lease was associated with the KF No. 1 natural gas well, (Please mail ALL correspondence to: not with the Kustatan Production Facility. Additionally, the article incorrectly P.O. Box 231647 Anchorage, AK 99523-1647) Subscription prices in U.S. — $118.00 1 year, $216.00 2 years claimed that Glacier Oil & Gas Corp. was “decommissioning the facility and Canada — $206.00 1 year, $375.00 2 years shifting operations to the West McArthur River unit.” In truth, Glacier is consol- Overseas (sent air mail) — $240.00 1 year, $436.00 2 years idating operations from the West MacArthur River Production Facility into “Periodicals postage paid at Anchorage, AK 99502-9986.” Kustatan. Petroleum News regrets the errors. POSTMASTER: Send address changes to Petroleum News, P.O. Box 231647 Anchorage, AK 99523-1647. PETROLEUM NEWS • WEEK OF DECEMBER 11, 2016 5 l PIPELINES & DOWNSTREAM Mostly decreases for North Slope lines Increased throughput bringing down tariffs for ConocoPhillips lines; shipping rates to increase for out of state Hilcorp lines

By ERIC LIDJI ologies. The companies attributed its Pump Station 1 on the trans-Alaska oil Pipeline in 2016 and forecast none for For Petroleum News decrease “primarily to a surplus net carry- pipeline. 2017, suggesting that the line is used over balance largely reflecting the fact Milne Point Pipeline is proposing an exclusively for interstate shipments. The majority of the North Slope that actual operating expenses for 2015 intrastate rate of 63 cents per barrel to company also proposed a $1.14 per barrel A pipelines are proposing decreases in were lower than previously estimated and ship oil from the Milne Point unit to the rate with FERC for 2017, but presented shipping rates for the coming year, projected throughput for 2016 is currently Kuparuk River unit (down from $1.11 per the rate as an increase rather than a according to recent filings with the expected to be higher than previously barrel). The revision appears to be largely decrease. Regulatory Commission of Alaska. But estimated,” according to information administrative because the pipeline made According to the FERC filing, total some Hilcorp lines appear to be increas- included in state and federal filings. no revenue last year and expects none this annual throughput on the pipeline ing the cost of shipping to out of state The increase in throughput on the year from intrastate shipments, suggest- decreased from 2010 through 2012 but markets. Alpine Pipeline is largely connected with ing that Hilcorp is currently using the increased in 2013 and 2014 before declin- In their annual rate filings, the the startup of the CD-5 project at the pipeline exclusively for shipping oil to ing in 2015. Kuparuk Transportation Co., Alpine Colville River unit in late October 2015. out of state markets. The company pro- Endicott Pipeline Co. is proposing an Transportation Co., Milne Point Pipeline While not mentioned in the filings, posed an identical 2017 rate with FERC intrastate rate of $3.27 per barrel to ship LLC, Northstar Pipeline Co. LLC and throughput on the Kuparuk Pipeline ben- for interstate transportation service. oil from the Endicott field to Pump Endicott Pipeline Co. LLC all proposed efitted from the startup of Drill Site 2S in According to the FERC filing, total Station 1 (down from $4.86 per barrel) declines in the rates they charge to ship October 2015 and could be partly respon- annual throughput on the pipeline and $2.08 per barrel to ship oil from its oil to markets within Alaska, while the sible for the proposed rate decrease. decreased from 2010 through 2012 but Badami connection to Pump Station 1 Milne Point Pipeline LLC, Northstar The Oliktok Pipeline Co., on the other increased in 2013 and 2014 before declin- (down from $3.09 per barrel). As with the Pipeline Co. LLC and Endicott Pipeline hand, is asking to charge $17.15 per thou- ing in 2015. Former Milne Point unit other two pipelines, Hilcorp reported no Co. LLC are proposing increases (albeit sand cubic feet to ship natural gas from operator BP Exploration (Alaska) Inc. revenue from intrastate shipments in at seemingly identical rates) for out of the Prudhoe Bay unit to the Kuparuk and current operator Hilcorp Alaska LLC 2016 and forecast none for 2017, suggest- state service. River unit (up from $3.12 per mcf) and both increased drilling and workover ing that the line is used exclusively for The Oliktok Pipeline Co., on the other $12.99 per thousand cubic feet to ship activities at the unit in recent years. interstate shipments. The company pro- hand, is proposing a major rate increase. natural gas from the Prudhoe Bay unit to Northstar Pipeline Co. is proposing an posed identical rates with FERC for 2017 the Milne Point Pipeline Connection (up intrastate rate of $1.14 per barrel to ship but presented them as an increase. The ConocoPhillips pipelines from $2.37 per mcf). oil from Seal Island at the Northstar unit Endicott Pipeline has had decreased Through subsidiaries, ConocoPhillips A similar rate increase proposed for to Pump Station 1 (down from $3.90 per throughput in recent years. l Alaska Inc. operates the Kuparuk the pipeline last year led shipper BP barrel). As with the Milne Point Pipeline, Pipeline and the Oliktok Pipeline, which Exploration Alaska Inc. to challenge the Hilcorp reported no revenue from connect the Kuparuk River unit to the rates. The challenge was partly in intrastate shipments on the Northstar Prudhoe Bay unit, and the Alpine response to questions about throughput Pipeline, which connects the Colville estimates on the line, which had recently River unit to the Kuparuk River unit. converted to shipping exclusively natural The Kuparuk Transportation Co. is gas after years of shipping both natural proposing an intrastate rate of 22.8 cents gas and natural gas liquids. per barrel to ship oil from the Kuparuk River unit to Pump Station 1 of the trans- Hilcorp pipelines Alaska oil pipeline (down from 31.6 Through various subsidiaries, Hilcorp cents per barrel) and 17.4 cents per barrel Alaska LLC operates the Milne Point to ship oil from the Milne Point Pipeline Pipeline, which connects to the Kuparuk Connection along the pipeline to Pump River unit; and the Northstar Pipeline and Station 1 (down from 23.5 cents per bar- Endicott Pipeline, which both connect to rel). The RCA is taking comments on the proposed rate change through Dec. 22. The Alpine Transportation Co. is pro- posing an intrastate rate of 72 cents per barrel to ship oil from the Colville River 0ʋSɡʋQɍGDWɈIʝɠʃȱɏʝɵɗʋQɍJDɡ unit to the Kuparuk River unit (down ʖQʏXVʤʢɨʖɚ$ODʂNɈ from 94 cents per barrel). The RCA is taking comments on the proposed rate change through Dec. 21. Both companies recently proposed MAPMAKERS ALASKA identical decreases with the Federal Energy Regulatory Commission for inter- state transportation service to out of state markets. 259 South Alaska Street, Palmer AK 99645 | (907) 745-3398 Both companies calculate shipping www.mapmakersalaska.com | [email protected] rates each year using approved method- 6 PETROLEUM NEWS • WEEK OF DECEMBER 11, 2016

l FINANCE & ECONOMY GOVERNMENT NETL awards for shale oil, gas research Brent to average $43 The National Energy Technology Laboratory has awarded funding to various Department of Energy national laboratories for research into hydrocarbon extrac- tion from shale reservoirs. The idea is to obtain a better understanding of the fac- tors that affect prudent resource development, this year, $52 in ’17 NETL says. Although recent technical advances Research topics include an have unlocked vast quantities of oil and gas investigation into the EIA forecasts US crude production at 8.9 million bpd this year, from low permeability rock formations, recov- properties of fractures in ery efficiencies of less than 30 percent for gas shale gas reservoirs and down from 9.4 million in ’15; expected to drop to 8.8 million in ’17 and 10 percent for oil indicate that continuing research is warranted, the agency says. the impact on reservoir By KRISTEN NELSON The 2016 average for Henry Hub NETL has selected six projects for funding. sustainability of the Petroleum News The Lawrence Berkeley National Laboratory is materials used to keep is forecast to be $2.49 per million conducting three of the projects, while the Los fractures open. he U.S. Energy Information Btu, rising to $3.27 in 2017. Alamos National Laboratory, the Sandia T Administration expects U.S. crude National Laboratories and the Stanford Linear oil production to average 8.9 million bar- ally reduce supply below levels which Accelerator Center are each conducting one project. The projects had already rels per day this year, down from 9.4 mil- would have occurred anyway is unclear. been granted a total of $3.6 million in NETL funding but, based on the projects’ lion bpd last year. The agency said in its If the agreement contributes to prices merits, that funding has been increased to $4.8 million over a two-year period, Dec. 6 Short-Term Energy Outlook that rising above $50 per barrel in the coming NETL says. 2017 production is expected to drop fur- months, “it could encourage a return to Research topics include an investigation into the properties of fractures in ther to 8.8 million bpd. supply growth in U.S. tight oil more shale gas reservoirs and the impact on reservoir sustainability of the materials But there is a caveat, said EIA quickly than currently expected,” EIA used to keep fractures open. Another project is investigating the ways in which Administrator Adam Sieminski. said. Prices near $50 per barrel have fluids used for hydraulic fracturing can induce damaged zones that can inhibit the “U.S. monthly oil resulted in increasing Permian basin flow of oil and gas. production could investment by some oil companies and One project researches the impact on hydrocarbon flow of injected water that increase more quick- prices above $50 “could contribute to is adsorbed onto shale surfaces. Other research areas consist of assessing the pro- ly next year if supply growth in other U.S. tight oil duction of low-viscosity shale oil; an investigation into hydraulic fracturing OPEC’s recent deci- regions and in other non-OPEC produc- processes, to improve hydraulic fracturing performance; and the development of sion to trim its out- ing countries that do not participate in the a fluid model for gas release and recovery from shale formations. put pushes the price OPEC-led supply reductions.” —ALAN BAILEY of oil above $50 a barrel, which would Positive growth encourage more investment in U.S. ADAM SIEMINSKI EIA said if there is continuing global regions that have tight oil production.” supply growth in 2017 that may postpone The agency’s oil price expectations are withdrawals from global inventory until that Brent will average $43 per barrel this 2018. The agency said inventory build is year and $52 per barrel in 2017, with expected to average 800,000 bpd in the West Texas Intermediate forecast to aver- first half of 2017 and to average 400,000 • Commercial Diving age about $1 less than Brent in 2017. bpd for all of 2017. • Marine Construction Services EIA increased its Brent oil price fore- Global economic data have been more • Platform Installation, Maintenance and Repair positive than previous expectations “and • Pipeline Installation, Maintenance and Repair cast by $1 per barrel from November and • Underwater Certified Welding said both Brent and WTI prices are increases in oil demand growth could • NDT Services expected to remain close to $50 per barrel help to support prices in the coming quar- • Salvage Operations ters,” EIA said. • Vessel Support and Operations in the first half of 2017, and to end the American Marine year at about $55 per barrel. U.S. oil production has been “more Services Group resilient in the current oil price environ- ment” than expected, and this has been 6000 A Street, Anchorage, AK 99518 OPEC reflected in improving financial condi- Members of the Organization of the • Environmental Services tions for oil companies. 907-562-5420 Petroleum Exporting Countries • Oil-Spill Response, Containment and Clean-Up “Improved profits could encourage oil • Hazardous Wastes and Contaminated Site Clean- announced a framework for supply reduc- Deadhorse, AK producers to increase capital expenditures Up and Remediation tions at the organization’s Nov. 30 meet- • Petroleum Vessel Services, e.g. Fuel Transfer and expand production in 2017 and ing and several non-OPEC members also 907-659-9010 • Bulk Fuel Oil Facility and Storage Tank beyond, especially if oil prices increase,” Maintenance, Management, and Operations said they would freeze or reduce produc- www.amarinecorp.com • www.penco.org the agency said. [email protected] tion. EIA said that the extent to which EIA said a group of 91 publicly traded those plans would be carried out and actu- Anchorage Honolulu Los Angeles global oil companies in the third quarter of this year reported the first quarterly upstream profits since the fourth quarter of 2014, collectively earning almost $2.3 billion with Brent averaging $47 per bar- rel, compared to the third quarter of 2015 when the group lost $54.1 billion at Brent prices averaging $51. Many companies have written down the value of their assets since the fourth quarter of 2014, reducing earnings in the quarter in which the write-down was taken, the agency said, and the increased earnings in the third quarter of this year are partly attributable to a reduction in asset write-downs, which declined 80 percent year over year, and partially attributable to reductions in operating expenses which were greater than declines in revenue. Natural gas The Henry Hub spot price for natural gas increased by 60 cents per million British thermal units from Nov. 1 and set- tled at $3.51 per million Btu Dec. 1, a We’re the experts at building for Alaska. drop of 43 cents from the October aver- age. Natural gas marketed production is Alaska’s fully integrated steel fabricator, service center and coatings facility. forecast to average 77.5 billion cubic feet per day this year, EIA said, down 1.3 bcf SteelfabAK.com see EIA FORECAST page 8 PETROLEUM NEWS • WEEK OF DECEMBER 11, 2016 7

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Source: Symantec Internet Security Threat Report, Volume 20 © 2016 AT&T Intellectual Property. All rights reserved. AT&T, the Globe logo and other marks are trademarks and service marks of AT&T Intellectual Property and/or AT&T affiliated companies. All other marks contained herein are the property of their respective owners. This document is not an offer, commitment, representation or warranty by AT&T and is subject to change. 8 PETROLEUM NEWS • WEEK OF DECEMBER 11, 2016 l EXPLORATION & PRODUCTION ANS crude production up 4.6% from October November average 549,263 bpd, compared to 525,033; Cook Inlet production averaged 15,000 bpd in October, down 2% from September

By KRISTEN NELSON Prudhoe volumes include satellite pro- decline from October to November, aver- The majority of the increase came Petroleum News duction from Aurora, Borealis, Midnight aging 60,226 bpd in November, down 1.5 Sun, Orion, Polaris, Sag River, Schrader from the BP Exploration (Alaska)- percent, 909 bpd, from an October aver- laska North Slope crude oil produc- Bluff and Ugnu, as well as production operated Prudhoe Bay field, the age of 61,135 bpd. Alpine includes satel- Ation averaged 549,263 barrels per from the Hilcorp-Alaska operated Milne Slope’s largest, which averaged lite production from Fiord, Nanuq and day in November, up 4.6 percent from an Point and Northstar fields. 308,632 bpd in November, up 7.4 Qannik. AOGCC data show Milne Point aver- October average of 525,033 bpd, an percent, 21,149 bpd, from an increase of 24,230 bpd. aged 19,301 bpd in October, down 1.5 Cook Inlet down 2% October average of 287,483 bpd. The majority of the increase came from percent (292 bpd) from a September aver- AOGCC data show Cook Inlet produc- the BP Exploration (Alaska)-operated age of 19,593 bpd, while Northstar aver- tion averaged 15,000 bpd in October, Prudhoe Bay field, the Slope’s largest, aged 4,974 bpd in October, down 8.1 per- operated Oooguruk field. down 1.9 percent, 291 bpd, from a which averaged 308,632 bpd in cent (436 bpd) from a September average AOGCC data show Nikaitchuq aver- September average of 15,291 bpd. November, up 7.4 percent, 21,149 bpd, of 5,409 bpd. aged 22,344 bpd in October, down 1.1 Only one field in Cook Inlet, the from an October average of 287,483 bpd. percent, 248 bpd, from a September aver- Glacier Oil and Gas West McArthur River Production information for the most Kuparuk age of 22,593 bpd. Oooguruk averaged field, had a month-over-month production recent month comes from the Alaska The second largest per-barrel increase 15,275 bpd in October, up 21.6 percent, increase, averaging 842 bpd in October, Department of Revenue’s Tax Division was at the ConocoPhillips Alaska-operat- 2,716 bpd, from a September average of up 23.6 percent, 161 bpd, from a which reports North Slope oil production ed Kuparuk River unit, which averaged 12,558 bpd. September average of 682 bpd. consolidated by major production centers 145,906 bpd in November, up 1.7 percent, The largest month-over-month and provides daily production and month- 2,378 bpd, from an October average of Endicott, Point Thomson decrease, 10.6 percent, was at the ly averages. More detailed data, including 143,528 bpd. The largest month-over-month per- BlueCrest Hansen field, the Cosmopolitan Cook Inlet and individual North Slope Volumes for Kuparuk include satellite centage increase was at Hilcorp-operated project, which averaged 152 bpd in fields and pools, is reported by the Alaska production from Meltwater, Tabasco, Tarn Endicott, which averaged 11,736 bpd in October, down 18 bpd from a September Oil and Gas Conservation Commission on and West Sak, and from the Eni-operated November, up 10.8 percent, 1,144 bpd, average of 170 bpd. a month-delay basis. Nikaitchuq field and the Caelus Alaska- from an October average of 10,592 bpd. The Glacier Oil and Gas Redoubt Endicott volumes include production Shoal field averaged 684 bpd in October, from satellites at Eider and Minke, from down 9.1 percent, 68 bpd, from a continued from page 6 The 2016 average for Henry Hub is the Glacier Oil and Gas-operated Badami September average of 752 bpd. forecast to be $2.49 per million Btu, field and from the ExxonMobil-operated Hilcorp’s Trading Bay field averaged EIA FORECAST rising to $3.27 in 2017. Point Thomson field. 1,983 bpd in October, down 7.4 percent, “U.S. natural gas inventories were at AOGCC data show Badami averaged 159 bpd, from a September average of per day from the 2015 level, and “the their highest level ever at the beginning 879 bpd in October, down 3.5 percent, 32 2,142 bpd. first annual production decline since of the current heating season, but bpd, from a September average of 911 Hilcorp’s Beaver Creek field, the 2005.” The agency said natural gas stronger gas demand this winter and bpd. inlet’s smallest, averaged 198 bpd in production is forecast to increase next increased exports are expected to Point Thomson averaged 1,688 bpd in October, down 3.5 percent, 7 bpd, from a year to 80 bcf per day, up 2.5 bcf per reduce natural gas inventories to more October, up more than 5,000 percent, September average of 205 bpd. day from the 2016 level. normal levels by the end of winter in 1,657 bpd, from a September average of Hilcorp’s Middle Ground Shoal aver- Increases in the Henry Hub spot late March,” Sieminski said. l 32 bpd. aged 1,823 bpd in October, down 2.7 per- price were driven by growing domestic ExxonMobil has been commissioning cent, 50 bpd, from a September average of natural gas consumption coupled with facilities at Point Thomson since last 1,874 bpd. higher pipeline exports to Mexico and spring and in the second half of November Swanson River, also a Hilcorp field, natural gas exports. and the first few days of December averaged 1,867 bpd in October, down 1.8 Revenue’s daily volumes for Endicott percent, 35 bpd, from a September aver- appeared to indicate progressively stead- age of 1,902 bpd. ier volumes from Point Thomson, which Hilcorp’s McArthur River field, the is expected to be producing some 5,000 inlet’s largest, averaged 4,941 bpd in bpd initially and some 10,000 bpd when October, down 1.8 percent, 91 bpd, from a the West Pad at the facility comes online. September average of 5,031 bpd. Granite Point, another Hilcorp field, Lisburne, Alpine averaged 2,510 bpd in October, down 0.9 Volumes for BP-operated Lisburne percent, 24 bpd, from a September aver- averaged 22,763 bpd in November, up 2.1 age of 2,534 bpd. percent, 468 bpd, from an October aver- ANS crude oil production peaked in age of 22,295 bpd. Lisburne includes vol- 1988 at 2.1 million bpd; Cook Inlet crude umes from Niakuk, Point McIntyre and oil production peaked in 1970 at more Raven. than 227,000 bpd. l The ConocoPhillips-operated Alpine field was the only facility reported by Revenue to show a month-over-month

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$POUSPMT www.nanaworleyparsons.com page “Exploration Company of the Year” 11 honor goes to Kennady Diamonds www.MiningNewsNorth.com The weekly mining newspaper for Alaska and Canada's North Week of December 11, 2016 NEWS NUGGETS l MINE SAFETY Compiled by Shane Lasley Dam lessons learned After Golder review, ICMM binds members to more stringent TSF management

By SHANE LASLEY Mining News “The shortcoming lies not in the state of knowledge, but rather in the efficacy with toring the rock leftover after the desired minerals which that knowledge is applied.” Sare recovered is one of the most fundamental parts –Golder Associates GRAPHITE ONE RESOURCES INC. of mining. Typically stored behind massive earthen embankments, these tailings also pose a threat to need to be flexible enough to be tailored to the unique human life and the environment, if not properly man- circumstances of an individual mine but still be aged. Committed to sustainable mining, the accountable to higher level guidance. International Council on Mining and Metals has adopted new tailings dam management measures that Six key elements its 23 member companies must abide by and hopes The graphite drilled at the aptly named Graphite Creek project in In response to the Golder report, the top executives western Alaska has several distinguishing features that make it non-member mining companies adopt similar proce- of all 23 ICMM member companies endorsed a posi- particularly suitable for a number of technology applications, dures. including the anode material for lithium-ion batteries. tion statement “that commits members to minimize ICMM decided to take action following the high- the risk of catastrophic failures of tailings dams by profile tailings dam failures at Mount Polley, a cop- adopting six key elements of management and gover- Graphite Creek milestone nears per-gold mine in British Columbia operated by nance.” Imperial Metals, and Samarco, an iron mine in Brazil Graphite One Resources Inc. Dec. 7 reported that it is “I am delighted that as a result of the review, CEOs operated under a joint venture between BHP Billiton nearing the completion of a preliminary economic assess- of the world’s 23 leading mining companies commit- and Vale. ment for its Graphite Creek project near Nome, Alaska. ted to a new ICMM framework on how to further While the downstream effects of the Mount Polley Raising more than C$2.8 million, the company has achieved enhance the safe management of tailings dams,” said failure in 2014 were limited due to its remote location a number of major milestones in 2016. These milestones van Zyl. upstream of a large lake that helped absorb the impact, were reached during a comprehensive product development These six key elements of the ICMM position the Samarco disaster in 2015 was upstream of three program managed by TRU Group Inc., a technology metals statement are: towns and killed 19 people, including 14 mine consultant with expertise along the entire graphite-graphene •Accountabilities, responsibilities and associated supply chain. This program produced purified graphite from employees. competencies are defined to support appropriate iden- Graphite Creek averaging 99.98 percent graphitic carbon. “ICMM and its members are committed to drive tification and management of tailings storage facility When TRU Group first began examining Graphite Creek safety and environmental improvements in the indus- risks. material late in 2014, its technicians recognized distinguish- try,” said ICMM CEO Tom Butler. “After the tragic •The financial and human resources needed to sup- ing features they described as spheroidal, thin, aggregate and failure of the Samarco tailings dam, we had to deter- port continued tailings storage facility management expanded. The graphite specializing consultant postulated mine how we could best help to minimize the risk of and governance are maintained throughout a facility’s that these distinctive characteristics could lend to different the recurrence of such a catastrophic event.” life cycle. specialized applications with minimal processing. These Golder report •Risk management associated with tailings storage unique and naturally occurring properties have prompted facilities includes risk identification, an appropriate Graphite One to apply for the trademark, STAX, an acronym To find out what can be done to prevent another control regime and the verification of control perform- to describe Graphite Creek graphite. Further testing found tragic tailing dam failure, ICMM pulled together a ance. that more than 74 percent of the STAX flake graphite could panel of renowned tailings specialists and experts •Risks associated with potential changes are be turned into spherical graphite without milling. This is a from within it membership to review tailings manage- assessed, controlled and communicated to avoid inad- monumental achievement considering that only about 40 ment practices across the breadth of the council’s 23 vertently compromising tailings storage facility percent of the best-performing flake graphite found in any mining companies. integrity. other known deposit can be converted to spherical graphite, The review panel hired Golder Associates, a trust- •Processes are in place to recognize and respond to even using high-end equipment. In later phases of testing ed consulting and design company with more than 50 impending failure of tailings storage facilities and mit- completed this year, TRU Group measured the performance years of experience, to dig further into this problem. igate the potential impacts arising from a potentially of the spheroidized graphite produced from STAX material While Golder, as well as other investigations, iden- catastrophic failure. in coin cells typically used in watches and similar devices. tified the structural issues that ultimately led to the •Internal and external review and assurance This testing confirmed high performance, repeatability and dam failures at Samarco and Mount Polley, the con- processes are in place so that controls for tailings stor- stability of the spherical graphite produced from the western sulting firm said modern engineering, design and con- age facility risks can be comprehensively assessed Alaska deposit – all indicators of high-quality graphite for struction practices are adequate to prevent such tail- and continually improved. lithium-ion batteries. Graphite One and Tru Group are work- ings impoundment failures. Under each of these broad elements are more spe- ing on the production of exploratory grade samples of coat- “The shortcoming lies not in the state of knowl- cific criteria for which the ICMM member companies ed, spherical graphite for testing by potential end-users. edge, but rather in the efficacy with which that knowl- are bound. "Our program indicated the unique characteristics of our edge is applied,” Golder wrote in its report published STAX natural flake graphite, which more than met our on Dec. 5. “Therefore, efforts moving forward should Hope adopted by non-members expectations for performance on the key metrics for spheri- focus on improved implementation and verification of ICMM and Golder hope the lessons learned from cal graphite,” said Graphite One CEO Anthony Huston. controls, rather than restatement of them.” this review result more stringent tailings management "Our goal for Graphite One is to become a reliable producer The consulting firm concluded that mining compa- across the wider mining community. of high-quality graphite for the rapidly evolving energy and nies and associations need to implement more robust “We were determined to take action at the global high-tech sectors.” Graphite One said a preliminary econom- governance and assurances to ensure that best prac- level and all of our member companies have adopted ic assessment for the Graphite Creek project, a milestone tices are implemented at each and every operation. this new binding agreement,” said ICMM CEO originally slated for the end of 2016, is now targeted for “The review did not cover how or why the Butler. “We hope that non-member companies will completion by the end of January 2017. Samarco tailings dam failed, but takes lessons from also consider adopting this framework in order to help Hecla, MSHA salute our miners the tragic event as well as from other tailing dam fail- enhance the whole industry’s performance.” ures,” explained Dirk van Zyl, a member of the Terry Eldridge, senior project reviewer at Golder Hecla Mining Company Dec. 6 recognizes its miners, ICMM expert panel. “It finds that a higher level of Associates, added, “I hope that this report will be governance and assurance is key to confirming exist- widely read, not just by ICMM members, but by the see NEWS NUGGETS page 11 ing safety standards are implemented consistently.” mining industry as whole so we can continually Golder emphasized that these standards improve the safety of the industry.” l 10 NORTH OF 60 MINING PETROLEUM NEWS • WEEK OF DECEMBER 11, 2016

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lynden.com | 1-888-596-3361 PETROLEUM NEWS • WEEK OF DECEMBER 11, 2016 NORTH OF 60 MINING 11 continued from page 9 NEWS NUGGETS NORTHERN NEIGHBORS past and present, on National Miner’s Day. Established in 1891, Hecla has survived Compiled by Shane Lasley two World Wars, the Great Depression and numerous crests and troughs of the noto- riously cyclical metals market. “I want to thank the more than 10,000 hardworking men and women who have been part of the Hecla team over the past 125 years on National Miner’s Day,” said Hecla President and CEO Phillips Baker, Jr. “Together, through good times and bad, we have built Hecla to become the largest primary sil- ver producer and the third-largest producer of lead and zinc, in the USA. These achievements create jobs for our miners and value for our shareholders.” The U.S.

Mine Safety and Health Administration also saluted the some 366,000 American DIAMONDS INC. KENNADY miners on Dec. 6. MSHA said U.S. mines produce nearly 100 different kinds of min- erals, including coal, gold, copper, silver, granite, limestone, granite, salt and gravel. “They work in every one of the fifty states, and provide the raw materials for heat, electricity, roads and bridges, and countless consumer products, from electronics to cosmetics. Even toothpaste is composed of minerals obtained by miners,” MSHA inked in its Miner’s Day salute. Baker agrees. “While it is easy to take mining for granted, it is important to take a moment and recognize that without mining, we would not enjoy the lives that we have today. We have never forgotten the integral role our mines play in the fabric of the communities in which they operate. And while the industry has experienced tremendous progress in safety, efficiency and environmental awareness at our mines, we always strive to do even better,” said the Members of the Kennady North technical team take notes outside a drill at Faraday, Hecla CEO. Hecla’s Greens Creek Mine in Southeast Alaska is one of the largest and one of the diamond bearing kimberlite discoveries Kennady Diamonds has made at lowest-cost primary silver mines on the planet. Through the first nine months of its Kennady North project in Northwest Territories. 2016, Greens Creek produced 7 million oz. of silver, putting this underground mine on pace to reach nearly 9 million oz. this year. The mine is also expected to produce Kennady honored for diamond exploration 53,000 oz. of gold as well as healthy quantities of zinc and lead. Kennady Diamonds Inc. is co-recipient of the prestigious Mines and Money Exploration Company of the Year award for 2016, presented during Second Shorty Creek copper-gold target tapped the Mining Journal Outstanding Achievement Awards Gala Dinner at the Mines and Money Conference in London, England on Dec. 1. Kennady Freegold Ventures Ltd. Dec. 6 said the 2016 drill program at it Shorty Creek proj- Diamonds received this honor for its work at Kennady North, an advanced ect in Interior Alaska has confirmed the presence of a copper-gold-molybdenum por- diamond exploration project immediately north of Gahcho Kué, a Northwest phyry system with an alteration-mineralization footprint that covers roughly 2,500 Territories diamond mine being ramped up to commercial production by De acres. The company confirmed the porphyry potential in 2015, when it stepped out Beers Canada (51 percent) and Mountain Province Diamonds Inc. (49 per- from the previous shallow reverse circulation drilling completed by Asarco in 1989- cent). Upon accepting the award, Kennady Diamonds President and CEO 1990 with deeper core drilling. The best hole drilled last year, SC15-03, cut 91 Rory Moore paid tribute to the entire Kennady north team, from founder and meters averaging 0.71 percent copper-equivalent about 245 meters southwest of the former CEO to the camp crew. "Firstly, the former CEO of Kennady, Patrick historical drilling. Collared about 125 meters further southwest of SC 15-03, the first Evans had the vision and courage to spin out Kennady from Mountain hole of the 2016 drill program, SC 16-01, cut 434.5 meters averaging 0.12 grams per Province in 2012 and initiate an exploration program on the claims immedi- metric ton gold, 7.46 g/t silver and 0.36 percent copper, or about 0.57 percent cop- ately north of the Gahcho Kué mine,” said Moore. “This area had been previ- ously explored and most diamond explorers were skeptical of his chances for per-equivalent. A 207-meter section of this hole averaged 0.045 percent tungsten tri- success, but this did not deter Patrick who moved ahead boldly." The oxide. Freegold said early mineralogical work has confirmed that the tungsten pres- Kennady North CEO also recognized Aurora Geosciences Ltd., the ent at Hill 1835 is in the form of wolframite, which is typically recovered by gravity Yellowknife-based company that has designed and implemented all of the concentration. A further 120 meters southwest, SC 16-02 cut 409.6 meters grading exploration programs that proved skeptics wrong. "Gary Vivian, the president 0.41 percent copper-equivalent. A 409.6-meter section of this hole averaged 0.03 per- of Aurora, and Chris Hrkac, senior project manager for the Kennady North cent tungsten trioxide. Five holes of the 2016 program targeted Hill 1710, a 6,000- project together with their team, deserve the lion's share of credit for the suc- by 1,500-meter geophysical and geochemical anomaly situated roughly 2,500 meters cesses that Kennady has enjoyed to date,” said Moore. “Their innovative, northwest of Hill 1835. The holes drilled at Hill 1710 were spaced roughly 400 systematic and dedicated approach to a technically challenging project has meters apart, starting on the western edge of the soil geochemical anomaly. Each resulted in new and unique discoveries, and earned Aurora the respect of its hole intersected both copper and molybdenum mineralization with the copper values peers in the industry." This work has identified four kimberlites along a increasing as the drilling moved to the northeast. Hole 16-03, the westernmost hole, 3,000-meter-long corridor at Kennady North that is on trend and northeast of cut 172.6 meters averaging 0.03 percent copper and 0.034 percent molybdenum. Gahcho Kué. In addition to the technical team and camp crews, Moore recog- Hole SC 16-04, collared about 400 meters to the east, averaged 0.05 percent copper nized the importance of the company’s loyal investors. "One will not go far and 0.014 percent molybdenum over its entire 426.5-meter length. Hole SC 16-06, in diamond exploration in the Arctic without strong financial backing and I collared about 800 meters northeast of hole four, averaged 0.07 percent copper and want to thank all of our shareholders that have supported us along this excit- 0.01 percent molybdenum over the entire 516 meters. Hole SC 16-07 averaged 0.08 ing journey of discovery,” he said. "The fortunate combination of solid percent copper and 0.009 percent molybdenum over its entire 396-meter length, financing, creative exploration and visionary leadership has led to the great including 0.15 percent copper and 0.009 percent molybdenum in the top 70.8 meters. "The Shorty Creek target represents an exciting porphyry discovery in Alaska that see NORTHERN NEIGHBORS page 12 has the potential to host a significant copper-gold-molybdenum resource,” said Freegold President and CEO Kristina Walcott. “We are extremely pleased with the results of the 2016 program and given these highly encouraging results we look for- ward to further drilling to follow up on this exciting discovery.” Shorty Creek is North of 60 Mining News is a weekly supplement adjacent to the Elliot Highway about 75 road miles northwest of Fairbanks. of the weekly newspaper, Petroleum News.

Whistler explorer rebrands; GoldMining Shane Lasley PUBLISHER & NEWS EDITOR ADDRESS • P.O. Box 231647 Anchorage, AK 99523-1647 shopping for high-quality gold projects Rose Ragsdale CONTRIBUTING EDITOR Mary Mack CEO & GENERAL MANAGER NEWS • 907.229.6289 Brazil Resources Inc., owner of the Whistler gold-copper project in Alaska, Dec. [email protected] 5 said its board of directors has approved a change of its name to GoldMining Inc., Susan Crane ADVERTISING DIRECTOR which captures the company’s international portfolio and plans moving forward. "We Heather Yates BOOKKEEPER CIRCULATION • 907.522.9469 [email protected] are pleased to change the name of the company to GoldMining Inc. to better reflect Marti Reeve SPECIAL PUBLICATIONS DIRECTOR our diversified project portfolio and strategy to build a leading gold acquisition and Steven Merritt PRODUCTION DIRECTOR ADVERTISING development company throughout the Americas,” GoldMining Chairman Amir Curt Freeman COLUMNIST Susan Crane • 907.770.5592 Adnani explained. “With more than $21 million cash on hand – and now, a name that [email protected] better reflects our company's objectives – we plan to continue our exceptional J.P. Tangen COLUMNIST growth with additional low-cost acquisitions of high quality gold projects, to build Judy Patrick Photography CONTRACT PHOTOGRAPHER FAX FOR ALL DEPARTMENTS 907.522.9583 value throughout this period of a weak gold price environment." GoldMining’s com- Forrest Crane CONTRACT PHOTOGRAPHER mon shares began trading on Canada’s TSX Venture Exchange (under the new sym- Tom Kearney ADVERTISING DESIGN MANAGER bol "GOLD" and on the OTCQX International market under the new symbol Renee Garbutt CIRCULATION MANAGER Several of the individuals "GLDLF" on Dec. 7. No action will be required by existing shareholders or holders listed above are Mapmakers Alaska CARTOGRAPHY of warrants with respect to the name change. In addition to the Whistler project in independent contractors Southcentral Alaska, GoldMining is advancing Titiribi, a gold-copper project in NORTH OF 60 MINING NEWS is a weekly supplement of Petroleum News, a weekly newspaper. Colombia that it recently acquired from Trilogy Metals Inc.; the Cachoeira and São To subscribe to North of 60 Mining News, Jorge gold projects in northeastern Brazil; and its Rea uranium project in Alberta, call (907) 522-9469 or sign-up online at www.miningnewsnorth.com. Canada. l 12 NORTH OF 60 MINING PETROLEUM NEWS • WEEK OF DECEMBER 11, 2016 continued from page 11 signing of an agreement with Nunavut Tunngavik Inc. for exploration of the NORTHERN NEIGHBORS Arcadia Bay property, an Inuit-owned parcel on the Coronation Gulf coast in success of Kennady and its receipt of IDM MINING LTD. Nunavut. The property hosts Archean this award. We intend to honor this award by moving the company toward lode-gold style mineralization with a his- further discovery of kimberlites and their torical resource of 572,067 metric tons advancement into diamond resources at grading 9.6 grams per metric ton gold. Kennady North." Kennady is currently While this resource, calculated in 1983, working toward the finalization of a pre- does not meet NI 43-101 standards, liminary economic assessment for its Transition considers this historical esti- namesake project and, if things continue mate as an indication of the presence of to look good, the company plans to initi- mineralization. This resource is based on ate a feasibility study for building a near surface 680-meter-long section of Northwest Territories’ next diamond the 4,200-meter North Vein, one of a mine at Kennady North in 2017. series of north-trending gold-bearing Kennady shares this year’s Mines and vein systems identified on the property. Money Exploration Company of the Year Many of the vein systems have been award with co-recipient NexGen Energy, traced for great distance at surface with who was recognized for its impressive good apparent continuity including the uranium discoveries in the Athabasca more than 1,200-meter Sidewalk Vein, Basin in northern Saskatchewan. which has returned up to 9.4 g/t gold over 12.5 meters in historical drilling. Agnico grabs interest Transition Metals and Nunavut in White Gold; Yukon Resources, a subsidiary of Kitikmeot Agnico Eagle Mines Ltd. Dec. 6 Inuit Association, are working under an announced an agreement to acquire alliance to identify exploration properties 19.93 percent of the G4G Capital Corp.’s that will attract investment and lead to issued and outstanding shares. In late The 2016 drill program at IDM Mining’s Red Mountain project has extended all three zones the discovery of economic ore deposits, October, G4G Capital announced final- being considered for mining at this underground gold-silver project in northwestern British and the development of new mines and ization of an option to acquire 21 proper- Columbia. infrastructure in the Kitikmeot region of ties covering 2,490 square kilometers GroundTruth, an exploration services south of the Marc zone. “The majority of Nunavut, Canada. The mineral explo- (roughly 615,300 acres) of the White company founded by Ryan and Wood, to IDM’s drilling during 2016 was planned ration agreement grants the Alliance Gold district in the Yukon from leg- advance the company’s large portfolio of to upgrade resources and gather techni- exclusive rights to explore for minerals endary prospector Shawn Ryan and projects in the Yukon Territory. cal data for our feasibility study, howev- within CO-31 and sets out terms to Wildwood Exploration Inc., a company er these results have extended the known acquire a mineral production lease. owned by Ryan and his wife, Cathy IDM further expands limits to mineralization in all three pri- Nunavut Resources President Scott Wood. To better reflect its focus, G4G Red Mountain zones mary zones with mineralization open for Northey said, “We are pleased to consol- Capital plans to change its name to further expansion to the north, south and idate our ownership interest on the White Gold Corp. and move its head- IDM Mining Ltd. Dec. 6 reported down-dip,” said IDM Mining President Arcadia Bay project to include the por- quarters from Vancouver, B.C. to results from the final 13 underground and CEO Rob McLeod. “Of particular tions of the property with established Toronto, Ont. G4G shareholders will core holes completed during the 2016 significance is U16-1224, which inter- historical resources. The alliance will be season at its Red Mountain gold-silver vote on the name change at a special sected the widest portion of mineraliza- actively seeking partnership funding or meeting scheduled for Dec. 19. Agnico project 15 kilometers (nine miles) east of tion identified so far at the JW zone, investment to help us initiate programs Eagle will pay C$1.20 per share to Stewart, British Columbia. Highlights suggesting potential for another thick of work on the property in 2017.” The acquire a nearly 20 percent stake in this from this batch of results include 27 area of mineralization as seen in the Arcadia Bay property is located along emerging White Gold explorer. Closing meters averaging 6.2 grams per metric Marc and AV zones.” An updated the coast of the Arctic Ocean, roughly 25 of the transaction is expected to occur on ton gold and 23.25 g/t silver in U16- resource estimate slated for completion or about Dec. 13, and is subject to cer- 1214, an infill hole in the AV zone; 6.49 kilometers (15.5 miles) west of the pro- in early 2017 will be incorporated into posed port facility at the terminus of the tain conditions. Upon closing, Agnico meters of 21.36 g/t gold and 18.093 g/t an ongoing feasibility study program. Eagle will have the right to participate in silver in U16-1218, a step-out hole planned Izok Road Corridor. The IDM is planning further underground Nunavut government and Nunavut financings in order to maintain its 19.93 below the AV zone; 34.01 meters of 8.85 resource expansion and exploration Resources recently signed a memoran- percent stake in White Gold, and have g/t gold and 13.28 g/t silver, in U16- drilling at Red Mountain in 2017. the right to nominate one person for the 1220, an infill and metallurgical hole at dum of understanding to build the port company’s board. Agnico Eagle said it the AV zone; 18.22 meters of 9.12 g/t Alliance nabs coastal and a 350-kilometer (220 miles) road expects White Gold to leverage the gold and 27.87 g/t silver in U16-1224, a Nunavut gold project that links the deep-water arctic seaport to unique experience and innovative explo- step-out hole below the JW zone; and six Contwoyto Lake, near the area of the ration techniques of Ryan, who is the meters of 12.75 g/t gold and 44.19 g/t Transition Metals Corp. and Nunavut Izok Lake zinc-copper mine project explorer’s chief technical adviser, and silver in U16-1226, a step-out to the Resources Corp. Nov. 30 announced the being advanced by MMG Ltd. l PETROLEUM NEWS • WEEK OF DECEMBER 11, 2016 13 continued from page 1 testing. Ahtna’s prime interest in its gas explo- TOLSONA WELL ration program is the possibility of finding GOVERNMENT a gas resource that could alleviate the high a better understanding of the potential of cost of energy in the Copper River region. BOEM publishes environmental reports the prospect. Exploration in a region remote from spe- “We have learned so much throughout The Bureau of Ocean Energy Management cialized oil and gas support services and has announced the availability of the findings One of the Alaska projects this drilling program and are thankful to infrastructure is challenging. But a project have successfully reached our target and from six research projects conducted as part of conducted an oil spill risk such as the drilling of the Tolsona well the agency’s Environmental Studies Program. analysis for the Liberty oil completed this important phase,” said brings valued employment and business Michelle Anderson, Ahtna president. “It Two of the studies relate to the Alaska outer con- field that Hilcorp proposes for residents of the Copper River region, tinental shelf, while three studies relate to the would not have been possible without the including Ahtna’s shareholders. In addi- to develop from a gravel relentless commitment of our drilling Gulf of Mexico and the Pacific region. The sixth tion to direct work on preparing the study investigated the characteristics of sounds island in the Beaufort Sea. team, guidance from other owner/opera- drilling site and conducting the drilling tors, and the support of the Ahtna board emitted during high-resolution marine geophys- operations, local businesses, including ical surveys. and leadership. We are very excited about shops and lodges, have seen an uptick in the potential of this well and the impact it One of the Alaska projects conducted an oil spill risk analysis for the Liberty oil business at a time of year when business is field that Hilcorp proposes to develop from a gravel island in the Beaufort Sea. The could have on our region if the testing traditionally slack. proves positive.” study used actual oil spill data from the Gulf of Mexico, the Pacific outer continental And the experience of involvement in shelf and the North Sea to make statistical predictions about what might happen at A gas prone region the drilling of a well brings a sense of Liberty. The study found that most spills are likely to occur on the production island, practical purpose and achievement in fur- and that the likelihood of a spill from a pipeline or well is very low. The region of the drilling is known to thering the economic well being of the The other Alaska study evaluated the weathering characteristics on the sea surface be gas prone. A previous gas exploration region, Ahtna thinks. Ahtna has also indi- of three types of Alaska crude oil and three types of refined oil that might be carried well, the Ahtna 1-19 well, drilled about cated that it is “open for business” and by tankers in Alaska waters. The objective was to better understand what might hap- two miles east of the Tolsona well welcomes external investment in its pen from the natural weathering of oil spilled in the Alaska offshore. An understanding between 2005 and 2007, encountered gas exploration efforts. Further exploration of weathering effects can help in planning spill response strategies. but eventually had to be abandoned opportunities exist in the region. BOEM says its Environmental Studies Program develops, funds and manages rig- because of exceptionally high formation —ALAN BAILEY orous scientific research to inform policy decisions regarding the development of pressures and problems with water energy and mineral resources on the outer continental shelf. Research results are encroachment. available online through the agency’s ESPIS system. Based on that experience, the drilling team for the Tolsona well took mitigation —ALAN BAILEY measures to guard against problems with high-pressure subsurface water. Those mitigation measures proved effective — Ahtna said that the drilling team success- 6RFLHW\RI3HWUROHXP(QJLQHHUV fully isolated the potential gas zone from the high-pressure water zone above it. 33rd Annual Scholarship BBQ However, with complex subsurface geology, the well did prove challenging to drill. In fact, drilling continued to a depth Fundraiser 700 feet deeper than had originally been planned. Ahtna said that Schlumberger, the rig owner, and the next planned oper- The SPE Alaska Petroleum Section would like to The Alaska Section has ator of the rig had both been cooperative thank all our sponsors and everyone who donated to awarded Over $500,000 in accommodating the resulting additional time required for the drilling — the well the Scholarship fund for 2017 & 357 scholarships in was finally completed in 70 days with no last 15 years! recordable safety incidents, Ahtna said.

Sparse data )XQGUDLVLQJ3DUWQHU Dan Lee, Ahtna oil and gas develop- ment manager, told Petroleum News that the challenges for the drilling mainly emanated from sparse data about the sub- surface geology. “One of the biggest challenges is the 3ODWLQXP6SRQVRUV lack of information,” Lee commented, Prize Winners—Top 5 reflecting on the sparse data from wells previously drilled in the region. Grand Prize: $500 Cash Ahtna does have 2-D seismic of the tar- Winner—Dave Roby get area, but the geology is complex in detail. And, although the well is being *ROG6SRQVRUV drilled not far from the Ahtna 1-19 well and in a similar geologic setting, the two 2nd Prize: $400 Cash wells are in different fault blocks with Winner– Kasper Kowalewski subtly different geology. “The thicknesses of the zones and the depths at which we encountered the zones are different in all the wells,” said Drilling 3rd Prize: Two R/T tickets Manager Marty Lemon. “We had to drill AK Railroad the well deeper than we had proposed because the formations were coming in 6LOYHU6SRQVRUV Winner— Vern Johnson deeper in the fault block that we were in.” Apparently the high pressure subsur- face water, which appears to be a feature 4th Prize: $300 Cash of the region, permeates fractures in the rocks. The drilling team used especially Winner — Tara West large diameter casing strings to enable additional casing to be run and cemented when water was encountered, Lemon said. The drillers also used a technique WŚŝůdƐƵŶĞŵŽƌŝ Paul and Beverly Chan 5th Prize: Two Tickets : called managed pressure drilling, to hold Resurrection Bay Cruise— back the pressure in the well from the sur- %URQ]HDQGRWKHU6SRQVRUV Major Marine face, he said. Alaska Railroad Corp. Bear’s Tooth Theatre EV Downhole Video Winner—Dave Roby

A possible gas resource Hotel Captain CooK Mahay’s Jet Boat Adventures Glacier Brewhouse Although Ahtna does not yet know whether it has a gas find, log data obtained Furie Alaska Major Marine Tours Postcard Pantry GCI Big Rays from the well does indicate the possibility of a gas resource. Lemon said that there YƵĂĚĐŽWĞƚƌŽDĂƌŝŶĞƌĐƟĐ>ŝŌ^LJƐƚĞŵƐ are five distinct intervals of interest for the 14 PETROLEUM NEWS • WEEK OF DECEMBER 11, 2016 NEED TO STRETCH YOUR DOLLAR? Becoming a contracted advertiser To become a Petroleum News ‘contracted advertiser’ you simply have to agree to run 12 ads of any size over a 12-month period. In return we’ll give you this additional marketing exposure: BUSINESS SPOTLIGHT 20

PETROLE UM NEWS • WEEK OF JU LY 13, 2008 Cruz Construct ion, Inc. Business Spotlight Cruz Const ruction i O Exposure in the weekly Petroleum News e s a genera T x l c perienced in ontractor O re H mote explorat Opti St large-scale ion suppor P affing Gr heavy c t and Y ou ivil project S p log s. Its E istical capabilit extensive Opti Staffing Group is ies RT get the the premier E eq right U personnel uipmen people provider i , full servi N t wh and O ce ere the n the A y ar C mark e n et R Constructi eeded. Cruz ed on one principl place. It was found- on has be e alone: C 24 en design l Individuals are the T PETROLEUM NEWS • WEEK OF SEPTEMBER 20, 2015 “first re ated a 10 yst behind the success of S sponder” f -year cata- E or the Alas and any organizations goal R Emergenc ka Division o objectives R y Services f , and theref s O due ore are F to mob to the compan any organizati the key asset that ilize statewide y’s ability on possesses on extremely the center .Placing the individual Jeff Miller gr short notice. of focus for Opti Staf at aduated from objectives fing Gr University (c Oregon State and its internal oup’s own onstruction en mai employees’ career goals ment, bu gineering man ntaining this regarding siness degree) age- the aspi , Const and worked fo candidates it rations of the Oil Patch Bits ruction three r Wilder represents, and yea finding the opera rs before joinin between a cli right m • You make the List tion in 2004. g the Cruz ent’s organizati atch Jeff and w ple it hi onal goals and the two daugh ife Monica ha res, has l ed to a peo- ters and a son ve Jeff Mille other personnel higher rate of Each MiHow2 video is filmed in a workshop or appropriate off-site setting and features coachin ; dad has grea r, senior proje provi success than g their athlet t fun ct manager ders and em Schaeffler centers in on bearing replacement in video qu ic teams. He a Staffing Group’ bodies Opti Motion Industries’ energetic and knowledgeable host, Tom Clark. ent wintertime lso loves work s motto: “Our success Avonly Loka pratfalls prov ing and playin Founded is determined n,founder ide great ente g outdoors,an by Avonly Lokan, by your success!” Motion Industries, a lead- The series is also available for viewing via Facebook and YouTube. Additional MiHow2 rtainment to b d his fre- daughter, this a long time ystanders. way of doi Anchorage resident along success rates in the Paci ng business has led to the with her husband ing distributor of industrial and Tom’s Toolbox videos are scheduled to be posted in coming weeks. For more informa- expansi —PA staffi fic Northwest on of this busi and • Your employees are spotlighted maintenance, repair and ULA EASLEY ng and the rol and continues to chal ness model tion visit www. motionindustries. com. e individuals pl and its ay within the employm lenge traditional operation replacement parts, ent arena. thinking about is pleased to announce the Com —PAU Y-Te ch Services Inc. awarded DLM contra ct pan LA EASLEY release of another MiHow2 ies involved video. The goal of the video Y- Tech Services Inc., a subsidiary of Yulista Holding LLC, has been awarded the MH-60T and no in Alaska • Your news gets in Oil Patch Bits series is to provide instruc- rotary wing aircraft depot level maintenance support services contract for the United rthern ADVERTISER Ca COURTESY MOTION INDUSTRIES MOTION COURTESY n tion to viewers to help them States Coast Guard. Y- Tech Services will support the USCG Aviation Logistics Center ada’s o PAGE AD A il and PPEARS A g with their practical applica- Medium Range Recovery product line and other support divisions such as the ALC’s indus- DVERTISER as industry ACE Air A tions. Cargo Delta Lea PAGE AD AP trial operations division by providing a full range of DLM services including, Aircraft disas- sing PEARS AD Air Liquide . . De VERTISER The video shows how to ...... lta P Pump a sembly and component repair and support. The MH-60T mission includes search and res- Air Lo ...... nd Leasing P gistics of Ala ...... Dowlan Natco Cana AGE AD APP avoid jamming the bearing at ska . . . .19 d-Bach Corp. da EARS cue, combat support, law enforcement, international ice patrol, marine environmental pro- Airport Equi D Natu pment oyon Drilling re Conservan one end when replacing Alask cy,The . . . . . tection, and marine resource conservation. 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Al ...... 21 Fire and Safe ipment Servic ...... 7 aska Dreams ...... ENS ty North S es (NSES) ...... 8 R Alaska . . . tar Terminal “Equipment efficiency starts with proper installation of parts,” said Randy Breaux, Editor’s note: All of these news items — some in expanded form — will appear in Alaska ...... & Stevedore Frontier Cons Epoch We ...... Northern Air (NSTS) tructors ll Services ...... Cargo . . . . . Motion Industries’ senior vice president, southern U. S. operations, corporate marketing and the next Arctic Oil & Gas Directory, a full color magazine that serves as a marketing Alaska Inters E .21 Nort ...... tate Constru quipment Sou hern Transpo ...... Alask ction (AIC) rce Inc. rtation Co...... 7 strategic planning. “Proper bearing installation also cuts down on frustration levels as tool for Petroleum News’ contracted advertisers. The next edition will be released in a Marine Line ESS Sup Northland s ...... port Services Wood Produc March. Alaska Rail ...... Worldwide No ts well.” road Corp...... 2 Evergreen He rthwest Techn Ala 4 licopters of A ical Services ska Regional Fairw laska Offshore Council of Ca eather Comp Divers . . . . . Alaska R rpenters (AR anies,The . . O ...... ubber & Supp CC) Flowline A ...... ilfield Impro ...... A ly laska ...... vements ...... 4 laska Steel C Fou 11 Opti S o. ndex taffing Group Alaska Te P lecom Friends of .A. Lawrence A Pets ...... laska Tent & Fro ...... Panalp Tarp ntier Flying S ...... ina ...... Companies involved in Alaska Alaska ervice ...... 7 ...... Texti PDC . . . . . les Harris Group ...... Alas ...... 16 ka West Expr Peak Civil ...... ess ...... Technologies ...... Alliance,T ...... G-M Pe . .8 he ...... ak Oilfield S Am .24 ervice Co. . . erican Mari GBR Penco ...... and northern Canada’s oil and gas industry ne ...... Equipment ...... Ame ...... 14 rican Tire Co ...... GCI Petroleum ...... rp...... 16 Equipment ...... Ameri-Tec Pe & Services .16 h Building Sy Great North trotechnical ADVERTISER PAGE AD APPEARS ADVERTISER PAGE AD APPEARS ADVERTISER PAGE AD APPEARSAr stems ern Engineer Resources of ctic Controls GPS ing PGS On Alaska ...... Environmen shore ...... Arctic F ...... tal . . . .2 oundations ...... Hawk Co Prudhoe Bay . . .16 nsultants . . Shop & Stor Delta Leasing ...... 27 Arctic Slope H ...... PTI G age Telephone As .C. Price ...... roup A N-P Arctic soc. Co-op...... 4 Structures Heating DET-TRONICS & Ventilation ABR Nabors Alaska Drilling Arctic Wire R H Sales ope & Supply oladay-Parks Dowland-Bach Corp. ASRC Energy Servic Industri AECOM Environment ...... 4 Nalco es al Project Ser ASRC I vices Q-Z Doyon Anvil ...... 21 Energy Servi nspirations . ces Alaska ...... aeSolutions ...... 6 NANA WorleyParsons ASRC Ener Jackov ...... QUADCO gy Services H ich Industria ...... Doyon Drilling Aurora Ge ouston Contr l & Construct . . . . .8 R Nature Conservancy, The osciences acting (HCC) Judy Patrick ion Supply . ain for Rent Air Liquide ...... 19 Av Photograph ...... 1 alon Develop Ken y 4 Salt + Doyon, Limited ment ai Aviation Light Creative Alaska Clean Seas (ACS) NEI Fluid Technology ...... Kenwort Schlumberg ...... Doyon Universal Services h Alaska er ...... 19 Nordic Calista King S Seekins Fo Al k D treet Storag rd ...... B-F e S ...... Kuukpik Ar haw Alaska ...... B ctic Services ...... 17 adger Produc Kuu Spenar ...... tions kpik - LCMF d Builders Su ...... Baker H pply . . . .6 ughes LaBodega STEELFAB B ombay Delux Lis 3M Al e Restaurant ter Industries aska BP Explora Ta tion (Alaska) Lounsbury & iga Ventures Bro Associates oks Range Su Lynde Tire Dist pply ...... n Air Cargo ribution Syste Calista C ...... T ms (TDS) orp...... Lynden Air ...... otal Safety U C . .23 Freight ...... S. Inc. anadian Mat Lyn ...... 24 TOTE Systems (Ala den Inc...... 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He stud here he recei writing edia and com for a com- Anchorage, w journalism, m HR director sity of Alaska in print eviously the s, and op- ver a background and outside ...... 39 was pr employee and has age Press ...... buyer’s guide 1,100 MCGILLIE in 2001, hor ine Maintenance had up to ANITA degree for the Anc ...... 30 Pipel ...... 39 pany that U.S. es articles Categories in ...... this...... directory ...... the featur on . . . . . umbing . .39 across erous . . .16 Fire Protecti ...... 30 Pl ...... in five states a to the num the School ...... Cargo ...... Generation ...... erated add Anit all phases rojects. ectors for tising ...... Freight/Shipping & ...... 30 Power ...... 40 excited to ience in eelance p d of dir Adver ...... 16 ...... are very s of exper fr on the boar /Charter & Support . ing Services ...... 31 Process Equipment ...... 40 “We ver 13 year ement, y serves Air Passenger ...... 17 Fuel ...... s ...... brings o oyee Engag He currentl Inc...... 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Hotels ...... 32 Safety E ...... 41 CH2M consultin - Buildings ...... 18 ...... ull-service rowing en ng & Lodging ...... trial Gases ...... 32 Security ...... 41 a global f rapidly g Camps, Cateri ...... 19 Indus ...... al ...... HILL, part of its Lectu tions ...... Parts & Supply . . . . . Seismic & Geophysic . . . .42 es Harrier CH2M unced as enz to re at the Gran Cellular Communica . . . .19 Industrial ...... 33 ...... elcom cial , anno Bryan Clem d Canyon. The ...... ces ...... & Storage Space . . . GCI w s commer erations firm otion of lar. Studen geology of Alaska cals ...... 9 Inspection Servi ...... 33 Shops ...... 42 its team a and op the prom a, the ts use many scien and the Low Chemi ...... 1 ...... ation ...... arrier to t- portfolio ment Alask ting ce disciplines to er 48 is spectacu ytical Lab ...... Instrumentation Systems . . .34 Soil Stabiliz ...... 42 med J.J. 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IL & GAS COMPANI ganizin as features Fairbanks com neering ...... te Medical Services . . O ...... 45 Harrier w sity of Alaska panies accom- Environmental Engi ...... 26 On-Si ...... 39 ...... s. Chamber, spa- e & Cleanup ...... rators ...... rum horage y new pany the stud Environmental Respons . . .28 Permitting ...... 39 Ope the Anc thrice-weekl ents ...... e joining Su Valley’s on the nmental Supplies . . . . Photography ...... 39 Befor the Mat- trip, help- Enviro ...... 28 nology ...... an, Heavy Hauling . . . . . pe, Fittings & Thread Tech the Frontiersm ing the students Equipment & ...... 28 Pi tor for ental ...... grasp geological Equipment Sales/R concepts, and serv- in g as mentors for the interested young scientists. NEWS ITEMS

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Hats off to ConocoPhillips!

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. 20, No. 1 ECTORY • Vol OIL & GAS DIR ARCTIC to Earth’ COMPANY PROFILES Fugro — ‘Down Challenge and Up to the design, construction, for infrastructure ents ironm O geo-solutions eme env R Delivering a’s extr G Alask U e in F tenanc main Y

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Our Alaska rage. town Ancho to h Slope. brochure or flyer. nt people on the Nort most wa s program at do you allow hazard Q. Wh y? ntrol for a sh ber of oil compan team sets co g on a num about your laska Fugro survey are workin ook know working in A A. We a—both in C ro has been - ommission- cts in Alask A. Fug rforming on eventual dec and gas proje he 2014 40 years, pe duction and tic. During t r more than r oil and pro t and the Arc ed in fo e projects fo ey- Inle ere mobiliz and offshor nd pub- ing. mber of surv son, crews w e shore le energy, a support a nu field sea s the state. W ng, sustainab ide We also in Alaska for ations acros gas, mini take great pr programs multiple loc hore shallow tomers. We and mapping encies. ore and offs ic sector cus ted to con- ing ernment ag formed onsh rig l d are commit and state gov rting per assisted with is history an federal phic cha assessments, as- in th state. lude hydrogra hazard e crossing ccess in the Examples inc d Atmos- rmed pipelin tinued su l Oceanic an moves, perfo an systems, the Nationa and air- lled metoce pany for n (NOAA) sments, insta a for the was the com Administratio ses rocessed dat We’ll give you free online advertising When Petroleum News readers click on articles each week . What year pheric llite based uired and p busy Q sate d acq r y whom? borne and ort of an ing to be anothe ded and b ices in supp 2015 is look turn foun nded mapping serv SDMI. global down ugro was fou wide Digital s despite the ers A. F Alaska State year for u As stakehold Dutch engi- the (SDMI). gas market. in 1962 by ing Initiative n the oil and ful for this stra, Mapp ment i we are grate eer Kees Jou rce develop laska’s future, and for n on The resou u- in A t in our state e focus was along with n d investmen us they will see your ad, which will appear in rotation on the current story pages. The size of your whos y ommunity, continue instilled in log c m ve tion techno rs, benefits fro that clients ha founda r stakeholde the trust rams. echanics. merous othe aid safe nav- n these prog and soil m asets, which as partners o se public dat planning ’s primary the preliminary es your ur company and support vesti- mployees do . What is yo igation and route in ow many e Q uch as siting Q. H s activity? en- activities s have? - busines volved in the company employs ap annual contract determines the size of your online ad. o is heavily in gations. ny-wide Fugro Fugr with pa A. en working A. Com essionals. Lo- and has be the rojects the 12,500 prof ergy sector Alaska since important p proximately panies in Q. Are there or has l and gas com designed to tly a part of Continued on next page oi services are y is curren 1970s. Our from compan early ct lifecycle, tly? the full proje to done recen support ent, through to developm exploration Contact Susan Crane: 907.770.5592 WEB ADS PETROLEUM NEWS • WEEK OF DECEMBER 11, 2016 15 continued from page 1 up the Sterling Highway to the Tesoro oil accident on the highway and questions over he said. refinery at Nikiski. Given the oil production putting funding into oil development rather The Alaska Oil and Gas Conservation BLUECREST DRILLING rates from the well that started operation in than renewable energy. Commission oversees the safety of drilling April, a truck, holding between 315 and 320 Representatives from the oil industry, operations in Alaska and in January 2015 cept is to use directional drilling to target the barrels of crude oil, only has to traverse the including Kara Moriarty, executive director updated its regulations for hydraulic fractur- offshore reservoir at a depth of some 7,000 highway once about every couple of days, of the Alaska Oil and Gas Association, com- ing. Recently Bob Shavelson, executive feet and then to drill horizontally through Martineck said. However, the frequency of mented that there is a continuing need for oil director of environmental organization the reservoir. The resulting well bores will truck movement will increase as more wells development; that the Cosmopolitan field is Cook Inletkeeper, asked for a further have measured depths of up to 24,000 feet, come on line. The new development well being developed safely; and that oil fields change to the regulations — Shavelson an exceptional drilling distance that requires will probably have initial production in the such as Cosmopolitan bring employment wants a public hearing to be held whenev- an exceptional rig. In September Benjamin range of 2,500 to 4,500 barrels per day, and major economic benefits to the state. er hydraulic fracturing is proposed for Johnson, president of BlueCrest Energy, Martineck said. During the board meeting, board mem- stimulating production in a well. The told the Alaska Oil and Gas Congress that ber Fred Parady commented that AIDEA commission is holding a hearing on the the rig has a 750-ton top drive and a 7,500- AIDEA loan acts as a financing entity. Assessing environ- request on Dec. 15. l pounds-per-square-inch drilling mud sys- mental risks and concerns is part of the per- tem. Under a line of credit from AIDEA, mitting process for a development project, Given the compartmentalized nature of BlueCrest received the balance of AIDEA’s the field reservoir, a typical characteristic of $30 million-loan in July — the company Cook Inlet oil and gas fields, BlueCrest is had originally hoped to complete the instal- going to conduct multi-stage fracking in its lation of the drilling rig and start the drilling wells, to open up the barriers within the of its new well in the spring of 2016. But, ENVIRONMENT & SAFETY reservoir, so that oil can flow to the well following delays in the contracting and con- bores. Martineck said that the reach of the struction of the rig, the drilling of the well Record low sea ice cover in November fracking would extend about 220 feet out has only just started. And, so, with Arctic sea ice cover has hit a record low extent for November, the National Snow from the well bores. The first well would BlueCrest needing revenues from ramped and Ice Data Center has reported. Following unusually high air temperatures and involve about 16 frack stages, with multiple up oil production to make its loan payments, southerly winds, the November ice extent, at an average of 3.51 million square miles, stages being conducted together —it would the company requested, and AIDEA has was well below the long-term average for the month. And, with the Antarctic sea ice be unlikely to be necessary to frack more now approved, a partial deferral of the start cover also setting a record low for November, global sea ice cover was exceptionally than 20 stages in any of the wells, Martineck of loan payments. The original maturity date low, NSIDC reported. said. of the loan will be maintained. In the Arctic, relatively fast ice growth for much of November was offset by an There is an ample supply of water for the The new drilling rig acts as collateral for almost unprecedented decrease in the ice cover in the middle of the month. Ice fracking from local state-approved sources the loan. And, to cover any shortfall growth in November primarily happened in the Chukchi, Beaufort and East Siberian and there are several facilities in the region between the loan amount and the potential seas, and in Baffin Bay. However, there was a slight loss of ice in the Barents Sea. where the waste fracking fluids can safely sale value of the rig, the loan agreement Air temperatures in November were well above long-term averages across the be disposed, Martineck said. Apparently required BlueCrest to establish a reserve entire Arctic Ocean and Canada, with temperatures up to 18 degrees F above average each frack stage will require some 1,780 account of $15 million. BlueCrest had at the North Pole. However, temperatures were up to 8 F below average in northern barrels of water. intended to use the proceeds from state tax credits to fund the reserve account. Eurasia, with record snow falls recorded in Sweden and across Siberia early in the Conventional oil field However, with the deferral of credit pay- month. ments following a payment veto by Gov. NSIDC says that an unusual jet stream pattern resulted in storms entering the Despite the use of fracking techniques Bill Walker, AIDEA has approved a change Arctic Ocean through the Fram Strait, between Svalbard and Greenland, setting up a similar to those used for the development of to the terms of that reserve account. The southerly wind flow that caused unusual warmth over the Arctic Ocean while also shale oil elsewhere in North America, the reserve fund is now set at the greater of $5 pushing sea ice northward. Warm Atlantic water circulating across the Arctic conti- Cosmopolitan field is a conventional oil million or 120 percent of the difference nental shelf also kept sea surface temperatures in the Barents and Kara seas unusually field, not a shale oil play: The fracking will between the principal outstanding on the high, a factor that also inhibited sea ice formation, NSIDC reported. open up the oil communications within the loan and the distressed sale value of the —ALAN BAILEY reservoir rather than enticing oil from an drilling rig, but with BlueCrest incurring an impermeable oil-bearing rock. And, so, unfunded reserve fee. rather than having to regularly drill and frack new wells to entice more oil out of the Many comments subsurface, as in a shale-oil situation, each LEADER In All We Do of the limited number of Cosmopolitan The appearance of the loan change reso- lution on the board meeting agenda trig- wells will be produced in a traditional man- Doyon Drilling, Inc. ner over an extended period of time. In fact, gered a flurry of comments from members hydraulic fracturing has been used quite fre- of the public. A number of people expressed Doyon Universal Services strong concerns about potential environ- quently for improved field reservoir per- Doyon Anvil, LLC formance in both the Cook Inlet basin and in mental issues, mainly voicing worries about DoyonLimited® oil fields on the North Slope. the perceived risks of conducting fracking Doyon Associated, LLC WWW.DOYON.COM BlueCrest is trucking oil from the operations in the Cook Inlet region. Other concerns include the risk of a tanker truck Doyon Remote onshore production pad for Cosmopolitan Facilities & Services, LLC

ENVIRONMENT & SAFETY Leaked diesel found in platform leg Responders have completed the lightering and disposal of diesel fuel that had been discovered to have leaked into one of the legs of the Tyonek platform in Cook Inlet. The platform houses the wellheads and production facilities for the North Cook Inlet gas field. Hilcorp Alaska has recently completed the purchase of the field and platform from ConocoPhillips and discovered the leaked fuel on Nov. 29. On Dec. 1 oil spill response organization Cook Inlet Spill Prevention and Response Inc. began pumping the fuel out of the leg into a tank for transfer to shore in batches for safe discharge. The U.S. Coast Guard oversaw the operation and reported no indications of any oil sheen on the water adjacent the platform. “The source of the diesel has been identified and is fully contained within a leg of the platform and poses no threat to wildlife,” Hilcorp spokeswoman Lori Nelson told Petroleum News in a Dec. 2 email. “Fluids from the leg are being pumped into con- tainers and will be properly disposed of. … This condition existed prior to Hilcorp tak- ing over operation of the platform. As we work in cooperation with the Alaska Department of Environmental Conservation and the United States Coast Guard, the safety of our personnel and the environment remain our top priority.” The Coast Guard has subsequently told Petroleum News that the removal of the diesel fuel from the platform leg was completed by Dec. 5. A total volume of 20,580 gallons of fuel was removed, and none of the fuel escaped into the waters surrounding Engineering, drilling operations, remote camp services, the platform, Coast Guard spokesman Petty Officer Bill Colclough told Petroleum News. and security—together, our companies blend expertise Nelson also confirmed that no hydrocarbons had been released into the Cook Inlet, “We will continue to work in cooperation with ADEC and the USCG as we do post- and technological muscle in support of smooth, safe, and inspections and subsequent follow up,” Nelson said in a Dec. 7 email. successful operations in the North Slope oil fields. —ALAN BAILEY 16 PETROLEUM NEWS • WEEK OF DECEMBER 11, 2016 Oil Patch Bits

BELL selected as PIRATE group of the quarter Fluor was also ranked as the most just company in the capital goods category. BELL and Associates is proud to “We are honored to make the Forbes inaugural Just 100 list announce that they have been selected as of top companies,” said David Seaton, chairman and CEO of the personal involvement reduces accidents Fluor. “The recognition reaffirms the values that have con- to everyone work group of the quarter on tributed to Fluor’s 100-plus year global legacy and why we are the North Slope. PIRATE is a behavioral recognized as an employer of choice in our industry.” based safety process that requires employee The Forbes Just 100 list is the first-ever annual ranking of involvement at all levels. The recognition has how America’s top companies perform on the issues Americans been a long time in the making. care most about according to Forbes. The list was compiled through one of the largest sur- COURTESY BELL & ASSOCIATES BELL & COURTESY “I would personally like to thank all the veys ever conducted on attitudes towards corporate behavior involving 50,000 Americans members of the BELL survey team that have over the last 18 months. made this award possible,” said Tim The top six issues ranked highly by the public include the following: providing fair pay Barnhart, project manager, “and for keeping for industry and job level; non-discrimination in hiring, firing and promotion practices; pro- themselves and those around them safe!” viding a safe workplace; following laws and regulations; respecting workers; and creating BELL’s dedication to safety and the belief jobs in the U.S. Each company’s score was weighted to reflect the overall priorities of the that “safety is everyone’s business” are rea- American public. sons why they have not had a lost time inci- The complete list of winners can be found at www.forbes.com/just100. The inaugural dent in more than 15 years and a recordable list will appear in Forbes magazine’s Dec. 20 issue. accident in over 10 years or 605,399 hours worked. The program has been led by BELL employees Josh Erhardt and Kevin Chiasson for the last three years and their message has been heard loud and clear by the group here at BP’s main construction camp. Judy Patrick Arctic Oil photo book — on sale now! The Arctic Oil coffee table style photo books make the perfect Christmas gift for your Fluor named to Forbes Just 100 list friends, relatives, business associates and co-workers. They also make an excellent safety Fluor Corp. recently announced that it was named to the inaugural Forbes Just 100 list. see OIL PATCH BITS page 18 Companies involved in Alaska and northern Canada’s oil and gas industry

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I think they are burning the mid- not the middle? leading into, I think over the years I’ve When you have one person calling the night candles in D.C. coming up with Olson: I think I’ve seen more finger chaired four or five committees, so I’ve shots saying it’s my way or the highway things they can do by executive order. pointing and blaming of other people on got the experience of running a commit- — and we’ve seen that with other gover- all sides this year, be it the House, the tee. nors not just this one — it’s not going to Petroleum News: Do you think the Senate or the administration. Even peo- Now when you look down at the ros- work. Arctic is a good place for exploration? ple in between, the oil companies. It’s ter and at people making up the new Shell had problems with its rig but they either somebody else’s fault or we’re not House majority, the people with any kind Petroleum News: One of the more also cited regulatory problems as well. listening or whatever. I don’t see any- of committee leadership or involvement high profile tax discussions is always oil Olson: I think it’s probably much body trying to find a solution. are the three Republicans. We are going tax, even though it’s the income tax more onerous offshore than it is onshore. to be looking at a whole slate of people affecting everyday Alaskans more so, do Petroleum News: OK, so 12 years is a who are going to need to be brought up you see the oil tax talks even more Petroleum News: Looking ahead these lot to serve and it’s coming to a close. to speed on how things flow and how to volatile than last year? next two years, what would you like to What will you miss the most about it? run a committee. Unfortunately, that Olson: I think you will. What’s see for the state in resource develop- Olson: I really enjoyed committee comes at a difficult time for the state. changed other than the makeup of the ment? We’ve seen that a lot can happen work. For a long time, every bill moved organizations? The leadership has in two years. out of committee with consensus. I was Petroleum News: Could there be an changed. The number of people hasn’t Olson: I’d like everybody to come to blessed with a good committee most of advantage of having a different majority changed. The views haven’t changed. an agreement with something they can the time, and that made a difference. I make up to bring new perspectives to the live with on the tax regime. They don’t had some real good minority members. forefront? Petroleum News: What do you think have to like it but it has to be wrapped up That helped. Anything we moved, we Olson: The only experience I had was Caelus’ Smith Bay discovery will bring to where it’s not going to change in two were able to get the kinks out to where watching the Senate a few years ago. The the discussion of oil tax structure? years. That is going to be difficult. Look everybody could live with it. I certainly only thing I saw were a few bills that Olson: I don’t think it’s going to move at the players — and I’m not going to didn’t get everything I wanted it, but we were weighted in the middle. They were forward until there are definite side- name any of them — you’ve got people put out a product we could live with. l neither left or right. What you’ve got is boards on any definite tax changes that who are hard and fast on one side and the middle. If that’s what you’re looking are going to be put into place. others who are hard and fast on the other. for, I don’t think that will produce new ideas. I think when you’ve got something Petroleum News: Do you see this dis- on the cutting edge has come out from covery as any kind of game changer for one side or the other and has been slight- prospective tax changes? ly left or the right. Olson: I think it’s one of them. I think PIPELINES & DOWNSTREAM Having said that I think at the end of there are others. All are on the North last session, you saw an example where Slope. I hear the governor is thinking of Nutaaq tariff rate of $1.10 starts Jan. 1 everybody worked on a bill that basically gas-to-liquids again for the North Slope. The Regulatory Commission of Alaska said Dec. 1 that the rate of $1.10 per nobody ended up liking but most people Having been to the only gas-to-liquids barrel proposed by Nutaaq Pipeline LLC for the Badami Oil Pipeline is suspended voted for it, the crime bill (SB 91). That facility, I think they are in possession at subject to protests and becomes permanent if no protest is filed. The rate is effec- was basically Johnny Ellis and John least in the United States of what works tive Jan. 1. Coghill, who are basically about as far and what doesn’t. apart as two people could be politically The pipeline, owned by Glacier Oil and Gas, runs from Badami to Endicott, and carries crude oil from Badami and condensate from the Point Thomson unit and they were able to work together on Petroleum News: Do you think it will farther east. that. It wasn’t perfect but it was neces- take some creative or different thinking to RCA said if no protest to the rate is filed, “each day’s rate becomes permanent sary to start. That was done without a advance new policy or generate new the following day.” majority. exploration beyond rehashing the same If a protest is filed, the rate from the date of filing forward remains suspended You asked why I’d like to be down debate? until Dec. 31, 2017, unless RCA orders a further suspension. there. I’d like to see how this is going to Olson: I’ve heard some wild ideas Nutaaq has filed for the same tariff rate with the Federal Energy Regulatory work out. I wouldn’t have organized with these last few years. I’ve heard of using Commission. RCA regulates rates for in-state transportation; FERC regulates them. I would have been watching from dirigibles on the North Slope for who rates for interstate transportation. the outside. knows what. I’ve heard of using the top Nutaaq’s filing with FERC said the rate revision is based on updated expenses of the world route with more days per for 2017 and updated throughput estimates from PTE Pipeline LLC, the line from Petroleum News: So what do you think year they can get vessels through. So we Point Thomson to Badami. it’s going to take to get a stable tax may hear more ideas. I don’t know. I “The rate reduction is driven by anticipated materially increased production regime or do you think what we have one remember back in the early to mid-’70s from PTE Pipeline LLC, up approximately 452 percent from 2016 (605,008 bbls) now? there was talk of running the gas down to 2017 (3,341,910 bbls),” the filing said. Olson: Ultimately we are going to through the McKenzie Valley. It was Point Thomson operator ExxonMobil has been bringing the field’s condensate have to have new sources of revenue. We called the over the top route, but we production online since last spring and recent production postings from the Alaska are going to have to broaden the bases. would run it into Northern Canada and Department of Revenue indicate more sustained production from the field, which We had two polls that were out, one by take it through McKenzie Valley into an is expected to initially produce some 5,000 barrels per day. The volumes cited for Rasmussen and the other by GCI, where Alberta hub. I think on a federal basis 2017 would average out to some 10,000 bpd, which is the production level for there was overwhelming support for and a state basis, we’ll never see that. It which Point Thomson facilities are rated. using the Permanent Fund. I had the may have made sense for the producers chance to sit down with the governor and but it didn’t produce enough jobs. We —KRISTEN NELSON the former attorney general after the polls need to factor that in. the whole thing is came about and discussed having an about revenue and jobs. advisory vote. So if the numbers that were being put out to the Legislature Petroleum News: Let’s look out of Essential Expertise for Alaska were accurate, the governor would have state to D.C. What do you think the new the strength of the people behind it. That Nalco is the world leader in delivering programs presidential administration could mean that maximize production, protect assets and never happened. to Alaska? I still think if the governor wants to reduce TCO for Mining, Oilfield production, Olson: I’m not going to touch that Refining, Industrial producers and Utilities. utilize the Permanent Fund, he is going to until that one until I see who gets the Our differentiated technologies and services have to have the support of the people. I Department of the Interior. It would be a • Save water don’t think that support is there at this • Increase energy different answer for each of the five, six • Deliver cleaner air and water point and time. That is the biggest pot we or seven people under consideration, plus have available. The next would be the tax there could be another five or six we regime we tossed out. The one that made don’t know about. the most sense is we have the lowest tax rate for gasoline in the country. We could Petroleum News: Do you have a pref- have tripled it from 8 cents to 24 cents a erence for an Interior secretary? gallon and still had around the fourth of Olson: Not at this point. fifth lowest in the country. %XLOWWRGHOLYHUDEHWWHUZRUOG Then again, the problem with that is Petroleum News: Would you say $(&20LVRQHRIWKHODUJHVWDQGPRVWUHVSHFWHG we would have had a real problem with you’re more optimistic? SURYLGHUVRIHQJLQHHULQJDQGFRQVWUXFWLRQVXSSRUW (aviation) gas. This could have caused us Olson: The way I feel right now, it VHUYLFHVLQWKHZRUOG$(&20KDVVHUYHG some problems with carriers like Fed Ex. could be someone whose name is not out $ODVND¶VRLODQGJDVLQGXVWU\VLQFHWKHGLVFRYHU\ I think we are going to have to look at all there in the public right now. RIRLORQ$ODVND¶V1RUWK6ORSH the aspects of it. We had an income tax when I moved up to Alaska in the 1970s. Petroleum News: Obama essentially It’s going to be a tough sell at this point shut down the Arctic from development  to re-implement it. A state sales tax will from the Interior’s five-year plan. Are you ZZZDHFRPFRP 18 PETROLEUM NEWS • WEEK OF DECEMBER 11, 2016

continued from page 1 undermines Canada’s climate-change continued from page 16 PHOTOGRAPHS OF ALASKA’S NORTH SLOPE commitments. PROTESTS “Nobody has any idea of the beast that OIL PATCH BITS is going to be unleashed in Vancouver and the Canadian Broadcasting Corp., over this issue,” he said. “It’s out of the award, retirement present, or thank- tried to soften his position by insisting box now and I don’t know how you’ll you gift for any individual or business that “no warning was intended” in his ever stuff it back in.” that is involved in Alaska’s North comments that “if people choose for their Slope oil industry. Stewart Phillip, president of the Union own reasons not to be peaceful then the of British Columbia Indian Chiefs, said Judy Patrick Photography’s gift to government of Canada, through its you takes 25 percent off now until the two pipelines would put rivers and defense forces and police forces, will coasts at risk and have devastating Dec. 22! Hardcover, regular price $65, ensure that people will be kept safe. ... We is now $48.75 per book, a $16.25 impacts on climate change. live under the rule of law.” savings! Soft cover, regular price $35, He said that in less than a week more is now $26.25, an $8.75 savings! Others distance themselves than 10,000 people has signed a petition to Contact Judy Patrick Photography stop Kinder Morgan, while 100 First at [email protected] BY JUDY PATRICK Defense Minister Harjit Sajjan and Nations and tribes across North America to order your copy, pick up at: 511 W Transport Minister Marc Garneau dis- have joined forces under a Treaty Alliance 41st Ave, Ste. 101, Anchorage, AK tanced themselves from Carr’s position, Against Tar Sands Expansion to stop 99503, or call 907-258-4704. declaring they would “always protect the Trans Mountain, Line 3, Keystone XL, right of Canadians to protest when they Energy East and the Dakota Access Crowley awarded US Department of Defense contract don’t agree with something. ... We’re con- Pipeline. fident they would do so peacefully.” Phillips urged Trudeau to see the error The U.S. Transportation Command, an agency of the U.S. Department of Defense, has Prime Minister Justin Trudeau of his ways and “not allow the same kind awarded Crowley Logistics Inc., a subsidiary of Crowley Maritime Corp., a multi-year con- acknowledged “there’s lots of people” of ugly, hateful and violent reaction to the tract to provide transportation and related services supporting Department of Defense who disagree with his decisions to activities in the U.S. and Canada. peaceful prayers of our brothers at sisters” approve expansions of Kinder Morgan’s The Department of Defense freight transportation services contract is one of the at the Standing Rock camps in North Trans Mountain pipeline to Vancouver largest logistics contracts awarded by the U.S. government. The period of performance is Dakota that have been established to defy two base years followed by five option years for a total value of approximately $2.3 bil- and Enbridge’s Line 3 to Wisconsin, federal orders and stop construction of lion. adding: “That’s fine and that’s fair and Dakota Access. “We are very proud and appreciative of the opportunity to support our country and you’re allowed to. the Defense Department with transportation and logistics services through this new “I look forward to working with people Fight on numerous fronts TRANSCOM contract,” said Tom Crowley, company chairman and CEO. “We will reward to manage and mitigate the very real fears Sven Biggs, energy and climate cam- TRANSCOM’s confidence in us by providing the highest quality service with safety, that people might have” about the impact paigner for the environmental group integrity and high performance.” of transporting bitumen from the Alberta Stand.earth said the Trans Mountain The program encompasses all forms of truck transportation to include less than truck- oil sands to export markets, he said. approval “signals the beginning of a new load, full truckload, expedited and refrigerated services. Delivery locations will include But Trudeau also observed that if phase in the struggle against pipelines.” vendor facilities, Defense Department warehouses or depots, and U.S. military installa- pipeline construction is stopped there is tions. He and Greenpeace oil sands cam- nothing his government can do to prevent paigner Mike Hudema said they are ready Crowley’s participation in this contract will provide more than 70 new employment the shipment of crude by rail “which is opportunities in the local Jacksonville, Florida, community. to carry their fight to numerous fronts more expensive, more emitting and much from the streets to courts and the legisla- more dangerous.” Eschenberg appointed to the AECOM-led joint venture ture. Ric McIver, interim leader of the “Diversity in tactics is a key strategy,” AECOM, a premier, fully integrated global infrastructure firm, announced today that Progressive Conservative party in Alberta, said Hudema. “That will mean lawsuits, John Eschenberg, experienced veteran of the nuclear and environmental industry, has noted that federal Green Party leader meeting with government officials, show- been appointed director of salt disposition in the nuclear high level waste program with Elizabeth May said she is prepared to go ing up at the ballot box (in the May 2017 Savannah River Remediation LLC. to jail to prevent the Trans Mountain proj- British Columbia election), protests and Savannah River Remediation is a limited liability company led by AECOM, Bechtel, ect from being built. direct action.” BWXT, CH2M and AREVA. “She has declared war on common For B.C. Premier Christy Clark it could Following a 25-year career with the Department of Energy and the private sector, sense and Canadian unity,” he said. “We be an about-face from the 2013 election Eschenberg most recently served as director of capital projects and infrastructure for can’t let the pipeline get held up by people campaign when New Democratic Party PricewaterhouseCoopers in Washington, D.C. In this role, he led the firm’s overall project who will never agree to any standard. The leader Adrian Dix stunned his own party management advisory efforts for new nuclear plant construction, development of their law of the jungle cannot prevail.” operational readiness review program and the initial test program. His responsibilities by unilaterally opposing Trans Mountain Alberta Premier Rachel Notley headed and sacrificed what was seen as an insur- also included advisory efforts on nuclear power plant decommissioning, financial due dili- into hostile territory to argue that export- gence, license transfer, dry fuel storage, and construction and management of independ- mountable leader in the polls. ing crude will obtain higher international Clark is now faced with tying her re- ent spent fuel storage installations. prices for producers, generating revenues “John has a spectacular reputation in the industry,” said Dr. Todd Wright, AECOM gen- election chances to arguing that Trans for national health care and education pro- eral manager and executive vice president of nuclear and environment’s business unit. Mountain will be a source of jobs and rev- “His leadership in the private sector and with the U.S. Department of Energy led to many grams, while sending a message to ener- enue, provided she can reach an agree- successes in the DOE complex for both Environmental Management and the National gy-sector investors that Alberta is open for ment with Kinder Morgan to allocate a Nuclear Security Administration. John will be a tremendous asset to our organization.” business. portion of its pipeline profits to British Concerns over pipeline Columbia and to establish a “world-class” Editor’s note: Some of these news items will appear in the next Arctic Oil & Gas response program for oil spills on land or Directory, a full color magazine that serves as a marketing tool for Petroleum News’ However, Andrew Weaver, leader of l contracted advertisers. The next edition will be released in March. water. the Green Party in British Columbia, said it was “offensive for the premier of anoth- er province to come to our province and to market” production from the oil sands that PETROLEUM NEWS • WEEK OF DECEMBER 11, 2016 19 continued from page 1 ing to the transfer of a PACE loan to a house buyer after No change a house sale, Therriault commented. Essentially, under IEP NEGOTIATIONS mortgage arrangements, the transfer of a PACE loan can to Fairbanks gas price disqualify a buyer from obtaining financing, he said. But the price of gas delivered to Fairbanks consumers During its Dec. 1 meeting the board of the is key to the viability of the project. The price needs to Alaska Industrial Development and Export Originated in 2013 be low enough to compete with the cost of heating oil, Authority approved a resolution that there will be IEP originated in 2013 as a consequence of legislation enticing consumers to convert their building heating sys- no change to the price of gas in the New Year for introduced by then Gov. Sean Parnell. The idea was to tems from oil to gas. IEP has set a target gas price at the customers of Fairbanks Natural Gas. AIDEA cur- alleviate the high cost of energy in Fairbanks by making burner tip in Fairbanks of $15 per thousand cubic feet, a rently owns FNG and, as a state agency, regulates available an affordable supply of natural gas. A secondary price significantly below that of the gas currently deliv- FNG’s tariff in place of the Regulatory purpose was to eliminate the severe winter air pollution in ered to the city. Commission of Alaska. Also, as a government Fairbanks by encouraging residents to use clean burning There are currently two gas utilities in Fairbanks: agency rather than a private company, AIDEA was gas rather than wood stoves for heating their homes. Fairbanks Natural Gas and the Interior Gas Utility. FNG able to reduce FNG gas pricing in 2016 relative to Unusually for AIDEA, the project was mandated by provides the current gas supply to the central area of the price levels when FNG was privately owned. the Legislature, with state funding appropriated for the city. IGU does not currently supply gas but plans to do The board also approved a change in FNG’s fis- project. The Legislature also approved the use of AIDEA so, once an expanded gas supply has been established. cal year, to have the fiscal year end on June 30 loans for some of the project funding. As part of IEP, AIDEA has taken ownership of Pentex rather than Dec. 31. That will line up the gas utili- Originally the plan, as set out in the legislation, was to Alaska Natural Gas Co., the owner company of FNG and ty’s fiscal year with that of AIDEA. As a conse- purchase and liquefy natural gas on the North Slope and of the companies operating the Point MacKenzie LNG quence there will be another gas rate review at the then truck the LNG to Fairbanks using the Dalton plant and the LNG trucking operation. end of June. Highway. The project built a gravel pad on the Slope for Expanding the gas supply With price increases scheduled for the gas which the LNG plant, developed a plan for the construction of Hilcorp supplies to FNG, and with warmer than the plant and advanced negotiations with the Fairbanks Therriault told the AIDEA board that negotiations average weather and low fuel oil prices both soften- utilities. But in January 2015 AIDEA called a halt to the continue with a Cook Inlet gas producer over a potential ing the demand for natural gas in Fairbanks, the project when it became apparent that the capital and oper- expanded gas supply for the LNG plant. Finding a sup- FNG gas price may have to go up for the 2018 fis- ating costs were going to be too high to meet the project ply arrangement acceptable to both the producer and IEP cal year, Dan Britton, president of FNG, told the objectives. is tricky because, while the gas price needs to be low board. enough to meet the IEP gas price target, initial gas vol- —ALAN BAILEY A change in direction umes will be relatively small, with no certainty over the Instead, with legislative approval, AIDEA opened up scale of eventual gas demand in the Interior. the project to the possibility of obtaining gas from either Similarly, the cost of expanding the LNG plant must Consolidating the utilities the North Slope or the Cook Inlet basin; to the possibility fit within the required gas price parameters. The IEP of shipping the gas by pipeline as well as in the form of team had been working with Salix Inc., a subsidiary of AIDEA’s plan for an expanded gas distribution system LNG; and even to the possibility of using energy alterna- electric and gas utility company Avista Corp., on a plan in Fairbanks is to sell Pentex to IGU, thus consolidating tives such as propane. With a source of North Slope gas for plant expansion. However, a couple of months ago, in the utilities into a single organization that can achieve already established, the Alaska Department of a move to drive down costs, Salix withdrew from the economies of scale while also implementing a fully coor- Commerce, Community and Economic Development, project, selling its project documentation for the plant dinated gas distribution system. The IEP team had hoped AIDEA’s parent agency, led an effort to secure an alterna- expansion to AIDEA. The idea now is that FNG will pur- to complete a draft agreement for the Pentex purchase by tive gas supply from Cook Inlet, while the IEP team sue the LNG plant expansion — Therriault told IGU by the end of this year. Therriault told Petroleum sought proposals for transporting gas to Fairbanks. Petroleum News that the IEP team is working towards News that negotiations over the purchase are now likely The upshot was a project in which the team entered preparing a proposal for plant expansion that can be put to continue beyond December but that the IEP team into gas supply negotiations with a Cook Inlet gas pro- before the AIDEA board for approval. Therriault told the hopes to present an agreement to the AIDEA board early ducer while working with Salix on a plan for a Cook Inlet board that Dan Britton, president of FNG, has reviewed in 2017. LNG plant. Meanwhile, in 2015, in anticipation of an the Salix documentation and contacted the vendors that Therriault told the board that Jim Whitaker, Gov. Bill enlarged gas supply for Fairbanks, FNG and IGU moved had been involved in the LNG plant work. Walker’s senior adviser for major projects, is now acting as a facilitator in the negotiations between the two ahead with expansions of their gas distribution systems in Reduced transportation cost Fairbanks utilities. IGU would like to see more of the the city, using funding from AIDEA loans. Also in 2015, state funding for the project made available, but there are AIDEA purchased Pentex, thus becoming owner of FNG IEP has seen success in moves to reduce the cost of limitations on how those funds can be used, Therriault and FNG’s gas supply chain. transporting LNG to Fairbanks. Following successful said. But, under the terms of the 2015 legislative authoriza- tests in 2015 of a prototype large capacity LNG trailer, to tion for the broadened scope of the project, the expansion improve the economies of scale for the LNG transporta- Encouraging conversion of the Fairbanks gas distribution network was suspended tion, that trailer continues in use and FNG has ordered With the rate of conversion of Fairbanks homes and after the 2015 construction season, pending AIDEA more trailers of the same design. approval of new gas supply arrangements. “That’s working out well to drop the delivered price businesses to the use of natural gas being so critical to the economics of IEP, the IEP team continues to seek ways to So, at present, AIDEA owns and operates Pentex’s of LNG into the community,” Therriault said. Fairbanks gas supply operation, with plans to sell that As an alternative to road transportation, this fall the alleviate the conversion costs — the drop in the price of fuel oil following the fall in oil prices since 2014 has ren- operation to IGU. The agency anticipates expanding the Alaska Railroad tested the carriage of LNG by rail, using Cook Inlet gas supply for the operation at an acceptable cryogenic LNG trailers borrowed for the purpose. dered the gas conversion question particularly challeng- ing. One possibility is the passing of Property Assessed gas price. Salix has left the project, but AIDEA’s IEP Britton told the AIDEA board that the railroad test had team anticipates expanding the Point MacKenzie LNG proved very successful. The challenge now is to reduce Clean Energy, or PACE, legislation in Alaska. Legislation of this type, which enables low-interest loans for energy facility at an acceptable cost, thus boosting the LNG the cost associated with shipping the LNG trailers by deliveries to Fairbanks. This would support an expanded road between the LNG plant and the railroad, and conversions, is being re-introduced in the upcoming leg- islative session, having missed the cut in this year’s ses- gas distribution system in the city and an increasing num- between the railroad and the LNG storage facilities in ber of natural gas consumers. Fairbanks. For example, it may be possible to load the sion. —ALAN BAILEY containers onto rail cars at some intermediate point on The PACE legislation would only apply to commercial the railroad route, such as Houston or Pittman, Britton properties. The use of PACE for residential properties has commented. been tried in some states but has run into difficulties relat-

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Anchorage: (907) 248-0066 Prudhoe Bay: (907) 440-0084 Fax: (907) 248-4429 5631 Silverado Way, Suite G Anchorage, AK 99518 www.pesiak.com 20 PETROLEUM NEWS • WEEK OF DECEMBER 11, 2016 continued from page 1 least in the near term. ANWR is such a Water Act administered by the U.S. Army What might also be possible is lightning-rod nationally that it will be dif- Corps of Engineers. ANALYSIS that the state of Alaska’s plan for ficult to get this through even a •Likewise, there could be a review of a limited one-year winter Republican-controlled Senate (it failed last BLM’s policy for requiring mitigation on his attitude really is on resource issues, is exploration drilling program in time, when Republicans also were in con- oil and gas projects in NPR-A that is sepa- a complete unknown. “In my lifetime, no trol). rate and in addition to the Army corps’ one has ever become president after hav- ANWR’s coastal plain, which would involve no leases being However, if a bill did get through requirements. These policies affected ing said so little about what they will Congress a President Trump would proba- ConocoPhillips in its permits for GMT-1, a issued (and thus no congressional actually do with the reins of power,” said bly sign it. What might also be possible is new project in the reserve. University of California professor David approval) might find favor with that the state of Alaska’s plan for a limited Victor in an article published by the incoming administration. one-year winter exploration drilling pro- Authority an issue Brookings Institute. gram in ANWR’s coastal plain, which Critics have argued that BLM has no Trump is unpredictable and is even •Likewise, undoing parts of the highly would involve no leases being issued (and authority under its statutes to impose these showing signs of waffling on some cam- restrictive Arctic offshore drilling rules thus no congressional approval) might find requirements and that the agency’s claim paign positions, even on climate change — might be possible, such as requirements favor with the incoming administration. of authority under regulations is flimsy. If the president-elect says he is now “open” like having a standby rig nearby. Although BLM’s policies go away it would leave on the issue. these rules also apply nationwide in the Walker another unknown wetlands policy back with the U.S. Army His appointment of Scott Pruitt, OCS the Arctic rules are more restrictive. Interior Secretary Sally Jewell nixed Corps of Engineers. Oklahoma Attorney General and a fierce •What could easily change, however, this plan previously when former Gov. •Don’t expect, however, a shift in more critic of President Obama¹s climate- are federal agency interpretations of the Sean Parnell advanced it, even though the traditional mitigation rules set out by the change policy, as new head of the U.S. Arctic rules, such as agencies’ rigid inter- state offered to foot the $50 million bill. corps under the federal Clean Water Act. Environmental Protection Agency, seems pretation of rules that Arctic OCS drilling It’s not known that Gov. Bill Walker will The Clean Water Act and Clean Air Act, to contradict that, however. operations must be 15 miles apart. This resubmit the plan, however, or that the the foundations of federal environmental However, even with a pro-development was sprung on Shell late in its Chukchi Sea Legislature would appropriate the $50 mil- law, have been in place for decades and president and a development-friendly drilling and it stopped the company from lion. have strong bipartisan support. Interior secretary, it will take time for poli- drilling two exploration wells instead of •There could also be changes in the Overall, “The regulatory apparatus for cies at the top to trickle down to the field- one even with the rig was available and Interior Department’s rules establishing oil and gas probably won’t change much, level agencies where Alaska industries ready to go. large protected areas in the National although public lands could be different,” operate. Petroleum Reserve-Alaska, particularly Prof. Victor said in his Brookings Institute What could happen? Senate filibusters those along the northeast coast of the article. Any change that can be done without reserve where there are very good “A Trump presidency presumably Meanwhile, here are some things that new legislation might allow near-term prospects for discoveries. would ease the process for leasing on pub- could happen fairly soon, some believe. action. However, if a change in law is These policies were set in the frame- lic lands, although any changes would Here are some things not to expect and required, the probability of a U.S. Senate work of the U.S. Bureau of Land likely be tied up in the courts as will efforts things that might be expected. filibuster will delay things. Management’s plan for the NPR-A, and to speed pipeline projects,” he wrote. •Is it possible for the president-elect to If that happens on the Arctic OCS sale they could be redone by a new administra- Relief of rules for emissions of methane undo President Obama’s refusal to include issue it might be more practical to wait for tion with a rewrite of the record of deci- and use of water for shale gas and oil oper- Arctic lease sales in the new five-year the next cycle in the five-year schedule, the sion, which would involve no lengthy new ations could occur, “but it is already Outer Continental Shelf program? Some cycle starting in 2022. However, given the EIS process, some believe. There would becoming clear that these rules do not have think it might be, although there are differ- time needed for sale preparations and more still be protected areas but they would be a ruinous effect on drilling. They are ent legal views. Some say the record of work on an EIS that could push any new smaller, this argument goes. instead a compliance cost,” he said. decision on the government’s environmen- Arctic sales back into the mid-2020s. However, this would set off a firestorm Victor warned that one of the greatest tal impact statement could be redone fairly •Don’t bet on the coastal plain of the of opposition and lawsuits from environ- challenges for the oil and gas industry will quickly, which would allow the Arctic Arctic National Wildlife Refuge being mentalists, who would set up protection of be, “to avoid looking at a Trump presiden- sales to be re-inserted into the sale sched- opened to exploration and development, at Teshekpuk Lake, which is near the NPR-A cy as a blank check for any production and ule (they were in the draft schedule). coast, as a new poster-child and fund-rais- infrastructure here in the U.S.” ing gambit. “Instead, oil and gas companies looking •More easily done, however, are at the long term will need to keep working changes to agency policy decisions not on to find smart ways to reduce emissions done in a regulatory framework, such as and environmental footprints and to sus- interpretations or policy statements. An tain public trust, even if the federal gov- example is the Obama administration’s ernment doesn’t offer a credible threat of presidential order last year requiring feder- regulation,” Victor wrote. l al agencies to develop their own wetlands mitigation and compensation policies, with Contact Tim Bradner no regard for current rules under the Clean at [email protected]

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