State Agency Follows up on Commitment
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page Q&A: Neuman says gas pipeline 3 a priority; revenue issue at $50 oil Week of January 11, 2015 • $2.50 A weekly oil & gas newspaper based in Anchorage, Alaska Vol. 20, No. 2 • www.PetroleumNews.com ● EXPLORATION & PRODUCTION Mining News goes weekly New Liberty plan Hilcorp proposes a gravel production island for Beaufort Sea oil field page Redstar plans winter drilling 17 near the historic Apollo mine www.MiningNewsNorth.com The weekly mining newspaper for Alaska and Canada's North Week of January 11, 2015 By ALAN BAILEY The subsea line from Liberty will have a NEWS NUGGETS ● A LASKA Petroleum News double-walled pipe-in-pipe structure, Pebble critics laud New JV chases copper, similar in design, presumably, to the gold near Pebble ilcorp Alaska has filed a development plan Kijik Corp. and Alaska Earth Sciences Inc. Dec. 30 oil-gas drilling ban subsea line from the Oooguruk field to announced the formation of Chuchuna Minerals Company, a joint venture partnership to advance exploration at the for the Liberty oil field with the Bureau of Groundhog copper-gold project, situated immediately north of Mine development proponents say petroleum exploration moratorium the west. the Pebble project in Southwest Alaska. Alaska Earth H Sciences, an Anchorage-based geological consulting firm that should have little relevance to future of copper-gold-molybdenum project discovered the Groundhog prospect, will own 51 percent of Ocean Energy Management, BOEM spokesman Chuchuna Minerals; the remaining 49 percent will be owned By ROSE RAGSDALE IP by Kijik, the Alaska Native village corporation for Nondalton, For Mining News NERSH the nearest community to the Groundhog property. Kijik ART John Callahan told Petroleum News on Dec. 30. In brings local experience and resources to the project, which is n the face of it, President Barack Obama’s deci- P sion to place a ban on offshore oil and gas after abandoning a plan to develop the field using ED expected to improve the development of community engage- O IMIT ment and work force development programs. Results from a drilling in Alaska’s Bristol Bay Region appears to L November Hilcorp purchased a 50 percent interest number of geophysical surveys over several years infer that have handed opponents of the Pebble Project another Groundhog lies along the northeast margin of the Kaskanak weapon in their ongoing fight to block development PEBBLE ultra-extended reach drilling from a surface loca- batholith and is intersected by a north-northeast-trending cor- of the enormous copper-gold-molybdenum deposit. in Liberty from BP and became field operator. The ridor of distinctive intrusives. Alaska Earth Sciences said But Pebble supporters say a moratorium on petro- these surveys reveal very large conductive and resistive bodies leum exploration in Bristol Bay has little or no rela- tion at the Endicott field, the company was consid- in northeast trending structures on the Groundhog property. tionship to the merits of the mine project. field is on the federal outer continental shelf of the Multiple occurrences of porphyry-style mineralization and Oil and gas drilling in Bristol Bay has long been a breccias occur within this belt, including Pebble West and contentious issue, dating back to the 1980s when ering a new plan for field development. BOEM East and several other significant discoveries. Chuchuna industry interest in the area increased. Beaufort Sea, east of the Endicott field, off the Minerals will be seeking an option partner to continue explo- But little drilling occurred before the 1989 Exxon ration. Valdez oil spill in Prince William Sound prompted Congress to bar drilling in Bristol Bay and buy back had given BP until the end of 2014 to file its new leases that had already been issued at an ultimate cost central North Slope. (See map, page 31) Progress report for Livengood of more than $100 million. President Bill Clinton issued a moratorium on International Tower Hill Mines Ltd. Jan. 5 reported The area is “too precious for us to be putting out plan. In taking over operatorship of the field, Bristol Bay drilling in 1998. Congress lifted its ban in progress toward optimization of the Livengood gold project in to the highest bidder,” Obama said in avideo mes- 2003, but Clinton’s order was only overturned by Interior Alaska. The 2014 program included metallurgical sage announcing his decision. President George W. Bush in 2007, when plans were work; mine production scheduling studies; power supply alter- In a memo to the Interior Department, the presi- Hilcorp was presumably faced with that filing made to hold a lease sale in 2011. Suspended in 2012 natives review; and alternative camp reviews. The company dent extended protections for an area estimated to In 2010, Obama canceled the 2011 lease sale and says this work has developed an improved production sched- provide 40 percent of U.S. wild-caught seafood. put aseven-year moratoriumon oil and gas activity ule, as compared to the project’s 2013 feasibility study and Interior Secretary Sally Jewell said Obama’s in Bristol Bay. generated detailed work plans for 2015. These plans include action caps decades of work from the community to page 31 In recent years, Republicans have tried multiple Over the course of several years BP had pro- LIBERTY PLAN additional metallurgical tests and engineering, including con- protect the region’s economic and cultural heritage. see times to require a Bristol Bay lease sale but failed to firmation of the flow sheet and optimizing the operating costs. “With its pristine waters, rich fisheries and strong pass such legislation. Once defined, the operating costs generated from this work tourist economy, Bristol Bay is a treasure that should Obama moved Dec. 16 to permanently bar oil and will be used to evaluate and optimize the project configuration be off limits for oil and gas development,” Jewell posed various ways to develop Liberty. Eventually, gas drilling in the North Aleutian Basin, including added in a statement. see NEWS NUGGETS page 18 Bristol Bay off the coast of southwestern Alaska. see PEBBLE page 18 MOVE IT WITH TTAAIGA VENTURES ● PIPELINES & DOWNSTREAM FASTFFAAST — WWHENHEN YYOOU WWAANT ITT,, WWHEREHERE YYOOU WWAANT IT Fairbairbaannksks andand Anncchorahorage-be-basedsed remoterem site expediting andnd lologistic supsupport;port; camps ooff aallll sizes s, fuel systems. Expansion a divider CAMPS — EXPEDITING Find us at 2700 S. Cushman, Fairbanks, AK 99701 | 907-452-6631 | Fax: 907-451-8632 351 E. 92nd Ave., Anchorage, AK 99515 | 907-245-3123 DO IT WITH PPAACACWEST DRILLING [email protected] PacWestPacWesst DRILLING MUD, PVC ANDND PPAACTO TOILETS 2700 S. Cushman, Fairbanks, AK 99701 | 907-452-6631 Tesoro, HEA ask why all should pay for KBPL work; Enstar says it benefits system 351 E. 92nd AAvve., Anchorage, AK 99515 | 907-245-3123 TATAIGAVENAAVVVENTURESTURES.COM drilling supply [email protected] | taigaventures.com By ERIC LIDJI Hilcorp recently created Kenai Beluga For Petroleum News Pipeline to merge four regional Does the Bristol Bay drilling ban presage trouble for Pebble? Find out more in the Jan. 11 issue of Mining News, inside. transmission pipelines into a single proposal to increase east-to-west deliverabil- system. The consolidation carried broad ity across Cook Inlet is revealing some of the changing AGDC board; A support from utilities and producers Walker potential challenges of consolidating four regional across the region. nixes confidentiality agreements pipelines into a single system. Tesoro Alaska Co. LLC and Homer Electric Alaska Gov. Bill Walker has removed Association Inc. are questioning whether the cost Beluga Pipeline LLC is seeking regulatory three public members from the board of of the regional expansion project should be includ- approval to upgrade an existing compressor and the Alaska Gasline Development Corp. ed in system-wide shipping rates. add two new compressors at the Kenai Pipeline and instructed commissioners serving on Enstar Natural Gas Co. believes the project Junction to increase shipments from natural gas the board not to sign confidentiality would bolster the overall system. see EXPANSION PROJECT page 30 agreements. The Hilcorp Alaska LLC subsidiary Kenai Legislators who led in the develop- ment of AGDC have expressed their dis- ● FINANCE & ECONOMY appointment. Calling it a “paradigm shift” in the GOV. BILL WALKER way the state will conduct business with Alaska’s gas, the statement from the governor’s office said Canada’s upstream reels “there will be transparency in the process.” see AGDC BOARD page 30 Double whammy from glut of oil and gas; companies edge toward layoffs, default AIDEA cancels North Slope LNG By GARY PARK The M&A sector enjoyed a robust year in ith MWH For Petroleum News 2014 and could see more of the same this concession agreement w year as cash-strong companies grab On Monday Jan. 5 the Alaska Industrial Development and ith oil prices ending their biggest dive since distressed assets, analysts say. Export Authority formally canceled the concession agreement W2008 and natural gas prices now getting hammered, the Canadian petroleum industry is with engineering firm MWH for the construction and operation 2014 robust for M&A of a North Slope liquefied natural gas facility for the supply of facing a double whammy of unmatched propor- gas to Fairbanks and the Alaska Interior, AIDEA spokesman tions as it faces the possibility of layoffs in the The M&A sector enjoyed a robust year in 2014 Karsten Rodvik told Petroleum News in a Jan. 6 email. The con- thousands as big LNG and oil sands projects get and could see more of the same this year as cash- cession agreement had been scheduled to terminate at the end of shelved and the threat of bankruptcies. strong companies grab distressed assets, analysts The only glimmer of hope lies in the merger and December, but with the possibility of a 90-day extension.