A project manager for Hilcorp was in Soldotna Wednesday drumming up support for the company’s ambitious plans for a new project on the North Slope. Before a joint meeting of the Kenai and Soldotna chambers of commerce, Liberty project manager Mike Dunn says oil workers on the Kenai Peninsula are filling jobs at Hilcorp’s similar wells in the Beaufort Sea.
“There’s probably 10 or 15 guys on that island that live on the Kenai Peninsula,” he said.
Liberty is a proposed nine-plus acre man-made gravel island that will drill for light crude in the Beaufort, where 60 million to 100 million barrels are thought to be recoverable. The island would be about six miles offshore in roughly 19 feet of water.
The oil would be piped ashore before being mixed with heavier crude to flow down the trans-Alaska oil pipeline. Like most of Hilcorp’s operations in and around Cook Inlet, Liberty represents another working-over of a prospect other companies have given up on. But it’s also a big step up for the small independent producer and its biggest Alaska project since arriving in Cook Inlet in 2011.
“This is not traditionally what we do," Dunn said. "Typically, we buy the older oil fields and just figure out how to extend the field life by doing well work and working on facilities. But what’s comforting about this project is what we’re talking about doing has been done by other companies. Whether it’s building an island or putting in a subsea pipeline or building the facilities like that, other folks have done that. It’s a little bit different than our model, but it’s not that different in that it is a project that others have maybe given up on that we think we can do.”
Dunn says it will take a slight bump in oil prices over the next couple years to attract investors. Hilcorp is a partner in Liberty with BP, while the Arctic Slope Regional Corporation also owns a small share. Hilcorp is now the fourth largest oil producer in the state.
However, the company's less than stellar regulatory track record in Cook Inlet hasn’t provided much confidence for people wary of more Arctic development. But Dunn says the Liberty proposal is different than the legacy Cook Inlet field.
“We’re always concerned, whether it’s a small spill or we have an incident, we always study what happened and learn from that and go better next time. What is nice about the projects on the North Slope is its new construction. It’s brand new pipe, we’re monitoring the flow in, flow out, we’ve got temperature monitoring. It’s state of the art technology," he said. "Compared to some of the pipelines that were installed in Cook Inlet almost 50 years ago, the technology has come a long way. So that’s what’s nice about this project.”
The Liberty prospect still has a lot of regulatory hurdles to jump before getting the green light, and actual production is at least five years off. It’s also the first Arctic drilling proposal that’s located entirely in federal offshore waters. The Bureau of Ocean Energy Management is the federal agency in charge, and is taking public comments about the project now.