ConocoPhillips wins drilling permit for project in Alaska’s petroleum reserve

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WASHINGTON — The Obama administration on Thursday green-lighted ConocoPhillips’ plans to build the first-ever oil production facilities at a federal reserve in Alaska.

But amid low oil prices, it is unclear when — and if — ConocoPhillips will go through with its broader Greater Mooses Tooth project, which ultimately could involve drilling up to 33 wells in the National Petroleum Reserve-Alaska.

The drilling permit and right-of-way authorization issued Thursday by the Interior Department’s Bureau of Land Management empowers ConocoPhillips to construct an 11.8-acre drilling pad and related infrastructure inside the reserve. The company has two years to conduct the work under the new drilling permit.

A ConocoPhillips spokeswoman called the approval “good news.” “We are seeking approval for funding,” added spokeswoman Andrea Urbanek.

For Alaska, the project offers the promise of putting new oil into the 800-mile-long Trans-Alaska Pipeline System, which was originally built to ferry 2 million barrels of crude per day away from North Slope oil fields. It now carries about a quarter of that as nearby production declines, leading to slower flows, thick layers of wax buildup and freezing ice crystals that can cause corrosion.

BLM Director Neil Kornze called the approval “an important milestone.”

“I’m proud of this collaborative effort to ensure thoughtful, balanced, and responsible development in the NPR-A that will provide additional economic security for Alaskans as well as a new source of oil for the Trans-Alaska Pipeline System,” Kornze said in a statement.

The National Petroleum Reserve is a 23-million-acre region in northwest Alaska — the size of Indiana — that was set aside because of its oil and gas potential 92 years ago.

ConocoPhillips and BLM have tangled over some project details, with the company originally seeking to build a 7.7-mile access road to the site. Because the shorter route would involve two bridges at creek and river crossings the BLM preferred an 8.5-mile alternative.

The Bureau of Land Management also directed ConocoPhillips to pay into a mitigation fund as part of the project, with the money going to help develop a regional strategy for conservation and restoration work.

Environmentalists have said the mitigation fund does not make up for permanent damage to the region’s wetlands and tundra.

Leah Donahey, senior campaign director with the Alaska Wilderness League, noted that the Greater Mooses Tooth project will take place just a short distance from the Colville River and the Teshekpuk Lake that provides habitat to an array of migratory birds, caribou and bears.

“Its impacts will be felt throughout the entire reserve and surrounding communities,” Donahey said. “Moving forward, the need to mitigate the inevitable consequences of drilling in a world-class landscape like the reserve must be addressed.

The Greater Mooses Tooth project was initially proposed in 2002.

Sen. Lisa Murkowski, R-Alaska, noted that over years of review, regulators added “additional mitigation requirements and stipulations that have either complicated or delayed the project.”

“Mitigating impacts to subsistence and local communities is critically important to responsible development, but the protracted process and requirements (Greater Mooses Tooth) has been subject to must not be a precedent for development in the NPR-A,” Murkowski said.

Oil pulled from the Greater Mooses Tooth site would be processed 17 miles away, at the existing Alpine production facility on state lands.

Anadarko Petroleum Corp. has a 22 percent working interest in both the Greater Mooses Tooth wells and the Alpine facility.

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