Environmental and energy supply concerns swirl around Northstar

Oct 26, 2001 02:00 AM

Six miles off the northern Alaskan coast sits the newest frontier in Arctic oil drilling: A 5-acre man-made island crammed with two nine-story-tall oil processing modules, three 9,600- kW turbine-driven generators, two natural gas compressors, producing wells, gas injectors, a shop, warehouse and living quarters.
From the air, the BP PLC project known as Northstar, set to begin production next month, looks like something made of Lego blocks. Beneath the blue-grey water of the Beaufort Sea that surrounds it, however, is a technological first: A dual oil and gas pipeline buried beneath the sea floor, something that has never been done before under icy Arctic waters.
Oil interests expect Northstar, along with several other new developments, to help stem the 11-year decline in Alaska's oil production -- particularly important now, they argue, as the nation faces a potential interruption of supplies from the Middle East. Nearly 14 % of the oil consumed daily in the United States comes from Persian Gulf countries, according to the US Department of Energy.
"We're far too dependent on foreign sources of oil, and the reliance continues to grow," said Carl Portman, deputy director of the Resource Development Council, which represents Alaska's major industries. "These new fields coming on line are effectively offsetting the decline."

President Bush pressed the same point recently when he urged Congress to pass an energy bill that would open new domestic oil fields, including those in the Arctic National Wildlife Refuge, saying that energy independence would make the nation more secure.
Senate Majority Leader Tom Daschle says he wants lawmakers to take up a comprehensive energy bill before Congress adjourns next month. He says he will allow a vote on a Republican bill that would open the refuge for oil drilling, similar to a bill already passed by the Republican-controlled House. Senators are sharply divided on the issue, mostly along party lines.
The Northstar project is small by Alaska standards, tapping a 13-square-mile field containing 175 mm barrels. But it has taken on significance beyond its expected peak production of 65,000 bpd, because eventually it could lead to other such projects in the frozen seas off Alaska's North Slope and keep oil coursing down the trans-Alaska pipeline.

The North Slope fields that came on line nearly a quarter-century ago now produce about half their peak production of 2.2 mm bpd, sending 5 % to 6 % less oil down the pipeline each year. Activists from the environmental group Greenpeace have challenged the Northstar project in court and gained widespread publicity in spring 2000 by camping out on the frozen water near the island.
And the Inupiat Eskimos, who live on the North Slope and depend on sea mammals such as bowhead whales for food, fear that a spill could disrupt their centuries-old cultural traditions. But federal courts have permitted the project to move ahead.
The debate over Northstar is similar to that over the Arctic refuge, which is believed to hold between 3.2 bn and 16 bn barrels of oil. But some of the players are lined up on different sides. Environmentalists argue that drilling in the refuge might disrupt a sensitive ecosystem where more than 200 species, including a large caribou herd, feed on the rich forage that bursts forth in round-the-clock summer sunlight.
Many North Slope Eskimo communities already benefit from onshore oil development through taxes. They favour drilling in a narrow coastal stretch of the refuge because it would generate royalties paid on any oil extracted.
But they feel differently about offshore development in the Beaufort Sea -- the part of the Arctic Ocean north and east of Prudhoe Bay -- fearing the effect on bowhead whales, seals and other sea life, as well as the wider ecosystem that includes polar bears and eiders.

Rosemary Ahtuangaruak, one of the plaintiffs in the federal suit who lives in the village of Nuiqsut, blamed seismic activity from oil development near a whale migrationroute several years ago for an unsuccessful whaling season, which she said left the community without the meat it normally relies on through the winter.
Working at the village clinic at the time, Ahtuangaruak said she saw a sharp increase in suicide attempts, domestic violence and alcoholism that winter. "They were the deepest, darkest days I've ever seen," she said. "There was no subsistence food to fill the cellars. We were calling other villages to get food."
The North Slope borough government, which represents eight predominantly Eskimo communities, has taken a different approach to Northstar. Borough officials figured the project was going to happen anyway, so they decided to work out an agreement with BP in which the company would post a performance bond to compensate the affected communities in case of an oil spill, said Mayor George N. Ahmaogak Sr. Details of that agreement are still being hammered out, he said.
Still, the mayor said, the federal government should be finding ways to mitigate the impacts of potential oil spills, instead of leaving it to the local communities to strike agreements with oil operators. Legislation that would have provided a permanent flow of assistance to communities affected by such development failed recently in Congress. "The federal government is supposed to study and manage these impacts and provide some aid," Ahmaogak said. "And they're not doing a darned thing."

The Northstar field is not the first offshore development in the Arctic. Endicott field, another BP project, sits on two islands linked to the mainland by a causeway. The difference is that Endicott's pipeline is above ground, on the causeway.
The field was originally discovered by Shell in 1983, but for years it was considered too challenging to tap. Its opening now is an example of how new technologies are allowing companies to extract oil in areas that were previously missed or were too expensive or logistically difficult to develop.
Northstar's oil and gas pipelines are strapped together and buried in a 10-foot-wide trench excavated into the sea floor through a slot cut into the ice. Gas is transported from the mainland to power the Northstar installation and to inject into the wells, increasing the pressure to ease the extraction of oil. The oil will make its way to the trans-Alaska pipeline, which will transport it 800 miles south to the port of Valdez, where it will be loaded onto tankers.
BP says the dual pipeline was designed with state-of-the-art techniques to avoid ruptures and has undergone rigorous tests by state and federal regulators. Built of carbon steel, it is three times thicker than what's required for pressure containment, the company says, and is buried seven to nine feet below the ocean bottom, more than three times deeper than required to ensure protection from being scoured by ice and other perils. The pipeline is flexible, allowing it to absorb shifts in the sea floor.

The project also uses a relatively new technique that minimizes the "footprint" of oil developments by drilling horizontally, enabling one well pad to tap a wide area. Northstar may be a technological marvel, but environmentalists and Eskimos worry that the technology has yet to be perfected that can clean up an oil spill in conditions of broken ice, which occur here during spring and fall.
Two years ago, Greenpeace and a group of Inupiats sued to block Northstar in federal court, arguing that the environmental impact statement for the project approved by federal regulators was inadequate, and that BP lacked a proper oil spill response plan. Last month, the Ninth Circuit Court of Appeals denied the challenge, clearing the way for Northstar to go into operation. On the matter of the spill response plan, the court said it didn't have jurisdiction. The groups have not decided whether to appeal.
"This is a test case. We're taking a risk," said Jenna App, the attorney representing Greenpeace. "Oil will be going through a sub-seabed pipeline in the Arctic Ocean without a spill plan that allows cleanup to occur for a large portion of the year. "The combination of the settling of the pipeline, the potential for ice gouging and the potential for ice scouring -- those are all unknowns," App said. "Without a sufficient spill plan in place, those unknowns become potential catastrophes."

The project hit a number of bumps after BP acquired a major interest in the field in 1995, among them construction delays in part due to legal challenges, and problems with oil spill cleanup plans. Three times, the company failed tests, required by state and federal officials, showing how it would clean up an oil spill in conditions of broken ice. Oil skimmers ended up picking up chunks of broken ice, clogging the skimmers and hampering their ability to collect oil.
For now, the company has agreed to drill only when the ice is solid in the winter until it finds a way to remove oil in broken ice. Even if the Northstar operation is problem-free, no one expects an immediate flurry of new offshore development inthe Arctic. BP is in the midst of developing another project, called Liberty, about 12 miles east of Prudhoe Bay, with estimated reserves of 120 mm barrels. Beyond that, plans are few.

While both Northstar and Liberty would be considered giant fields in Texas or Oklahoma, they are marginal in the high Arctic because of the technological challenges and high cost. Northstar, for example, has a projected development cost of $ 690 mm. "It's not the playground of small players," said Ken Boyd, an oil and gas consultant in Alaska. "There are few companies in the world that can afford to take this kind of risk."
During the winter, an ice road is built on the frozen sea to carry supplies; during the rest of the year people and materials arrive by boat or helicopter. The two nine-story oilfield processing modules had to be shipped 2,000 miles by barge from Anchorage.
Most of the interest in Alaska's North Slope is still focused onshore, in particular the National Petroleum Reserve -- Alaska, to the west of Prudhoe Bay, that was opened for lease sales by the Clinton administration, as well as in the Arctic wildlife refuge still being debated in Congress.
"We expect the focus for exploration and development to remain onshore," said Paul Laird, a BP spokesman. "The predominance of past discoveries awaiting development also is onshore. "At the same time, we believe Northstar's success will help to prove that we can, do, will conduct offshore development in a safe and environmentally sound manner, and the safeguards we engineered into our projects are effective in mitigating the risks."

For those companies with interest in offshore activity, Northstar is one to watch, said Bill Van Dyke, petroleum manager for the state Division of Oil and Gas: "Now that you have a model for physically how you do it and cost-wise what it takes, I think people might go back and re-evaluate some of the prospects and see whether it might be worth it to drill."

Source: The Baltimore Sun
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