First look at Nanushuk released

  • This illustration shows proposed facilities and drill sites for the Nanushuk project on the North Slope under development by Armstrong Energy. Production is hoped for by 2021 and is projected to reach a peak rate of 120,000 barrels per day. (Illustration/Courtesy/US Army Corps of Engineers)

The details of how Armstrong Energy plans to develop its billion-plus-barrel North Slope Nanushuk oil prospect are now public after the U.S. Army Corps of Engineers released the draft environmental impact statement for the project.

Tucked between ConocoPhillips’ large Alpine and Kuparuk River fields, the Nanushuk project in the Pikka Unit is expected to produce upwards of 120,000 barrels per day of conventional light oil at its peak rate.

An exploratory well and sidetrack Armstrong drilled last winter about 20 miles south of the project area indicated the reservoir could hold more than 2 billion barrels of oil, company CEO Bill Armstrong said in a prior interview with the Journal.

At this point, though, the Nanushuk project is based on 1.2 billion barrels of proven recoverable reserves. It is named after the Nanushuk geologic formation that is Armstrong’s primary target.

Armstrong Energy operates the Pikka Unit for its partners Spanish major Repsol and Denver-based independent GMT Exploration Co. Armstrong increased its stake in the project to become majority owner and took over as operator of the project from Repsol in late 2015.

Long an overlooked North Slope play, 3D underground seismic mapping technology has helped geologists locate subtle but large oil-bearing traps in the Nanushuk formation in recent years.

Armstrong has emphasized his belief that more Nanushuk oil reservoirs can be found in other areas of the Slope and this past January ConocoPhillips announced its Willow discovery, a 300 million-barrel recoverable Nanushuk find west of the Alpine field in the National Petroleum Reserve-Alaska.

For its project, Armstrong Energy is proposing three gravel drill sites just south and east of the Colville River delta to hold a total of 146 production and injection wells.

A central processing facility to improve the oil to sales quality would also be located on the northernmost drill site pad.

According to the draft EIS, nearby oil processing facilities at Kuparuk and Alpine do not have the capacity to handle the 120,000 barrels per day of peak production from the Nanushuk project.

The Bureau of Ocean Energy Management also recently released a draft EIS for Hilcorp Energy’s proposed Liberty project, which would produce about 60,000 barrels of oil per day from a manmade island in shallow federal waters just offshore from Prudhoe Bay.

Initial production from Nanushuk is targeted for sometime in 2021; however that would overlap with the tail end of what is expected to be a four- to five-year construction period.

A final EIS is expected next year, according to the Corps.

The workforce on the project is expected to start at just 20 to 50 construction-related workers during the first year of development and peak at about 1,450 construction and drilling personnel by year four.

A drilling workforce of about 450 people is expected to remain on the project for up to 15 years after construction, in addition to about 200 permanent operations personnel needed for the length of the expected 30-year production life of the project.

Drill Site 3, on the southwest edge of the project area, would be the closest infrastructure to the Village of Nuiqsut, which sits about 6.5 miles to the southwest and across the Colville River from the proposed development.

In total, Armstrong’s plan would require 331 acres of new gravel pads, 26 miles of new gravel roads and use an estimated 2.74 million cubic yards of gravel fill from nearby mines.

It would impact an estimated 330 acres of wetlands.

Three alternative project options developed by the Corps of Engineers would make modest reductions to the cumulative gravel footprint down to 301 acres and 21 miles of road.

A southern access plan would utilize a road built by the state-owned Alaska Industrial Development and Export Authority and Anchorage-based Brooks Range Petroleum for the small Mustang oil project that Brooks Range is advancing adjacent to the Nanushuk project.

But that would move the processing facility and operations camp closer to Nuiqsut on new gravel pads about 10 miles from the village.

A northern access option would utilize a road expected to be built for Caelus Energy’s delayed Nuna development to the northeast of Nanushuk. It would also require additional pads for the processing facility and operations camp but would move them farther from Nuiqsut.

The third alternative would re-route as much of the road and pipeline infrastructure out of the Colville River’s 50-year floodplain as possible. It would also try to alleviate concerns of area residents and regulators about potential impacts to migrating caribou by routing the roads to be less parallel to the general south-to-north Colville River.

Segments of north-south roads and pipelines could act as impediments to caribou traveling along the coast, particularly during the summer when the animals move closer to the Beaufort Sea coast for relief from insects, according to the draft EIS.

The Army Corps of Engineers is accepting public comments on the draft Nanushuk plan through Nov. 14 on the project’s website, www.nanushukeis.com.

Elwood Brehmer can be reached at elwood.brehmer@alaskajournal.com.

Updated: 
10/25/2017 - 10:33am

Comments