Major projects have permitting milestones ahead in 2019

Environmental reviews are underway on a suite of development projects that could permanently change the face of Alaska.

The fate of several of those projects could largely be known by this time next year.

It doesn’t get any bigger than the Alaska LNG Project. Estimated to cost roughly $43 billion by the Alaska Gasline Development Corp., it would be one of the largest infrastructure developments in the history of the country and the 18,000 jobs the Labor Department says it could generate by all accounts would send Alaska into a building frenzy.

Long term, Alaska LNG is seen as a means not only to monetize the state’s stranded North Slope gas reserves, but also as the key to unlocking economic development in the Interior and other remote regions of the state by providing more affordable natural gas to areas that currently rely on fuel oil for heat and diesel for power generation.

Former Gov. Bill Walker, the project’s biggest champion, insists increased access to natural gas could spur the development of other, currently economically challenged resource projects across Alaska, notably Interior mines.

The Federal Energy Regulatory Commission is scheduled to release the first draft of the Alaska LNG environmental impact statement in February, with a self-imposed final EIS deadline coming Nov. 8, 2019. The subsequent deadline for a record of decision on the project is set for Feb. 6, 2020, according to FERC’s schedule.

Gov. Michael J. Dunleavy was roundly critical of Walker’s state-led Alaska LNG Project plan during his campaign, but he has mostly been quiet about his plans for the project — particularly on the financing-partner side — since being elected.

Regardless, Dunleavy’s administration is expected to continue the federal permitting effort, given FERC approval would be needed for any iteration of an LNG export project.

A record of decision is also expected any day for AGDC’s smaller, in-state Alaska Standalone Pipeline, or ASAP, gas project from the U.S. Army Corps of Engineers.

On the North Slope, a couple big projects are in the midst of EIS reviews as are a couple contentious federal land-use plans.

The next step for the Nanushuk oil project, now led by Australian-based Oil Search Ltd., is also a record of decision after the Corps issued its final Nanushuk EIS Nov. 2. With the potential to produce upwards of 120,000 barrels per day the Nanushuk project is the largest oil prospect moving towards development in the state.

Oil Search Alaska President Keiran Wulff said in November that the company plans to exercise a $450 million option to purchase additional Alaska assets from Armstrong Energy sometime next year. Oil Search bought an operator stake in the Nanushuk project from Armstrong for $400 million in a deal announced in late 2017.

First production from the Nanushuk project in the Pikka Unit is scheduled for the end of 2023, according to Wulff.

The Bureau of Land Management is in the early stages of drafting an EIS for ConocoPhillips’ $4 billion to $6 billion Willow oil project to the west of Nanushuk in the federal National Petroleum Reserve-Alaska. BLM issued a notice of intent for the EIS in August after the company submitted its “Master Development Plan” for Willow.

ConocoPhillips estimates Willow could produce upwards of 100,000 barrels of oil per day at its peak; first oil is pegged for the mid-2020s.

A timeline for the Willow EIS is not yet available; however, Deputy Interior Secretary David Bernhardt has issued a directive to Interior agencies including BLM to have environmental impact statements done within a year.

BLM also kicked off the scoping period to begin revising the NPR-A Integrated Activity Plan Nov. 21, a move made with the intent of opening more of the reserve to oil and gas leasing and potential road development.

The emergence of the Nanushuk geologic formation as a major oil target across the Slope since the last plan was written, as well as advances in drilling technology make it an appropriate time to rewrite the federal land-use plan, according to Assistant Interior Secretary Joe Balash.

The most prospective Nanushuk area, according to the U.S. Geological Survey, is in the northeast portion of the NPR-A around Teshekpuk Lake that was made off-limits to oil and gas leasing in the 2013 plan.

Balash said when scoping commenced that rewriting the NPR-A Integrated Activity Plan should take about a year or a little longer. The scoping period for the NPR-A plan is open through Jan. 7.

To the east, BLM is busy — or will be when the government shutdown ends — working on the Arctic National Wildlife Refuge oil and gas lease sale EIS. The agency released a draft version of the two-volume, 756-page document Dec. 20 on the eve of the shutdown that started at midnight Dec. 21.

The draft EIS offers three leasing scenarios with varying limitations on available acreage and activity timing intended to account for wildlife migrations and local subsistence activities. Each alternative would allow for at least 400,000 acres of the 1.5 million-acre ANWR coastal plain to be open for leasing over multiple lease sales Congress ordered be held before 2025.

Interior officials have said they very much want to hold the first ANWR lease sale in late 2019, which would require a completed EIS. Public comments on the draft ANWR EIS are being accepted through Feb. 11.

BLM has yet another EIS in the works for a project a ways down the Dalton Highway from the North Slope oil fields.

The Alaska Industrial Development and Export Authority is leading development of a 211-mile industrial road to access the Ambler mining district, which stretches for about 75 miles along the southern flank of the Brooks Range in the upper Kobuk River drainage.

BLM is writing the EIS for the road and the first draft of that document is expected in March 2019, with a final EIS following late next year, based on the current schedule.

The $280 million to $380 million limited-access gravel road is seen as the first step towards developing multiple mines in the Ambler mining district, which holds more than 30 known metal deposits; but its remoteness has precluded significant development.

Not coincidentally, Trilogy Metals Inc., which for years has been exploring the Ambler district, intends to initiate an EIS for its Arctic copper, zinc and precious metals prospect next year, too, according to CEO Rick Van Nieuwenhuyse.

Finally, the long-anticipated draft EIS for the Pebble mine project is expected in January from the Army Corps of Engineers.

Corps Pebble project manager Shane McCoy said in a November briefing on the work that the draft EIS will evaluate three development alternatives in addition to the requisite “no-action” option.

However, because of the large scope of the project — infrastructure including 35 miles of roads, a subsea natural gas pipeline, a ferry across Iliamna Lake and a major port — the EIS will have multiple “sub-alternatives” for the mine’s support infrastructure, according to McCoy.

The draft Pebble EIS will touch on, but not delve into, one of the primary concerns held by those who oppose the project, McCoy said.

The Army Corps of Engineers is primarily tasked with adjudicating Pebble’s Clean Water Act Section 404 wetlands fill application — a construction permit. As such, evaluating the likelihood of and potential consequences from a mine waste release is not in the Corps’ purview. That is a job for state Dam Safety Program officials and Pebble hasn’t yet applied for its tailings dam permits.

However, McCoy said the Corps conducted a cursory review of spill risks given it was a prominent topic in the comments the agency received during the scoping phase of the EIS.

“We did convene folks together for a very high-level spill risk scenarios that included the folks from Pebble, the folks from the state as well as AECOM’s specialists, but it’s at a much higher level than what would be required for an actual dam permit,” he said.

AECOM is the third-party contractor tasked with compiling the EIS data for the project.

A final Pebble EIS is tentatively scheduled for December of next year.

Additionally, Pebble Limited Partnership spokesman Mike Heatwole said conducting a preliminary economic assessment for the project is on the company’s “to-do list” but it’s not a pressing matter at this point.

Pebble’s opponents have long questioned the economic viability of the mine, particularly the smaller mine plan the company is currently advancing.

Pebble CEO Tom Collier told the Journal in April that he wanted to have an economic analysis of the project published sometime in 2018.

Attempting to permit a large mine before conducting multiple reviews of its economics is a departure from typical mine development processes.

Corps officials have said they would like Pebble to provide them economic information for inclusion in the final EIS, but Heatwole contended it is not a requirement for completing the document.

 

Elwood Brehmer can be reached at [email protected].

Updated: 
01/28/2019 - 4:56pm

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