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Feds issue key permitting document to advance Hilcorp Alaska’s offshore oil project

The Trump administration Thursday issued a key permitting document that supports Hilcorp Alaska's plan to build the first oil production facility on an artificial island in federal waters of the Arctic Ocean.

The newly released environmental impact statement for the Liberty Project identifies measures to reduce impacts to the environment, including to help protect bowhead whales and subsistence hunters, the Bureau of Ocean Energy Management said in announcing the document.

The report is not a permit for development, though it could help support a key federal permit in October, said John Callahan, a spokesman with BOEM.

The agency analyzed different development scenarios, including no development, and said Thursday it prefers Hilcorp's proposed plan. That plan best balances the agency's mission of energy development and environmental protection, Callahan said.

(ADN archive 2005)

Hilcorp Alaska has proposed building a 9-acre gravel island to support drilling and oil production in the shallow federal waters of the Beaufort Sea, east of Prudhoe Bay and about 5 miles off the Alaska coast.

Hilcorp estimates the Liberty Unit contains at least 120 million barrels of recoverable crude oil. First oil is not expected to flow until sometime in the 2020s, the report says. Production could reach up to 65,000 barrels of oil daily starting two years after oil production starts, adding to North Slope rates currently above 500,000 barrels.

The proposed Liberty facility would be protected by natural islands, with oil shipped ashore using a pipe within a pipe. The report, more than 1,000 pages long, said the project would have a life span of up to 20 years.

Callahan said it would be similar to four existing oil-production facilities built in state waters of the Beaufort Sea, including Northstar Island owned by Hilcorp.

"Liberty is distinctive because it would be the first (oil-production) facility located in federal waters anywhere in Alaska," Callahan said.

Andy Mack, commissioner of the Alaska Department of Natural Resources, said Thursday the state supports the Liberty project.

"We think Hilcorp has done a good job putting the plan together," said Mack. "They are working with communities on the North Slope to make sure potential impacts to subsistence are mitigated."

Mack said the state would not receive production taxes from the Liberty project.

The report said over the project's life, royalties and other revenue to the state would amount to $533 million, with the federal government receiving $1.1 billion. It said the impact to Alaska's economy, on an annual basis, would be negligible but positive. Wages in Alaska for thousands of jobs would amount to $1.7 billion, and $1.2 billion elsewhere in the U.S., the report said.

The Center for Biological Diversity, a conservation group, said the project poses a "massive pollution threat" to polar bears and other Arctic animals.

"It will also light the fuse on a carbon bomb that will worsen climate change and hurt coastal communities around the world," said Kristen Monsell, oceans legal director for the group.

The agency will rely on the document to issue a decision in October to approve, reject or amend Hilcorp's development and production plan, though it's not the only permit the project will need for development to proceed, Callahan said.

"Hilcorp still needs to get a range of permits from other state and federal agencies," Callahan said.

BP had long sought to develop the Liberty prospect before selling half of it to Hilcorp, now the operator, in 2014.

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