Feds launch environmental review for third development proposal at offshore Liberty field

For the third time since the late 1990s, federal regulators have embarked on an environmental review of an oil field that has languished off Alaska's northern coast without development.

The Liberty field, which targets an oil reservoir initially discovered in the 1980s, has a new operator and a new development plan -- replacing two previous plans that won regulatory approval but were never carried out because of various economic and technical problems.

Now the Bureau of Ocean Energy Management is starting a new environmental impact statement process to evaluate the development plan submitted earlier this year by new operator Hilcorp Energy Company. The Texas-based company last year bought a half-share in the project from BP Exploration Alaska Inc., along with other BP assets on the North Slope. BP had previously pursued, and eventually abandoned, two separate Liberty development plans.

Hilcorp's Liberty plan proposes that production and processing be conducted from an artificial gravel island and hearkens to old-style concepts, but it with some modern twists, including improved technology, equipment and environmental-management practices, BOEM's Alaska regional director said.

"What's proposed has basically been done before," said James Kendall, the agency's Alaska director for BOEM. There are four other artificial islands used for production from other oil fields in state waters of the Beaufort Sea, he noted in an interview Monday during a public meeting on the project.

What has not been done before is commercial oil production from an all-federal offshore field.

If developed, Liberty would be the first oil-producing field located entirely in the federally managed outer continental shelf. But the project is much more modest than the now-shelved and much higher-profile Arctic offshore ambitions pursued by Royal Dutch Shell. Shell ultimately decided to abandon the project after spending $7 billion on its Alaska offshore program.

Instead of being located 70 miles offshore and hundreds more miles away from any oil-field infrastructure, as Shell's Burger prospect in the Chukchi Sea was, Liberty is less than six miles from the North Slope coastline and close to long-producing onshore facilities. Instead of producing billions of barrels and opening a whole new operating area, as Shell envisioned would result from a big discovery in the Chukchi, Liberty holds an estimated 150 million recoverable barrels, according to BOEM.

But Liberty's modest scope has some advantages, Kendall said.

Even if Shell had made a big discovery at the Burger prospect, and even if Shell had pursued development, it would likely have taken at least a decade to get any Chukchi Sea oil into the trans-Alaska pipeline system, Kendall said.

In contrast, Hilcorp's plan, if carried out, could "get oil in the pipe sooner rather than later," he said.

For now, several hurdles remained to be cleared before any oil flows from Liberty.

BOEM must complete a full environmental impact statement, a process it completed in 2002 for BP's first Liberty development and production plan. BP's subsequent production plan, which envisioned ultra-extended-reach wells to produce the field from land, was the subject of a smaller-scale environmental assessment issued in 2007.

There is no mandated deadline for completing the new environmental impact statement, Kendall said. "I would say it's going to be two years, plus or minus a few months," he said.

BOEM has just finished one of the early steps of the EIS process. It held five scoping meetings to solicit public comment on the development plan, three in North Slope communities, one in Fairbanks and the final one in Anchorage.

Those meetings were not designed to be public hearings, with advocates testifying for or against Liberty development, Kendall said. They were more open-house-style events, with members of the public encouraged to sit at tables with BOEM officials to air their concerns and ask questions.

Among the aspects of Hilcorp's plan that drew interest at the Anchorage meeting were Hilcorp's proposed island design, which would use interlocking blocks as a border instead of old-fashioned sandbags; the plan to bring oil through a pipeline beneath the seafloor to the already operating Badami oil field pipeline; and risks to marine mammals that would be posed by industrialization and barge transport.