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After $35 million, state pulls plug on Umiat road project

  • Author: Dermot Cole
    | Opinion
  • Updated: September 28, 2016
  • Published January 2, 2015

FAIRBANKS -- In what would turn out to be the final weeks of the Parnell administration, the state quietly dropped plans for an environmental impact statement on the proposed 100-mile Umiat road, according to the U.S. Army Corps of Engineers.

The state confirmed on Oct. 21 that it "has no future plans to proceed with the project," Army Corps of Engineers project manager Melissa Riordan said in an email Wednesday to those tracking the road plan. She said the Corps intends to file a formal notice Monday in the Federal Register ending work on the environmental impact statement.

She said that in the summer of 2013 the state said it was reconsidering the study plan and the Corps put the project on hold. The notice next week is to end the work, which has been paid for by the state. The state began studies on the road in 2009.

The state had appropriated about $35 million to study the proposed gravel road, which had an estimated price of $350 million to $385 million, according to a report by the Wilderness Society, a group that opposed the project.

Department of Transportation and Public Facilities officials told lawmakers a year ago that the project was in a "holding pattern" while Linc Energy worked on a winter drilling program to further define the oil potential and economics. The road has been described as a critical component of the development plan.

In March, Linc Energy said it continued to work with the state to advance development plans, with company chief executive Peter Bond releasing a positive statement about the completion of a test well producing 650 barrels per day. He said state incentives were critical to the project:

"As I said to Gov. Sean Parnell, without these incentives it would not be possible for Linc Energy to drill and develop Umiat, and for me to be standing in front of you with a container of sweet light crude oil which has just flowed from the Umiat field. It may not be well known but approximately 65 percent of the cost of development of the Umiat oil field is paid for via these state incentive programs."

At that time, he said, the company was continuing to analyze the best routes for a pipeline to connect to the trans-Alaska pipeline and a road. A DOT spokesman said a key factor in the decision to stop paying for the impact statement is that the oil company wants a pipeline and a road, while the DOT effort was on the road only. Linc Energy could continue a study that would include a road, the pipeline and development of the oil field, the spokesman said.

Umiat is in the northern foothills of the Brooks Range, about 100 miles south of Prudhoe Bay. Oil and gas have been discovered in the area, with the first find in 1943, but the lack of road access was one of the reasons it has not been economical to develop. The state wanted to build a 30-foot-wide gravel road, which would cross six major rivers, starting north of the Brooks Range, near Galbraith Lake.

"The primary benefit of the project is increased access to oil and gas resources for exploration and development on state lands," the DOT said in earlier presentations on the road.

The state said one reason for building the road was that "industry officials have stated that exploration and development activities would increase substantially in the region were road access available, as this would significantly decrease their logistical costs."

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