DOE/Alaska Poised for Arctic Tundra Study

Abstract: A lot's riding on establishing a scientifically based "drilling window" for the North Slope, especially since its natural gas reserves probably will be needed in the U.S. in the near future.

Analysis: An Arctic tundra study is scheduled to get underway on Alaska's North Slope this fall, extending through the winter months and into late-summer 2004.

The $340,000 study, to be conducted jointly by scientists with the U.S. DOE and the Alaska state government--along with partial funding and technical service assistance from several major oil companies and Yale University--apparently would establish once and for all how long the petroleum industry can move equipment over Arctic tundra each year without damaging the area's fragile ecosystem. Ostensibly, it would gain more scientific data to apply to such a "drilling window," which for more than 30 years has been limited somewhat arbitrarily to the period during which there is a minimum of 12 in. of frozen ground and 6 in. of snow cover over the tundra. Until the window opens, nothing heavy can be moved on North Slope tundra.

In recent years, this frozen condition, which allows construction of ice roads on which to move drilling and support equipment, has occurred at different times of December and January, and the spring thaw sometimes has ensued earlier than usual, to boot. Obviously, oil companies are anxious to find out whether the activity period could be extended, even if only for a few more days beyond the three months or so they have now. Time is money--big money--on the North Slope.

The study takes on added significance in light of an apparently impending natural gas deliverability crisis in the Lower 48 states. Its findings also would affect the time period allowed for additional gas reserves development and subsequent construction of the over-the-tundra portion of a proposed natural gas transmission pipeline from the North Slope to the Lower 48 states.

Various versions of such a pipeline, which would cost as much as $20 billion but which would bring up to 4.5 bcf/d of much-needed North Slope gas to U.S. consumers, have been planned for more than three decades. However, the line has never been considered seriously until recently. The 2003 Energy Bill now pending in Congress includes provisions for federal loan guarantees to those who build and own the line, as well as an accelerated depreciation allowance and tax credits for use if gas prices fall below a certain level. Those companies involved, including BP, ConocoPhillips, Anadarko Petroleum, and others, are insisting on having such incentives before tackling construction.

Also significant to the study's findings are the implications for future petroleum development in other U.S. and Canadian Arctic areas. Late last year, the possibility of exploring a small portion of the Arctic National Wildlife Refuge (ANWR) was denied in Congress. However, several companies are still planning to resume drilling on leases they hold in the adjacent National Petroleum Reserve--Alaska (NPRA), a 9.6-million-acre block immediately west of the Prudhoe Bay producing complex where ConocoPhillips and others already have made several oil discoveries. Additionally, a Canadian company--Talisman Energy--only recently signed a farm-in agreement with the French company Total Fina Elf to drill wells on NPRA leases the latter acquired in 2002. Talisman says the first well is set to be spudded when the weather window opens next winter. They, too, will be vitally interested in any changes--good or bad--brought about by the study.

The tundra study likely was an offshoot of a recently released National Research Council report on the cumulative effects of North Slope oil development--particularly on the ecology of the Prudhoe Bay area. That report, mandated by Congress and released this past March, contained both good and bad news. It found, for example, that there is no evidence of accumulated environmental effects of operations at Prudhoe Bay since 1968, when oil was first discovered there. Oil spills have occurred, the report noted, but so far they have had no lasting effect. What's more, the industry's adoption of horizontal drilling technology and use of smaller-footprint drilling/production equipment have resulted in less damage to North Slope tundra than in the early days, and the use of remote sensing to help find oil accumulations has reduced the need for off-road travel onto unaffected tundra.

However, the report was not as positive about the effects, for example, of North Slope geophysical operations. It found that the network of trails used for seismic exploration have harmed vegetation, caused erosion, and degraded the "aesthetic beauty" of the tundra. Seismic operations offshore, the report notes, have altered Bowhead whale migration patterns, as well. Among other findings was that the range and reproductive success of caribou herds, at times, have been altered by oil and gas activity.

The tundra study's findings also will be important to the companies involved in the recent methane hydrates coring activities conducted near the Kuparuk River field near Deadhorse, Alaska. That project--now suspended until the drilling window opens next winter--is part of a two-year, $10.5 million cost-shared partnership among the DOE, Anadarko, Maurer Technology Inc., and Noble Engineering and Development to investigate the possibility of capturing the gas content of hydrate crystals frozen in permafrost beneath Arctic tundra.

The project, detailed here earlier (see Oil and Gas Advisory, "Methane Hydrate Coring Starts Soon," March 3, 2003), includes first-time use of a specially designed Arctic Drilling Platform (ADP) which was designed specifically to reduce the impact of drilling operations on tundra.

The ADP is a lightweight, 100-ft.-by-100-ft. aluminum drilling platform elevated about 12 ft. above the tundra on specially designed steel legs that are frozen into the ground. The platform consists of 16 modules fitted together at the wellsite to support the drilling operation, with five additional interlocking modules to form an adjacent platform for personnel accommodations.

Based on platform designs similar to those used offshore, the ADP is compact and modular, allowing it to be transported safely by helicopters or with ultra-low-impact rologon type of vehicles with wide "pillow" rollers for spreading cargo weight over large portions of the ground beneath. Anadarko engineers designed the ADP, and a patent is pending.

Although the current prototype used for the hydrate coring this past winter is a scaled-down version of one that could be deployed in the future for actual Arctic well drilling/completion operations, Anadarko officials have said that it could one day eliminate the need for the gravel drilling pads and ice roads now in use for Arctic operations.

The company also believes that the ADP could be used to drill over tundra even during the warmer months, since the above-ground design allows adequate air circulation and should allow sunlight to reach the tundra grass, eliminating permanent damage.

Anadarko believes the ADP could represent a major step in the virtual elimination of the after-effects of drilling on fragile ecosystems. Variations could be used for drilling wells at non-Arctic locations, as well.

After much delay, the developers of still another new product, the Light, Automated Drilling System (LADS), say they have successfully commissioned and tested the rig under actual drilling conditions. That rig, described here previously (see Oil and Gas Advisory, "Automatic Rig Leaves Soon for North Slope," Dec. 16, 2002), was used recently to drill a shallow (2,290-ft.) hole near the fabrication yard at which it was assembled near Brady, Texas. The cased-hole well, says its developer, Nissho Iwai Corp., will be converted to a water supply well for the city of Brady.

LADS completion delays caused a pending North Slope try-out with BP to be canceled. Thereafter, however, Nissho Iwai assembled a new management team to ensure project completion and testing. BP designed the LADS, which uses automated controls and hydraulic drilling systems, including automatic pipe handling and a slanted derrick to make directional drilling easier, for use in Arctic area operations. It, too, is modularized and can be moved over frozen tundra by air or with rologon type of equipment. The rig is light, weighing less than a third of a conventional Arctic rig, and demonstrates a much smaller (by two-thirds, says Nissho Iwai) footprint. Once optimized, the company says five persons can operate it, which is about half the number necessary to operate a conventional rig under Arctic conditions. They, too, probably will watch for details of the tundra study once it is completed, since lighter equipment on tundra is safer and sounder, environmentally.

One thing is clear, however. Development of both proved and unproved North Slope gas reserves is bound to take on a much higher priority in the next few months as an apparently incipient natural gas crisis develops. So a lot may be riding on the outcome of the tundra study, since it will directly affect the time needed to get new gas supplies to Lower 48 factories and homes.