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Feds won't extend suspension of operation for Hilcorp's Liberty
Kristen Nelson Petroleum News
The U.S. Department of the Interior has denied a request from Hilcorp Alaska for a further suspension of operation for its leases at Liberty offshore the North Slope southeast of the Duck Island unit. The leases are all beyond their initial terms and there has yet to be any production.
The Dec. 26 decision is in response to an Aug. 28, 2024, request for a 3-year suspension of production for the three leases in the Liberty unit, which are currently held under an SOP granted Dec. 22, 2021, for 3 years, which expired Dec. 26.
The Bureau of Safety and Environmental Enforcement said its review of the SOP request is complete and the SOP request is denied.
A Dec. 9 letter to Interior and BSEE from Alaska's senators, Lisa Murkowski and Dan Sullivan, requested approval of the request for extension of the SOP and provided an overview of the project status.
ERD rather than an island The senators said. Hilcorp's original development and production plan for Liberty submitted to the Bureau of Ocean Energy Management in 2014 called for a gravel island. They said Hilcorp worked diligently with state and federal governments, the University of Alaska and the Alaska Native community on plans for potential development at Liberty and obtained an SOP in 2021.
"Over the course of this process, however, Hilcorp encountered permitting delays, processed new information, and, consequently, made adjustments to the previously proposed plan. They determined that in order to mitigate any environmental impacts and avoid further permitting delays, the best course of direction for the development of the Liberty Unit was to pursue the use of an extended reach drilling (ERD) development project instead of a gravel island development project."
In addition to the August request for an SOP extension, the company submitted an amended development and production plan for Liberty to BOEM describing its "proposal to develop the reservoir utilizing extended reach drilling from Endicott Satellite Drilling Island."
The senators said the extension of the SOP was "justified to carry out the requirements of the National Environmental Policy Act, particularly due to the inordinate delays Hilcorp has encountered in obtaining required permits because of third party challenges to agency actions," and said with the existing SOP expiring Dec. 26, there was not enough time for BOEM to review the changes in the revised DDP.
BSEE decision BSEE said the oldest of the Liberty leases, OCS-Y-1585, has an effective date of Aug. 1, 1991. OCS-Y-1650, with an effective date of Oct. 1, 1996, is the site of the Liberty 1 well, which had a commercially viable well test in 1997 and was plugged and abandoned that same year. The first two leases were unitized in 2003 and a third lease, OCS-Y-1886, with an effective date of July 1, 2007, was approved to join the unit in 2016.
The leases are all beyond their primary term and remain valid until expiration of the unit. Since the 2003 unit formation there have been nine separate lease suspensions, with each suspension "justified to BSEE's satisfaction citing various technical, permitting, and legal delays and other challenges in accordance with regulatory requirements and BSEE's discretion."
Issues around the current decision include the development and production plan for the unit, the oil spill response plan and the National Environmental Policy Act.
Among the issues it cites in its denial of the SOP, BSEE said there must be a commitment to production, requiring a firm timeline for production prior to the end of the lease term, and the agency said Hilcorp's proposal only includes preliminary steps, not a commitment to production prior to the end of the SOP.
--KRISTEN NELSON
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