ConocoPhillips plan for new Alaska oil field get boost with regulatory milestone

Greater Mooses Tooth 2 will the the third — and westernmost — field in the National Petroleum Reserve Alaska.

By Yereth Rosen - March 23, 2018
ConocoPhillips Anchorage headquarters. (Jack Bohannon / CC BY 3.0 via Wikimedia Commons)

ConocoPhillips Alaska Inc.’s plan to build the westernmost producing oil field in Alaska’s Arctic got a boost on Thursday when federal officials issued a draft environmental impact statement for the project.

The Bureau of Land Management, in its draft EIS, evaluated alternatives for the Greater Mooses Tooth 2 project that ConocoPhillips hopes to build on the western North Slope.

In a statement, the BLM said the release of the draft EIS was “part of the Administration’s approach to achieving American energy dominance” and that public comments on the analysis will be accepted through May 7.

Greater Mooses Tooth 2, or GMT 2, would be the third oil field within the borders of the National Petroleum Reserve in Alaska. The others are also operated by ConocoPhillips: CD 5, located on Alaska Native land within the reserve, started production in 2015, and Greater Mooses Tooth 1 is currently being built and expected to start production later this year.

GMT 2 is expected to produce up to 30,000 barrels a day, an amount similar to that at GMT 1. ConocoPhillips expects production to start in late 2021.

Of the development alternatives for GMT 2 that were evaluated in the draft EIS, two call for both road and pipeline connections to existing infrastructure and one envisions a roadless development that would have only a pipeline connection. There is also a no-action alternative offered that would reject GMT 2 development entirely.

Evaluation with an EIS and approval of a selected development alternative is required before the project may be built, according to federal environmental law, so the release of the draft EIS is milestone in that process.

Oil-industry supporters also found some good news in the state revenue forecast released March 16 by the Alaska Department of Revenue: Prices for Alaska North Slope crude, and therefore revenues, are now expected to be higher than was forecast in December.

The Department of Revenue predicts that prices for ANS crude will average $61 a barrel for the current fiscal year, which ends June 30. That’s an increase from the $56-a-barrel price predicted in the last revenue forecast, and it means that the state treasury will have $256 million more at the end of the fiscal year than was anticipated.

It is far from enough to fill a budget gap that is estimated to exceed $2 billion this year and be or similar sizes in future years, said Sheldon Fisher, commissioner of the state Department of Revenue.

Still, he told the state Senate Finance Committee on March 19, “This certainly helps. It’s going in the right direction.”

Overall, the revenue forecast was mixed for the state, Fisher said in his presentation to the committee.

Total North Slope oil production in the current fiscal years is expected to average 521,800 barrels per day, a slight decline from the approximately 524,000 barrel-per-day figure posted in the last fiscal year, according to the report.

An increase in North Slope oil production is expected in the next two years, to a peak of 536,100 barrels per day in Fiscal 2020, according to the report. Production is expected to slip in years after that, reaching 493,000 barrels per day in Fiscal 2017, according to the report.