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Oil giant to drill farther off Alaska shore

With oil prices three times what they were in 1997, and taking a cue from a North Sea project that uses ”extended-reach” technology, BP has decided to proceed with development of an oil field in the seas off Alaska.
/ Source: Reuters

For eight years after striking oil in the ice-choked Beaufort Sea off Alaska’s northern coast, BP officials pondered what to do with the discovery.

The Liberty prospect holds an estimated 100 million to 150 million recoverable barrels of oil. But the field is four to six miles off the coast under waters periodically covered by sea ice, where challenging conditions mean development is expensive and holds risks for workers and the environment.

So BP kept plans to drill at Liberty on the shelf.

Now, with oil prices three times what they were in 1997, and taking a cue from a North Sea project that uses ”extended-reach” technology, BP has decided to proceed with development of Liberty.

If all goes well, BP hopes to have the field in production by 2011 or 2012.

The extended-reach technology allows BP to drill into the ground onshore and then direct the drill horizontally under the floor of the shallow waters off north Alaska.

Earlier use off Britain
The same techniques were used at Wytch Farm, an offshore North Sea field drilled entirely from land on the British coast. At Wytch Farm, BP set an industry record for extended-reach drilling, hitting a target seven miles from the drill rig.

“It’s that success that was a key factor in our decision to pursue Liberty from onshore,” said Daren Beaudo, spokesman for BP Exploration (Alaska) Inc. “It is an opportunity to learn more about the technology and to try it in a place where it could have further impact on drilling in Alaska. And it could have further impact on other drilling opportunities in the world.”

Liberty’s size is modest by Alaska North Slope standards. At 150 million barrels, it would satisfy U.S. thirst for oil in 2012 for a week.

For instance, the coastal plain of Arctic National Wildlife Refuge could hold 10.4 billion barrels of recoverable crude, according to federal estimates. Drilling there has been rejected by Congress.

First of many?
Liberty stands out because it would be the first producing oil field entirely in the federally managed outer continental shelf off Alaska.

“We’re pretty excited about it. We’d like to see it move forward and be a showcase for similar OCS (Outer Continental Shelf) development in Alaska,” said Jeff Walker, the U.S. Minerals Management Service Alaska regional supervisor for field operations.

To date, the only oil produced from federal waters off Alaska has come from a separate oil field that lies mostly on state leases. Only a portion of the field, BP’s Northstar unit, falls in federal territory. The field produces about 60,000 barrels a day, with facilities located on an artificial island constructed by BP.

Area residents, most of them Inupiat Eskimo, have long opposed offshore development because of potential risks to migrating whales and other impacts.

But the plan to drill Liberty from onshore makes the project more palatable to locals, said an official with the North Slope Borough, the Minnesota-sized district of northernmost Alaska.

“We are always pleased any time we can get oil facilities out of the offshore and onto the land, where we think the environmental risk can be significantly reduced,” said Tom Lohman, an environmental adviser with the borough.