A federal agency is launching an environmental review of plans by the Spanish oil company Repsol to develop what may be one of Alaska's biggest oil discoveries in years.
The U.S. Army Corps of Engineers announced last week it will prepare an environmental impact statement associated with the Nanushuk project on the North Slope, near the village of Nuiqsut, that the oil company estimates could yield 120,000 barrels per day.
Plenty of questions surround the proposal, including when, or if, Armstrong Oil and Gas, a privately held company from Denver, will take over majority ownership and operation, said Lanston Chinn, chief executive of the village's Native corporation, Kuukpik Corp.
The companies announced restructuring in October that would make Repsol the minority owner. The change is expected to be completed this summer, said Jan Sieving, Repsol's vice president of public affairs in North America.
Kuukpik Corp. owns land in the area and could benefit economically from development. But the corporation, which asked for the environmental impact statement, does not like the project so far, Chinn said.
He said the corporation is concerned that a small company like Armstrong won't have the capital to properly develop the area. Kuukpik will be watching warily to make sure things such as gravel roads and pipelines don't threaten subsistence hunting and the environment, he said.
"Subsistence resources and the subsistence lifestyle have to be protected to our liking for oil and gas development to move forward," Chinn said.
Sieving said Repsol fully supports the Corps' decision to review the proposal. She said Repsol will continue working closely with the village and regulatory agencies.
"We are committed to environmental and subsistence protections," she said.
The Corps decided in October that the project could significantly affect the human and natural environment, leading to the review, said Ryan Winn, north section chief for the U.S. Army Corps regulatory division in Alaska.
The analysis, with public meetings planned in four Alaska communities, will consider development alternatives designed to reduce the impacts, according to a notice from the Corps published Thursday in the Federal Register.
The project would be located near the east channel of the Colville River -- with two of the three proposed drill sites half a mile away -- on a combination of state and Native corporation lands. Plans call for building 25 miles of gravel roads to connect the sites, including a 14-mile road extending to ConocoPhillips' Kuparuk field and other North Slope oil fields, the announcement said.
Repsol calls for 76 production wells and injection wells that pump gas and water underground to help maintain reservoir pressure to support oil production.
A central processing facility on a 23-acre gravel pad would separate water and gas from oil. Pipelines, and two bridges the length of football fields, would cross over two rivers flowing into the Colville. Development would include a wastewater and water treatment plant, a helicopter landing pad, and other facilities.
Some 3.2 million cubic yards of gravel and other fill material would be placed into 288 acres of U.S. waters, including wetlands, triggering requirements under the Clean Water Act regulating discharges of fill material in federal waters.
The Corps said in October that the project is "highly controversial" in Nuiqsut, population 450, and some 7 miles southwest of the proposed development. Among other concerns, villagers are concerned that pipelines -- though they would be raised seven feet off the ground by vertical support members -- would alter caribou migration patterns and hurt hunting.
The project would exist partly in the Colville River delta. It would join ConocoPhillips' Alpine project as the only other development with drill sites in the delta, an area that supports fish, caribou and a variety of migratory birds.
Repsol and Armstrong have said the project could yield up to 120,000 barrels daily. That estimated rate is not "unreasonable" based on details that have been published about the project, said Mark Myers, Natural Resources commissioner and a former head of the U.S. Geological Survey.
The field would lie east of Alpine, another large field where oil production peaked at 139,000 barrels a day in 2007, but is now about 56,000 barrels per day.
The environmental review process could take 18 months or last for years, Winn said.
The Corps is currently working to set dates for meetings in Barrow, Nuiqsut, Anchorage and Fairbanks. It will soon issue a public notice calling for an initial round of comments that will extend to late April.