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BP's Liberty project delayed again

February 01, 2011|by Rhonda McBride | Channel 2 News

ANCHORAGE, Alaska — Another delay was announced Tuesday for BP's Liberty project in the Beaufort Sea. The project, which employs directional drilling from a man-made island three miles offshore, has been criticized by environmentalists as too risky for the Arctic.

Bloomberg News reports that BP's CEO, Bob Dudley, told investors meeting in London that the project has been pushed back to "beyond 2013."

Dudley also announced the postponement of BP’s Na Kika and Galapagos development projects in the Gulf of Mexico, during his discussion of the company's fourth-quarter performance.

This isn't the first time the schedule for the Liberty project has changed. Initially, BP planned to begin drilling last year, with startup set for 2011. After the Deepwater Horizon spill in the Gulf of Mexico, the company pushed the schedule for Liberty back a year, with drilling to begin in 2011 and production in 2012. In November, however, BP stopped construction of the Liberty rig.

The company said it would conduct a design and engineering review to evaluate the billion-dollar project's safety systems.

Steve Rinehart, a spokesperson for BP, says once the review is complete, the company will have a better handle on the timetable for start up. The latest estimate is for production to begin in 2013.

If Liberty goes forward, it will set new records for what's known as extended-reach drilling. Plans call for the Liberty rig to drill down two miles into sandstone, and then go out horizontally between six and eight miles -- a distance about as far as that from the Port of Anchorage to the Carrs Huffman grocery store.

Tim Bradner, a veteran oil and gas reporter for the Alaska Journal of Commerce, says it's not uncommon for projects as big as this one to be delayed.

"Show me a new project on the Slope that's ever come in on time," Bradner said. "There probably have been some. There are always delays, glitches, mechanical issues."

But Bradner says news of another delay at Liberty is unsettling to Alaskans worried about the decline of North Slope production. Currently, about 630,000 barrels of oil a day flows through the trans-Alaska pipeline.

"We're seeing 7 percent declines in the last year, moving oil through the pipeline," Bradner said. "Any delay of getting more oil through the pipeline is becoming of serious concern to people."

Jason Brune, the executive director of the Resource Development Council for Alaska, says fields like Liberty are needed to stop the decline. Although the state would not collect taxes from Liberty, because its leases are federal, Brune says its output would still flow through the pipeline.

The owners of the pipeline say the lower the throughput, the more costly it is to ship the oil and the sooner the day will come when the pipeline will have trouble operating.

BP says Liberty would tap into a reservoir of 100 million barrels of oil and produce about 40,000 barrels a day.

"We're losing that much every year, " said Brune. "We absolutely have to have fields like Liberty."

Brune says this latest news should put even more pressure on the Legislature to lower production taxes to encourage more development on state lands.

"Next week, ENI is going to be bringing on Nikaitchuq, which is a field which will be producing between ten and twenty thousand barrels per day. That's the only one that's in the pipeline for new production," Brune said. "So in the next five to seven years, we don't have any exploration going on that could bring new oil into the pipeline and that's scary."

Contact Rhonda McBride at rmcbride@ktuu.com

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