An American company is proposing to build an artificial island to drill for oil off Alaska's coast — something that's been done before and could be considered on the Canadian side of the Beaufort Sea as a safer alternative to offshore drilling, according to one analyst.
Hilcorp Alaska, a subsidiary of Texas oil company Hilcorp Energy, wants to build its Liberty Project — a gravel island as an offshore oil platform — in the Beaufort Sea on the Alaskan side. U.S. drilling regulators are currently deciding how to assess the environmental impact of the plan.
Oil companies already use man-made islands for oil production in the U.S. and Canadian Arctic. Imperial Oil uses islands in the Mackenzie River at Norman Wells and back in the 1970s and 1980s a number of oil companies built islands off of Tuktoyaktuk.
"I think it might encourage some Canadian companies in ways that they can drill in the shallow waters of the Beaufort Sea," energy analyst Doug Matthews said.
Matthews says a number of oil companies own leases near the shore in the Canadian Beaufort Sea and these companies could build islands to drill for oil. Islands such as these are typically built in the winter when the surface of the ocean is frozen.
"It's not complicated stuff," Matthews said.
"You wait for the ice to form. You haul the gravel in. You dig a hole. You pour the gravel in and bingo-bango, you have an island."
Hilcorp Energy Co.'s Liberty Project would be built in U.S. federal waters about eight kilometres off Alaska.
The nine hectare island would be built about 10 kilometres from shore in about six metres of water. Hilcorp Energy says it would produce about 60,000 barrels of oil a day and over its lifetime it could produce 80-130 million recoverable barrels of oil.
No plans in Canadian Arctic
Recently both Chevron and Imperial Oil have halted plans to drill in the deep waters of the Canadian Beaufort Sea. Chevron ditched its plan in 2014 as the price of oil dropped. Imperial pulled out this year, saying it didn't have enough time meet the regulatory requirements that came with drilling some of the deepest wells ever in the Beaufort Sea.
Local aboriginal peoples and environmental groups have protested these and other companies' plans to drill in the Canadian and U.S. Arctic.
Matthews expects the same will happen with this latest plan to build a man-made island.
"There is going to be litigation. The Americans are nothing but litigious people," Matthews said.
"I would expect the Friends of the Earth, Greenpeace, Mothers Against Arctic Drilling, whoever you want will all be out there filing court cases."
But Matthews says drilling on an island is safer than drilling offshore.
"No one wants a blowout to occur. But if one did, you are much more capable of handling it on an island configuration than a vessel configuration in much deeper water," Matthews said.