August 3, 2008

Oil Service Workers Busy, but Lack Bunk Space at Day’s End

By Tim Bradner, Alaska Journal of Commerce, Anchorage

Aug. 3--Things are still going gangbusters in Alaska's North Slope oil patch and oil service contractors engaged in oil field maintenance and support work are busier than ever. Bed space is still extremely tight, as are seats on airplanes ferrying workers to and from the Slope.

About 14,400 people were at work on oil and gas projects in May, the latest period for which statistics were available from the state Department of Labor and Workforce Development. About the same number of people were working in May 2007, but 2007 employment levels showed a big increase over 2006, during which 10,100 were employed in May.

Most oil industry workers are employed by contractors and service companies. There are reports that activity levels could pick up even more in the next two years.

Keith Burke, general manager of CCI, a subcontractor to CH2M Hill, says his company is busy and could be doing more if additional camp space were available.

"We could put more people to work if there were more facilities available," Burke said.

CCI has 50 to 60 people on the Slope at any one time, which translates to 110 and 120 total employees because of the two-week on, two-week off rotations in work schedules, Burke said. The company is a subsidiary of Bristol Bay Native Corp., an Alaska Native regional corporation in Southwest. About 20 percent of the company's employees are shareholders of BBNC.

The workload is increasing, which is good news for Burke's company and other service firms. BP Exploration (Alaska) Inc. is finishing major reconstruction of Prudhoe Bay field pipelines this summer but the producing companies, which also includes ConocoPhillips, are now starting to focus on more intensive maintenance of major production facilities and well pad equipment, including the small flow lines from the wells to the oil and gas processing plants.

For example, one project CCI may be working on is the removal of old lead-based paint in and around the major production facilities. This will be done as a part of a broader maintenance and "renewal" initiative, he said.

The focus of the maintenance work is in the Prudhoe Bay field because that is the oldest of the North Slope producing fields. The Kuparuk field and other North Slope fields are newer, but their time for major maintenance and renewal will eventually come too.

Meanwhile there are some new projects cranking up that will be putting more people to work next year. One is BP's new Liberty project, a new offshore oil field that will be developed with long "extended-reach" wells drilled from onshore.

The drill rig for Liberty will be at Endicott, a producing field eight miles west of the new field. To support Liberty, one of two gravel production islands at Endicott will be substantially enlarged, from 11 acres to 30 acres. A new drill rig is being construction for Liberty and that will be moved to the new, enlarged Endicott island in late 2009. The rig will be the largest on the North Slope, at 280 feet in height. Its support modules to house drill pipe and pumping systems for the drilling fluids will be large too, measuring at widths of 450 feet and 250 feet.

There are now 250 people at work on Endicott, and that number will increase to 500 as the project moves further into development, according to Darryl Luoma, BP's Liberty project manager.

Another new development that appears to be moving forward, for now at least, is ExxonMobil's Point Thomson gas cycling and condensate production project. ExxonMobil and other Point Thomson lease owners, which include BP, Chevron and ConocoPhillips, are engaged in a dispute with the state of Alaska, but Craig Haymes, ExxonMobil's Alaska production manager, says the companies hope to get issues resolved with the state. ExxonMobil is the field operator.

In any event, the schedule is tight -- the plan is to have production of 10,000 barrels per day of condensates by 2014 -- and ExxonMobil needs to let contracts are get work underway now, Haymes said. About 200 people will be at work on the project this winter, he said.

ExxonMobil announced the award of contracts to Alaska Frontier Constructors Inc. and Nanuq Inc. to build a 50-mile ice road from Prudhoe Bay to Point Thomson and to build an ice airstrip at the field, both projects to be done this winter.

Haymes said modifications on a Nabors Alaska Drilling Co. rig to work at Point Thomson is also underway with the work being done in Deadhorse, the industrial community on the Slope that is adjacent to the Prudhoe Bay field. Barging of equipment and materials to the site is also planned to be done this summer, Haymes said.

Meanwhile, Burke said he is concerned that bed space in the Prudhoe Bay area is likely to get even tighter next winter with the possible closure of one of the oldest camps in Deadhorse, the Caribou Inn. That will remove accommodations for about 300 people.

The larger contractors and subcontractors are supposed to provide their own employee housing, but one of the challenges is that contracts with the field operating companies are too short to allow new camp facilities to be paid for if contractors invest in their own new camps.

There is obviously a need for more housing for workers but there is still uncertainty as to how much work will be done, and by whom, that it will be difficult for one or even several contractors to take a risk in adding bed space. It's an important consideration, Burke said, because keeping a worker on the slope costs at least $200 a day, and that doesn't include air fare and other forms of support needed for personnel.

Tim Bradner can be reached at [email protected]">[email protected]


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