Small oil firm gambles on Arctic

OOOGURUK ISLAND, Alaska (AP) — Drilling in a field capable of yielding as much as 90 million barrels of oil seemed just right for Pioneer Natural Resources Co. — except for one thing. The field sits about three miles offshore in the Arctic Ocean.

Undaunted, the Irving, Texas, company had a solution. Build a gravel island, equip it with a drilling rig and then ship the oil through eight miles of pipeline to a processing center onshore.
Easier said than done, maybe, but today the 10-year-old company sits poised to begin drilling wells from Oooguruk Island in a few weeks and producing oil by the first half of next year.

Pioneer will be the first independent operator to produce oil on the North Slope, a market cornered primarily by major producers such as BP PLC, Exxon Mobil Corp. and ConocoPhillips for 30 years.

Other independents such as Houston-based Anadarko Petroleum Corp. and London-based BG Group PLC are also exploring the North Slope for oil and natural gas but haven’t announced plans.

While no one is predicting a land grab for the smaller, yet potentially profitable, fields, Pioneer’s work is being closely watched, said Michael Rae, analyst with energy consultant WoodMackenzie.

“What this does is, it shows that the independents can go to the North Slope and establish themselves in a high-cost environment,” Rae said. “It also provides them a springboard for future development. That’s something Alaska needs.”

CNN