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Oil company seeks to export Yukon crude from Skagway

Posted: April 9, 2014 - 8:01am
Skagway, seen here March 31, 2014, could soon become home to an oil export terminal as a Yukon oil company seeks to send its crude to the Lower 48. (James Brooks photo)  James Brooks | Capital City Weekly
James Brooks | Capital City Weekly
Skagway, seen here March 31, 2014, could soon become home to an oil export terminal as a Yukon oil company seeks to send its crude to the Lower 48. (James Brooks photo)

Alaskans know Valdez as the state’s oil port of choice, but an independent Yukon oil producer is planning to make Skagway No. 2 on the list of Alaska oil ports.

Last week, Skagway Mayor Mark Schaefer announced that officials from Northern Cross Yukon are interested in using the port of Skagway to export crude oil to a refinery in Washington state.

Northern Cross, an independent oil producer with backing from Chinese state oil company CNOOC, has been investigating the Eagle Plains area along the Dempster Highway north of Dawson City for almost a decade.

Northern Cross director and CEO David Thompson said his company is still in the “resource assessment” phase at Eagle Plains but wants to be prepared to export whatever comes out of the ground during preliminary drilling. “This would be a way to establish production and give us more insight into what is there,” he said. “Our feeling is there are conventional oil resources there.”

According to a 2005 study by Natural Resources Canada, the Eagle Plains Basin is estimated to contain 426 million barrels of crude oil. In comparison, the Prudhoe Bay Oil Field has an estimated ultimate recoverable size of 15.3 billion barrels.

A smaller size means a smaller footprint. Thompson said any pipeline to Skagway “is way down the road.”

“I think we’re looking at the transition now from seismic (testing) to drilling,” he said. “The best way to evaluate that is to put wells on stream. If we do put that on stream, what would we do with that?”

His company instead plans to truck oil to Skagway, then send it south on barges that already haul refined fuel — gasoline, fuel oil and diesel — north.

According to a letter emailed to Skagway borough officials, Northern Cross anticipates shipping as much as 2,000 barrels per day, starting as early as spring next year.

In the letter, Northern Cross expects to send 8-10 tankers per day over the highway to Skagway, where they will offload into five storage tanks to be built in Skagway. A tanker barge would arrive every two weeks to take the product south.

Kathleen King, a natural resources specialist with the Alaska Department of Oil and Gas, said Northern Cross doesn’t need a permit from her department. “There’s no oil and gas permits needed for trucking that crude from Canada to Skagway,” she said.

Interim Skagway borough manager Emily Deach said the company probably will not need a local permit, either. “If they’re going to be trucking the entire time, they would not need a permit from us,” she said. “If they’re building tanks, which might happen in the future, they would have to go through a permitting process.”

Shay Kokiw, a spokeswoman for the Yukon government’s department of economic development, said Northern Cross has not yet filed official application related to trucking oil to Alaska.

James Sullivan, an organizer with the Southeast Alaska Conservation Council, said he’s familiar with many of the energy projects proposed for Southeast Alaska, but he hadn’t heard of Northern Cross’ plan. “They’re all interesting, but I don’t think many of them are feasible or at a feasible stage right now,” he said.

Skagway doesn’t have the space that Valdez has — crammed into a narrow valley, “there’s no apparatus to export oil in Skagway right now; you’d have to put in a whole new facility in that little space,” Sullivan said.

Kristin Ryan, director of spill response for the Alaska Department of Environmental Conservation, said Northern Cross may not need a permit, but its shipper will need to have an oil spill response contingency plan. So far, no company has come forward to start that process.

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