Phillips delays experimental well on McCovey prospect

ANCHORAGE (AP) -- Phillips Alaska Inc. has postponed an offshore exploration well in the Beaufort Sea because the company did not have a key state ruling in time to complete the well this winter.

The North Slope Borough government also is objecting to the project, saying Phillips' plan to build a temporary ice road on the frozen Beaufort Sea could buckle from the wind and current.

Phillips also is facing a legal challenge from Inupiat Eskimos who live on the North Slope and from environmentalists.

Finally, Phillips needs permits from the state Division of Governmental Coordination.

In one of the busiest North Slope development seasons in a decade, the state offices in Juneau have been soaked by a fuel spill and have lost workers needed to review projects.

With critical winter construction days passing, Phillips with partner Chevron and Alberta Energy decided late last week not to pursue the exploration well, Phillips spokeswoman Dawn Patience said.

''There is not any single issue behind the decision. We have one outstanding permit from the state and limited time,'' Patience told the Anchorage Daily News.

Meanwhile, Phillips has asked state officials to focus on permitting other exploration work.

Phillips plans a busy drilling season and is seeking permits for at least 12 exploration wells.

The McCovey prospect sits 12 miles north off the North Slope coast. Phillips had planned to build an ice road from Prudhoe Bay across the sea ice to the drill site.

Offshore oil development always has been controversial. Some North Slope Borough residents oppose drilling in the Beaufort because of the possible effects on bowhead whales, which many people believe now travel farther offshore to avoid the noise from oil development.

Also, the oil companies have little ability to clean up an oil spill in summer's broken ice conditions.

The federal Minerals Management Service approved Phillips' permit to drill the McCovey well. Because an oil spill could effect state waters, Alaska officials reviewed the project as well.

Glenn Gray with the Division of Governmental Coordination said approval snagged on two points.

The first was a diesel spill on the roof of the agency's Juneau offices last month, which forced workers to abandon the building for other offices. The delay was compounded by low staffing, he said.

Second, the North Slope Borough sent a letter to Gray's office in October saying the ice road was inconsistent with the Coastal Management Plan, which protects the environment from adverse effects of development.

Like the controversial Northstar oil development, 12 miles west, McCovey also is battling lawsuits.

The Anchorage environmental firm Trustees for Alaska has filed three lawsuits against the project. The suits challenge the federal Minerals Management Service's requirements for oil spill cleanup in the McCovey permits, said Jenna App, a Trustees attorney. The lawsuits are pending before the 9th U.S. Circuit Court of Appeals.

Patience said the lawsuits had no effect on Phillips' decision to delay the McCovey exploration.

''We're committed to going forward again next year,'' Patience said.