State approves APA winter drilling of two exploration wells south of Badami

The Alaska Division of Oil and Gas on Thursday approved APA Alaska's plan to drill two exploration wells south of Badami this winter. Drilling is scheduled to begin Dec. 1.

The approval covers ice pads and 58.3 miles of temporary ice roads running east from Endicott Road toward Point Thomson, with spurs to the drill sites and a link to Badami infrastructure. Chinook-1 sits about 12 miles southwest of Badami Dock. Hungry Horse-1 sits about four miles south of the dock. Both are on the same state lease, south of Badami and east of Prudhoe Bay.

Under Alaska Oil and Gas Conservation Commission rules, the wells must be suspended or plugged and abandoned once drilling ends.

APA applied Oct. 2. On Oct. 7 the division asked five agencies for comment.

The Alaska Department of Environmental Conservation filed the only comment. It cited state rules that require secondary containment sized to hold the largest tank plus room for local precipitation. DEC also said the pad layout in the application differs from the one in APA's most recent oil discharge prevention and contingency plan, and that APA will need to update that plan. The division said it passed DEC's comments to the company.

The approval does not relieve APA of other agencies' permits. Off-road travel and ice roads fall under a separate five-year permit APA sought June 12 for state land between the Canning and Colville rivers, which Alaska News previously covered. State records do not show whether that permit, or drilling permits from the conservation commission, have been issued.

APA Corp agreed in the spring to buy Savant Alaska, the Badami operator, for about $70 million upfront plus later payments tied to future development of APA's eastern North Slope position. APA says the deal adds about 104,000 gross acres and 1,500 barrels a day of production. Closing is expected by year-end, subject to regulatory approval.

"The pending Savant acquisition in Alaska will secure critical infrastructure adjacent to our position and increase flexibility as we evaluate next steps," Chief Executive John J. Christmann IV said in an August earnings release.

On Wednesday, the division approved a permanent Savant gravel road from the Badami Main Pad, about 32 miles east of Deadhorse, over the Point Thomson pipeline. Its stated purpose is to cut the risk of building ice roads for rig moves. Construction is scheduled to begin Nov. 1.

An eligible person affected by Thursday's decision may appeal to the Department of Natural Resources commissioner within 20 calendar days, before any court challenge.