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Apache's Hendrix speaks of frustrating permitting delays, inlet beluga lawsuit

Posted: February 25, 2013 - 12:54pm

John Hendrix, Apache Alaska general manager, told a crowd of energy industry representatives Friday he was frustrated by federal permitting processes that have stalled his company's seismic exploration and called for their support.
"This is a proven basin, but if we don't have permits to run there is not going to be a pace and there is not going to be production," Hendrix said during a morning speech to the Alaska Support Industry Alliance at the Kenai Industry Education Forum hosted at the Challenger Learning Center in Kenai.
Hendrix said Apache has about $200 million worth of seismic work it would like to do in the area -- including marine seismic work being challenged by a lawsuit -- but is currently waiting on numerous federal permits before proceeding.
"We had no permits, so we lost one whole seismic season, one whole production season, one whole development season and Anchor Point and Ninilchik lost almost $60 million worth of revenue," he said.
On Friday, a few hours after Hendrix spoke to The Alliance, Apache received an Incidental Harassment Authorization permit from National Marine Fisheries Service to restart its marine seismic data gathering operations in the middle of Cook Inlet. The company's previous IHA permit allowed for 30 beluga whale "takes," of which Apache had none last year, Hendrix said.
"I'm proud to tell you, very proud, that we had zero takes of beluga whales last year," he said. "Those are acoustic takes."
The company's new IHA runs for one year staring in March and allows the company to "harass a small number of marine mammals" including belugas incidental to the marine seismic survey, which involves air guns producing loud underwater sounds to aid in the data-gathering process.
The permit allows for a "Level B" harassment, which the National Oceanic and Atmospheric Administration defines as having the "potential to disturb a marine mammal or marine mammal stock in the wild by causing disruption of behavioral patterns, including, but not limited to, migration, breathing, nursing, breeding, feeding, or sheltering but which does not have the potential to injure a marine mammal or marine mammal stock in the wild."
The permit also stipulates that the death or injury of any belugas is prohibited and would result in "the modification, suspension, or revocation of this authorization."
Four plaintiffs have challenged the NMFS previous decision to allow Apache's first year of marine seismic testing alleging it would harm the endangered beluga whales. Those plaintiffs include the Native Village of Chickaloon based in Sutton, the Natural Resources Defense Council, Center for Biological Diversity and Center for Water Advocacy. Hearings on the lawsuit started in U.S. District Court in Anchorage in early February.
Hendrix said he didn't want to speak at length about the lawsuit, but said federal officials have been cautious to ensure they aren't sued again if Apache is issued another permit.
"Like I said, they took a bullet for us," Hendrix said. "It wasn't Apache being sued, it was the federal government, your tax-paid agencies that had to defend their decision."
Hendrix said he felt the company "did everything right" as evidenced by having no beluga takes and went as far to say the "federal government acted responsible." He justified that comment on the fact that Apache had numerous ships and observers watching to make sure no belugas were nearby during seismic operations.
"If they are (nearby) we do a quick shut down and then we wait until they pass outside that zone and then we start back up again," he said. "... We did that for a reason. We were allowed 30. We knew that if we were going to get a permit in October of 2012 like we were told that we were going to, we had to prove we could manage this down, this number."
Also during his Friday speech, Hendrix spoke at length about the company's desires to produce in the area. He also talked about the progress of Apache's recently drilled Kaldachabuna No. 2 well located near Aurora Gas's Moquawkie and Lone Creek units close to Tyonek.
Hendrix said the well is basically a test well designed to analyze the formation and investigate the reservoir. But Apache will ready it for production if possible, he said.
"We're working with Hilcorp's John Barnes on making sure we can go through their processing plant if it is oil," he said. "If it is gas then through Aurora."
While Apache has made no secret its desires to produce oil, Hendrix stressed the company wanted to be part of the solution to looming Cook Inlet gas shortages and felt it can make a difference long term.
"If we find gas along the way, we are going to be socially responsible," he said. "We are not going to commit social suicide. And, we're a for-profit company."
Moreover, Hendrix said the company has the resources and the manpower to continue its massive seismic gathering campaign. But the company's desires are still limited by permits, he said.
"Here's Apache," he said. "We're at your gate. We're at your door. We want to go to work. Help us. We'll be responsible. We're from Alaska. We want to do the right thing -- we're not here for tax credits."
Brian Smith is a reporter and city editor for the Peninsula Clarion. He can be reached at brian.smith@peninsulaclarion.com.

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