Homer Alaska - News

Story last updated at 6:41 PM on Wednesday, April 20, 2011

Welcome to the neighborhood: North Fork residents adjust to natural gas development

By McKibben Jackinsky and Michael Armstrong
Staff Writers


Photo by McKibben Jackinsky

In mid-March, prior to production, the glare from flaring and tall work lights were among the disruptions noted by residents living near Armstrong Cook Inlet's natural gas operations on North Fork Road.

When Armstrong Cook Inlet announced plans to drill for natural gas near Mile 9 North Fork Road in 2008, Mark McConnell, whose family lives across the street from the pad, gave Armstrong a big Sarah Palin welcome.

"Drill, baby, drill," said McConnell's yard sign that also became a backdrop for picture-taking tourists, he recalled.

While Mark and Juley McConnell cheered gas development in the quiet rural neighborhood near the north fork of the Anchor River, others haven't been as glad to see industrial development.

Who controls development?

Those wishing local laws would assert more control of industrial development in rural areas run into a sometimes forgotten fact of Alaska oil and gas exploitation: Under state law, subsurface rights, which allow for extraction of petroleum resources, are separate from and dominant over surface rights.

Production of natural gas from Armstrong Cook Inlet's operations on North Fork Road began earlier this month, with the gas delivered to Enstar and piped north, to Anchorage. A capital project request by the city of Homer for a $10 million natural gas distribution line from Anchor Point to Homer and Kachemak City is in the capital budget currently awaiting action by the Alaska Legislature.

Other exploration and possible production also are being considered for this general area. If Union Oil Company of California gets its way, an extension of the company's agreement with the state of Alaska will allow continued exploration and development of 2,560 acres — three leases — near Nikolaevsk until March 31, 2012.

In the case of Armstrong Cook Inlet's gas wells near Mile 9 North Fork Road, the Denver-based company owns the land where it has its pads on Epic Road and Holly Lane and leases subsurface rights in the area from the state.

While ownership of subsurface rights varies, generally the state of Alaska retains subsurface rights of land conveyed to it by the statehood act.

Under the Kenai Peninsula Borough's local option zoning code, landowners can establish local zoning districts in areas like the rural subdivisions of the North Fork. Such districts can restrict industrial activity if zoned rural residential. Even if the Mile 9 area had been zoned, however, borough laws couldn't totally prohibit subsurface gas development, said Jonne Slemons, manager of oil and gas permitting for the Alaska Division of Oil and Gas. Local laws can regulate activity and establish rules like noise monitoring.

"To some degree, yes, if the comprehensive plan documents are in place, if the zoning has been established, the state will work to observe that effort and not disturb the activity and lives of the people in that community," said Slemons.

The same situation applies for the city of Homer, which has area wide zoning. A gas company could drill an exploratory well in downtown Homer if it had state rights. It's more likely production wells would happen in zoning districts allowing mineral extraction, however. Directional drilling allows some latitude in placing production wells, said Slemons.

Reactions of North Fork residents

The McConnells purchased their property in 2005 and moved in two years later. A little more than half an acre, the triangle-shaped piece of land is at the intersection of North Fork and Nikolaevsk roads. Before Armstrong began work across the street, McConnell remembers he and his neighbors were notified with a letter and given details during a public meeting.


Photo by McKibben Jackinsky

A thin line of spruce trees and about 200 feet separate the Paulsrud residence from the Armstrong Cook Inlet natural gas wells on North Fork Road, about 10 miles east of Anchor Point.

Such notification is required under state permitting. When Armstrong Cook Inlet put out a draft plan of operations, neighbors had the opportunity to comment on anything, Slemons said. During review of the project under Alaska's coastal management program, citizens also could comment on how the project would impact the coastal environment. Armstrong Cook Inlet has a plan of operations. It had to get permits from federal and stage agencies, too.

Neither McConnell nor his wife are blind to the impacts of operations related to the drilling for and production of natural gas.

"Of course there's noise when the (drilling) rig was going, but it's like any other noise, you get used to it," said McConnell, adding that that there never was a time anyone in his family was unable to drive North Fork Road due to increased traffic.

Juley McConnell agreed.

"It's been loud, but not disturbing. Trucks go by, but the traffic is not any worse that it was, and for us it was OK because they kept us sanded out here," she said of Armstrong's efforts to keep wintry road surfaces drivable. "They've been really good to us."

The activity also has meant full-time employment for McConnell. Since early 2008, he has worked as a roustabout, operating heavy equipment for Starichkof, a locally owned service company.

Rick and Lori Paulsrud are Armstrong's next-door neighbors near Epic Road. Approximately 300 feet of land separate their three acres from the gravel pad where the wells are located. In 1965, Unocal drilled an exploratory well on Holly Circle about 1,300 feet from the Armstrong Cook Inlet pad.

"We've lived here almost 11 years and if we'd had any idea when we bought this house that this was going in next door, we'd never have considered it," said Lori Paulsrud.

The side of the house facing the wells lacks windows.

"That's helped a little bit because there's a lot of lights. Probably the worst was when they were doing flare testing," said Paulsrud. "It's been real quiet lately, but there was one time that (the flare) went on for about a month. ... It sounded like you were listening to an airport with jets taking off."

For a while, the Paulsruds were notified by e-mail of Armstrong's activity, "but they haven't contacted us about anything for quite awhile," said Lori. "It's been several months."

Even though things are quieter since production began, the Paulsruds are aware activity could pick up again.

"A gentleman told us several years back that if they found a viable source of oil, they would probably truck it out. It's not a highway, he said, so he didn't think it would be a big thing to truck it back and forth. But that's the whole point, it's not a highway," said Lori. "If it comes to that, trucks coming by here on a regular basis, we would move. We're not going to live next to that."

Better regulations called for

Such complaints raise concerns with Cook Inletkeeper, a Homer-based environmental watchdog group.

"The borough doesn't have a basic nuisance ordinance," said Cook Inletkeeper director Bob Shavelson. "To me, the larger issue is the industrialization of a rural residential area."

Relocating isn't the Paulsruds' first choice, but they talked to a real estate agent last summer when a house they were interested in came on the market.

"We wanted to see if (the bank) could work a deal with us where we would buy contingent on our selling. They didn't want to do that with the purchase of this particular home, but (the bank representative) said she'd be willing to write up a proposal to the gas company to see if they'd buy our place," said Lori.

That is a course of action the Paulsruds haven't pursued at this point.

"We haven't acted on that because we haven't wanted to move," said Lori. "We've done an awful lot of work on our place over the last 11 years and really don't want to sell it. Our son was raised here."

From where Kathy Hatch lives near Holly Lane, Armstrong's operations are about a half-mile to the northeast. Wells being considered in the Nikolaevsk area would be about two miles away as the crow flies. Hatch and her husband purchased their property in the 1980s.

The couple has experienced bright light from the well pad. Hatch is concerned about the quality of their water being adversely impacted. She worries about the decibel level of sound generated by the drilling operations. She is uncomfortable that her remote lifestyle at risk.

"This changes the whole character of our land up here," she said. "We've loved this place for 30 years and I'm not willing to sit back and do nothing while they gradually destroy all the reasons why we settled here."

Hatch has been in contact with state officials, voiced her concerns to Cook Inletkeeper and written to local newspapers. She also has made her concerns known to Armstrong.

"As far as gas companies go, Armstrong has been very accessible to my phone calls," said Hatch. "I've talked to the head guy, to almost anybody I wanted. I can't say I trust everything I've been told, but I do think they're trying to conduct their work in a manner that's community friendly."

Considering herself anti-natural gas, Hatch said, "I don't think it's sane at all to pursue nonrenewable fossil fuel energy sources when we have so much ability to pursue renewable energy sources."

The state does try to address neighbors' concerns before and during development, Slemons said. Her office heard of a complaint from a North Fork neighbor who had problems with a project by a different company. Slemons also heard about noise issues and she said her office worked with Armstrong to address the issue.

"I think they did a good job of that. We checked to make sure they followed through," she said.

Slemons said from the state's perspective the project has gone well.

"Overall it's a good example of a good neighbor project to a population that's looking at in four or five years affordable gas," Slemons said.

Armstrong has designated Solsten XP, an Anchorage management and contracting service, as its Alaska contact. To get on e-mail distribution lists or raise concerns, e-mail Amber Babcock with Solsten XP at amber.babcock@solstenxp.com.

Michael Armstrong can be reached at michael.armstrong@homernews.com. McKibben Jackinsky can be reached at mckibben.jackinsky@homernews.com.