Alaska project approved

Hilcorp Energy’s site could be first oil and gas production facility off federal waters in Arctic.

U.S. Secretary of the Interior Ryan Zinke on Wednesday announced that his department has issued conditional approval to Hilcorp Alaska LLC, a unit of Houston-based Hilcorp Energy Co., for what could be the first oil and gas production facility in federal waters off the coast of Alaska.

The privately held company is working to develop an artificial gravel island in the Beaufort Sea about 20 miles east of Prudhoe Bay in the shallow water about 5 miles off the coast. Four artificial islands built to produce oil and gas currently operate nearby in Alaska state waters.

The decision comes after President Donald Trump last year began working to reverse an Obama Administration executive order that protected a substantial amount of the U.S. Arctic from offshore from oil and gas development.

As part of its conditional approval, the Interior Department stipulated that oil and gas drilling may only occur during solid ice conditions and placed seasonal restrictions on operations and vessel traffic to allow for subsistence whaling activity on the nearby Cross Island. Hilcorp still must obtain required permits from state and other federal agencies to conduct the work.

The planned production facility is unlike past Arctic oil ventures, such as Royal Dutch Shell Plc’s failed exploration campaign, which employed floating drilling rigs to hunt for crude 70 miles off the Alaska coast in the Chukchi Sea.

The Beaufort Sea is now the epicenter of the oil industry’s interest in U.S. Arctic waters.

The shallow waters are easier to plumb, already boast oil production operations and are close to onshore facilities at Prudhoe Bay.