If troubles come in threes, Ninilchik, Alaska, has had its share. First there was a bad fishing season. Then, a series of destructive storms have hit the Kenai Peninsula and other portions of Southcentral Alaska, resulting in Gov. Sean Parnell declaring a state disaster.
Now, oil and gas firm Apache Corp. has called a "pause" in its Ninilchik-based, 3-D seismic work, halting a much-needed economic boost locals welcomed.
Apache's area of oil and gas exploration includes leases of approximately 850,000 onshore acres, tidal acres and offshore in the Cook Inlet basin. The decision to call a timeout in the related seismic work is due to a lack of necessary permits, said Lisa Parker, manager of Apache's government relations.
An independent producer based in Texas, Apache claimed earlier this year that there may be as much oil remaining in Cook Inlet as has been recovered in the 55 years since production began – about 1.3 billion barrels. In 2011, the U.S. Geological Survey estimated about 600 million barrels was undiscovered but could be produced using today’s technology.
“When you go up there, it’s kind of like going back in time,” Apache vice president for exploration John Bedingfield told Petroleum News in July. “It’s interesting, but things have just been frozen for 40-plus years.”
Apache still needs a U.S. Army Corps of Engineers permit to place marine nodes -- 65-pound, 6-inch receivers that lay on the inlet floor and collect seismic data -- in state waters and a National Marine Fisheries incidental harassment authorization, which allows for the incidental taking of small numbers of marine mammals.
In addition, Apache will prepare an environmental assessment, which is necessary for the company to do work within the Kenai National Wildlife Refuge, said Parker.
A plan to resume the seismic work is being put together, she said.
"We have extensive acreage in Cook Inlet that we want to image," she said. "Apache's not leaving Cook Inlet. We are in the process of getting the permits so we can do the imaging we need to do. Unfortunately, several of those permits take a long time."
Lara McGinnis, manager of the Kenai Peninsula State Fair, said the fair had a contract with SAExploration, Apache's primary contractor. The fair's contract was to provide space for a helipad and mess hall for a monthly rate of $4,400, paid on a month-by-month basis. The contract began Aug. 20 and was to continue for up to 10 months. McGinnis was notified the end of last week that the project had come to a standstill.
"SAE said all along that this was the plan, but plans change in this industry very quickly," said McGinnis. "They were very clear about that."
The ripple effect has McGinnis most concerned. For instance, there's the high school student McGinnis hired to clean "so she could afford college and participate in sports. Her family can't do it without this kind of income."
Keeping a positive outlook, McGinnis said this is Ninilchik's "opportunity to make lemonade out of lemons. What kind of jobs can we create? A lot of tears have been cried, but we'll come out the other side."
For Alex Kaye, finding work related to the seismic project added to the two jobs he already had. After three days, however, he received word the job had come to an end.
"I'm hurting because of it, but I was here before Apache and I'll be here after," said Kaye, who is hoping the project will resume and he'll be back to work.
Commercial fisherman Gary Deiman -- his wife, Sharon, is among those who lost project-related employment -- said the shutdown has "taken the wind out of my balloon. Everybody was expecting a little bit out of this whole deal, and now it sounds like nothing at all."
American Legion Post No. 18 had agreed to provide space for the project camp for four months in exchange for a donation of $10,000. Even though the project has come to a halt, the donation was well timed. It will be used for repairs of water damage caused by the recent storms, said post spokesman Gary Jackinsky.
The project allowed Glen Thomas to rent several of his cabins on a month-by-month contract with SAExploration. For him, the experience has been positive.
"They lived up to their contract 100 percent because it was month-by-month," said Thomas. "They said (the pause) could happen. I have no problem at all with it. They just came in at the right time to enhance my income so I could upgrade my situation. I'm very pleased to have them there and look forward to them coming back if they restart the project."
Parker said both federal and state permits were applied for simultaneously. Some of the permits were received within two months. Others took from last April until earlier this month.
"We would like there to be a timeline and a process. Unfortunately, agencies don't work that way," said Parker. "When we apply for them, we apply for them in sufficient time that an agency should be able to review and issue a permit. We also provide them with a time frame for when we would like to begin operations. ... This is an unfortunate situation, but we'll keep working so we can resume our seismic operations."
Next week Apache will mail cards to property owners in the area where seismic operations were occurring that say "We've taken a pause. We'll be back. When, we don't know, but we will be back," said Parker.