Summary of Regulatory Environments in North Slope Areas

All of the Agencies are extremely helpful and supportive of efforts to conduct operations on the central region of the North Slope of Alaska, particularly on State lands in the more mature activity areas of the Slope between the Colville River on the west and the Canning River on the east. With oil and gas production providing over 80% of State revenues, the State agencies over the past several years have initiated work process reviews to reduce bureaucracy and unnecessary paperwork to facilitate timely permits while, at the same time, rightfully demanding compliance with health, safety and environmental regulations. Most new entrants to Alaska, including AVCG/Brooks Range Petroleum, have focused on this central area of the Slope with the majors now focusing exploration in the high-cost, bigger stakes areas of offshore northern Alaska or in NPRA.

The regulatory environment on Federal lands in the NPRA farther west on Federal lands (west of the Colville River) is much tougher, although significant development has occurred around ConocoPhillips’ (formerly ARCO) large Alpine Field and satellites with additional exploration even farther west. The most restrictive element in NPRA is that new development must be road-less, similar to offshore platforms’ operations but with access being by air or vehicles over ice roads in the winter and some summer barging to key staging areas on the coast. Recent pad and facility development expansion farther west requested by ConocoPhillips has been delayed by Federal agencies requesting additional permit reviews. The State has requested more timely approval by the Federal agencies. When NPRA was re-opened for leasing of Federal lands in the late 1990s, the oil industry was vocal about supporting road-less development in the NPRA, but some companies are now challenging that while, on the other hand, the Federal government is adhering to the industry’s original testimony and agreements to road-less development.

The Arctic National Wildlife Refuge to the east – between the Canning River and the border of Canada - remains off limits for oil exploration and development due to environmental habitat concerns. Ironically, and much to the positive, administrations in the Federal and State governments over the past 10-15 years have been very willing to foster exploration and development on the central North Slope and NPRA (as long as the NPRA development is road-less) to appease the industry from too aggressively pushing the opening of ANWR.

Regulatory Environment in the Central Area

For the core area of the Slope with existing infrastructure – the central area - the most important thing is to plan activities as early as possible so that a successful summer studies program can be conducted before the snow falls. Missing the summer studies window could delay a project by one year. Summer studies for exploration activities include: acquiring archeological site clearance and surveying the proposed ice pads and ice road routes; and lake studies for water sources. Summer studies for development activities may include: more detailed surveying and archeological site clearance; and hydrology, vegetation, and wildlife studies.

A company incorporates summer studies’ data into a Plan of Operations and then begins the permitting process. Below is a list of permits or authorizations required for an exploration project by the various authorities on the central area of the North Slope. Knowing the permits that are required, and the timeline to obtain those permits, avoids surprises and delays. Brooks Range Petroleum has successfully obtained timely permits for all our summer studies, winter seismic and exploration drilling activities over the past four years of our field operations. Not discussed in this synopsis are the Allotment Owner and Native Community consultations and approvals that are required; Brooks Range Petroleum personnel have extensive experience with Alaska Native groups and individuals on the North Slope.

Existing Facilities Owners

North Slope Borough

Alaska Oil and Gas Conservation Commission

Alaska Department of Natural Resources

Alaska Department of Environmental Conservation

US Fish and Wildlife Service

Prepared by Brooks Range Petroleum Corporation | Jim Winegarner, Vice-President of Land and External Relations