Is Liberty dead? An ambitions Alaska North Slope drilling project stalls as BP reconsiders.

• Author: Loy, Wesley
• Position: OIL & GAS

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On a manmade island in the Beaufort Sea, a colossal drilling rig billed as one of the most powerful in the world juts 240 feet into the Arctic sky.

BP installed the rig to punch horizontal holes of unprecedented length to a rich, offshore oil accumulation known as Liberty.

Under the original plan, crude from Liberty should have started flowing in 2011, helping to stem the worrisome production decline from Alaska's North Slope.

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But the big blue super rig so far hasn't sunk a single hole, standing idle for months in a mystery that seems almost as deep as the wells it was supposed to drill.

No one, it seems, is willing to say much. But the best available evidence suggests BP's $1.5 billion Liberty project is hung up in tough circumstances, including fallout from the Deepwater Horizon disaster and an apparent conflict with the rig's builder, Parker Drilling Co. of Houston, Texas.

The situation begs the question: Is Liberty dead?

"We are in a review stage on this project that has been under way for some time now," Steve Rinehart, spokesman for BP Exploration (Alaska) Inc., said in a June 5 interview. "When we're ready to say more, we will."

What began as a decent oil find evolved into a highly ambitious project.

Liberty is located on federal leases in shallow water, about 20 feet deep, in the Beaufort Sea about six miles offshore and 15 miles east of Prudhoe Bay.

BP drilled and tested Liberty No. 1, the discovery well, in early 1997. On May 2 of that year the company announced a commercial discovery estimated at more than 100 million barrels of recoverable oil.

A find of that size is modest compared to Alaska giants such as the BP-operated Prudhoe Bay field, which has produced more than 12 billion barrels of oil to date, and the ConocoPhillips-operated Kuparuk River field, which has produced nearly 2.5 billion barrels.

But make no mistake, a field capable of producing 100 million barrels is a huge prize. BP has said production could plateau at 40,000 barrels per day. Overall North Slope production through the first five months of this year averaged less than 600,000 barrels per day.

The question for BP was how to produce the offshore discovery. The initial idea was to build a gravel island at Liberty with production facilities and a buried subsea pipeline to carry the oil to shore. That's what BP did for its Northstar field, which sits in federal and state waters northwest of Prudhoe Bay. Northstar...