October 19, 2012 Record of Decision Department of the Army U.S. Army Corps Record of Decision of Engineers Alaska District APPLICANT: Exxon Mobil Corporation and PTE Pipeline LLC ACTIVITY: Point Thomson Development Project (PTP) APPLICATION NO.: POA-2001-1082-M1 This document records the U.S. Army Corps of Engineers’ (Corps) decisions related to the findings and determinations for this action. This document also presents comments received during the public review processes and responses to those comments. The applicant has applied to the Corps for permits under Section 404 of the Clean Water Act (CWA) and Section 10 of the Rivers and Harbors Act (RHA) of 1899 for construction activities required for hydrocarbon exploration and development on the North Slope of Alaska. This document presents Corps’ findings and determinations for the United States (U.S.) Environmental Protection Agency’s (EPA) Section 404(b)(1) Guidelines (Guidelines) compliance; public interest review (PIR); and applicable laws, regulations, and executive orders that were considered in the Environmental Impact Statement (EIS) and permit evaluation processes. It also is the record of decision (ROD) that concludes the Corps’ implementation of the National Environmental Policy Act (NEPA) for the action. The EPA, U.S. Fish and Wildlife Service (USFWS), and the Alaska Department of Natural Resources (ADNR) acted as cooperating agencies in the EIS process. Background The Corps, Alaska District, Regulatory Division received a draft Department of the Army (DA) permit application from the Exxon Mobil Corporation (applicant) on October 19, 2009 requesting authorization 1 for the placement of fill material in waters of the U.S., and placement of structures and removal of dredged material in navigable waters of the U.S., in connection with the applicant’s proposed Point Thomson Project (PTP). These actions fall under Corps’ jurisdiction under Section 404 of the CWA and Section 10 of the RHA of 1899. The Corps, as part of its permit review process, developed a Final EIS in compliance with the NEPA. Exploration in the Point Thomson area began in the winter of 1969/1970 with the drilling of the first exploration well. To date 21 exploratory wells have been drilled on and off shore in the general Point Thomson area, and several gravel structures remain in the area from those exploration activities. In 2002, the EPA started a NEPA process in response to the applicant’s proposed oil and gas development plans for the Point Thomson area, located on the North Slope of Alaska, 60 miles east of Prudhoe Bay on the Beaufort Sea coast. At the time, the EPA was the lead federal agency because the development plans called for the potential designation of ocean dredged-material disposal sites, which would have required EPA authorization under Section 102 of the Marine Protection, Research, and Sanctuaries Act (MPRSA). Preparation of the EIS was discontinued before its completion at the request of the applicant. In 2006, the ADNR began an effort to terminate the Point Thomson Unit (PTU) and leases, claiming the leaseholders had failed to drill, develop, and produce the Unit and leases in adequate time. The State of Alaska and the PTU Operator, applicant, and working interest owners were involved in a series of legal disputes concerning the PTU until March 29, 2012, when parties involved signed a settlement agreement. The operators and working interest owners have committed to produce condensate liquids from the Point Thomson Reservoir for delivery into the Trans-Alaska Pipeline System (TAPS) by the end of the 2015- 2016 winter. The settlement agreement also outlines scenarios and deadlines for future reservoir development and lease schedules. This settlement does not bind the Corps to a particular timeline nor is the Corps a party to this settlement. 1 October 19, 2012 Record of Decision The applicant’s current proposed project is substantially different from the 2002 plan, and would not be subject to Section 102 of the MPRSA. However, the current development plan would require authorization from the Corps to construct structures in navigable waters of the U.S. under Section 10 of the RHA of 1899 and to discharge dredge and/or fill material into waters of the U.S., including wetlands under Section 404 of the CWA. Therefore, the Corps is the lead federal agency for the Final EIS and is conducting its review of the DA permit application concurrently with the NEPA process. The proposed project involves development of hydrocarbon resources (gas condensate and possibly oil) from the Thomson Sand Reservoir in the Point Thomson area. The project area is located on the northern edge of Alaska’s Arctic Coastal Plain (ACP), 60 miles east of Deadhorse and Prudhoe Bay and 60 miles west of Kaktovik, on the coast of Lion Bay. It is named after a local geographic landform called Point Thomson. A description of the proposed project, including all activities subject to authorization by the Corps, is located in Section 2.1 of this ROD. Activities on the North Slope are shaped by the extreme conditions of the climate. The sun does not rise above the horizon for about two months in the winter, which leads to an average minimum winter temperature in the project area of -24ºF. In summer, the continuous sunlight only results in an average maximum temperature of 55ºF due to the latitude. The project area is covered with snow for about 8 months of the year; however, snow may fall at any time of the year. The project area is defined to extend eastward from Deadhorse to the Staines River and from the lagoon side of Flaxman Island along the Beaufort Sea coast to approximately 8 miles south of the coast line. Most of the Thomson Sand Reservoir is offshore under state coastal waters, while most of the proposed facilities would be located on land. The western boundary of the Arctic National Wildlife Refuge (ANWR) is approximately 2 miles from the easternmost extent of the proposed project. An export pipeline and transportation routes would extend from the Point Thomson facilities to existing facilities to the west. According to the applicant, since the 1970s, hydrocarbons from the North Slope have contributed a substantial share of U.S. domestic production. Production at Point Thomson would help offset current declines in North Slope production and maintain efficiency of the TAPS. The primary hydrocarbon resource at Point Thomson is natural gas and liquid gas condensate from the Thomson Sand Reservoir; there is also some oil present. Evaluating these hydrocarbon resources is part of the proposed action and would include identifying and assessing the location, size, and characteristics of the reservoir and the resources contained therein, as well as determining the commercial viability of producing those resources. Short-term and long-term flow tests would be required to further define the formation fluids and their producing characteristics and to understand how the reservoir properties and connectivity vary between wells. Summary of Decision The information presented in the Corps’ determination of the project’s compliance with the Guidelines, the PIR, the EIS, and the comments and other supplemental information considered following the public involvement period have been independently reviewed and evaluated. The process has produced sufficient and accurate assessments of the resources, needs, concerns, and other issues that relate to this action and therefore is appropriate for the PIR and alternative analysis required by 33 CFR 320.4(b)4 and 40 CFR 230.10. Based on these considerations, the Corps finds that Alternative B of the Final EIS (the applicant’s Proposed Action), with modifications and incorporation of additional mitigation measures as determined under the Guidelines, is the Least Environmentally Damaging Practicable Alternative (LEDPA), and is not contrary to the public interest. Project impacts resulting from the discharge of fill in waters of the U.S., including wetlands (WOUS), will be permanent filling of 267.1 acres of WOUS. This authorization also requires compensatory mitigation for the direct and indirect impacts to WOUS, as described in Section 7.2 of this ROD. A DA permit will be proffered to the applicant. The authorization will include special conditions to avoid and minimize potential adverse impacts and to compensate for unavoidable adverse impacts to the aquatic ecosystem, and to ensure that the project would not be contrary to the public interest and is in compliance with the Guidelines. All work will be performed in accordance with the attached plan, sheets 1 - 84, dated October 19, 2012. 2 October 19, 2012 Record of Decision Contents 1.0  Authority 8  2.0  Applicant Proposed Project 8  2.1  Proposed Project Description 8  2.2  Location 10  2.3  Purpose and Need 10  Applicant’s stated purpose and need 10  Basic project purpose and water dependency [40 CFR 230.10(a)(3)] 11  Overall project purpose [40 CFR 230.10(a)(2) and 2009 HQ SOP page 15]: 11  2.3  Scope of Analysis: 33 CFR 325, Appendix B, 7(b) 11  Determined Scope for NEPA: 12  Determined Scope (Permit Area) for National Historic Preservation Act: 12  Determined Scope (Action Area) for Endangered Species Act: 12  3.0  Alternatives Considered 12  3.1  No Action 13  3.2  Action Alternatives 13  Common Components 13  Alternative B: Applicant’s Preferred Alternative 14  Alternative C: Inland Pads with Gravel Access Road 15  Alternative D: Inland Pads with Seasonal Ice Access Road 16  Alternative E: Coastal Pads with Seasonal Ice Road 18  3.3  Modifications Evaluated During Public Review 19  3.4  LEDPA 19  4.0  Public Involvement 20  4.1  Comments Received on the NEPA Process 20  4.2  Comments Received on the Public Notice 20  Federal Agencies 21  State Agencies 31  Local/Tribal 33  Nongovernment Organizations 33  Individuals and Businesses 37  Applicant 38  Applicant’s Rebuttal to Objectionable Comments 39  5.0  Evaluation of Compliance with 404(b)(1) Guidelines 40  5.1  Finding of Practicable Alternatives (40 CFR 230.10 (a)) 40  Analysis of Impacts 41  Determination of the LEDPA 75  5.2  General Description of Dredged or Fill Material 76  General Characteristics of Material 76  Quality of Material 77  3 October 19, 2012 Record of Decision Description of Proposed Discharge Site 77  Description of Discharge and Disposal Methods 78  5.3  Factual Determinations and Technical Evaluation Factors 78  Physical Substrate Determinations (40 CFR 230.11 (a)) 78  Water Circulation, Fluctuation, and Salinity Determinations (40 CFR 230.11 (b)) 80  Suspended Particulates and Turbidity Determinations (40 CFR 230.11 (c)) 85  Contaminant Determinations (40 CFR 230.11 (d)) 87  Aquatic Ecosystems and Organism Determinations (40 CFR 230.11 (e)) 89  Proposed Disposal Site Determination (40 CFR 230.11 (f)) 99  Determination of Cumulative Effects on the Aquatic Ecosystem (40 CFR 230.11 (g)) 103  Determination of Secondary Effects on the Aquatic Ecosystem (40 CFR 230.11 (h)) 104  5.4  Determination of Compliance or Non-compliance with the Restrictions on Discharge 105  Finding of LEDPA (40 CFR 230.10(a)) 105  Restrictions on Discharge (40 CFR 230.10(b)) 106  Finding of No Significant Degradation (40 CFR 230.10 (c)) 106  Minimization of Potential Adverse Impacts (40 CFR 230.10(d)) 107  Summary of Findings of Compliance 108  6.0  Public Interest Review Factor Assessment 108  6.1  Needs and Welfare of People: Environmental Justice and Subsistence 108  Environmental Justice 108  Subsistence 108  Factor Conclusion 109  6.2  Fish and Wildlife Values 109  Beneficial Effects: General 110  Detrimental Effects: General 110  Birds 110  Terrestrial Mammals 110  Marine Mammals 111  Fish and Invertebrates 111  Factor Conclusion 112  6.3  Aesthetics 112  Beneficial Effects 113  Detrimental Effects 113  Factor Conclusion 113  6.4  Safety 113  Beneficial Effects 113  Detrimental Effects 114  Factor Conclusion 114  6.5  Water Supply and Conservation 114  Beneficial Effects 114  4 October 19, 2012 Record of Decision Detrimental Effects 114  Factor Conclusion 114  6.6  Energy Needs 115  Beneficial Effects 115  Detrimental Effects 115  Factor Conclusion 115  6.7  Conservation 115  Beneficial Effects 115  Detrimental effects 115  Factor Conclusion 115  6.8  Recreation 116  Beneficial Effects 116  Detrimental Effects 116  Factor Conclusion 116  6.9  Economics 116  Beneficial Effects 116  Detrimental Effects 117  Factor Conclusion 117  6.10  General Environmental Concerns 117  Beneficial Effects 117  Detrimental Effects 117  Factor Conclusion 117  6.11  Wetlands and Vegetation (320.4(a)(1), 320.4(b)(2)(iv), 320.4(b)(2)(vi)) 117  Beneficial Effects 118  Detrimental Effects 118  Factor Conclusion 118  6.12  Historic Properties & Cultural Resources 118  Beneficial effects 119  Detrimental Effects 119  Factor Conclusion 119  6.13  Flood Hazards 119  Beneficial Effects 119  Detrimental Effects 119  Factor Conclusion 119  6.14  Floodplain Issues 119  Beneficial effects 120  Detrimental effects 120  Factor Conclusion 120  6.15  Land Use 120  Beneficial Effects 120  5 October 19, 2012 Record of Decision Detrimental Effects 121  Factor Conclusion 121  6.16  Navigation 121  Beneficial effects 121  Detrimental effects 121  Factor Conclusion 121  6.17  Shore Erosion and Accretion 121  Beneficial Effects 122  Detrimental Effects 122  Factor Conclusion 122  6.18  Water Quality 122  Beneficial Effects 122  Detrimental Effects 122  Factor Conclusion 123  6.19  Food and Fiber Production 123  6.20  Mineral Needs 123  Beneficial Effects 123  Detrimental Effects 123  Factor Conclusion 124  6.21  Considerations of Property Ownership 124  Beneficial Effects 124  Detrimental Effects 124  Factor Conclusion 124  6.22  Climate Change 124  Beneficial Effects 124  Detrimental Effects 125  Factor Conclusion 125  6.23  Cumulative and secondary affects on the aquatic ecosystem 125  6.24  Other factual determinations and Technical evaluation Factors 125  6.25  Public Interest Review General Criteria 126  7.0  Description of the Permitted Project 127  7.1  Description of Project Features 127  7.2  Mitigation Discussion 130  Avoidance/Minimization 130  Compensatory Mitigation Determination 130  7.3  Special Conditions and Rationale for Inclusion 131  8.0  Statement of Findings 140  8.1  Public Interest Determination 140  8.2  Findings of Compliance or Non-compliance with the 404(b)(1) Guidelines (40 CFR 230.12) 140  8.3  National Environmental Policy Act of 1969 [42 U.S.C. 4321 - 4347] 140  6 October 19, 2012 Record of Decision 8.4  Clean Water Act (33 USC Section 1341) Section 401 Certificate of Reasonable Assurance [33 CFR 320.4(d)] 140  8.5  Endangered Species Act of 1973 [16 U.S.C. 1531] 141  8.6  Fish and Wildlife Coordination Act [16 U.S.C. 661] 141  8.7  Magnuson-Stevens Fishery Conservation and Management Act 141  8.8  National Historic Preservation Act of 1966 [16 U.S.C. 470 et seq.] 141  8.9  Clean Water Act [33 U.S.C. 1251 et seq.] Section 404 [33 U.S.C. 1344] and 404(B)(1) Guidelines 40 CFR 230 Subpart B] 142  8.10  Rivers and Harbors Appropriation Act of 1899 [33 U.S.C. 401, 403, 407] 142  8.11  Marine Mammal Protection Act of 1972 [16 U.S.C. 1361 et seq, 1401-1407, 1538, 4107] 142  8.12  Executive Order 13175 Consultation and Coordination with Indian Tribal Governments 142  8.13  Clean Air Act [42 U.S.C. 7401 - 7671 Section 176(c)] 142  8.14  Executive Order 12898 (Environmental Justice) 142  8.15  Executive Order 11988 (Flood Plain Management) 142  7 October 19, 2012 Record of Decision 1.0 Authority This permit action is being taken under authority delegated to the District Engineer by 33 CFR 325.8, pursuant to Section 10 of the RHA of 1899 and Section 404 of the CWA. 2.0 Applicant Proposed Project The applicant submitted a complete DA permit application on October 26, 2011. The application contained a description of what the Final EIS referred to as Alternative B: Applicant’s Proposed Action. The EIS analyzed impacts of five alternatives including the No Action Alternative and four Action Alternatives. A public notice (PN) was issued concurrently to the release of the Draft EIS on November 18, 2011. The applicant revised some of the figures and submitted additional figures to further clarify the project. A second PN was issued by the Corps concurrent to the issuing of the Final EIS on July 27, 2012, in order to give the public an opportunity to examine and comment on the revised and additional figures. Comments received on both PNs are discussed in Section 4.0 of this ROD. 2.1 Proposed Project Description In the July 27, 2012, PN, the applicant initially proposed a total acreage of fill in WOUS of 273.4 acres, subject to authorization by the Corps under Section 404 of the CWA. Fill would include gravel for the construction of drilling/production pads and connecting roads, airstrip, gravel stockpile, vertical support members (VSM) for infield pipelines and an export pipeline, and pilings for a proposed barge offloading facility and service pier. The project would also include construction and rehabilitation of a gravel mine. Fill material would come from a new mine site located at approximately 2.5 miles inland. Dredging and discharge of fill/dredged material in navigable waters, subject to authorization by the Corps under Section 10 of the RHA, would be required in the barge docking area offshore of the Sealift Bulkhead and Service Pier, with a small amount of fill placed onshore. Construction of the barge facilities would also require placement of structures in navigable waters of the U.S., subject to authorization by the Corps under Section 10 of the RHA, Table 2.1 describes proposed structures in navigable waters of the U.S. Table 2.2 describes the acreage and type of all proposed infrastructure requiring fill in WOUS. Table 2.1: Proposed Structures in Section 10 Waters of the U.S. Footprint Component Type of Material (acres) Service Pier Piles (6) <0.1 Steel Mooring Dolphins (8) <0.1 Steel Temporary Ramp Supports (6) <0.1 Steel The project would comprise two major components: production facilities and an export pipeline. These would include three gravel pads, 5 development wells, infield gathering lines, 12 miles of infield gravel roads, a 5,600 foot airstrip, a gravel mine, and processing facilities and support infrastructure. Construction of two of the three gravel pads (the Central Pad and the East Pad) would involve the expansion of existing gravel fill. Similarly, two of five proposed wells have already been drilled from existing fill at the proposed Central Pad in 2009-2010 under State and local approval. These wells did not require new fill in WOUS, or additional DA authorization. The use of Long Reach Directional Drilling (LRDD) would allow development of the primarily offshore Thomson Sand Reservoir from three onshore pads located near the coast. The Central Pad (total 56 acres including 13.2 acres of existing fill) would involve the expansion of the existing PTU-3 pad and would accommodate additional drilling, processing facilities, a Class I injection well, and support infrastructure. 8 October 19, 2012 Record of Decision Table 2.2: Proposed Fill in Section 10 and Section 404 Waters of the U.S. Approximate Initial New Fill Type of Material Component Placement Volume (cy) (acres) Discharged Fill in Section 404 Waters of the U.S. Central Pad a 602,000 42.8 Pit run gravel fill Central Pad Access Road (2.7 miles) 151,000 19.9 Pit run gravel fill East Pad b 120,000 11.0 Pit run gravel fill East Pad Access Road (2.3 miles) 189,000 25.5 Pit run gravel fill West Pad 214,000 18.9 Pit run gravel fill West Pad Access Road (4.4 miles) 271,000 33.4 Pit run gravel fill Alaska State C-1 Pad c 17,000 0.0 Pit run gravel fill Alaska State C-1 Pad Access Road (0.03 miles) 2,200 0.4 Pit run gravel fill Emergency Boat Launch (onshore) 880 0.05 Pit run gravel fill/concrete Dredging and Fill Discharge Area 3,900 0.9 Dredged material Water Source Pad 6,000 0.7 Pit run gravel fill Water Source Pad Access Road (0.03 miles) 1,100 0.2 Pit run gravel fill Badami Auxiliary Pad 2,000 0.25 Pit run gravel fill Badami Pipeline Crossing Pad 1,000 0.16 Pit run gravel fill Airstrip and Helipad 414,000 42.3 Pit run gravel fill Airstrip and Helipad Access Road (0.24 miles) 12,000 1.7 Pit run gravel fill Navaid Pads 15,000 1.6 Pit run gravel fill Navaid Pad Access Roads (0.22 miles) 9,000 1.5 Pit run gravel fill Electrical Trenching 2,670 0.4 Organic/inorganic Gathering and Export Pipeline VSMs 3,600 0.1 Sand slurry/steel Culvert Scour Protection - 0.1 Concrete 2,254,000 gravel extracted Pit run gravel fill/ Gravel Mine 49.6 1,246,000 overburden replaced overburden Gravel Mine Access Road (0.14 miles) 23,000 3.3 Pit run gravel fill Gravel Stockpile 204,000 12.9 Pit run gravel fill Fill in Section 10 and Section 404 Waters of the U.S. Emergency Boat Launch 80 0.2 Pit run gravel fill/concrete Dredging and Screeding Area 3,900 CY removed 5.5 Dredged material Total: 3,507,680d 273.4 - a Central Pad footprint would also include the existing 13.2 acre PTU-3 pad for total acreage of 56.0 acres b East Pad footprint would also include 4.63 acres of the existing 4.8 acre North Staines River 1 pad for a total acreage of 15.6 c Alaska State C-1 Pad would also include the existing 4.1 acre Alaska State C-1 pad d Does not include extracted gravel or removed dredged material The West and East Pads would be strategically located to access the western and eastern extents of the Thomson Sand Reservoir. The West Pad (approximately 19 acres) would be a new pad constructed to support drilling and production. It would be located 4 miles west of the Central Pad at 20+ feet elevation. The East Pad would include a new 11-acre pad on the sea coast at 17+ feet elevation connected to the 9 October 19, 2012 Record of Decision existing 4.6 acre North Staines River 1 exploration pad, which would be utilized for temporarily staging equipment and camps during drilling. Gathering pipelines, elevated a minimum of 7 feet above the wetland tundra surface on VSMs, would transport hydrocarbons produced from the West and East Pads to the Central Processing Facility (CPF) at the Central Pad. The Point Thomson Export Pipeline (PTEP) would be a common carrier pipeline and subject to Federal Energy Regulatory Commission (FERC) regulation. The 22-mile long, 12-inch nominal diameter export pipeline would transport processed liquid hydrocarbons from the CPF at the Central Pad to a connection with the British Petroleum’s (BP) Badami Facility, Sales Oil Pipeline. The PTEP would also be elevated a minimum of 7 feet above the wetland tundra surface on VSMs. Other associated facilities would include a small gravel pad at Badami to house leak detection and metering skid infrastructure and a small pipeline crossing pad to allow ice road crossings. The applicant’s proposed mitigation measures are presented in Chapter 4 of the Final EIS. Modifications to the original proposal are discussed in Sections 3.3 and 5.4, as a result of the evaluation by the Corps in determining the LEDPA. 2.2 Location The project is on Alaska’s Beaufort Sea coastline, within the North Slope Borough (NSB), approximately 60 miles east of Prudhoe Bay and 60 miles west of Kaktovik, Alaska. Further descriptions of the project setting and location can be found in Sections 3.0, Alternatives Considered and 7.0, Description of the Permitted Project of this ROD. 2.3 Purpose and Need This section discusses the purpose and need for the project from the applicant’s perspective and the Corps’ regulatory requirement. The first section provides the applicant’s stated purpose and need. The following sections address the questions of whether the project is water dependent, availability of alternatives outside special aquatic sites that would meet project purpose, and the basic and overall project purpose of the project from a Federal perspective. Applicant’s stated purpose and need In their DA permit application, the applicant states: The project will initiate commercial hydrocarbon production of the Thomson Sand Reservoir by the winter season of 2015-16, as dictated by the applicant’s legal settlement with the State of Alaska signed on March 29, 2012. The project will deliver liquid hydrocarbons to the TAPS Pump Station No. 1 at Prudhoe Bay for shipment to market. Initial production of liquid hydrocarbons is expected to be approximately 10,000 barrels per day (bpd). The Project will delineate and evaluate hydrocarbon resources in the PTU. ExxonMobil, as PTU operator, and the PTU owners have committed to the production of liquid hydrocarbons from the Thomson Sand Reservoir by winter season 2015-16. The ADNR has recognized this commitment and has authorized production consistent with this schedule. The State’s position is that production is required at the earliest feasible time. The proposed project will achieve this important purpose. Production of liquid hydrocarbons at Point Thomson serves other public purposes and needs. Development of this resource will help the U.S. meet domestic energy demand and reduce dependence on foreign sources of oil. Production at Point Thomson will help offset declining production from Alaska’s North Slope reservoirs, and will help maintain the throughput of TAPS. The project will provide economic benefits to the state, NSB, and local communities through the creation of new jobs and tax revenues. The project will provide an important source of employment for Alaska businesses, workers, and local residents. This will include both temporary jobs during drilling, engineering, procurement, and construction, and long-term jobs supporting permanent operations. The project will be a source of new 10