Petroleum

Petroleum

ANWR lease sale; aerial surveys
The Department of the Interior is on schedule for its planned first lease sale in the coastal plain of the Arctic National Wildlife Refuge, DOI’s Assistant Secretary for Lands and Minerals, Joe Balash, said May 30 at the annual Alaska Oil and Gas Association conference in Anchorage. Lawsuits may cause a delay, however.
In another development, a Canadian company will fly airborne geophysical surveys over the refuge this summer to aid companies in bid preparation. There are ways the airborne data can be linked to existing ground-based geophysical data from surveys done in the 1980s. Conservation groups are objecting because of noise effects on wildlife but DOI says it has no jurisdiction on aerial flights.

ASRC wants to sell Placer
Arctic Slope Regional Corp. has submitted permits for a one-pad development at its Placer project on the North Slope, to be on-line in 2022 but is also now looking to sell the property. Detring Energy Advisors of Houston has been retained to help sell the property. Detring said Placer unit could hold 35 million to 45 million barrels of recoverable oil from 110 million barrels of estimated oil-in-place, or in the reservoir rock.

Oil Search continues with Pikka
Plans for the proposed Pikka project on the North Slope are proceeding. Oil Search, operator for itself and partner Repsol, received a Record of Decision on the Pikka EIS in mid-May, which also triggered approval of key federal permits. The company has reaffirmed its plan for 120,000 barrels per day from two new drill sites with an optional third. The company also said most production will come from the Nanushuk formation but the deeper Alpine reservoir may also be tapped, Petroleum News reported. Although formal approvals from Oil Search and Repsol have yet to come, the tentative plan is for construction to begin in the winter of 2020 and to span three winter slope building seasons.

State resurrects SALSA
State DNR Commissioner Corri Feige said the state will again offer three “Special Alaska Lease Sale Area” blocks of leases in the annual fall area-wide North Slope sale planned for December. The “SALSA” blocks involve bidders having access to state-owned high quality seismic data acquired through the now-ended tax credit incentive program, and bidding for the acreage with leases grouped. In the 2018 areawide sale there were no takers for the SALSA blocks.

Tepid show at Cook Inlet sale
The state’s annual Cook Inlet areawide lease sale in May 22 drew only three bids, all from Hilcorp Alaska, the dominant operator in the inlet. Hilcorp appeared to be filling in leases around its existing acreage. An offering of state onshore and submerged lands for lease on the Alaska Peninsula drew no bids, as has been the case in recent years. Bidding in recent state sales has varied and low turnouts by companies has happened before. Cook Inlet is a mature basin and the potential for major new discoveries of oil appears limited, although many geologists believe oil can still be discovered at depth. The potential for gas is quite good (the basin is considered gas-prone) but without capacity to export liquefied natural gas the market is limited to regional utility markets, which have signed contracts with Hilcorp, the major gas producer.

Squabble over well bonds
The state Dept. of Natural Resources is objecting to new bond requirements ordered by the Alaska Oil and Gas Conservation Commission to cover cleanup and plugging of abandoned oil and gas wells. DNR argues the higher bond amounts are higher than needed and burdensome for industry. The Alaska Oil and Gas Association, the industry trade group, is making similar arguments. The AOGCC, an independent quasi-judiciary state commission charged with ensuring well safety, raised the bond amounts over concerns that thinly-financed independent oil explorers will be unable to cover costs of properly capping wells and cleanup. This will be an interesting test of the pro-development administration of Gov. Mike Dunleavy vs. the legal mandate to an independent state commission to ensure safety.

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