May 15, 1998 --- Vol. 4, No. 26May 1998

Alaska Supreme Court upholds Northstar oil lease, work to resume

Upholding a lower-court ruling, the Alaska Supreme Court today gave approval of the innovative Northstar lease agreement between the state and BP Exploration (Alaska) Inc., signaling the go-ahead for development of the North Slope oil field.

“This ruling will enable us to get Alaskans back to work before year's end as we ramp up construction and fabrication activity," said Richard Campbell, president of BP Exploration (Alaska). “It also will enable us to conduct a year 2000 major sea lift and begin Northstar production by late 2000 or early 2001.”

Both courts found that Commissioner John Shively of the Department of Natural Resources was authorized to negotiate the amendments and present them to the Legislature for approval, and that these amendments did not violate the Alaska Constitution or qualify as special treatment for BP.

DNR receives exploration license proposal in Copper River basin

A 60-day public comment period began ticking May 15 for the state’s first exploration license proposal. The exploration licensing program applies to state lands other than the North Slope and Cook Inlet basins presently under production, and provides for companies to license large blocks of land for exploration.

The state receives no money for exploration licenses, but applicants commit to spend specified amounts on exploration within an agreed-upon time frame. If exploration is successful, regular oil and gas leases can then be issued for the specific area to be put into production. The state must complete a best interest finding before an exploration license can be issued.

The Department of Natural Resources division of oil and gas said the name of the applicant was confidential at this time. The state is also requesting competing proposals for this license area. If no competing proposals are received then the name of the applicant will be included in the best interest finding.

If competing proposals are received, the best interest finding will give notice that sealed bids are requested from prospective licensees. Notice of intent to submit a proposal must be received by the division no later than June 15; competing proposals must be submitted no later than July 15.

Proposals must be between 10,000 and 500,000 acres and may extend beyond the proposal area; a specific work commitment must be part of the proposal.

Division of oil and gas officials told PNA that the division is committed to the completion of best interest findings for the state’s scheduled areawide sales, and that they will be unable to accommodate additional best interest finding work for at least 18 months. The division has requested assistance from the Department of Law in formulating ways in which it could produce best interest findings in shorter periods of time, either by seeking legislative funding for privatization of the data gathering and preliminary drafting portions of the finding, or by accepting data gathering and preliminary drafting provided by a third party but paid for by the applicant, while at the same time maintaining a “fair and competitive structure.”

The proposed license area encompasses 276,480 acres — a 24-mile-wide by 18-mile-long block of 12 townships — some 25 miles west of Glennallen and immediately south of Lake Louise. The Glenn Highway runs through the southeastern portion of the area; most of Lake Louise Road from its Glenn Highway junction is also in the license area.

A map of the area shows eight exploratory wells, all of which have been plugged and abandoned. Two of the wells are in the proposed license area.

Henry McGee appointed senior vice president for Prudhoe Bay

Henry McGee has assumed Kevin Meyers’ former position of senior vice president, Prudhoe Bay/Greater Point McIntyre business unit, at ARCO Alaska Inc. Meyers was appointed ARCO Alaska president and chief operating officer earlier this year.

This is McGee’s second tour in Alaska for ARCO. His most recent position was as vice president, financial planning and control, for ARCO International in Plano.

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