February 01, 2002 --- Vol. 8, No. 13February 2002

State receives four offers for North Slope royalty-in-kind gas

The state of Alaska has received four offers to buy North Slope royalty-in-kind natural gas.

At a bid opening this morning, Commissioner of Natural Resources Pat Pourchot said the proposals were from Alaska Power and Telephone Co. in Tok; Anadarko Petroleum Corp. and AEC Marketing (USA) Inc. - a joint proposal; Chevron U.S.A. Inc.; and Williams Energy Marketing and Trading.

Kevin Banks, petroleum market analyst with DNR's Division of Oil and Gas, said before the bid opening that analysis of the proposals would begin right away. The commissioner will then decide whether to negotiate with any of the companies making offers.

If a decision is made to go ahead, the next step would be negotiation of a contract, Banks said. A best interest finding would be prepared and issued for public review. After a final finding was completed, the contract would be submitted to the Legislature for approval.

The state offered 70 percent of its Prudhoe Bay and Point Thomson royalty gas Dec. 26, saying that selling royalty gas now "responds to a commercial opportunity" to improve future royalty revenues from natural gas and to promote new private investment.

Ice road season ramps up

The state opened lands north of 69 degrees 40 minutes north latitude to ice road construction Jan 25, Leon Lynch of the state Division of Mining, Land and Water told PNA. But construction began at the beginning of the year on parts of ice roads to drilling sites in the National Petroleum Reserve-Alaska on a case-by case basis.

Extended cold temperatures have been slow to freeze the ground because of an insulating blanket of snow this winter. Lynch said rolligon traffic packs snow and drives frost levels down more quickly to levels that allow ice road construction to begin. Peak Oilfield Service Co. was able to construct 60 miles of road from Meltwater to the Colville River crossing on a pre-packed route, he said.

Phillips Alaska Inc. and Anadarko Petroleum Corp. have wells planned in NPR-A this winter from ice pads with ice road access.

South of the 69 degree 40 minute north latitude line, winter movement is being considered on a case-by-case basis, he said. Frost levels are marginal where PGS Onshore is doing seismic work near Happy Valley, 80 miles south of Deadhorse, but deep snow there protects the tundra, allowing some work to progress.

The Bureau of Land Management approved ice road construction and tundra travel on Dec. 31. Usually BLM follows the state lead, but this year has been unusual, said Don Mears of BLM. He said NPR-A seems to be colder than Deadhorse.

Mears said the agency is just finishing project evaluations for this year. The e-mail system at the Department of the Interior has been shut down, which has delayed work at the agency.

Phillips has been hauling by rolligon to the Hunter prospect under a plan approved last year, and is building ice roads now, Mears said. Anadarko is working on ice pads, he said.

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