December 17, 2004 --- Vol. 10, No. 120December 2004

Rutter and Wilbanks to drill this winter near Glennallen

Midland, Texas-based Rutter and Wilbanks Corp. plans to drill a single gas exploration well near Glennallen, Alaska, this winter. It will be the first well in Alaska’s Copper River basin since Copper Valley Machine Works drilled the Alicia No. 1 well in 1983.

Rutter and Wilbanks has filed an application for an oil discharge prevention and contingency plan with the Alaska Department of Environmental Conservation for the well, which will be approximately 12 miles west of Glennallen and approximately 2,000 feet north of the highway.

A rotary drilling rig will be used for the well, which the company plans to drill in January and February.

If natural gas is found, additional drilling may occur year-round.

In its April 11 edition Petroleum News reported that Rutter and Wilbanks and partner Delphi International were shopping for investors in the 398,445-acre Copper River block. That acreage, under a five-year exploration license agreement with the state of Alaska since 2000, was won by Anschutz Exploration. Kevin Corbett, new ventures manager for Anschutz, told Petroleum News that subsequent to winning the exploration license, Anschutz entered into an agreement with Forcenergy — now Forest Oil — to jointly explore the area.

The 50-50 partners signed an exploration agreement covering the 398,445 acres with Rutter and Wilbanks and Delphi.

It is not clear from the DEC’s public notice whether the proposed well is in the exploration license block or on adjacent Native corporation land.

In April, Forest was going to be the operator, but the permit applications list applicant Rutter and Wilbanks as the operator.

“This is a risky deal, but we have a long history of taking risks. We have been wildcatters for three generations, and see no reason to stop now. We have a shot at some really big reserves on this deal,” Bill Rutter III told Petroleum News in April.

Note: See full story in the Dec. 26 edition of Petroleum News.

Anadarko challenges proposed TAPS tariff hike and existing rate

Anadarko Petroleum filed a protest with the Federal Energy Regulatory Commission Dec. 16 challenging the 2005 tariff increases proposed by the five owners of the trans-Alaska oil pipeline system. The company also filed a complaint with FERC protesting the existing tariffs, calling them unjust and unreasonable.

Anadarko asked the commission to “suspend the 2005 tariffs, declare those rates subject to refund, initiate hearing procedures, establish just and reasonable TAPS rates … and grant Anadarko refunds, reparation, damages (with interest) and other appropriate relief, including attorney fees.”

This will be the first time FERC has been asked to review the reasonableness of the tariff on North Slope oil being shipped down the 800-mile pipeline to markets outside Alaska. Two years ago the Regulatory Commission of Alaska ruled on a similar complaint from shippers, including Anadarko, and drastically lowered the tariff for TAPS oil being used in-state. RCA also ordered the pipeline’s owners to cough up substantial refunds.

The state of Alaska had filed a protest with FERC against the rate increases mid-week calling the proposed increases excessive and discriminatory because of the difference in the rate for North Slope oil being used in the state and the oil bound by tanker for destination outside the state.

Currently the tariff for oil being purchased for in-state use is about $1.96 per barrel as compared to $3.01 per barrel for oil headed outside the state. The largest hike being proposed from TAPS owners is a 28 percent hike requested by BP that would take the out-of-state rate from $3.01 to $3.86 per barrel.

BP and Conoco, which together own about 75 percent of the pipeline, told the Anchorage Daily News that the out-of-state shipping rates they are proposing for next year are fair and proper.

Conoco spokeswoman Dawn Patience said her company’s proposed tariff reflects, in part, a lower than expected flow of oil down the pipeline recently, raising costs per barrel shipped.

BP spokesman Daren Beaudo said some years his company’s tariff has dropped, not risen. He said next year’s proposed tariff was calculated precisely under the 1985 settlement agreement between the state and producers to cover the company’s pipeline operating costs plus provide a profit.

Note: See full stories in the Dec. 19 edition of Petroleum News (pages 1 and 8) available today online at

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