October 28, 2004 --- Vol. 10, No. 97October 2004

EnCana surrenders its five NPR-A leases

As part of a strategy change for its Alaska oil and gas acreage, EnCana has relinquished its leases in the National Petroleum Reserve-Alaska.

According to Mapmakers Alaska, the five leases, ranked as “low potential” by the Bureau of Land Management, encompass 56,980 acres and were picked up by the Calgary-based independent in a June 2002 federal lease sale. Fifty-five miles southwest of the community of Nuiqsut, the leases are adjacent to Total’s Fox prospect (see related story this issue) and just south of a ConocoPhillips/Anadarko Petroleum lease that contains the USGS/Husky Inigok Test Well No 1.

“Basically, we have had a little bit of a strategy change in terms of how we prioritize our acreage in Alaska. It is a function of several things, including drilling results from our own drilling up there and looking at other drilling results in NPR-A. We went through an evaluation of the NPR-A acreage and, as a result, prioritized it down,” Paul Myers, vice president USA region for EnCana, told Petroleum News Oct. 25.

“That acreage was not part of the stratigraphic interval we’re trying to focus most of our efforts on right now,” he said. The decision to drop the NPR-A leases was part of a “continued maturation process of our portfolio – deciding where we want to be and where we want to focus,” Myers said. “We’re pretty much doing it everywhere in the world.”

There is “one area” in Alaska that EnCana is “most interested in,” he said, and the five leases aren’t in it, Myers said, declining to identify that area.

EnCana, one of the largest oil and gas leaseholders in northern Alaska, picked up a block of 19 offshore leases in a wildcat area north of NPR-A at the U.S. Minerals Management Service’s Sept. 24, 2003 Beaufort Sea sale. Encompassing approximately 100,000 acres, the Smith Bay area leases are adjacent to six existing ConocoPhillips-Anadarko Petroleum leases, “so it appears that people think there’s something there,” MMS Alaska Director John Goll told Petroleum News after the sale.

But there are no wells in the immediate area. It’s in a hole between exploration wells, he said, and MMS will be very interested to see results of seismic exploration in the area.

State rejects some bids from Oct. 27 sales

The Alaska Division of Oil and Gas said Oct. 28 that it is rejecting three bids submitted by Arctic Falcon Exploration LLC at its Oct. 27 North Slope areawide sale because the bids did not meet the minimum bid requirement of $10 an acre. Arctic Falcon bid $9.49 an acre for tract 2, $5.34 an acre for tract 4 and $5.12 an acre for tract 6.

The division is also rejecting four bids from Mark Anderson for tracts 959, 974, 1098 and 1099 “as there are competing bids and the deficiency is material.”

Anderson bid $20 an acre for tract 959, the only tract on which Armstrong Alaska, which bid $19.79 an acre for the tract, was outbid. Armstrong outbid Anderson on tracts 974, 1098 and 1099.

The division said it is recommending that Anderson “be permitted to correct the deficient bids” on tracts 1082, 1093, 1194 and 1219, “as there were no competing bids making the deficiency immaterial.”

With the Arctic Falcon bids dropped, and an Armstrong bid substituted for one of the Anderson bids, the new total for the North Slope areawide sale is $9,447,756.80, with 61 tracts sold covering 225,280 acres.

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