ConocoPhillips’ participation in the State of Alaska’s Dec. 7 North Slope and Beaufort Sea areawide lease sales raised eyebrows since several years ago the company dropped almost all of its state exploration acreage, in favor of focusing on larger targets in federal lands and waters.
ConocoPhillips bid unsuccessfully in partnership with Exxon on one tract in the Beaufort Sea sale, but was high bidder on 35 tracts in the North Slope sale, with the bulk of the tracts in a large block south of Point Thomson and Badami on the eastern North Slope in the Slugger/Jacob’s Ladder area. (In October, Alaska Venture Capital Group, or AVCG, relinquished a number of leases in the area from its proposed Greater Bullen unit, and some Anadarko leases in the area expired this year.)
Although some of the bidders in the sale appear to have been consolidating existing lease positions, ConocoPhillips was clearly establishing a new position in known, but undeveloped, areas of interest.
“That’s acreage that we have looked at in the past and when it became available we chose to bid on it,” ConocoPhillips Exploration Manager Michael Faust told Petroleum News senior reporter Alan Bailey after the lease sale.
The region is prospective for oil — to the north of ConocoPhillips’ new leases AVCG’s operating company, Brooks Range Petroleum, is hoping to develop some known oil resources between the Point Thomson and Badami oil fields.
But Faust said the acquisition of state onshore leases to the east of Prudhoe Bay does not mark some new strategic direction for ConocoPhillips — the lease purchase was simply a case of snapping up some attractive acreage that became available.
The company will now evaluate the leases, identifying drillable prospects that can be added to the company’s worldwide portfolio of exploration opportunities, Faust said.
The company already owns 3-D seismic data for the area, ConocoPhillips Land Manager David Brown told Bailey.
Faust said that funding to drill would depend on how the prospects in the leases compare with exploration opportunities elsewhere, and that the state’s ACES production tax would be a factor in that comparison — ConocoPhillips wants to see changes in the progressivity elements of ACES.
“One of the things that certainly weighs into that (funding) decision is the fiscal regime in Alaska,” Faust said. “That is a strong component of how competitive they will be as overall opportunities.”
See Alan Bailey’s full story in the Dec. 11 issue of Petroleum News, which goes online at 11 a.m., Dec. 9, at www.petroleumnews.com.