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NEWS BULLETIN

February 07, 2003 --- Vol. 9, No. 13February 2003

AVCG tells state to dissolve Sak River unit; will focus on Colville prospects

John Jay “Bo” Darrah Jr. told Petroleum News Alaska Feb. 6 that Alaska Venture Capital Group LLC has decided to disband the 11,520-acre Sakonowyak River unit at the mouth of the Sakonowyak River in Gwydyr Bay and cancel plans to further explore the prospect.

Rents on four of the unit’s leases were due Feb. 1 and were not paid, Darrah said.

AVCG, a Kansas-based independent, has a 38 percent interest in the prospect, which contains both offshore and onshore state leases three miles north of the Prudhoe Bay unit boundary. Sakonowyak River operator BP Exploration (Alaska) Inc. holds a 62 percent interest.

The unit was formed in mid-2001 at the request of AVCG, which was funding an exploration program expected to include a test well this year.

One of the reasons for abandoning the prospect, Darrah said, was that the company was unable to find another partner to share the financial risk.

The project could have been funded “100 percent internally,” Darrah said, but “because AVCG is new to the North Slope, we needed verification for our drilling ideas. … Sak River has some tough geological questions that could not be satisfactorily answered enough to lower the risk to the experienced explorationist that looked at the deal.”

Darrah said AVCG still has 110,000 acres under lease, including “hotter plays” in the Colville area that it will concentrate on.

Editor’s note: See full story in the Feb. 16 edition of Petroleum News Alaska.

EnCana plugs and abandons McCovey

EnCana Oil & Gas (USA) notified the U.S. Department of the Interior Minerals Management Service Feb. 2 that it was plugging and abandoning the well bore at its McCovey No. 1 well north of Prudhoe Bay in the Beaufort Sea. No details were available, but the company confirmed in writing Feb. 3 the verbal notification from the day before of the permanent abandonment. The well was not sidetracked.

As of press time there was no word from the agencies as to whether they still expect a second plan of exploration for next season.

The McCovey prospect was being drilled from the SDC — the steel drilling caisson — which was towed to the site in July. ConocoPhillips Alaska Inc. and ChevronTexaco are partners at McCovey, with EnCana operating.

New DGC director named; move orders expected next week

Bill Jeffress joined the Division of Governmental Coordination as its new director Feb. 3. DGC said Jeffress comes to state government with extensive experience in the private sector, specifically the mining and timber industries. He spent several years working in the Nevada mining industry and in 1992 moved to Alaska to work on the Fort Knox and True North Mines. In addition to working for the private sector, DGC said Jeffress also has experience working with government including work under a cooperative agreement between the state of Nevada and U.S. Environmental Protection Agency, Region IX.

"We do have a new director," and DGC is still in the governor's office, the governor's press secretary, John Manley, told PNA this morning. Manley said DGC "will be moving over to DNR at some point." Executive orders for that move are expected next week, he said.

Gov. Frank Murkowski said in his state-of-the state address Jan. 23 that he planned to make the Department of Natural Resources the lead agency for all state permitting, streamline the Alaska Coastal Management Program and transfer responsibility for that program from the Office of the Governor to DNR, eliminating DGC in the governor's office “in favor of the Department of Natural Resources as the lead agency.”

Tundra open

The Department of Natural Resources, Division of Mining, Land and Water opened all zones of the North Slope for off-road travel in late January. This was the latest tundra opening since DNR began keeping records in this area in 1969.

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