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NEWS BULLETIN

February 03, 2003 --- Vol. 9, No. 11February 2003

Canadian producers say delay enhances Alaska’s gas economics

Stalling the development of Alaska gas makes economic sense for the North Slope owners and the operators of pipelines to the Lower 48, Canada’s natural gas producers have argued in a regulatory filing.

In a submission to the National Energy Board, the Canadian Association of Petroleum Producers makes a case for bringing Alaska gas on stream later rather than sooner, to take advantage of existing infrastructure.

Without suggesting an ideal timetable, the association noted that a long-range forecast by the U.S. Energy Information Administration says that Alaska gas is unlikely to reach markets before 2020.

If North Slope gas was to start flowing by 2011 a major new “express” line would be required from Western Canada to Chicago, the association said. But even a delay to 2016 could see space open up on TransCanada PipeLines Ltd.’s mainline to the U.S. Midwest.

In testimony filed for the National Energy Board hearing, which starts Feb. 24, the Canadian Association of Petroleum Producers accused TransCanada of inflating its financial requirements by prematurely forecasting developing of Alaska gas.

The timing of any project to deliver gas from the North Slope affects TransCanada’s depreciation expenses, which then spill over to pipeline revenue requirements and shipping tolls.

Forest Oil unveils large Cook Inlet prospect, needs partner

Forest Oil said its offshore Corsair prospect in Cook Inlet could hold more oil reserves than the company's producing Redoubt Shoal field.

Pre-drill analysis indicates that Corsair could contain 137 million barrels of oil, 79 million barrels in the Tyonek formation and 58 million barrels in the Hemlock formation, a company spokesman said. But these are conservative estimates, he said.

Forest was to have booked up to 70 million barrels of Redoubt oil reserves last year.

Analysis also indicates that 480 billion cubic feet of natural gas may be locked in Corsair, the spokesman said, and perhaps another half-trillion cubic feet of gas in four other Forest inlet prospects: Olsen Creek, Viggen, Tutna and Valkyrie.

However, he said that because of Forest's large investment in Redoubt, the company needs a partner to help share exploration expenses at Corsair, as well as at Forest's other inlet prospects.

Corsair is said to be geologically linked to the failed Tyonek Deep prospect, formerly called Sunfish. The area's complicated geology could pose a problem for Forest, a spokesman for the Alaska Division of Oil and Gas said.

Anadarko just 10,000 acres away from onshore limit

Anadarko Petroleum Corp. is a hair away from exceeding the limit on "chargeable" onshore acreage, but said it's monitoring the situation.

A spokesman for the company said the big independent's exploration position in Alaska now stands at about 490,000 acres, just 10,000 acres shy of the 500,000-acre state limit.

To avoid busting the acreage cap, Anadarko recently gave up rights to 26,012 acres (five tracts) it won in last year's North Slope Foothills Areawide Lease Sale.

"The 500,000 acres allows the opportunity to explore onshore Alaska, but it also gives us an additional incentive to ensure we have the highest quality acreage for our portfolio," the company spokesman said.

He would not say whether Anadarko intends to participate in the upcoming Foothills sale in May, but did say the company is looking for additional partners for some of its existing North Slope acreage, particularly in the Foothills region.

Taking on partners would help reduce Anadarko's interest in onshore acreage while spreading financial risk.

Anadarko's 2003 budget includes $63 million for Alaska

Anadarko Petroleum Corp. has carved $63 million from its announced $2.3 billion 2003 capital budget for exploration and development work in Alaska, the company said.

Anadarko said it plans to test two North Slope prospects this year, including a possible satellite near the Alpine field and another well in the National Petroleum Reserve-Alaska. A portion of the budget will go to paying the company's share of 16 development wells at Alpine, the company said.

The Houston, Texas-based independent also said it plans to invest in 400 square miles of 3-D seismic surveys north and south of Alpine and 300 square miles of 2-D seismic in the North Slope Foothills region.

Of the total budget, Anadarko has allocated $1.5 billion to worldwide development projects, primarily for fields in the Gulf of Mexico, Western Canada, East and Central Texas, North Louisiana and Wyoming.

About $381 million is earmarked for exploration in North America, the Middle East, North and West Africa and Australia. The overall budget also includes $107 million for infrastructure and other construction projects and $337 million for capitalized interest and overhead.

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