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NEWS BULLETIN

February 05, 2003 --- Vol. 9, No. 12February 2003

Donkel asking AOGCC to protect overriding royalty in lease

Dan Donkel has asked the Alaska Oil and Gas Conservation Commission to protect his interests in lease ADL 380066, which expired Jan. 31, the same day he petitioned the commission for assistance.

The lease on the North Slope was held by ConocoPhillips Alaska Inc. (85.5 percent). The state holds 12.5 percent royalty and there is a 2 percent overriding royalty.

Donkel told the commission that his interest in the lease is as an overriding royalty owner.

He said that he asked ConocoPhillips to either expand the Kuparuk River unit to include the lease or create a separate unit including the lease, but that the company has told him it will not put the lease in a unit.

In a Jan. 29 letter to ConocoPhillips, which Donkel provided to the commission, he told the company that lease ADL 380066 "is immediately adjacent" to the Hemi Springs well which "currently holds your lease ADL 28249 beyond its primary term."

He told the company that since it was unwilling to unitize, he would invoke the commission's "duty to protect my interest" in lease ADL 380066.

ANS January production down 3 percent; Cook Inlet up 8 percent

January Alaska North Slope crude oil production was off 2.88 percent from December production, averaging 1,004,054 barrels per day compared to a December average of 1,033,814 bpd. January to December production dropped at all North Slope fields, from less than 1 percent at Lisburne to more than 11 percent at Northstar.

The opposite was true in Southcentral Alaska, where overall Cook Inlet January production driven by Forest Oil Corp.'s new Redoubt Shoal production was up 7.84 percent from December.

The Department of Revenue noted several reasons for reduced North Slope production: Milne Point had a turbine problem early in the month, with production (which averaged 52,732 bpd in December) dropping as low as 36,018 bpd before ramping back up into the 50,000-bpd range on the 10th. Alpine production was down Jan. 8 due to a prover meter malfunction (dropping out of the 100,000-bpd range to 72,409 bpd). Badami production was down the week of Jan. 13 in preparation for introduction of a smart pig later in the year; and Northstar output was at zero Jan. 9-13 for compressor seal replacement.

The Department of Revenue does not report Cook Inlet production by field, but Gary Carlson, Forest Oil's senior vice president, told PNA in January that the company can process 3,000 bpd from Redoubt through its West McArthur River unit facilities. Production will increase once the company's dedicated Redoubt Shoal facilities at Kustatan come online later this year.

January Cook Inlet production averaged 32,285 bpd, up from 29,937 bpd in December, an increase of 2,348 bpd.

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